As the demand for A.I.-ready digital infrastructure skyrockets, data center development has become an urgent and necessary foundation for a wide spectrum of high-performance computing technologies—and for the businesses that are increasingly dependent on them. Unsurprisingly, data center construction has surged globally. Yet as growth accelerates, teh roadblocks to building at the required pace and scale have become far more pronounced. 

Arguably, the most critical factor in data center development today is access to power. Alex de Vries-Gao, the founder of tech sustainability website Digiconomist, estimates that by the end of 2025, energy consumption by A.I. systems could reach 23 gigawatts—twice the total energy consumption of the Netherlands.

This poses two intertwined challenges. First, many countries simply lack sufficient power or a modern grid capable of supporting these demands. Much of the U.S. and U.K. national grid infrastructure was built between 1950 and 1970 and designed around large coal-fired plants—a post-war regeneration system now decades overdue for modernization. As coal availability waned, nuclear and renewable sources such as wind and solar began to fill the gap. Yet, these types of energy systems take time to develop and rely heavily on robust, upgraded power networks. The sudden increase in power demand resulting from the proliferation of data centers has highlighted the crucial need for investment in power infrastructure globally.

Second, the demand for such vast power has sharpened scrutiny on the carbon footprint of data centers. As a result, data-intensive businesses are increasingly looking for data center partners that have proven sustainability credentials and can help decarbonize their IT workloads. That often means looking further afield than your local neighborhood data center provider to find a partnership that is environmentally and financially beneficial and sustainable long-term. At atNorth, we are seeing unprecedented demand for environmentally responsible A.I. infrastructure at speed and scale. Power bottlenecks caused by power availability simply cannot be allowed to become a limiting factor to growth.

The Icelandic example

Data centers located in cooler climates such as the Nordics can leverage highly energy-efficient cooling systems that significantly reduce the energy required to power and cool the hardware they host. The region also benefits from abundant renewable energy and relatively young, resilient power and internet networks. 

Iceland, in particular, is a global leader in clean energy: 71 percent of its energy is generated by hydropower, and 29 percent from geothermal energy. Icelandic data centers can combine renewable energy with its naturally cool ambient temperatures to achieve exceptional energy efficiency. While global average Power Usage Effectiveness (PUE)—the metric of data center energy efficiency where the ideal value is 1.0 (representing 100 percent efficiency)—hovers around 1.48, Icelandic facilities average between 1.1 and 1.2, enabling customers to significantly decarbonize their IT workloads. For example, BNP Paribas lowered its total cost of ownership, cut energy use by 50 percent and reduced CO₂ output by 85 percent by relocating a portion of its IT infrastructure to one of atNorth’s Icelandic facilities.

Temperatures in Iceland typically range from 30°F (-1 °C) in winter to 52°F (11 °C) in summer, enabling free-air cooling of some IT workloads. As compute density increases to accommodate A.I. and other high-performance applications, more advanced cooling technologies—such as Direct Liquid Cooling (DLC) or Direct to Chip Cooling—that allow water (or coolants) to reduce the temperature of the computer equipment more efficiently due to superior heat dissipation have become essential. These solutions are widely available in Iceland and across the Nordic countries, which are well known for their environmentally friendly ethos and circular economy principles.

Moreover, Iceland’s political and economic stability offers another key advantage as geopolitical uncertainty grows across regions. Businesses are now more sensitive to the physical location of their data and the legal frameworks that govern it. As a member of the European Economic Area (EEA), Iceland has adopted the E.U.’s General Data Protection Regulation (GDPR) and reinforced it with national legislation, resulting in robust safeguards for data privacy and security.

Going beyond carbon reduction

These factors have driven a surge in Nordic data center development in recent years, positioning the region at the forefront of the industry. While much of the world works to upgrade legacy power networks in order to start building data centers, the Nordic countries are addressing newer challenges associated with more mature data center development. Certainly, at atNorth, we have seen growing demand for a more holistic approach to sustainability and responsible operations. It is not enough to mitigate environmental impact; data center operators must deliver tangible benefits to the local communities in which we operate to support long-term sustainability and economic growth.

Using the most sustainable materials possible is one factor that can showcase an honest commitment to care for the natural environment. atNorth’s ICE03 data center was constructed using Glulam, a sustainable laminated wood product with lower environmental impact and superior fire resistance compared to steel. Similarly, the site was insulated using sustainable Icelandic rockwool, produced from natural volcanic basalt and known for its durability, fire resistance and low ecological footprint.  

The process of heat reuse—the recycling of waste heat from the data center cooling systems for use in the local community—is a practice that is common in the Nordic countries and growing in popularity across northern Europe. This is a fundamental part of sustainable data center design, and even in countries like Iceland, where naturally heated geothermal water is abundant, opportunities for further improvement remain. At ICE03, for example, atNorth partnered with the municipality of Akureyri to channel waste heat into a new community-run greenhouse, which will provide a space for schoolchildren to explore ecological farming practices and sustainable food production. These initiatives reduce carbon emissions for both the data center and the receiving organization while addressing specific local needs, such as fresh vegetable production in a country that imports 80 percent of its fresh produce.

Community engagement is also becoming pivotal to the data center development process as competition over suitable land intensifies. Just as the concept of a “trusted brand” has proven fundamental in the consumer retail market—with some research suggesting that 81 percent of consumers need to trust a brand before considering a purchase—the same principle extends to regional decision-making that directly affects the lives of local people. Therefore, operators that can demonstrate a genuine commitment to good corporate citizenship will undoubtedly find more success.

To ensure authentic integration with local communities, local hiring is essential. Over 90 percent of the workforce involved in developing atNorth’s ICE03 site came from nearby communities. The company also supports local education, charities and community projects through volunteer support and financial donations—sponsoring a local run in Akureyri, funding Reykjanesbær’s light festival and donating advanced mechatronics equipment to Akureyri University to support training for data center-related careers. 

Building for the A.I. era—responsibly 

As digitalization intensifies, so will the demand for high-performance data center capacity. Yet such rapid expansion carries risks that could seriously undermine long-term sustainability. The boom-and-reckoning pattern seen in industries like palm oil—where explosive growth preceded significant deforestation—serves as a warning. 

The data center industry must learn from history and chart a new path in which digital infrastructure can be technologically advanced, environmentally responsible and locally beneficial. In short: data centers must be developed to meet A.I.-era performance demands while driving responsible growth and long-term value for clients, communities and our planet.