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Sweden cuts Electricity Tax for Data Centers

Contributed by Scandicorp
27 April, 2017

As from 1st January 2017 Sweden slashed the electricity tax used by data centers by 97% in an attempt to make its IT sector competitive against neighboring countries. The 97% tax cut has reduced overall electricity prices by about 40% for any existing or new data centers greater than 0.5MW.

Data Centers as an important source for Swedish Economy

Data centers already contributed 6.2 billion Krona ($687 million) and 3,600 jobs to the Swedish economy in 2015 according to a report by the Boston Consulting Group. The energy tax reforms mean data centers are expected to add 25 billion Krona and 14,000 jobs by 2025, according to the report. "This is acknowledging that the world has changed," says Tomas Sokolnicki, a senior investment adviser at Data Centers by Sweden, a quasi-government trade body. "We have a digital industry, so it should be handled and treated like other base industries in Sweden."

Tax reduction extended also to smaller data Centers

Recently the Swedish government announced that this tax reduction would be extended also to smaller data centers in connection with the budget proposal this coming autumn. Finance Minister Magdalena Andersson commented; "We hope that this will bring more data centers resulting in an increase in jobs and growth, not the least in the northern parts of Sweden."

Who will benefit?

Facebook, who opened a state-of-the-art facility in Luleå in northern Sweden in 2013, will certainly benefit.  Recently Amazon also announced plans to develop three data centers near Stockholm, although they declined to disclose the investment amount.

Most of Sweden's electricity comes from renewable sources

It is not only the fact that electricity is cheaper in Sweden; it is also cleaner, which helps some of the world's tech giants achieve their much-publicized goals of using only renewable energy. Over 65% of Sweden's electricity comes from renewable sources like wind and hydroelectric power.
A cold climate and abundance of cold water is also a big attraction for data center operators, all of whom are trying to minimize power and cooling costs. It remains to be seen how neighboring Norway and Finland will react to the Swedish move of cutting taxes on electricity for data centers.

Contributed by Scandicorp. Visit our website www.scandicorp.com


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