Data Centers in Iceland

Iceland – The Green HPC & Colocation Hub

Executive Summary

Iceland is the premier market for energy-intensive computing workloads like High-Performance Computing (HPC), AI training, and blockchain. Its 100% renewable energy grid and naturally cool climate provide a globally significant cost and sustainability advantage. This secures low operational expenses and helps companies meet aggressive carbon reduction goals for large-scale deployments.

Iceland: At A Glance

Network & Connectivity Ecosystem

Carrier Density & Carrier Neutrality: The market features 8 data centers and is served by a primary national provider, as of September 2025. Carrier-neutral facilities offer access to international connectivity through multiple subsea cables landing in Iceland.

Direct Cloud On-Ramps: There are no direct cloud on-ramps or hyperscale cloud regions located within Iceland, as of September 2025. Access to major cloud providers like AWS, Google Cloud, and Microsoft Azure requires dedicated network connections to primary European hubs such as London, Dublin, or Amsterdam.

Internet Exchange Points (IXPs): The main exchange is the Reykjavik Internet Exchange (RIX). RIX is critical for keeping domestic internet traffic within the country, which improves performance and reduces latency for local users and applications.

Bare Metal: Bare metal server solutions are available, providing dedicated, high-performance computing resources. Providers such as OVHcloud offer services suitable for the HPC and AI workloads that thrive in Iceland's climate.

Power Analysis

Average Cost Of Power: Industrial electricity prices are highly competitive, sourced from an energy mix that is approximately 100% renewable from hydropower and geothermal sources, as of September 2025. This green energy profile significantly reduces both operational costs and carbon footprints for data center tenants.

Power Grid Reliability: The power grid is well-engineered and exceptionally reliable, drawing from stable geothermal and hydroelectric sources. Data center corridors are supported by redundant power infrastructure, ensuring high uptime for critical operations.

Market Access, Business & Tax Climate

Proximity To Key Business Districts: Data centers are concentrated on the Reykjanes Peninsula, providing strategic proximity to Keflavik International Airport and the capital, Reykjavik. This location supports the nation's growing technology, finance, and scientific research sectors.

Regional Market Reach: Iceland's location makes it an effective bridge for data transfer between North America and Europe. It is an excellent site for disaster recovery, data backup, and content delivery networks serving both continents.

Tax Advantage For Data Centers: Iceland offers compelling financial incentives, including a reported 35% tax credit specifically for new data center investments. These programs lower the total cost of ownership and actively encourage foreign technology investment.

Natural Disaster Risk

Iceland has a Very Low overall natural disaster risk profile, with an INFORM Risk score of 1.6 out of 10, as of September 2025. The country's unique geology shapes its risk landscape, with institutional preparedness and coping capacity rated as very strong.

The primary natural hazards are:

• Coastal Flooding: Rated 6.5/10
• Earthquake: Rated 5.4/10

Risks from river floods, tsunamis, drought, and tropical cyclones are negligible. The main considerations for infrastructure are related to seismic and volcanic activity, which are well-understood and managed within the country's building codes and operational procedures.