Data Centers in Iceland

Iceland – Cool, Clean, and Connected Power

Executive Summary

Iceland is a premier global destination for high-performance computing (HPC), AI clusters, and any large-scale compute workloads that demand immense power and cooling. Its 100% renewable energy grid provides predictable, low-cost electricity, while the subarctic climate delivers year-round free-air cooling. This unique combination allows businesses to achieve exceptional power efficiency and support sustainability goals without compromising on performance.

Iceland: At A Glance

Network & Connectivity Ecosystem

Carrier Density & Carrier Neutrality: Over 1 provider and 8 data centers operate in Iceland as of September 2025. While the market is concentrated, facilities provide access to the key international carriers connecting the country to other global hubs.

Direct Cloud On-Ramps: There are no public cloud regions or direct on-ramps located within Iceland. Businesses connect to major cloud providers like AWS, Google Cloud, and Microsoft Azure via dedicated private network links to primary European hubs such as Dublin, London, and Amsterdam.

Internet Exchange Points (IXPs): The Reykjavik Internet Exchange (RIX) is the primary IXP in Iceland. It facilitates local traffic exchange between networks, improving domestic latency and performance.

Bare Metal: Bare metal server capacity is available from providers in the region. Options from global suppliers like Hivelocity and OVHcloud can be leveraged for compute-intensive workloads.

Power Analysis

Average Cost Of Power: Industrial electricity is estimated between €0.07 – €0.11/kWh as of September 2025. This rate is among the lowest in Europe, providing a significant long-term operational cost advantage, particularly for power-dense deployments like AI and HPC.

Power Grid Reliability: Iceland's power grid is exceptionally reliable. It is sourced almost entirely from stable, redundant geothermal and hydroelectric power plants, ensuring high uptime and insulation from fossil fuel price volatility.

Market Access, Business & Tax Climate

Proximity To Key Business Districts: Data centers are strategically located in the southwestern corner of Iceland, primarily near Reykjavik and the Keflavik International Airport. This area contains the country's main business districts and submarine cable landing stations.

Regional Market Reach: Iceland serves as a unique mid-point hub for workloads that require geographic diversity between North America and Europe. It is an effective location for disaster recovery, data backup, and latency-tolerant compute tasks.

Tax Advantage For Data Centers: Iceland offers significant financial incentives for data center investment. The government provides a reported 35% tax credit and may grant exemptions from residency and work permit requirements for essential technical staff, reducing both capital and operational expenses.

Natural Disaster Risk

Iceland has a Very Low overall natural disaster risk profile, with an INFORM score of 1.6 out of 10 as of September 2025. This rating reflects a stable environment with excellent institutional coping capacity.

While the overall risk is minimal, operators should be aware of specific regional hazards. The highest individual risk factors for the country are:

• Coastal Flooding: The primary natural hazard risk, though modern data centers are sited accordingly.
• Earthquake: The country is seismically active, requiring infrastructure to be built to specific engineering standards.
• Epidemic: A low-frequency but nationally relevant risk factor.

Risks from river floods, tsunamis, tropical cyclones, and drought are negligible.