Data Centers in Iceland

Iceland – Cool, Clean, and Connected Infrastructure

Iceland offers a unique value proposition for high-performance computing and data-heavy industries. Its combination of 100% renewable energy, a cool climate ideal for free-air cooling, and a stable, business-friendly environment makes it a prime location for workloads that demand both sustainability and cost efficiency. For companies prioritizing green credentials without sacrificing performance, Iceland is a compelling choice.

Iceland: At A Glance

Network & Connectivity Ecosystem

Carrier Density & Carrier Neutrality: The market features over 1 provider, with a focus on high-capacity subsea cable routes to Europe and North America. As of September 2025, there are 8 data centers, primarily offering carrier-neutral interconnection.

Direct Cloud On-Ramps: There are no public cloud on-ramps located directly within Iceland. Businesses connect to major cloud providers by extending their networks to primary European hubs like Amsterdam, Frankfurt, or London via the country's robust subsea cable systems.

Internet Exchange Points (IXPs): The Reykjavik Internet Exchange (RIX) is the primary IXP in Iceland, facilitating local traffic exchange and improving domestic network performance. Most international peering occurs directly through carrier connections linking to major European exchanges.

Bare Metal: Bare metal server options are available in Iceland, often catering to high-performance computing (HPC) and specialized workloads. Providers like Hivelocity offer dedicated server solutions that leverage the country's unique power and cooling advantages.

Power Analysis

Average Cost Of Power: Industrial electricity prices are estimated between €0.06 – €0.09/kWh as of September 2025. This low and stable pricing is a direct result of the nation's vast geothermal and hydroelectric resources, providing significant operational savings for power-intensive deployments.

Power Grid Reliability: The Icelandic power grid is exceptionally reliable and stable. The country's infrastructure is modern and well-maintained, drawing from a surplus of renewable energy sources that ensure consistent, high-quality power delivery to data center facilities.

Market Access, Business & Tax Climate

Proximity To Key Business Districts: Data centers are strategically located to serve the capital region of Reykjavik, the hub of Iceland's economic and technological activity. This proximity provides low-latency connectivity for local financial services, research institutions, and the growing tech sector.

Regional Market Reach: While a small domestic market, Iceland serves as an ideal midway point for workloads that require geographic diversity between North America and Europe. It is an excellent location for disaster recovery, data backup, and content delivery network (CDN) caching for transatlantic traffic.

Tax Advantage For Data Centers: Iceland offers significant financial benefits, including a reported 35% tax credit or abatement for data center investments. This incentive, combined with exemptions from certain work permit conditions for specialized staff, makes the financial case for establishing operations very attractive.

Natural Disaster Risk

Iceland's overall natural disaster risk is rated as Very Low, with an INFORM Risk score of 1.6 out of 10 as of September 2025. While the country is geologically active, the direct risk to modern, well-engineered data centers is minimal.

Key risk factors include:

• Coastal Flood: Rated at 6.5, this is the highest individual risk factor, primarily affecting specific low-lying coastal areas.
• Earthquake: With a score of 5.4, seismic activity is common, but building codes and infrastructure are designed to withstand significant events.
• Epidemic: Scored at 2.7, reflecting a low but present risk common to any developed nation.
• Other risks such as river floods, tsunamis, and tropical cyclones are rated at zero.