Data Centers in Reykjavik

Reykjavik – Europe's 100% Renewable Power Hub

Reykjavik offers a unique value proposition for high-performance computing (HPC) and dense compute workloads, powered entirely by renewable energy. Its stable, low-cost geothermal and hydropower, combined with attractive tax incentives, make it a prime location for companies prioritizing sustainability and predictable operational expenses. This market is ideal for businesses that can architect their applications to tolerate slightly higher latency to major European hubs in exchange for significant power cost savings and green credentials.

Reykjavik: At A Glance

Network & Connectivity Ecosystem

Carrier Density & Carrier Neutrality: The market has over 8 data centers operated by a primary provider, as of September 2025. This creates a focused but effective ecosystem, with international connectivity delivered via multiple high-capacity subsea cables connecting Iceland to North America and Europe. Carrier neutrality is available, allowing interconnection between networks.

Direct Cloud On-Ramps: There are no public cloud on-ramps located directly within Iceland, as of September 2025. Access to hyperscale cloud providers requires connecting through major European hubs such as London, Dublin, or Amsterdam. Private network extensions can establish dedicated, secure links to these cloud regions.

Internet Exchange Points (IXPs): The Reykjavik Internet Exchange (RIX) is the primary peering point in Iceland. It facilitates local traffic exchange between carriers and content providers, improving domestic network performance and reducing reliance on international transit for local data.

Bare Metal: Bare metal server options are available in Reykjavik, meeting demand for dedicated compute resources. Providers like Hivelocity offer solutions for companies needing direct hardware access for performance-intensive applications.

Power Analysis

Average Cost Of Power: Industrial electricity is exceptionally competitive, priced at approximately €0.05–€0.08/kWh, as of September 2025. This low and stable pricing is a direct result of Iceland's abundant geothermal and hydroelectric resources. These rates provide significant long-term operational cost advantages for power-intensive deployments.

Power Grid Reliability: Iceland's power grid is famously reliable and sustainable, with nearly 100% of its energy generated from renewable sources. Data centers in the Reykjavik area are supported by a well-engineered grid with built-in redundancy, ensuring high levels of uptime for critical facilities.

Market Access, Business & Tax Climate

Proximity To Key Business Districts: Data centers are located primarily in the greater Reykjavik capital region and nearby areas like Reykjanesbær, close to the international airport. This proximity serves Iceland's technology, finance, and research sectors while providing easy access for logistics and maintenance.

Regional Market Reach: While not a low-latency hub for continental Europe, Iceland serves as a strategic point between North America and Europe for workloads that are not latency-sensitive. It is an effective location for disaster recovery, data backup, and high-performance computing clusters that can operate independently of end-user proximity.

Tax Advantage For Data Centers: Iceland offers significant financial incentives. A reported 35% tax credit or abatement specifically for data center investment drastically lowers capital expenditure. Additionally, the government may grant exemptions from standard residency and work permit requirements for specialized personnel in the tech sector.

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. Although known for its geological activity, the statistical risk to well-engineered structures remains minimal.

Key environmental risks include:

• Coastal Flooding: The highest individual risk factor, reflecting the island's exposure to North Atlantic storm systems.
• Earthquake: A notable risk due to the country's position on the Mid-Atlantic Ridge, though building codes are designed to withstand seismic events.
• Epidemic: A low-probability, moderate-impact risk common to all developed nations.
• Volcanic Ash: While not explicitly scored, volcanic activity is a regional hazard that can periodically disrupt air travel. Infrastructure is typically located to mitigate direct lava flow risks.