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Iceland's Data Center Ambitions Are Stalled

A $300 million project announced as part of Iceland's bid to attract international data center development has been postponed for at least 12 months, the developers say.

In early 2007 the government of Iceland began been touting the country as an affordable destination for data center development, citing its abundant supply of geothermal power. At the time, we noted that companies considering Iceland "not forget the source of all that geothermal energy: Iceland sits atop an active volcanic rift."

Despite its natural advantages, officials in Iceland have unveiled only one data center project. And that was before the events of 2008, when Iceland was hit by an earthquake measuring 6.1 on the Richter scale and became one of the leading casualties of the global financial crisis. Now that lone home-grown project, a $300 million data center planned for Keflavik International Airport, has been delayed. Developer Verne Holdings said construction has been delayed by about 12 months, pushing the launch back to at least mid-2010.

"We had to obtain considerable information last summer because of the earthquake in south Iceland to convince our clients that everything was in order," Verne Holdings chairman Vilhjalmur Thorsteinsson told local media. "Then the banking system collapsed, currency restrictions took effect and of course the international financial crisis has influenced the foreign companies that we’re negotiating with."

Thorsteinsson said negotiations with prospective tenants are continuing, and that the project had effectively become a built-to-suit opportunity, awaiting an anchor tenant to move forward. Verne Holdings is owned by Novator, a company in the ownership of Icelandic entrepreneur Bjorgolfur Thor Bjorgolfsson, and U.S. investment fund, General Catalyst Partners.

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