Iceland is working to tip the scales toward renewable energy in a world where most computing needs are powered by coal.

The familiar fuss is that fossil fuels make the most business sense for computing. Data centers -- the big warehouses full of servers that process all our Googling, emailing, online banking and so forth -- are situated in areas that have easy access to cheap energy.

Coal and other traditional energy sources keep them running. But as data centers proliferate to feed the demands of the digital age, environmentalists say clean energy-supplied facilities are crucial to keep the growing greenhouse gas emissions from information technology in check.

Sprouting tech firms think they have found a sweet spot for clean-sourced data centers in Iceland. The Nordic island is ideal for hosting facilities that need inexpensive, but reliable renewable energy, the IT pioneers say.

Iceland has vast renewable resources and is conveniently nestled between North America and Europe. Plus, it has got a temperate climate and infrastructure connecting it to major population centers.

"All of those things meet at a cross section over Iceland that we really don't believe to exist anywhere else," explained Jeff Monroe, CEO of three-year-old data center company Verne Global.

At least, that is what Iceland's IT pros are counting on. They see their nation becoming a player in the clean technology scene. Industry observers are more cautious, but curious.

For years, Iceland has been looking for ways to commoditize the nearly endless energy resources presented by its geothermal activity and hydropower. The aluminum industry has been drawn in. Alcoa Inc. and others use the country's inexpensive power to run their energy-intensive aluminum smelting operations.

But it is not enough. Iceland was crippled by financial collapse just three years ago. It needs all the new foreign investment and related jobs that it can get. "We think it's important to have a variety of businesses," explained Einar Hansen Tómasson. "We have to diversify and distribute the risks."

Tómasson is project manager for Invest in Iceland Agency, an independent arm of the federal government. He's watched IT growth simmer within the country's borders for the past seven or eight years and wondered how it might connect with much bigger business abroad.

Most of the right pieces
Electricity is dirt cheap in Iceland, at prices as low as 4 cents per kilowatt-hour. That's compared to 10.77 cents per kilowatt-hour for commercial users of U.S. electricity, according to U.S. Energy Information Administration statistics for 2011.

Iceland's low energy costs are thanks to hot water streams from volcanoes and springs that give the country widespread access to geothermal energy. Meanwhile, rivers and waterfalls provide abundant hydropower. Virtually all of Iceland's electricity comes from these sources.

Data centers, notorious 24-hour energy guzzlers, can benefit from that cheap power and the efficient grids that have been built up to distribute it. Generous contracts with utilities allow low rates to be locked in for 15 years or longer. Also, Iceland's climate helps cool data centers naturally, sharply reducing air conditioning bills -- another major energy expenditure the biggest data center operators usually face.

Verne Global's data center, located in a former NATO command center in Keflavik, about 29 miles southwest of Reykjavik, will come into service this quarter. Its 100 megawatts of server power capacity will be filled with server modules as needed. One client, IT firm Datapipe, has already signed on.

The second Iceland facility, Thor Data Center, opened last year in Hafnarfjörður, 6 miles outside Reykjavik, and has 28,000 square feet to work with, some of which is already in use.

Still, various obstacles have kept Iceland's data center growth from reaching a boil.

"We were testing the water to see what would be the reaction from the market," said Tómasson, of Iceland's first attempts years ago to generate buzz about its tech potential.

Invest in Iceland Agency representatives floated Iceland's data center ideas to investors at a conference in New York in 2003. They were told IT transmission infrastructure between Iceland and North America wasn't strong enough and that "it was not the right moment."

"We put it on ice," Tómasson said.

Waiting for the Emerald Express
The investors were referring to the physical cables that keep the digital world connected. Fiber optic lines stretch underground and across seas to enable data transfer between faraway places. But users of those lines experience what technicians call unavoidable latency, the delay in computer processes that are run across distances. High latency would cause a website to load slowly, for example.

"For every mile, there's some delay," said Brad Brech, a board member of the Green Grid, an industry consortium that promotes IT efficiency. "We haven't solved all the physics yet."

Iceland is currently connected to neighboring Greenland, Scotland and Denmark through submarine lines that then connect to larger markets in Europe and North America. A new cable system, the Emerald Express, is set to link Iceland to the United States, Canada, Ireland, the United Kingdom and mainland Europe. It will be a "new superhighway system" for data, said Nancy Lyons, spokeswoman for Emerald Atlantis Ltd., which is building the system.

It's a 2,734-mile cable system that Iceland IT players have described as game-changing.

"It was very exciting news for us, of course, because the latency was the one [obstacle] with a lot of people," said Jason Pelletier of Green Earth Data, U.S. distributor for Thor Data Center. "Now that's not going to be an issue."

"It's like if AT&T were doubling the number of towers we have," added Green Earth Data CEO Olafur Olafsson.

Emerald Atlantis expects to have the lowest round-trip latency of any trans-Atlantic cable. It plans to ultimately build up its system to a rapid speed of 100 gigabits per second. That is fast enough to transmit all the printed works in the Library of Congress in 23 seconds, said a spokesman for tech consortium Internet2 in comments to Nextgov.

And a new cable system would provide additional needed bandwidth, said Fred Chong, director of the Greenscale Center for Energy-Efficient Computing at the University of California, Santa Barbara. That means more users can trade data between North America and Iceland with less congestion.

"This will definitely strengthen our position regarding the U.S.," said Tómasson, the Invest in Iceland Agency official.

Installation is scheduled to begin in the second half of next year, with a target ready-for-service date of December 2012. Until then, current latency levels are still workable for users who don't need quick data transfer.

'It's an education thing'
So transmission improvements are under way, but the newness of Iceland's tech scene remains as a hurdle. People just don't know about it yet.

"We've not been able to find a lot of big customers that are willing to bank on Iceland yet," said Brech, the Green Grid board member, who is also an IBM engineer.

"We've been in the driver's seat all these years trying to sell this data center [space] to foreign companies," said Tómasson. "They always have us on the monitor ... to see the progress."

Green Earth Data has set up shop in Europe and the United States to link clients to Thor Data Center.

"It's an education thing," said Olafsson, the CEO, in an interview at his office in Washington, D.C. "We've got to get out and market and do more PR. It's like anything that's new. People don't know about it."

Once they do, he says, "we would like to think it's a no-brainer."

But supply-chain infrastructure is still missing, cautions Jack Pouchet, another Green Grid board member, who is also director of energy initiatives at Emerson Network Power. Data centers need a steady, reliable flow of new equipment and service.

"A data center is a living, breathing animal," he said. "There are things coming in and out every day."

He also pointed to natural disasters as added risk factors in Iceland. Tough building standards can protect against earthquakes, he said, but volcanoes can cause the country to grind to a halt, as seen during the 2010 eruption in southern Iceland.

Tómasson counters that the volcano and earthquake activity is well-mapped, and data centers and power plants are located strategically with those risks in mind.

In all, he said, the country has been primed. "This is the year of the takeoff," he added. "We'll be getting more and more interest. I only see this as the beginning.

Big dreams about the big names
Brech says Tómasson may well be right, but he's going to wait and see.

"Once there are a couple big-name data centers that make the step, I think you'll see several more follow," he said. "It needs that first big example to start a little bit of a snowball."

In the United States, clean-sourced data centers have less momentum. Renewables here are intermittent, which would not suit data centers' constant needs. And facilities are linked to an electric grid that contains a mix of energy sources. In a standard grid, it would be impossible to ensure that a particular data center was being fed only renewable energy.

Microsoft, Google, Facebook and others are in an undeclared race to build the most energy-efficient data center in the United States. They are clustering in places like western North Carolina and eastern Oregon where coal, natural gas and nuclear run the show.

But they are also pouring resources into state-of-the-art servers, heating and cooling equipment, and ventilation to lower electricity needs (ClimateWire, Aug. 10).

Impressive, says Olafsson, but Iceland can one-up them.

"So they're saying, 'Oh, our processors are 20 percent cleaner.' Well, the real fix is using clean energy," he said. "Then they won't have to worry about how much energy they use."

Olafsson perhaps optimistically estimates that 5 to 10 percent of the world's data will someday flow through Iceland.

Reprinted from Climatewire with permission from Environment & Energy Publishing, LLC., 202-628-6500