EcoDataCenter on balancing sustainability and growth

Maria Tunberg

Welcome to the Analysys Mason podcast. My name is Maria Tunberg, and I'm a partner at Analysys Mason. During this series of podcasts, I will be joined by business leaders from across the TMT landscape to hear their thoughts and gather their insights on sustainability, ESG, and what it means to them, their organisation and the wider industry. 

Today, I'm delighted to be joined by John Wernvik, Chief Marketing Officer at EcoDataCenter. EcoDataCenter designs builds and operates data centres with a focus on sustainability. It uses renewable energy and advanced cooling systems to offer efficient, scalable, and sustainable solutions. Its data centres support AI ecosystems and enable clients to achieve net-zero emissions while ensuring operational reliability. 

John, it's a pleasure to have you on this podcast here today. Thank you so much for joining us.

John Wernvik

Thank you. Glad to be here.

Maria Tunberg

What if we start off by looking at the data centre industry in general? I'm curious to hear your perspective, what are the key sustainability-related challenges that data centre players are facing today?

John Wernvik

Well, I would say the industry as a whole has grown exponentially. Since ChatGPT exploded about two years ago, the acceleration of AI and digital society as a whole has had a tremendous impact on the data centre industry. The market is absolutely booming. 

So, I would say the overall challenge is how do we balance this super accelerated growth together with a sustainable way of growing? How is this impacting local communities where we take a lot of energy out from the grid, for instance? How is this affecting the general water supply because we also use a lot of water? 

So, I would say the data centre industry as a whole has been much more publicly scrutinised for our sustainability efforts, given the last 24 months, and I think that is only going to increase. We are a fairly young industry as well, so we have a lot of catching up to do in terms of transparency and communication with different stakeholders and communicating to the municipalities on what we are actually doing for sustainability efforts.

Balancing growth and sustainability challenges

Maria Tunberg

So, you're saying the data centre industry is new, and it's experiencing very rapid growth. Then, you have to balance that with ensuring a sustainable way of growing. It sounds like a fun but challenging thing to engage in.

John Wernvik

Yes, definitely. It's super challenging, of course, but that's also what makes it a lot of fun. It's something now that everybody's becoming more and more aware of, this situation, but also, we truly believe that placed in the right type of location, a data centre can also be a tremendous asset to society as a whole and local municipalities. So that's the vision or the mission that we have. To initiate those types of discussions with stakeholders and municipalities that data centres can be something extremely positive if strategically done right.

Maria Tunberg

Could you elaborate on that a bit? I'm curious to hear about the sustainability ethos at EcoDataCenter. I understand that this is at the heart of the things you do, but what does that mean to you as an organisation?

Local engagement and community integration

John Wernvik

I would say that the number one thing for us is that we are a local company. We're based in Sweden; we started here where I'm sitting today in Falun, where we have our first large campus. How we've developed this campus is, together with the municipality and the local utility company, we try to find out how we can balance each other out regarding how we can reuse the heat. How can we draw water and make investments together to benefit the mutual municipality as well? 

So, I think we have a different approach compared to a lot of others, where we actively engage a lot with local municipalities and see what we can do together to enforce the infrastructure around the communities as we grow. 

I think having that local angle, more than seeing the global digitalisation aspect, is a way we balance our sustainability efforts. We see that we have great momentum when we engage with municipalities when looking for new sites - that’s business-wise and also having a positive impact. Having that local commitment and local angle is really at the core of our ESG principles. 

One thing we struggle with is when you take global standards and then try to adapt them to a local community in Sweden, where we have completely different circumstances than you do in southern Spain, for instance, regarding water issues, etc., that is a challenge for us, but it’s something we try to advocate very much.

Maria Tunberg

Well, thank you for elaborating on that. What I hear you coming back to is this connection to the local place and the local municipality, and also working together with a local municipality to ensure that you build a sustainable business. 

You mentioned that you are today located at one of your sites, your first campus, would you like to say a couple of words about the different sites you have and where in Sweden you are located?

John Wernvik

Yes, definitely. I would say our main campus, we call it EcoDataCenter 1, is located here in Falun. Here, we are growing very fast; it's quickly becoming the largest campus in Sweden as of now. Then, we have two sites under development. We have one up in the northern part of Sweden, that's in Östersund, and then, just last week, we announced the acquisition of a new site in a municipality called Borlänge, where we will develop another mega campus going forward. 

Then we have three small city sites, two in Stockholm and one small site in Piteå as well. But the volume of those is much smaller than what we're building in the other three.

Maria Tunberg

Ok. So, there are several different municipalities or local places you need to interact with.

John Wernvik

I would say the interactions with those are very similar to each other. Even though they are different municipalities, the way of working and engaging with the local companies using local partners, etc., is fairly similar.

ESG integration in business strategy

Maria Tunberg

Could you explain a little bit about how you have managed to integrate the ESG principles or sustainability thinking into your overall business strategy and your internal processes?

John Wernvik

Yes, definitely. I think you need to go back to when the company was started. 

It sets a pretty high bar, having the name EcoDataCenter, so that gives us a lot of guidance. But we're still a scale-up company growing very fast. We're not the traditional big company where you have a lot of processes in place. We are very value-driven and value it very high up on the agenda from the beginning. So I would say what we are doing now is somewhat opposite to a lot of other big companies where we are coming from that angle and adopting processes to comply with standards like the GRI, etc., to be able to compare ourselves with others as well. And also, for transparency, it's important to follow up on processes. So that's what we have really been trying to develop for the last 12 to 18 months.

Sustainability goals and challenges

Maria Tunberg

You mentioned that you're a value-driven company, but you're also adapting to some of the international standards that are relevant to this area. Do you have some more specific metrics or goals that you have set for your organisation in terms of sustainability aspects?

John Wernvik

Definitely. We actually just revisited that and published the updated goals in our latest sustainability report. So there are a bunch of them in three different areas. The major one that we're working very hard on is to completely phase out fossil fuels. I would say that if you are to highlight one specific target that everybody needs to work extensively with, it is that. But for a data centre, that is hard because we rely on backup power, we need to make sure that our facility is up and running 24/7, every second of the year, pretty much. In order to do that, we have to have backup generators. In the industry as a whole, those are 99% powered by diesel or fossil fuels. What we have embarked on right now is making a transition to HVO fuel and putting that in the generator. When we do that, we see that we will come down to pretty much a 99% fossil-free full Scope 1 and 2 operation. So, that will be a tremendous bar to set for the industry as a whole. I would say that's one of the absolute major goals we have. 

Then, we work a lot with looking at the energy system as a whole. So, how can we help balance the grid? How can we help increase energy production? Also, where do we place our data centre campuses in terms of where the grid needs to have an outtake? So that is also something we work extensively together with utility companies and grid donors to see where those hotspots are and where it makes sense to place a data centre. I would say those are the two major targets that we're working extensively on right now.

Maria Tunberg

So, phasing out fossil fuels comes with a challenge in the data centre industry then you are also playing a part in balancing the energy system, which is definitely becoming more important as we electrify societies as well. 

I'm curious to hear about EcoDataCenter 2. I know that you're describing this as being part of a circular ecosystem. Could you explain - what does that mean?

Circular ecosystem and food production

John Wernvik

Well, for us, that definition is in terms of what we have built here in Falun. We want to magnify that to a new state. We reuse some of the heat at a nearby pellet production to help create that type of biofuel. So, they use the heat to dry the wooden chips. 

What we are currently looking at in EcoDataCenter 2 is using the waste streams to grow food in greenhouses together with a partner of ours called WA3RM. What we see is that with AI compute becoming more of the norm, especially in data centres in the Nordics, we are able to get up the heat in what we deliver away from the data centre, and that will enable a lot of other adaptations. So that's the goal of EcoDataCenter 2, to create that circular system where we, besides helping society in the digitalisation journey, can also help northern parts of Sweden become more self-sufficient in terms of food and also add a lot of job opportunities.

Maria Tunberg

Well, that sounds very exciting. So it's this symbiosis with other kinds of industries. You mentioned food production, greenhouses, and also biofuels through pellet production. Is this up and running already, or it's about to be developed, or where are you?

John Wernvik

Right now, we have applied for an environmental permit. So we're in the process of seeing how that plays out. Hopefully, we can get started in about 12 months time.

Maria Tunberg

It will be very exciting to follow. And good luck with all your permits and what needs to be done.

John Wernvik

Thank you.

Innovations in cooling technology

Maria Tunberg

If we focus a little bit on cooling technology, could you elaborate on that from EcoDataCenter's perspective? How does that contribute to energy efficiency? How are you working with the cooling aspect?

John Wernvik

Yes, I would say our belief of how we cool the data centre from a local perspective, I mean, where we have placed a data centre in Falun, for instance, we have a nearby lake which has a lot of surface water. There's no real risk of water shortage for a lot of years going forward. 

We also have a fairly cool climate here. So we use a lot of different cooling measures, but you could say that it's a dance between water and energy. So when we have peaks, we can use the water instead of using a lot of energy so we can balance with the grid somewhat. If the grid says that we need to have a larger outtake, we can adapt and use more energy instead. So we try to be as efficient as possible every minute of the day, and for a data centre and our clients, efficiency is always top of mind because that is ultimately also the cost of the operation, so it's in our best interest to be as efficient as possible.

Maria Tunberg

I like the description that it's a dance between water and energy it sounds a bit poetic. I understand it's the efficiency of being able to place your data centre at the right location and then being able to provide the most efficient operations. How are you, as a company, thinking about waste, for example, e-waste from hardware?

John Wernvik

Yes, that's a good question. Since we're a fairly new company, we haven't actually had that much e-waste as of yet, but we are working together with major Swedish recycling partners to see how we can develop an e-waste program. And then we're also part of a large EU program that's called EECONE, where the whole goal is to increase e-waste circularity solutions. 

So, as our company's journey moves further, e-waste will, of course, become more of an issue for our clients too, when they refresh their servers. But for ourselves, where we're at, at this moment in time, that is not a priority for our environmental impact.

Sustainable construction practices

Maria Tunberg

I understand. So, since you're a young company, it's been more focused on actually getting these sites in place. I know you have quite ambitious sustainability thoughts also when it comes to constructing these data centres and in terms of sourcing material, etc.

John Wernvik

Again, going back to the local aspects. We are the first data centre in the world that constructs a lot of the buildings in cross-laminated timber. And that laminated timber is also 90 to 95% locally sourced here from Dalarna.

The volume of wood that we use in our data centre takes the Swedish forest about three to five minutes to grow back. So I think that's also a great circular example of how to use materials for building these large, complex constructions in a much more favourable way. When we've done our own lifecycle analysis comparing data centres, we see that building with our type of solution is three times better in terms of embodied carbon in the structure compared to traditional data centres built mainly out of concrete and steel.

That's something we try to push really hard. We have a tradition in Sweden of building in wood, but when you go out in the world and talk to major global clients coming from other parts of the world, their first thought is, but wood burns; a data centre can't burn. So, then we have to talk to them about cross-laminated timber is actually very fire resistant and show them how fire resistant it is. So it's been a journey convincing clients, but now we have great traction, and we know that a lot of the global companies are also now looking at using mass timber in their data centres.

Maria Tunberg

That’s very interesting to hear. Also, connecting back to the local place and the circularity.

John Wernvik

Yes, definitely. I think that maybe for some places in the world, it wouldn't make sense to build with cross-laminated timber, so you have to have a local perspective on the full biology at that place to be as efficient as possible.

Maria Tunberg

Could you speak about your personal journey of pushing and leading sustainability efforts at EcoDataCenter? Are there some lessons that you learned along the way that you would like to share? Do you have any tips or advice for others who would like to engage in this topic?

Driving sustainability from within

John Wernvik

I would say it's hugely beneficial to me, and it's been a great experience being in an industry that is growing so fast and where you have to balance growth and sustainability. That is hard to do. 

In organisations, you always have that tug of war between growth and sustainability: how do we balance this? How do we build out as fast as possible but also be as good as possible? That's never going to change, but I think the number one thing I would say is that if the values of the company are in the right place, you will always manage to develop sustainable solutions in a better way. 

I think the thing that we have that I truly value is the ability to talk around the issue, not that it comes out late in the process, but it comes very early in the process, and say, where do we put our sites? What can we actually do together with the municipality and the local community?

Sufficient work capacity with local partners, etc. It's a great learning experience; there are not many companies that have had the possibility of being in a market that is as much in demand as with AI, so that is great.

Maria Tunberg

Of the things I take away from what you mentioned here is to have sustainability top of mind very early in the process. That makes a difference that you have that from the beginning.

John Wernvik

Yes, definitely. That makes everything so much easier; I think that's the best solution when working in sustainability because then it's not a late fix, but rather, you can mitigate all the risks early in the process. I’d say that that's the main thing where I believe a lot of others go wrong: it comes too late in the process.

Maria Tunberg

So, at EcoDataCenter, you have these values built in. From that perspective, how do you inspire your team, your colleagues, and the local communities and make them stay committed to these sustainability-related goals that you have?

John Wernvik

That's a good question. I'd say the number one thing is everything starts with the people. If we recruit the best people, people who believe in the cause and believe in what we are doing, that will come very naturally. While we progress and while everybody around us sees that we have momentum, that will give off positive energy and seeing that is a road to success. I would say that is the number one thing: to keep on pushing and to keep the energy going. 

In the last two and a half years, I don't think we really hit a stumbling block or a specific point in the journey where we've had to look ourselves in the mirror and see what we're doing and reevaluate. That will surely come, and then we'll jump on another podcast, and we can talk about that topic.

Maria Tunberg

Sounds good, I take that as a promise! 

And maybe to round this podcast off, if you were to give one key sustainability-related message to the industry right now? What would that be?

John Wernvik

I would say I see a lot of peers, including ourselves, struggle with all the new reporting-related frameworks coming out. It’s very easy to get stuck on reporting, but reporting will never be the thing that fixes sustainability. Reporting is only for transparency, so we need to fill the reports with numbers, and the numbers need to come down. So focus on what matters, cutting emissions and working with the municipality, rather than focusing on creating a best-in-class report.

Maria Tunberg

A very warm thank you, John. I think this was a very interesting conversation and very enlightening. And I'm sure it will be of great interest to our listeners as well. 

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