“Energy tax for data centers hits the environment”
This is a debate article. The opinions expressed are the writer’s own.
DEBATE. Data centers that co-locate companies under one roof are disadvantaged by current tax rules, while data centers that consume a lot of energy benefit, writes Martin Svensson, Interxion.
The data center industry continues to grow explosively and is an increasingly important part of our digital future.
The Swedish legislation on data centers, on the other hand, is very outdated and disadvantages the transition to more energy-efficient solutions. Giving tax deductions to companies that consume more energy, as today, creates the wrong environmental incentives.
To be able to meet the increased need for data storage and fast and secure connections, more data centers are required. But since data centers require a lot of energy, Sweden needs to reward those who contribute to reducing their climate impact. Unfortunately, the Swedish government has done just the opposite.
The current legislation instead means that tax breaks are given to companies that own all the hardware and equipment in their own data centers and strike at the companies that have chosen to invest in co-located data centers.
In addition to the law benefiting large companies that run their own data centers, it also benefits the companies that consume the most energy. Companies that reach more than 0.1 megawatts of installed power at one and the same data center may also benefit from the tax relief.
Sharing the resources in common data centers, so-called co-locations, increases the connections and connectivity that are crucial for Swedish companies’ development and competitiveness. It is also more environmentally friendly than hosting your own servers.
By placing their servers in a co-located data center, instead of an older internal data center, energy consumption is drastically reduced. But a company that today consumes 0.1 megawatts and then upgrades its storage solution risks losing the tax relief if energy consumption falls.
At Interxion, we have seen several examples of customers who have moved their storage to our data centers and who have lost their tax relief because they then consumed significantly less energy than before.
It is unreasonable for Swedish companies that choose more sustainable solutions to pay more in taxes. Sweden should instead look to its neighbors. In Norway, the tax relief also applies to co-located data centers, and in Denmark grants are given to companies that choose more sustainable solutions for their operations.
The Swedish government must create the right instruments for higher energy efficiency in Sweden as well. The law should be changed so that companies are encouraged to become more sustainable, not the other way around.
Therefore, the government must also include co-locations among the actors who are allowed to benefit from the tax breaks. It is time to review the energy tax for data centers.
Martin Svensson, Nordic Business Development Director, Interxion
