Wind power key to Scotland reaping gains from next data wave 

The Scottish head of Cisco, one of the world’s largest technology companies, said Scotland can attract more than £18bn of inward investment over the next few years by applying its commitment to wind power to the technology sector – but stressed it must act quickly to seize the opportunity.

Gordon Thomson, the US tech giant’s operations director for Scotland and Ireland, believes the “next wave” of economic and technology development will be the creation of “super data centres”, and he said Scotland is “ideally placed to harness the economic benefit”.

Thomson said: “This is a huge inward investment opportunity for Scotland that needs to be grasped.

“It’s an opportunity for Scotland to become a major global investment economy. Just as countries such as South Africa use gold, their natural resource, to build their economies, Scotland can do the same – except its resources are its climate and its commitment to green energy.”

One of the main attractions for global firms seeking to establish data centres here is the weather, Thomson contends. Data centres “tend to run hot with all the technology” and they require cooler locations, such as Scotland, to operate efficiently.

However, it is also crucial that technology firms reduce their carbon footprint and, in a world where global warming has become an increasingly pressing issue, it is important to be “seen to be green”.

Globally, the technology sector is responsible for just over 2% of all carbon emissions, more than the vilified airline industry, whose carbon footprint sits at slightly less than 2%.

Thomson said: “The establishment of super data centres themselves is a way for companies to reduce their carbon footprint, and the beauty of building them in Scotland is that they are less expensive to keep cool.

“But if they could be built near windfarms and powered by renewable energy, that’s an unbeatable proposition and a once-in-a-lifetime oppor- tunity to attract huge amounts of inward investment from some of the world’s biggest companies.”

He added: “I believe the Scottish Government should step up to the plate and make this happen.”

Asked to be specific about how much inward investment might be attracted, Thomson cited Microsoft’s recent $500m (£252m) investment in a data centre in Dublin, which will allow it to store electronic information relating to its online services from all over the world, and Citigroup’s 170m (£132m) investment to produce what it describes as the “greenest data centre in the world” near Frankfurt, in Germany.

“I believe Scotland could have 10 in two years,” said Thomson. “And why not 100 in five years?”

The construction of 100 data centres at an average cost of £375m each, by Thomson’s logic, could bring in more than £18bn – about a fifth of Scotland’s gross domestic product.

Two data centres are already being planned in the north and south of Scotland, where the electronic information will be stored at naturally low temperatures, doing away with the need to spend millions of pounds on air conditioning.

Thomson, however, believes these plans must be accelerated and expanded upon.

The Cisco head last year put together a White Paper on the idea, which has been seen by The Herald, and said he intends to lobby the Scottish Government further on the matter.

The beauty of Thomson’s plan is that these giant data centres will also create hundreds of skilled technology jobs in Scotland that cannot be lost to cheaper locations – as was the case with the electronics assembly plants that drove the boom-and-bust of Silicon Glen and call centres.

Cisco makes the infrastructure the internet runs on, and because companies communicate with their data centres via internet protocol, the tech giant’s Scottish operation would clearly benefit from a data centre boom in Scotland.

However, Thomson added: “This is not just about Cisco. Of course we would benefit, but it is more about a prosperity opportunity for Scotland.”

Aside from the benefits of the weather – it is on average two degrees cooler north of the border, which will make a significant impact on the cooling costs – Thomson believes Scotland is ideally positioned for additional reasons.

“Scotland is geologically, climatically and politically stable,” he said. “Businesses don’t want to put their important information in a risky area. Areas prone to natural disaster or likely regions for a terrorist threat are obviously best avoided.”

However, he said Scotland also has a reasonably-priced and reliable power network, a fast, reliable, next-generation telecoms infrastructure, a large pool of skilled workers and space to expand.

According to Thomson, while few other countries fit all the criteria, among those that do – including Ireland, Holland and some Scandanavian nations – there will be fierce competition for the big data centres of large, global companies. He added: “It’s crucial that we act now to seize the opportunity.”

In December property firm Internet Villages International announced plans to build a £600m data centre at Lockerbie, in Dumfries and Galloway.

By Mark Smith
Deputy Business Editor

The Herald

25 March 2008