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Icelandic data centres have two real advantages: electricity generated largely from geothermal and hydropower, and a cool climate that can help with cooling. Neither makes a facility automatically green. The answer also depends on how much new power it can use without worsening supply constraints, how efficiently its servers perform useful work, and whether promised heat reuse is actually happening.
Why Iceland can be a good location for data centres
Renewable electricity is a significant advantage
Data Centers Iceland, the industry association, says Iceland’s electricity is generated from geothermal and hydroelectric sources. A government-hosted second-opinion document also points to renewable electricity as a reason the country can suit energy-intensive data centres and argues that access to it can reduce greenhouse-gas emissions. This is a strong location advantage, but it does not establish that every facility’s electricity supply, construction impacts or full lifecycle emissions are low.
A cool climate can help with cooling
Cool outdoor conditions can make it possible to use outside air for some or much of a facility’s cooling, reducing the need for energy-intensive mechanical cooling. The actual approach depends on the site and its equipment; “natural cooling” is not a single standardized method or a guarantee of a particular energy saving.
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PUE measures facility overhead, not computing efficiency
Power Usage Effectiveness (PUE) compares a data centre’s total facility energy with the energy used by its IT equipment. A lower value indicates less facility overhead relative to IT energy, but PUE does not measure how much useful computing work the servers deliver for that energy.
Data Centers Iceland’s 2025 fact sheet reports an industry PUE range of 1.05–1.2. That is an association-published sector claim, not a facility-by-facility independent audit. Landsvirkjun’s 2025 assessment gives an Iceland PUE figure of 1.13 and a global average of 1.59. The assessment cautions that its source inputs and geographic comparability vary, so those figures should not be read as a controlled comparison of equivalent facilities.
Server efficiency is a separate question
Landsvirkjun describes PUE as an imperfect measure because it does not account for server efficiency, and notes that there is no widely accepted measure for comparing server energy efficiency. For an organization choosing a provider, the useful question is not only how much energy a building uses to support its IT equipment, but how much energy the equipment uses to complete the organization’s actual workload.
Renewable power is not unlimited capacity
Landsvirkjun’s 2025 assessment reports that data centres in Iceland consumed 1,169 GWh of electricity in 2022. That is a historical consumption figure, not a measure of spare capacity available today. The U.S. International Trade Administration’s Iceland guide, last published on April 1, 2026, says access to additional energy capacity could temporarily constrain the sector’s growth.
So “renewable” and “available” are different questions. A new facility still adds demand to an electricity system with finite generation and transmission capacity. The relevant check for a proposed site is whether the power can be supplied when needed and what adding that load means for other users and planned uses—not simply whether Iceland’s electricity mix is renewable.
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What operators say about cooling and heat reuse
Borealis
Borealis says its Blönduós campus uses Iceland’s cool climate, runs on renewable energy and supports high-performance computing and AI workloads. The operator reports PUE “as low as 1.03” and says the campus has 100+ MW of expansion capacity. These are operator statements, not independently verified site-wide results; the expansion figure should not be mistaken for confirmed power availability to a particular customer.
atNorth
atNorth describes its Iceland facilities as using renewable power and natural cooling. The operator says its ICE03 facility is liquid-cooling ready and will recycle excess campus heat through a partnership with Hringvarmi. The cited description does not quantify independently verified emissions savings or the amount of heat reuse achieved, so the partnership is evidence of a stated plan, not a measured outcome.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to judge whether a facility is a greener fit
There is no consistent, independently audited, facility-by-facility comparison in the sources available here. When comparing Icelandic sites with one another or with facilities elsewhere, ask providers for evidence on the same dimensions:
- Power: What generation sources supply the site, what additional capacity is available to the facility, and what is the impact of adding its load to the local system?
- Facility efficiency: What PUE is reported, for what year and facility boundary, and who measured or verified it?
- Useful computing: What energy does the proposed server configuration use to complete your workload? Do not treat PUE as a substitute for this.
- Cooling and heat: Which cooling methods are in operation, how dependent are they on local conditions, and are heat-reuse volumes measured rather than merely announced?
- Operational fit: Are connectivity, security, service levels, location and workload suitability adequate for your needs? A lower facility PUE alone does not answer these questions.
Provider materials can help identify facilities to investigate, but claims should be compared on consistent boundaries and backed by measurement where possible. Historical government discussion of renewable resources, competitive terms and climate-based cooling—such as Iceland’s 2018 announcement concerning a Borealis project—provides context, not evidence of current power prices or available capacity.
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