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Expert: A race for data centre infrastructure is underway and Estonia is part of it
Expert: A race for data centre infrastructure is underway and Estonia is part of it
The rapid development of artificial intelligence is driving demand for computing power and fuelling the development of larger data centres with ever greater computing capacity. While location decisions were once primarily determined by the availability of suitable land and good connectivity, access to electricity has now become one of the key constraints, writes Marina Lapidus, Co-Head of Construction and Real Estate practice at RASK.
A modern data centre can consume as much electricity as a small town. Finding a suitable site is therefore no longer enough. What increasingly matters is whether the local power grid can accommodate a new large-scale consumer and how quickly the necessary grid connection capacity can be secured.
Developers are increasingly looking for locations that combine a reliable energy supply, robust power grid infrastructure, access to renewable energy, strong connectivity and the ability to deliver projects quickly. The technical design of data centres is also changing.
Instead of a single building, developers are increasingly constructing entire data centre campuses that can be expanded in phases as demand grows. As a result, data centre development has evolved into a race for infrastructure in which access to land alone is no longer enough: power capacity, cooling, connectivity and speed of construction are becoming decisive factors in a project’s success.
Estonia also has an opportunity in this race. Its digital infrastructure, cooler climate, renewable energy potential and integration with the Nordic electricity market provide a strong foundation for the development of data centres and AI infrastructure. Whether Estonia can translate these advantages into tangible opportunities will depend on highly practical considerations: grid capacity, connection lead times, the speed of permitting procedures, the capacity of the construction sector and the availability of large-scale power capacity.
The next phase in the development of Greenergy Data Centers’ Hüüru data centre is a good example. The Hüüru data centre began operations in 2022. The building was purpose-built as a data centre from the outset rather than converted from an existing industrial or office building. Now, following the arrival in Estonia of international AI cloud infrastructure company Nebius, 22 MW of AI computing capacity is being deployed at the facility.
What makes the project technically complex is that no new building is being constructed. Instead, an existing and fully operational data centre must be adapted to accommodate significantly greater computing capacity. This places new demands on the power supply, cooling and other technical systems, while the building’s load-bearing structures and much of its existing infrastructure remain in place.
The new solutions therefore cannot be designed on a blank slate. They must be integrated with the existing building, technical systems and spatial layout. Moreover, the construction work is taking place in a data centre that must remain operational throughout. Power, cooling, ventilation and other critical systems must maintain their reliability for the entire duration of the upgrade, and the works must not disrupt services provided to existing customers.
In a project of this kind, construction and the development of technical systems are inseparable. Every modification must take into account both the requirements of the new AI infrastructure and the constraints imposed by the existing facility. Expanding an operational data centre in phases is therefore considerably more complex than constructing a new facility from scratch.
The Hüüru project has also been designed to allow for the potential use of waste heat generated by the data centre. This reflects a broader shift in data centre development across Europe: large facilities are no longer viewed solely as electricity consumers, but increasingly as part of the local energy system.
The Hüüru project also raised the question of how to make such a complex, international construction project work within the Estonian legal framework. As the Estonian construction market has so far had limited experience in delivering very large and technologically complex data centres, a contractor with international experience was brought into the project, while the widely used FIDIC conditions were adopted as the basis for the contractual framework.
However, an international model could not simply be transferred to the Estonian market as-is. The terminology, procedures and allocation of risks commonly used in international construction projects had to be aligned with Estonian law, local construction practices and regulatory requirements. This is particularly important in data centre projects, where construction, power supply, cooling, automation and IT infrastructure are directly interdependent. A delay in one system can delay the completion and commissioning of the entire project.
For this reason, the contract in projects of this kind also serves as a practical project management tool. It establishes who is responsible for what, how risks are allocated, which deadlines apply and how issues arising during the project are to be resolved.
Hüüru is a good example of how data centre development is introducing more complex technical solutions, international contracting models and higher expectations for quality, speed and risk management to the Estonian construction market. For Estonian construction companies, this creates an opportunity to develop local expertise and capabilities. While the most complex projects still rely significantly on international experience, each new project also strengthens the capabilities of local companies. The next wave of data centre development could therefore have a significant impact on the development of Estonia’s construction sector as a whole.
* Marina Lapidus advised Greenergy Data Centers on the construction agreement with Caverion, an international provider of smart and energy-efficient building solutions.
A modern data centre can consume as much electricity as a small town. Finding a suitable site is therefore no longer enough. What increasingly matters is whether the local power grid can accommodate a new large-scale consumer and how quickly the necessary grid connection capacity can be secured.
Developers are increasingly looking for locations that combine a reliable energy supply, robust power grid infrastructure, access to renewable energy, strong connectivity and the ability to deliver projects quickly. The technical design of data centres is also changing.
Instead of a single building, developers are increasingly constructing entire data centre campuses that can be expanded in phases as demand grows. As a result, data centre development has evolved into a race for infrastructure in which access to land alone is no longer enough: power capacity, cooling, connectivity and speed of construction are becoming decisive factors in a project’s success.
Estonia as an emerging destination
Estonia also has an opportunity in this race. Its digital infrastructure, cooler climate, renewable energy potential and integration with the Nordic electricity market provide a strong foundation for the development of data centres and AI infrastructure. Whether Estonia can translate these advantages into tangible opportunities will depend on highly practical considerations: grid capacity, connection lead times, the speed of permitting procedures, the capacity of the construction sector and the availability of large-scale power capacity.
The next phase in the development of Greenergy Data Centers’ Hüüru data centre is a good example. The Hüüru data centre began operations in 2022. The building was purpose-built as a data centre from the outset rather than converted from an existing industrial or office building. Now, following the arrival in Estonia of international AI cloud infrastructure company Nebius, 22 MW of AI computing capacity is being deployed at the facility.
What makes the project technically complex is that no new building is being constructed. Instead, an existing and fully operational data centre must be adapted to accommodate significantly greater computing capacity. This places new demands on the power supply, cooling and other technical systems, while the building’s load-bearing structures and much of its existing infrastructure remain in place.
The new solutions therefore cannot be designed on a blank slate. They must be integrated with the existing building, technical systems and spatial layout. Moreover, the construction work is taking place in a data centre that must remain operational throughout. Power, cooling, ventilation and other critical systems must maintain their reliability for the entire duration of the upgrade, and the works must not disrupt services provided to existing customers.
In a project of this kind, construction and the development of technical systems are inseparable. Every modification must take into account both the requirements of the new AI infrastructure and the constraints imposed by the existing facility. Expanding an operational data centre in phases is therefore considerably more complex than constructing a new facility from scratch.
The Hüüru project has also been designed to allow for the potential use of waste heat generated by the data centre. This reflects a broader shift in data centre development across Europe: large facilities are no longer viewed solely as electricity consumers, but increasingly as part of the local energy system.
International construction practices within the Estonian legal framework
The Hüüru project also raised the question of how to make such a complex, international construction project work within the Estonian legal framework. As the Estonian construction market has so far had limited experience in delivering very large and technologically complex data centres, a contractor with international experience was brought into the project, while the widely used FIDIC conditions were adopted as the basis for the contractual framework.
However, an international model could not simply be transferred to the Estonian market as-is. The terminology, procedures and allocation of risks commonly used in international construction projects had to be aligned with Estonian law, local construction practices and regulatory requirements. This is particularly important in data centre projects, where construction, power supply, cooling, automation and IT infrastructure are directly interdependent. A delay in one system can delay the completion and commissioning of the entire project.
For this reason, the contract in projects of this kind also serves as a practical project management tool. It establishes who is responsible for what, how risks are allocated, which deadlines apply and how issues arising during the project are to be resolved.
Hüüru is a good example of how data centre development is introducing more complex technical solutions, international contracting models and higher expectations for quality, speed and risk management to the Estonian construction market. For Estonian construction companies, this creates an opportunity to develop local expertise and capabilities. While the most complex projects still rely significantly on international experience, each new project also strengthens the capabilities of local companies. The next wave of data centre development could therefore have a significant impact on the development of Estonia’s construction sector as a whole.
* Marina Lapidus advised Greenergy Data Centers on the construction agreement with Caverion, an international provider of smart and energy-efficient building solutions.