First firm to exploit fast broadband link announces plans for £12 million data centre

Shetland’s economy received a major boost yesterday when a private IT firm announced plans for a £12 million data centre in Lerwick, representing the first trickle of what the council is hoping will turn into a flood of interest from such companies.

Alchemy Plus has signed an agreement with the SIC to develop what it describes as a “state-of-the-art” 10,000 square foot computing resource housing 300 racks of IT equipment.

The Dingwall-based company looks set to be the first to take advantage of the council’s decision to spend £1.1 million of public money on hooking up to a fibre optic link in Maywick to help improve broadband services in the isles. The decision was taken in the absence of action from telecoms giants including BT.

Two sites in the north of Lerwick, at Blackhill Industrial Estate and the Port Business Park at Gremista, are being considered by Alchemy as locations. They are being favoured because the company wants to hook up to the nearby district heating scheme to avoid wasting the heat generated by the machines, which are each roughly the size of a red telephone box.

Alchemy was very keen to stress what it saw as the environmental credentials of the project, claiming it will be one of the most energy efficient of its kind in the UK. It is looking to use a combination of renewable technologies, possibly wind and hydrogen, to power the data farm and hope to have it up-and-running within 18 months.

The SIC’s economic development unit has long viewed the IT sector as a potentially fruitful avenue when it comes to attracting sorely-needed private sector investment. Now that the fibre optic link connecting the telecoms network with Faroe and the UK mainland is due to come on stream by 2011, the enticement of an island location in a cold climate and the security of being far away from big centres of population may mean Alchemy is the first of several firms to bring its lucrative business to Shetland.

Although feasibility studies are still being carried out and further negotiations with the SIC will have to take place, it is understood the hope is for the bulk of the £12 million to come from Alchemy itself.

The company’s chairman Peter Swanson and chief executive officer Steve Chisholm were both in the isles yesterday, informing councillors at the development committee meeting of their plans.

It is estimated that around six jobs will be provided initially, with the hope that the data centre’s presence could lead to “hundreds more” in the longer term as businesses, home workers and other organisations begin using the services it will offer.

Plans are for the excess heat generated by the 4MW centre to be fed into Lerwick’s district heating scheme to allow it to expand and satisfy a backlog of demand. A feasibility study is being carried out and the possibility of delivering up to 100MBps (megabits per second) connectivity to subscribers to the heating scheme is also being looked at.

Mr Chisolm said Alchemy was looking to build a “very large and very powerful computing resource” to be used for “processing applications and manipulating and storing data”.

Essentially, it is similar to what large business computers can do, but on a “much larger scale”. He said measures to secure the centre would be largely internal – such as biometric technology to prevent unauthorised access – and the building itself will be a “relatively innocuous” presence which “looks like any kind of industrial warehouse or factory” and will not have to be surrounded by huge reams of barbed wire.

The key attractions of Shetland, Mr Chisholm said, were “the climate first and foremost”, along with the security advantages of being sited on an island. “Computers run very warm and there’s a cost to keeping them cool, whereas a cold, stable climate can use fresh air. You’ve got an established district heating scheme here – the majority [of such centres] waste a tremendous amount of energy in the form of heat escaping the building and the idea is to capture and put it to productive use.”

Alchemy is already developing what it describes as a “ground-breaking” and “environmentally friendly” centre for what is known as cloud computing in Inverness this year. It said yesterday it had rarely dealt with an organisation which was “as focused on development and as progressive in its thinking” as the SIC.

Cloud computing is a technology using the internet and central servers to maintain data and applications remotely. It allows consumers and businesses to use applications without installing them and to access their personal files at any computer which has internet access. It is expected to become increasingly commonplace in the next few years because it allows for more efficient computing by centralising storage, memory, processing and bandwidth.

In a press statement hailing the announcement, development committee chairman Josie Simpson said it was a “key milestone” in helping Shetland work towards its long term ambition of becoming a player in the digital economy.

“The council is very excited and fully committed to the development. We intend to utilise the data centre ourselves, not just to benefit from the financial and operational benefits that such a shared services facility can deliver, but also to ensure that we fully showcase the strengths of the facility to both local and international customers.”

Head of economic development Neil Grant described it as a “truly unique” project, adding: “As an island we may be disadvantaged by location and transport costs, however, within the digital sphere these constraints do not apply and our climate and green energy credentials position us very well within a growing international market for services.”

Meanwhile, councillors were told that the crucial work to link Lerwick to a fibre optic cable at Maywick – driven forward by recently-departed chief executive David Clark last year – will be provided using two separate routes.

A cable will be laid from Lerwick to Sandwick and an alternative route from Lerwick to Scalloway and onward to Maywick, using a submarine cable from Scalloway down Clift Sound, will also be installed. The alternative method of cabling means the project should be still be completed within the £1.1 million budget, supplemented by £250,000 in European funding.