The economic value of submarine cables in the Arctic

Digital transformation is driving steady growth in the need for digital infrastructure to facilitate the transport of data. Data centres and digital connectivity are essential for enabling these data flows.

Increasingly, businesses, governments, and research institutions are relying on solutions that require the ability to transport data at high speed, reliability and resilience between continents. Yet existing European cables, for example to Asia, are relying on congested, expensive, and unstable routes.

Against this backdrop, NORDUnet asked us to analyse the societal impact of a digital cable from Northern Europe through the Arctic to Asia.

The main conclusions of our study are:

• An Arctic cable could boost GDP in the Nordic region by more than EUR 1 billion annually if fully utilised.
• It is far more costly to build interconnectors for transporting electricity to data centres in Central Europe than to build cables to transport data between the Nordic region and the rest of the EU.
• Low temperatures and ample access to renewable energy sources allow data centres to be more energy effective and to emit less CO2 in the Nordic region than in other European regions.
• Some of the gains from increased connectivity will not accrue directly to investors but instead accrue to the wider society, making the business case for the investor less viable than for the society as a whole.
• To avoid potential market failures, governments can support the development of submarine cable projects indirectly through research and education networks acting as anchor tenants.
• Our suggestion to realise the potential of Arctic submarine cable projects is in line with the EU and Nordic countries’ political goals: ensuring a robust, more resilient digital infrastructure based on climate-friendly energy supply.

The study is commissioned by NORDUnet.