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Scottish skills, not independence, will affect data centre industry

SCOTLAND'S ability to attract large-scale data centre investment will be unaffected by its potential exit from the UK, despite London-based firms being the country's "best opportunity", Scottish Enterprise has claimed.

A new "recommendation report" commissioned by the development agency, based on the premise that Scotland will remain a part of the UK, has highlighted Scotland's relative advantages "in terms of lower carbon and electricity and higher potential for free-cooling and financial incentives".

But the survey also warned that the UK as a whole was hampered by uncompetitive taxation, energy and labour costs, raising the risk that "operators could begin to look elsewhere to reduce overheads".

In a letter in May to South Scotland MSP Joan McAlpine, Scottish Enterprise's former director of international operations, Neil Francis, said that companies' "gravitation towards London as a global financial and business centre- potentially- represent the best opportunity for Scotland" in the case of "data that has to remain within a UK/EU context".

Scottish Enterprise brushed aside questions on whether a strategy of targeting London-based firms as likely clients for Scottish data centres would be affected by potential changes in Scotland's relationship with the UK and the European Union.

The agency has insisted that Scotland's attractiveness would instead depend on "the availability of the appropriate skills and the quality and global competitiveness of the Scottish proposition".

The 30-page report, from consultant hurleypalmerflatt, includes the first systematic assessment of potential sites for investment in Scotland.

Welcoming the report, David Smith, Scottish Enterprise's director of technology, said: "Our aim is to focus on the economic prize for Scotland that is associated with big data. The Centre for Economics and Business Research estimates that the big data marketplace could see 58,000 new jobs created in the UK by 2017 and we are committed to securing as many of those jobs in Scotland as possible."

Heading the list of the most investment-ready "very large" sites are Riverside Business Park in Irvine, Johnstone Bank Farm in Ecclefechan, Springhill Parkway, Glasgow and Lomondgate Business Park Dumbarton. "Very large" buildings at Valley Park in Greenock and Freescale in East Kilbride are also recommended.

The hurleypalmerflatt report, which scored competing Scottish sites on criteria including electrical supply and security, will be supplemented by a report by consulting engineer DSSR examining the selected sites' potential to connect with power utilities, and the costs involved. The combined cost of both pieces of work is £24,000.

Hurleypalmerflatt's report does not refer to the 2014 independence referendum, or to any potential competitive advantages or disadvantages arising from changes in Scotland's constitutional status.

The report said: "Scotland is well placed to take a share of the global data centre market. It sits on part of the internet backbone, joining America and Europe.

"Scotland has the necessary power infrastructure with a mature and resilient electrical distribution network (and in the future will have an increased proportion of green energy from renewable sources).

"Scotland also meets many of the criteria for security and access to a skilled labour force and mature supply chain.

"About one-third of the energy demand of a data centre is for cooling and a cool, temperate climate offers potential operational cost reductions from utilisation of free cooling techniques."

Although Scotland already has a number of small private data centres, along with the 120-plus scattered facilities identified in the 2011 McClelland Review of public-sector ICT, it has so far failed to attract the large-scale facilities that are becoming dominant. With a few private-sector exceptions, "free cooling techniques" exploiting Scotland's naturally lower temperatures are so far largely unused.

To illustrate the industry's potential for Scotland, the hurleypalmerflatt report cites Google's €350 million (about £300m) investment in a site in Finland, which is providing 2500 construction jobs and on completion will employ more than 100 computer technicians, mechanics and electricians. The report noted: "Over 90% of the staff are Finnish and Google is pledged to hire locally as much as possible."

A spokesman for Scottish Enterprise said: "The demand for a reliable IT infrastructure from multinational companies across the globe is driving the massive expansion in data centre facilities.

"Market research shows that many decision-makers within Europe favour expansion within Europe (UK being top choice); that companies in the UK are most likely to expand; and that the UK is the top location for expansion."

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