Lithuania is rapidly emerging as a prime location for data center development, particularly in high-performance computing (HPC) and artificial intelligence (AI). The country boasts a unique combination of assets that make it an attractive destination for data center investments: a strong commitment to renewable energy, a robust digital infrastructure, a supportive business environment, and a skilled workforce. However, what sets Lithuania apart is its sustainable and forward-thinking energy strategy, which promises a cost-effective and reliable energy supply aligned with global demands for environmentally responsible operations. This article delves into why Lithuania, a hidden gem in Northern Europe, is poised to become a leading global hub for data centers.
Lithuania’s Energy Strategy
Commitment to Renewable Energy
Lithuania’s energy strategy plays a pivotal role in attracting data center investments. Historically dependent on energy imports, Lithuania has shifted its focus towards building a resilient and sustainable energy system. According to the "Energy Strategy 2050" by EPSO-G, Lithuania aims to achieve energy self-sufficiency while minimizing carbon emissions by 2035, targeting a 70 percent renewable energy share by 2030. This ambitious goal is backed by significant investments in renewable energy sources such as wind and solar power. From 2022 to 2023, Lithuania increased its per capita installation of new wind and solar energy capacity by 13 times.
This surge in renewable energy production not only drives the country towards an independent and green energy supply but also helps significantly reduce electricity costs. One notable initiative is the 700 MW offshore wind farm near Klaipėda, led by Ignitis Renewables in partnership with Ocean Winds. Expected to begin operations around 2030, this wind farm will generate approximately 3 TWh of green electricity annually, meeting up to 25 percent of Lithuania’s current electricity demand. Such initiatives not only enhance Lithuania’s energy independence but also align perfectly with the needs of modern data centers that prioritize renewable energy sources.
Major Renewable Energy Projects
By investing early in Lithuania, data center operators can benefit from competitive electricity pricing and favorable conditions before energy demand rises. According to the International Energy Agency (IEA), policies aimed at increasing renewable energy capacity will further decrease energy costs in the future. The country’s commitment to renewable energy is evident in its significant strides towards green energy production.
Projects like the offshore wind farm near Klaipėda represent Lithuania’s dedication to harnessing renewable resources. This particular wind farm is poised to play a crucial role in the country’s energy landscape, providing a substantial portion of the nation’s electricity needs. The combination of such large-scale projects and the country’s ambitious energy goals creates a compelling case for data center investments in Lithuania. This focus on sustainability is not just a trend but a strategic move to align with global demands for environmentally responsible operations.
Ideal Climate for Data Centers
Favorable Geographical Location
Lithuania’s geographical location in Northern Europe provides a favorable climate for data center efficiency. The average annual temperature in Lithuania ranges between 5°C and 8°C, which facilitates direct or indirect free cooling throughout much of the year. Studies have shown that free cooling can reduce cooling-related power consumption by up to 40 percent, depending on the climate and data center design. This cooling efficiency is particularly beneficial for increasing the operational sustainability and reducing the costs associated with data center operations.
According to KV Baltic data center specialists, more than 90 percent of the total hours per year in Lithuania are suitable for full indirect free cooling when conventional servers are used, and up to 100 percent full indirect free cooling when new HPC or AI servers with direct liquid cooling (DLC) or immersion technologies are utilized. This favorable climate significantly reduces operational expenses (OPEX) related to cooling needs, making Lithuania a cost-effective choice for data center operations. The optimal climate conditions, combined with advanced cooling technologies, enhance the overall efficiency and sustainability of data centers located in Lithuania.
Cooling Efficiency and Technologies
Lithuania’s natural cooling opportunities combined with cutting-edge cooling solutions support a highly energy-efficient setup, which is critical for AI and HPC data centers. This translates to lower power usage effectiveness (PUE) values, particularly for facilities like the KV Baltic data center project that utilizes high power density and liquid cooling technologies. The integration of these advanced cooling methods ensures that data centers operate at their peak efficiency levels while minimizing environmental impact.
By leveraging Lithuania’s ideal climate and innovative cooling technologies, data centers can achieve unparalleled energy efficiency. This not only reduces operational costs but also aligns with global sustainability goals. The combination of favorable climate conditions and state-of-the-art cooling solutions makes Lithuania an attractive destination for businesses seeking to invest in data centers. As such, Lithuania stands out as a leading contender for data-intensive industries looking for sustainable and cost-effective data center solutions.
Robust Digital Infrastructure
Extensive Fiber Optic Connectivity
Lithuania has made substantial investments in its digital infrastructure, establishing extensive fiber optic connectivity. The country is connected to Sweden via the NordBalt underwater cable, a 453 km high-voltage direct current (HVDC) submarine and underground cable system, ensuring reliable high-speed international connectivity. Additionally, Lithuania has established land fiber connections to Germany through the Baltic Highway, a solid fiber-optic backbone that connects the Baltic states to Western Europe, facilitating seamless data transmission. This robust digital infrastructure provides a strong foundation for data center operations.
The round-trip time (RTT) between Lithuania and major European cities is competitive for AI and HPC applications. RTTs to Stockholm, Sweden, are approximately 11 milliseconds, and to Frankfurt, Germany, average around 21 milliseconds. With Lithuania’s strategic position and robust infrastructure, it can deliver impressive RTTs to key European cities, making it an ideal location for serving clients across Europe. The combination of high-speed connectivity and competitive RTTs ensures that data centers in Lithuania can operate efficiently and meet the demands of data-intensive applications.
Competitive Round-Trip Times
Lithuania’s extensive fiber optic network and competitive round-trip times bolster its appeal as a prime data center location. The country’s digital infrastructure is a critical asset, enabling data centers to provide high-performance services and support a wide range of applications, including those requiring low latency and high-speed data transfers. This infrastructure is essential for maintaining the quality and reliability of data center operations.
The strategic connectivity between Lithuania and major European cities, along with the country’s robust digital infrastructure, creates a seamless environment for data center operations. This connectivity allows for efficient data transmission and ensures that businesses can meet the demands of clients across Europe. With its advanced digital infrastructure, Lithuania is well-positioned to attract data center investments and support the growth of data-intensive industries.
Skilled Technical Workforce
High Percentage of STEM Graduates
Lithuania is home to several technical universities that produce a steady stream of engineering and IT graduates, providing a technically proficient workforce to support data center operations. According to Eurostat, Lithuania has one of the highest percentages of STEM graduates in the European Union, with 25.2 percent of tertiary education graduates having qualifications in engineering, manufacturing, and ICT fields. This abundance of skilled professionals ensures that data centers in Lithuania have access to a highly qualified workforce.
The availability of technical talent is particularly advantageous for projects like the KV Baltic initiative, which incorporates advanced technologies such as liquid cooling and AI-focused systems. A well-educated workforce ensures that the data center industry can operate efficiently and scale effectively, meeting the demands of emerging technologies and data-intensive industries. The presence of a skilled workforce positions Lithuania as an attractive destination for data center investments.
Advantages for Advanced Technologies
Lithuania’s technically proficient workforce provides a significant advantage for data centers utilizing advanced technologies. The presence of a skilled workforce ensures that these data centers can operate at optimal efficiency and adapt to the evolving demands of the industry. The ability to leverage cutting-edge technologies such as liquid cooling and AI-focused systems further enhances Lithuania’s appeal as a data center hotspot.
In addition to a highly educated workforce, Lithuania offers a stable and supportive environment for businesses. The combination of technical expertise and a favorable business environment creates a conducive setting for data center investments. By attracting and retaining top talent in engineering and IT fields, Lithuania ensures that its data center industry remains competitive and capable of driving innovation in the sector.
Stable Business Environment
Political and Economic Stability
Lithuania offers a stable, democratic environment for businesses. The country hosts major international companies like Nasdaq, Western Union, Moody’s, and Thermo Fisher Scientific, alongside globally recognized Lithuanian unicorns such as Vinted and Nord Security. As a member of the European Union (EU) and NATO, Lithuania provides political and economic stability, underpinned by the Euro (EUR) as its currency. The World Bank’s "Ease of Doing Business" report ranks Lithuania 11th out of 190 economies, reflecting its business-friendly environment.
Political stability is crucial for data center investors seeking predictable long-term investments. In addition to political stability, Lithuania offers attractive tax incentives. The corporate profit tax rate is 15 percent, and there are additional incentives for large investments, such as a "green corridor" designed to expedite processes and approvals for qualifying projects. Lithuania also provides VAT reimbursement for eligible businesses and free customs procedures, which lowers the cost of setting up and expanding operations.
Favorable Government Policies and Risk Rating
Lithuania’s Ministry of the Economy and Innovation has introduced several incentives to attract foreign direct investment, particularly in sectors aligned with Lithuania’s strategic goals, such as green technology and high-tech industries. Investors benefit from streamlined regulatory processes, making it easier and more cost-effective to set up a data center. The "green corridor" initiative for significant investments is another example of Lithuania’s commitment to welcoming international businesses.
Lithuania also enjoys a favorable risk rating, which further enhances its business appeal. Fitch Ratings affirmed Lithuania’s Long-Term Foreign-Currency Issuer Default Rating at ‘A’ with a Stable Outlook in November 2024, supported by EU and eurozone membership, moderate government debt, and governance indicators above the median for ‘A’ category peers. Allianz’s Country Risk Report notes that Lithuania’s current account has moved back to a surplus of over 1.8 percent of GDP, with continued surpluses expected through 2026, highlighting the country’s economic resilience.
The partnership between KV Baltic and VMG is an example of aligning with Lithuania’s forward-thinking policies. KV Baltic’s advanced technical design, which integrates liquid cooling and other cutting-edge technologies, along with VMG’s green energy supply, positions the project in Klaipėda to attract data-intensive industries such as AI, finance, and large-scale cloud services.
Conclusion
Lithuania is quickly emerging as a top spot for data center development, particularly in high-performance computing (HPC) and artificial intelligence (AI). The country offers a unique blend of features that make it a compelling choice for data center investments: a strong dedication to renewable energy, a formidable digital infrastructure, a supportive business climate, and a highly skilled workforce.
What truly sets Lithuania apart is its sustainable and innovative energy strategy. This approach promises a cost-effective and reliable energy supply, aligning well with global demands for eco-friendly operations. The nation’s forward-thinking stance on renewable energy ensures that data centers can operate efficiently while minimizing their carbon footprint.
Moreover, Lithuania’s digital infrastructure is robust and continuously improving, making it an ideal environment for cutting-edge technologies like HPC and AI. The country provides a business-friendly environment with policies that encourage foreign investment and support the growth of tech enterprises. Additionally, the availability of a highly educated and skilled workforce adds to Lithuania’s attractiveness as a data center hub.
This combination of factors positions Lithuania, a lesser-known gem in Northern Europe, to become a leading global hub for data centers. Its blend of renewable energy, strong infrastructure, supportive business environment, and skilled talent pool makes it an unmatched destination for data center operations in the modern era.