Turning Heat into Power: Building Sustainable Data Centers for the AI Era

As AI workloads surge and digital demand skyrockets, IT leaders face a new era of infrastructure strain—where power constraints, heat management, and sustainability pressures collide. In this episode of The Hitchhiker’s Guide to IT, host Michelle Dawn Mooney interviews Svante Horne, CEO and founder of Scandinavian Data Centers, on building resilient, circular, and future-proof data center ecosystems.

Rooted in global finance and early data-center innovation, Svante’s career blends capital expertise with environmental problem-solving—driving a model that turns old military bunkers into AI-ready facilities that give back to the grid and the community.

Key topics include:

• Circular infrastructure: Reusing existing hardened sites (ex-military bunkers), leveraging Sweden’s low-carbon grid, and designing around district heating capacity rather than retrofitting heat disposal

• Waste-heat reuse at scale: Capturing 1:1 power-to-heat output, pushing high-grade heat into city heating systems, and enabling greenhouses to boost local food production

• Data center evolution: “DC 2.0” links facilities directly to heating grids, while “DC 3.0” transforms them into grid-stabilizing, community-heating, multi-benefit infrastructure nodes

• AI/HPC design pressures: Liquid cooling, rising rack densities, power grid constraints, and the need for sites engineered from day one for 100% heat recovery

• Data-driven resilience: Automation and analytics enabling alignment with local energy ecosystems, optimizing cost, uptime, and environmental impact

• Regulatory and societal shifts: Growing scrutiny on water use, land strain, and local benefits pushing operators toward greener, more transparent models

For CIOs planning long-term AI growth, this episode highlights frameworks, macro-to-micro case insights, and geopolitical energy considerations—explaining why Nordic power abundance and district-heating integration may shape the next decade of sustainable digital infrastructure.

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Hello and welcome to The Hitchhiker’s Guide to IT, where we explore the people and ideas shaping the future of technology. I’m your host, Michelle Dawn Boone. Today we’re talking about one of the biggest challenges and opportunities in the world of IT, how to build sustainable, resilient infrastructure that can handle the explosive growth of AI workload. Joining us is Svante Horn, CEO and founder of Scandinavian Data Centers.

Svante and his team are pioneering a new model for digital infrastructure, one that doesn’t just reduce energy use but also reuses it. By capturing and redirecting waste heat from data centers into local district heating systems, they’re turning digital demand into community value. So so great to have you here, Spande. Thank you for joining me today.

Thank you very much for having me.

Looking forward to kind of diving in here. Before we do that, can I ask you to give us a brief bio so we can get to know you a little bit better before we kind of dive into the Q and A here?

Sure, it would be my pleasure. And first of all, you very much Michelle for having me. Yes, fully Swedish but we moved to Memphis when I was seven so I spent eight wonderful years in the deep south or at least in the mid south as they call it in Memphis. And then went to a college in in New England and I didn’t know what to do in college. Someone said, if you can get a job in banking, will open more doors and closes.

So more by luck than, know, design actually was ended up at Morgan Stanley M and A and then transitioned into the markets where I spent another twelve years. And I have to unfortunately, I didn’t like it very much, but it turned into a fourteen year kind of journey. But what I did enjoy doing very much was helping entrepreneurs find capital so they could get going with their ideas. And there was a couple of guys at a data center in Soldom outside Stockholm and had one larger anchor tenant who outgrew their facility and they needed a bigger spot.

So they found one of the first military bunker divestments. And they knew a lot about building a data center in it, but they did not know very much about how to finance the building of the data center. So I helped secure both the bank, the government, the private capital. On the back of that, we were able to take NATO security standards for data centers, where applicable, double them.

So that turned into becoming a very exciting project. We sold that company about five years ago to a US IT company, and that was the start of what now is Scandinavian data centers.

That’s wonderful, Swante. So I wanna follow-up on that because many data centers, and you talked about kind of how it came to be, they focus on energy efficiency, but you’ve gone a step further. Can you walk us through how Scandinavian data centers captures and then reuses waste heat and then what it takes to make that system work at scale.

Sure. Thank you very much for asking. It’s actually been quite a journey. I mean initially when we started this whole project our thinking was very much centered around could we develop one of the world’s greenest data center platforms?

The thinking was Sweden has one of the greenest energy grids on the planet or lowest carbon intensity at least.

So that’s a very good starting point for green data center or platform. But also we have a cool climate which you know, things being equal is very those are two very important factors.

If we’re doing that, we’re pretty much doing what all the other data centers in the region are doing already. So there’s no huge moving the needle on that one.

But we try to think about could we take it a step further? And one was try to, you know, where applicable, where possible, use existing facilities.

It’s nice win generally from an environmental standpoint but much more a big win from cost savings and in our case in our first larger facility Scandi DC1 a huge benefit from a security perspective because we had twenty meters of you know, rock granite surrounding our whole data center, which is would basically be impossible to recreate in any other way than finding an existing facility and and taking it into use again and retrofitting it. But the big big focus was, how can we work with the waste heat? I mean, basically, one megawatt power in becomes one megawatt heat out. And, basically, taking what is a huge challenge for a lot of data centers in terms of how to transport this heat away from the servers, can we take it a step for and actually start using the heat for some kind of societal benefit and economic benefit, then we’re probably onto something.

So our first site, Volvo’s old military factory where Sweden built its fighter plane engines during World War two. It had been pretty much underused or disused for about thirty years, so it’s kind of a big economical win for the area to regenerate it. But there were two other big wins with the facility. One was ATEA, the largest IT company in the Nordics.

We’re running a smaller data center at the site, So it had it’s been validated and has had a hundred percent uptime for fifteen years now. So that’s nice from a credibility perspective. But also, TS become our anchor tenant and our operational partner and our sales partner. So that’s a huge benefit for a company in our where we are in our progression.

And then the bigger win in my opinion is the Motaladin, the main district heating pipe of Eskastunen where we’re based, is about one hour from Stockholm, runs right adjacent to the facility. And we’ve been able to buy the land from the from the government. So we have, ownership and and, yeah, control over it. And the big thing about that is that we’re able to take these massive amounts of heat discharge from the data center and actually push it down into the district heating grid and heat the city at the same time.

How does this change the way that we think about the role of data centers in society?

So basically what I just described is already being done in a large number of smaller and medium sized data centers in the Stockholm area, very few data centers outside of Stockholm. And as power and land are very scarce in Stockholm, it’s very hard to find new facilities and new sites. So, basically, that’s what I call data center two point o is is basically taking the district heating grid’s capacity to absorb heat and designing the data center on the back of that instead of building a data center and then trying to figure out what to do with the heat. And there’s three big mega trends, supporting what what’s going on here.

One is, you know, in the racks, we’re going from machine speaking to human to machine speaking to machine, and that translates into much higher information, transferring capacities, which requires more power, which generates more heat, and which means a very traditional conservative industries had to start adopting liquid cooling. And the liquid cooling aspect is quite important because it, a, creates higher out temperatures from the rack, but also much more energy energy efficient transfer. And the other big trend is heat pumps are becoming more and more efficient. So, basically, you talk about cope coefficient of performance, which basically means how effective they are.

The higher the temperature discharge coming into them, the more the better they are at increasing the heat even more. So it becomes like a double positive derivative. Last one being is most of it or pretty much all the district heating companies in the Nordics are having severe challenges on the back of biomass. I mean forestry products are the main input of how you heat cities.

And with Ukraine war and the stopping of exports from Russia all of a sudden the price of these inputs have doubled and driven up costs for the consumers or the normal people in the houses because that’s how they heat their houses. So it’s basically like Churchill said, never let a good crisis go to waste.

We’re having a crisis of digital infrastructure needs, a crisis of energy capacity constraints and a crisis of heating homes being much more expensive. And instead of seeing data centers as part of something exaggerate or increasing this problem it’s actually potentially part of the solution. And and that’s what I call data center three point o. Data center three point o is they’re using the whole ecosystem of a data center to generate that highest possible societal, environmental, and economic benefit.

So basically the generators and or the batteries and UPSs to help stabilize the electricity grid, already doing that at our sites.

But also having the reserve power capacity of the generators being a supplementary resource for the grid if we get into a crisis, which could be very important and letting the grid feel comfortable and increasing the consumption of the power base. And then finally, the heat discharge actually is there’s low grade and high grade heat. The low grade heat is from traditional IT operations, and that is ideal for greenhouses, which I’ll get back to in just a second. But the high the high grade heat that comes from the HPC and AI type workloads, that comes out at forty five to maybe even sixty degrees Celsius, and that’s a much better match because much better economics for the district heating system.

And why that is important is in the troughs of winter, the power heating plants of these cities need to focus on making heat when power is needed the most. But if there’s a nice baseload of heat coming out of a larger data center, all of a sudden they can’t focus on making power. And that’s also another way of freeing up more resources to to help stabilize and and make the grid and the system the energy system more resilient.

And the last bit being what I mentioned was the greenhouses. Well, if you can actually build real use case, real world needed greenhouses, Sweden only generates twenty percent of its produce or its food today. So we’re quite exposed to pandemics and other types of disasters.

It behooves us very much to actually increase our food production and has the wonderful added benefit of then the data center becomes instead of an energy culprit it becomes a compliment to the grid, but also an employer of a lot of people have hard time finding jobs in the modern economy.

What new pressures do these high performance environments place on data center design and then power management?

Absolutely. It plays well. But just to finish off what we just spoke about why this is something just to make it really applicable to the listeners is that if you pursue this course action where you try to find benefits in every one of these silos, well, we only wanna do it if there’s a proper each one of them has to be considered its own p and l center. So if it’s not generating value, we can’t pass it on to the customer.

It’s gonna hinder our deployment of our platform. And we want to be impactful, but to be impactful, we have to have a platform and a business that scales. So each one of these silos needs to create its own value and by doing that we can offer a lower total unit economics to our clients. And I think that’s a very important point to get across that we’re not only doing it to be good and green, which is great and which we’re very much behind, but we also wanna do it because we wanna be more economical.

And the last point being on that tangent is Sweden is the second largest net exporter of power in Europe year in and year out. Some years actually the largest. So what we kind of see is the keys to the castle is that Sweden has two ninety municipalities, two forty have the heating grids. If we can create a string of pearls inference based data centers in Sweden and in the other Nordic countries, we cannot only service the Nordic economies with inference infrastructure, can actually service a large part of Northern Europe including Germany.

And that becomes very interesting because then we can offer our clients the lowest TCOs. We can offer our societies the highest societal benefit, and we can offer the environment a big win in terms of just using, utilizing a lot of readily available green power. So, you know, everyone everyone wins in the end. Now back to your original question about the challenges of designing, high workload data centers.

We very much want to build AI and HPC, ready data centers. That’s the focus of these string of pearls data center inference data centers. I mean, we’re building high security data centers for for the customer base. That’s agency, public sector, mission critical sectors for sure.

But we’re also building a platform of inference AI data centers where from day one planned around being readily functional for AI and HPC, but also having that one hundred percent heat uptake.

Scandinavian data centers is built for both sustainability and resilience. So I want to talk about that balance. How do you balance uptime, energy efficiency, cost, especially as compute demand surge?

Well, that’s kind of what I was alluding to speaking to earlier was just that, you know, we really our our mantra is circular and secure. We think they go hand in hand. The more of a fit you are with the local energy system, the more of a a mission critical act we become. And on the back of that, we can actually have much better conversations with the government about them, you know, seeing our sites as mission critical and being more prioritized all other things being equal than a normal data center. So that’s part of the puzzle.

So from a technical standpoint for a minute, visibility automation critical here. How do tools and data driven insights help you optimize performance and sustainability across your infrastructure?

Well, I think that’s, it’s usually important to be a data driven organization in whatever you’re doing and even more so in these type of very high energy intensive sectors that we are in for a data center operator. But the key focus for us is how can we maximize the benefit of our design in terms of collaborating with the local energy system and heating grid. And for us, that’s our wheelhouse. That’s what we’re specialists in doing. I’m not in any way speaking downplaying the technical challenges of deploying a modern AI ready data center. But I think our uniqueness, our USP, if you will, is just our ability to take it a step further and really coinciding with those two other platforms.

So let’s take a look ahead. What does the next decade of sustainable infrastructure look like to you? And then how do we prepare today’s IT environments for tomorrow’s AI driven world?

I think there is going to be a growing public and you know by extension political and then by extension regulatory backlash on just go you know keeping on the way things have been going. I mean it’s clear that the industry keeps talking about the challenges of perception around the local benefits of a huge data center deployment versus the local costs. And I think it’s going to become more and more important for data centers to really explain not just how they’re helping from a macro perspective but also really supporting the micro. It’s everything connected to water use which is an increasing problem in more and more areas too in terms of helping balancing the grid.

So I think I’m not going say that we’re the only ones talking about this but I do think we’re really trying to make it a core part of our business plan. And I think the challenge is that so many data centers are scrambling to meet this exploding demand that you don’t really have any opportunity. You just don’t have time or resources to devote to challenging conventions. You’re just kind of keeping on going with conventions.

And at some point that’s just not going to work. So back to the clients, the end clients who are buying these workloads. I think you really do yourself a huge benefit if you’re looking at how can I think about future proofing the data center both from a technical perspective of where my IT workload will grow in the next five years but also the potential regulatory risks I’m running in placing my IT loader in an operator that’s not thinking about this very clearly down the line?

So I want to wrap up here Svante with a look at kind of an overview because we talked about some pain points, but it’s also really an exciting time. So what gives you optimism about where the industry is headed? And then how can IT leaders make a real impact on sustainability and resilience with all of that?

Sure. I mean, I think that one thing is very clear that the way that we’re going to live in harmony with our planet and with our societies will be very much AI and data driven. And by extension, you need data center infrastructure capacity to power those scientific breakthroughs, those cures to cancer, those one teacher for every student type of missions and visions that we have. But on the back of that I am optimistic. The industry is making huge strides in energy improvements and it’s almost like the car industry was giving the cloud industry or Microsoft and it’s like a lot of flack about oh it breaks down all the time and there was of course a rebuttal from the industry saying well your engines haven’t really improved in seventy years or doubling in capacity every two years.

Who’s really winning the challenge? And we’re seeing huge, huge improvements all the way down to the chips in terms of energy efficiency, in terms of productivity. So I think that we’re just the very beginnings of having to really optimize our digital workflows to the new energy constraints that we have to live with. So I really think that there’s going to be phenomenal improvements in the next five years in terms of these things.

But also the in terms of companies that I’ve been speaking to that work very closely between the utilities and the large data center operators on the back of data centers kind of being what I see as the natural nodes and the regulators of a much more efficient energy system. I think it really is it’s almost an environmental and I’ll even throw in the word patriotic duty for IT decision makers to really think of, okay, if historically the amount of power you have in a society is very correlated with the economic development of that society. If you have an ability to place your IT workloads where it doesn’t strain your local area or your country but is placed somewhere where there’s ample and abundant power and it’s green power and it’s cheap power, it kind of begs I mean there’s lots of trends saying that Nordics are very much the next big market and and we’re already seeing signs of that.

I basically challenge anyone to say, well, if you have the ability to deploy workloads where there’s ample power, that’s probably how you can make the biggest sustainability and economic impact over time. I mean, by you know, being in a high energy environment will most likely future proof your IT workloads a lot more than being in a low energy, availability environment.

Svante Horne, CEO and founder of Scandinavian Data Center. Svante, thank you for your time. Appreciate you being here and a lot of good things, as we said, happening. A few pain points. We talked about a resolution or two here, but exciting time nonetheless to be in and excited that you were able to join me here to give us all this information. So I appreciate your time today.

Thank you very much, Michelle. It’s my pleasure to be on your podcast.

And I want to thank all of you for tuning in and listening to The Hitchhiker’s Guide to IT. If you enjoyed this conversation, be sure to subscribe and check out past episodes where we talk with leaders across the IT ecosystem about how technology, energy, and innovation are shaping the future of digital infrastructure. I’m your host, Michelle Dawn Mooney. We hope to connect with you on another podcast soon.