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Summary:

You might hate the volcano for ruining your vacation, but geothermal, combined with hydrothermal power, means Iceland runs off of pretty much 100 percent clean energy. That’s the backbone for an entrepreneurial idea to create a green computing cloud courtesy of Icelandic startup Greenqloud.

There’s good and bad when it comes to all that geothermal activity in Iceland. Yes, the volcanos with unpronounceable names can spew ash and shut down air travel. But there’s also an abundance of electricity from geothermal power, which combined with hydrothermal power, means Iceland runs off of pretty much 100 percent clean energy. That’s the backbone for an entrepreneurial idea to create a green computing cloud courtesy of Icelandic startup Greenqloud.

Greenqloud, which is one of the startups that will present at our cloud computing event Structure on June 23 and 24 in San Francisco, was created by Internet innovator Eirikur Hrafnsson (who is the CEO) and his co-founder Tryggvi Larusson and has been under development for about a year and a half. The idea is to rent space in data centers based in Iceland and sell cloud computing services to web companies and individuals all over the world that want to manage their carbon footprint and embrace clean power. The cloud computing services include virtual server hosting, data storage, scientific data processing and software as a service infrastructure.

For those not familiar with cloud computing, it’s basically scalable computing services on demand; companies like Amazon are selling such services to startups and large web firms alike. Cloud computing will also contribute to a growth in the power consumption of IT and as Stanford Professor Jonathan Koomey pointed out at our Green:Net ’09 event, and Google’s Green Energy Czar Bill Weihl discussed at Green:Net 2010, there’s been an increased effort by Internet companies to add clean power and energy efficiency into the equation.

Hrafnsson told me during an interview on Thursday that Greenqloud plans to launch its beta service by the fourth quarter of this year on a small scale. After that, Greenqloud wants to launch on a much larger, public scale in 2011. The company plans to hit break-even by year two of operation and become profitable by year three. It’s raised about a half a million dollars from angel investors in Iceland and is looking to raise another round of funding to launch its service on a wider scale.

There are a few companies in the U.S. that have been working on somewhat similar ideas to combine clean power and computing, though they’re mostly straight green web hosting companies, while Greenqloud is offering green cloud computing. AISO.net offers solar-powered data center space, Greenest Host offers green web hosting, and companies like GoGreen Hosting, Sustainable Web Sites and ecoSky offer green web hosting based largely on carbon offsets. None of them seem to be printing money, suggesting the market for clean-powered web services isn’t exactly large at this point.

But Greenqloud’s service could be more attractive than some of these green web ideas, largely because Hrafnsson says that the service can save cloud computing users money. While the majority of these green web companies offer a premium service– using the marketing of the green aspect to charge higher rates — Hrafnsson says that both clean energy and data center space in Iceland is actually quite cheap and abundant so the company can charge the same or lower rates.

A large data center operator in Iceland like Verne Global (which Greenqloud is in discussions with) is able to offer a competitive 20-year fixed electricity rate, which protects the customer from volatile energy prices, and that is 100 percent clean power. Greenqloud plans to work with several data center operators, and Hrafnsson says there has been a recent “gold rush” in data center construction in Iceland — a combination of the devalued Kronor, the IT history of the country and the emission-free power grid.

Hrafnsson says Iceland can also act as the hub between web companies offering services in Europe and the U.S. Web operators commonly pay for two cloud computing services — in Ireland for Europe, and in the U.S. for the U.S. — but because of Iceland’s go-between location it can offer one cloud computing service for both continents.

If international carbon legislation does go into effect, the value of the Greenqloud service will rise dramatically. Already the UK’s Carbon Reduction Commitment has doubled energy operating costs and stopped people from building data centers in the region, according to Mike Manos, the VP of service pperations at Nokia. Koomey has said that if there was a carbon price of $19 per ton under a cap-and-trade system, a 130,000-square-foot data center that was powered by a coal-sourced utility could have to pay an additional $5 million.

Clean-powered data centers have also started to become more important in terms of PR for web companies. Greenpeace launched a campaign to try to stop Facebook from using coal power for data centers, and recently released a report on how cloud computing companies need to play more of a leadership role for legislation around IT and energy.

Overall the idea of Greenqloud is novel, but I see a few hurdles. There’s not much barrier to entry or a technology differentiator. So a data center operator, for example, or others could offer a similar service. So ultimately bringing in users to Greenqloud will be about marketing and branding, which can be expensive and daunting for Internet founder types. Also, we’ll see if cloud computing users will be willing to work with a startup in order to have a better carbon footprint. The majority of web companies just don’t care that much about clean power yet.

For more research on clean power and the cloud check out GigaOM Pro (subscription required):

Clean Energy and the Cloud, Redux

Hot Topic: Green Data Centers

Facebook’s Coal-Powered Problem

Images courtesy of Greenqloud and courtesy of Ben Husmann’s photostream.

By Katie Fehrenbacher

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  1. Disclaimer (I’m the CEO of Greenqloud)

    My view is that buying carbon offsets does not make one green but it’s better then nothing. “Truly green” means only using clean and renewable energy sources like Greenqloud does.

    I do not agree with the articles’ assumption that data center providers could start doing the same simply because they do not have the broad skillset to implement and run such a service and would be competing with their own customers. Data center providers are, in a very simplistic view, high tech real estate agencies and energy resellers.

    Also the “Infrastructure as a service part” is just the beginning for us :)

    But the author is right about one thing. Our success will boil down to marketing and that’s where you come in. Do you care about your internet carbon footprint? If you thought a volcano was having an impact on the environment you would be surprised how big of an impact Information Technology has and how fast it is growing.

    Let’s make the internet truly green! Spread the good word :)

    Sincerely
    – Eirikur Hrafnsson, CEO Greenqloud

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  2. @Eirikur – I don’t think it’s a question of like or want. That’s missing the point.

    Like most things that are ultimately bad for us ( smoking, drugs, guns, industrial accidents etc.) legislation will appear to curb and get rid of it. It is only a matter of time before taxes and legislation appear to curb carbon emission.

    At that point you guys have a business model that is reinforced by prevailing legislation and Iceland has a near monopoly of an energy enabler for that business model (I don’t think its a good idea to drill for lava :-) ).

    Iceland is also conveniently located between Western Europe and the USA. ( Latency can be minimized)

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    1. This is a good start, but there is much more than just clean power to deliver services that North America firms will align to. Please review this US. Based firm that is doing much more, without volcanoes and 10 hour flight to my service site….

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  3. [...] Structure 2010 LaunchPad Presenter: Greenqloud, Iceland’s Clean Power Cloud Computing Co. [...]

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  4. [...] Comments        0 It’s one thing to build a data center in a place like Iceland that can deliver 100 percent clean power through geothermal and hydropower. It’s another thing entirely to [...]

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  5. [...] one thing to build a data center in a place like Iceland that can deliver 100 percent clean power through geothermal and hydropower. It’s another thing entirely to [...]

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  6. @Tim you are absolutely right. The carbon taxes are coming and are already being implemented in 12 countries I know of. For the US I just read the “best” news I have seen on the matter.

    “Government panel estimates the cost of CO2 pollution: $21 per metric tonn and rising.” – http://bit.ly/c4M5JP

    So did Greenqloud’s potential value just rise dramatically Katie? ;)

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  7. [...] to build data centers, and Cantrell admits that the model is “extremely capital intensive.” In comparison a company like Greenqloud, which is launching this week at our cloud computing conference Structure, in San Francisco, is [...]

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