Canada has all the ingredients to be a leading player in the world’s growing need for vast data centres if it wants to be, says one consulting firm.
It has the untapped land, affordable electricity, cool climate, abundant water and a quick permitting process to make data centre construction attractive, RSM Canada LLP said in its Real Economy Canada report .
“Canada appears ideally positioned to capitalize on the demand for data centres, but it must approach this opportunity with intentionality, especially when it comes to cost and clean energy considerations,” Tu Nguyen, an economist at RSM Canada, said in the report.
She said Canada has an advantage over the United States, which has a lengthy approval process for data centre construction, and it has cheaper electricity than many European nations.
A big worry about data centres is the electricity needed to operate and cool them, but the volume of Canadian electricity that comes from renewable sources and the country’s favourable climate prompted the New Statesman Media Group to name Canada as the best country in the world to build low-energy data centres.
Global data centre demand is expected to triple by 2030, and the federal government and six provinces have already outlined frameworks for their expectations when it comes to these projects.
Alberta has already emerged as a frontrunner in the data centre race, with about three per cent of the country’s active data centre capacity already and 90 per cent of the proposed projects, in part because developers can build their own power generation rather than wait to rely on the grid, according to Royal Bank of Canada .
Meta Platforms Inc. recently broke ground on a $13-billion facility in Sturgeon Country, Alta., its largest facility outside Canada.
“Data centres are not a passing trend,” Nguyen said. “They are poised to become permanent infrastructure that will be critical for Canada’s AI development and its role as a technological innovator.”
But Canada would need to expand its electricity grid at an advanced rate to handle the rapidly expanding AI infrastructure, she said, and enable more emissions at a time when countries are trying to shrink their reliance on oil and gas.
Another issue is that a large chunk of profits from these facilities would leave the country, given that many of the leading AI companies are foreign and local benefits tend to dry up once construction is complete since data centres are generally not meaningful job creators.
“Policy can only go so far,” Nguyen said. “Looking ahead, it’s incumbent on businesses and governments to make the most of this emerging opportunity by building this infrastructure in a way that allows companies to fully utilize it to grow their technological capabilities.”
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Uncertainty surrounding oil prices and the interest rate outlook has Canadians feeling a tad less optimistic about the economy.
The Bloomberg Nanos Canadian Confidence Index rose to 50.88 for the last week, still behind the 51.8 rating at the beginning of September. A reading below 50 indicates a negative view on the economy.
Overall, consumers confidence over personal finance and job security have improved, though expectations for the economy and housing market have weakened.
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Today’s Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff and Bloomberg.
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