Why Putting Your Data Center in Canada Makes Sense

With its cool climate, low risk rating and skilled labor force, Canada seems like a great spot to build a new data center. If that's where your customers are, experts say, there's no reason not to expand north of the border. Otherwise, think twice.

There are a lot of myths about Canada—most related to the country's climate—but these misconceptions actually leave some wondering if Canada might be a good location for a data center.

Why Canada Is on the Data Center Radar

Michel Cartier, Kelvin Emtech CEO and president of the Data Center Innovation Expo, was joined by other experts from Quebec and beyond at last month's DCIE in Montreal to discuss recent data center innovations.

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Canadian data center

According to Cartier, there are numerous reasons that Canada is an appealing data center location.

  • Canada in general—and the province of Quebec in particular—has low energy costs and water rates.
  • Highly trained people, skilled labor and private network providers are all easy to find.
  • Canada is generally regarded as a low risk for both natural and man-made disasters.

In addition, the Canada Privacy Act appeals to European and international companies looking to locate data centers, Cartier says. Canadian law, which doesn't allow a government institution to collect personal information unless it relates directly to an operating program or activity of that institution, tends to be better aligned with European regulations than the USA Patriot Act, which makes data accessible to any parties of government.

"Most companies coming into Canada aren't a Yahoo or Google type of company," Cartier says. "We're seeing large, global co-locators with customers based in Europe and Asia who want to bring operations to North America but need regulations that protect the customer's privacy."

Canada's Climate a Natural Fit for Free Cooling

The recently released Data Centre Risk Index ranks Canada second out of 20 countries, with the United States No. 1. The report, produced by Cushman & Wakefield LLP and Hurleypalmerflatt, considered factors that are likely to affect successful data center operations. Canada got high scores for its low energy costs, political stability, bandwidth and ease of doing business. Factors such as cost of labor and inflation risks, while still favorable, scored lower.

Other data center trends—namely, energy efficiency and environmental impact—also suggest Canada might be a good location for a facility. Eddie Schutter, a member of the nonprofit industry consortium The Green Grid, points specifically to a favorable environmental climate that offers low taxes, low utility rates and economic incentives for green initiatives.

Green energy and free cooling, which is the process of using low air temperatures to chill water for cooling systems, are key factors in lowering data center operational costs. The most efficient and least expensive techniques use natural resources such as cool air and water, according to DCIE. This makes northern countries a natural choice for companies looking to set up new data centers.

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Since Quebec is much cooler than the rest of North America, it's an attractive place for data center development that could substantially lower operating costs while increasing energy efficiency.

"What we like to say in the province of Quebec is that electricity is cheap and green, and power distribution is good, in terms of the impact on the data center," says Patrick David, president of Groupe Datareal, a real estate company specializing in complete data centers. "Basically, you don't have downtime due to lack of quality in the distribution network."

For the country as a whole, David cites four key drivers for the Canadian data center industry: the cost of electricity, the general reliability of electricity providers, the abundance of hydroelectricity—Canada is the world's-third largest generator of hydroelectric power—and the potential to take advantage of free cooling.

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In addition, Schutter points out, Canada uses less oil and more natural gas than many developed nations. While gas is still a fossil fuel, it's the cleanest fossil fuel, he says.

If Your Customers Are in Canada, Your Data Center Should Be, Too

When considering Canada as a place to base your next data center, The Green Grid recommends that organizations consider the "geographic relationship to business requirements" to determine if it's the right business choice for your organization. This means investigating your customer market, network access, the technical labor market, the distance from current business locations, air transport and maintenance providers, to name but a few factors.

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Canada's climate, political history and economic growth might be good reasons to put a data center there—but doing so means nothing if that's not where your business needs to be. However, if you do need to expand, the industry leaders interviewed for this article give no indication that you shouldn't consider locating a data center north of the border if that's where your customers are.

CloudFlare, a California-based cloud service provider focused on website security and performance, recently launched nine data centers in a 30-day period. One is in Toronto.

Matthew Prince
Matthew Prince, co-founder and CEO of CloudFlare, which has equipped 23 data centers, many in facilities previously used by telecom providers, in just three years.

CloudFlare co-founder and CEO Matthew Prince says the company routes traffic for hundreds of thousands of customers and constantly monitors the paths in the network between people who are visiting customer websites and its 23 data centers. (When traffic is up, of course, there is always a need for additional facilities.)

After a usage analysis, CloudFlare noticed it had a large number of users in Canada. Most were served from the company's Chicago data center, Prince says. With the addition of the Toronto facility, he says, CloudFlare can now route Canadian customers to those servers, saving milliseconds of load and wait times to on customers' websites.

Based in Nova Scotia, Canada, Vangie Beal has been covering small business, electronic commerce and Internet technology for more than a decade. You can tweet with her online @AuroraGG. Follow everything from CIO.com on Twitter @CIOonline, on Facebook, and on Google +.

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