Canadian winters are challenging for some, but they have their advantages. In addition to producing the world's best hockey players, Canada has become host to a growing number of data centres that take advantage of the cold climate to mitigate the extensive costs of cooling their server infrastructure.

As server farms continue to pack more computing power, they have become significant consumers of energy – a New York Times study pegged the U.S. total at 2 per cent of total power consumption. Although there is some debate on the exact numbers, the proportion of this cost consumed by cooling is significant, and estimated to be as high as one half of the total.

Managing the significant heat that semi-conductors generate is consuming a growing portion of the cost of operating a data centre. Facilities in many parts of Canada are able to employ a technology called "free cooling" to reduce this by as much as 50 per cent. Essentially, these systems employ an additional cooling circuit that uses outdoor air to supplement the work done by the more energy-intensive components of the cooling system.

Story continues below advertisement

Information technology services company Fujitsu Canada is planning to open a facility to take advantage of what Canada has to offer. Free cooling, however, is only part of the picture. Access to cheap, clean, reliable energy is also a magnet for investors looking to build these power-hungry facilities, some of which consume roughly as much energy as a small city.

"The advantage Canada has is it's far cheaper and easier to bring data to power sources, and vice versa," says Mike O'Neil, president of IT research firm IT Market Dynamics. "It's much cheaper to stick your data centre next to a hydro dam."

The combination of cheap power and cold weather puts Canada in a similar league with Sweden and Finland, which have recently become the hosts of huge data centres built by Facebook and Google, respectively.

Many believe these facilities are only the tip of the iceberg. In the increasingly common cloud computing scenario where companies outsource their computing to remote providers, Canadian data centres can serve markets anywhere in the world. Market intelligence firm IDC estimates the sheer volume of data managed by businesses will grow 50 times over the next 10 years, and the number of servers needed to keep up with this growth will increase by 49 per cent in the next two years.

One of the biggest challenges for data centre operators is to convince customers that their facility is a safe place to entrust data that is often the lifeblood of their business. Infrastructure has to be operating almost 100 per cent of the time, and customers need the confidence that their data won't be lost or compromised.

"The expectation of always being available isn't just an IT issue, it's a brand issue," says Doug Stirling, senior manager of data centre business strategy at IBM Canada, which opened a 25,000-square-foot, $90-million data centre in Barrie, Ont., last September. Mr. Stirling mentioned Research In Motion's three-day outage last year, and the irreparable damage it caused the tech company, as an example.

"We can cool our facility for 210 days of the year without running the chillers," Mr. Stirling adds. "It saves us $320,000 a year in cooling costs."

Story continues below advertisement

Barrie Mayor Jeff Lehman says his central Ontario city offers some key ingredients for reliable data centres. "Barrie has two things that are really critical for data centres," he says, "and that is incredibly reliable power, and incredibly reliable water."

Political stability is another major concern. "Canada has been an island of stability in a time of considerable economic turmoil over the last five years," Mr. Lehman says. "We do have a role in terms of being a safe, stable, honest place to do business."

"Data custody is a whole other dimension as to why Canada is attractive," says David Drury, general manager of global technology services at IBM Canada. In this respect, Canada holds an advantage over the United States because many companies, particularly Canadian ones, are concerned about the U.S. Patriot Act, which allows the U.S. government to intercept and examine data stored in the United States without a search warrant.

Mr. Lehman hopes his city will become a haven for data centres. In addition to the IBM facility, Bank of Montreal and Toronto-Dominion Bank have also constructed their own facilities in Barrie. "We're seeing an emerging cluster in information storage and management here in Barrie," he says. "We're very interested in growing that for a number of reasons."

He notes, however, that government incentives often play a role. Finland and Sweden have both sweetened the pot with investment incentives, and some jurisdictions in Canada, such as Quebec and Kelowna, B.C., are getting into the game. "Ontario municipalities can't offer tax breaks – it's actually in the legislation that we can't do that," he says. "That's often cited as one of the reasons why Ontario cities have a tough time competing sometimes for large industrial facilities with the United States, where lots of states can offer corporate tax breaks."

The question many governments ask is what they can get in return. Many have been cool to data centres, because of a prevailing belief that they create very few jobs.

Story continues below advertisement

"One of the misconceptions is that all data centres are data warehouses, with 10 or so caretakers, and that's about it," says Mr. Lehmann, who says Bank of Montreal's data centre employs about 300 people in its Barrie facility. "Those are very good jobs. The people who protect bank information have to be at the top of their game."

Mr. O'Neil says governments have to look at the bigger picture. "When governments evaluate the benefit of a car plant, they don't just look at the car plant," he says. "The jobs are in the ecosystem."

Free Cooling

Free cooling systems use a device called an economizer, a specialized heat exchanger that uses cool outdoor air to help chill water or glycol that, in turn, circulates to the server racks. This reduces the load on compressors and pumps, which are the most significant consumers of energy within the cooling system. According to data from computer room cooling manufacturer Liebert Corp., a business of Emerson Electric Co., this arrangement can slash the cooling bill by as much as 50 per cent.

Why data centres love Canada

Major options companies weigh when choosing where to build their data centres. Here are the four major ones:

Story continues below advertisement

Climate

Free cooling takes advantage of a country's cold air to significantly lower a data centre's extensive energy costs.

Infrastructure

Cheap, clean power, access to large volumes of water, and high bandwidth Internet are essential to the operation of these facilities.

Political Stability

Data security is a major concern for all businesses, who can't afford to risk the security or the privacy of their data.

Story continues below advertisement

Incentives

Tax breaks, financing, and research grants are common perks offered by governments to attract data centres.

Editor's note: Fujitsu is planning to build a data centre in Canada, and has not already done so, as a previous version of the story stated. This version of the story has been corrected.

Join the conversation on Canada's competitiveness by following Canada Competes on Twitter:@CanadaCompetes