New Democrats, Old Economy

In early 2009, I started trying to rally the political will to make Manitoba a globe-leading, high-tech, green datacenter hub. This post tells the story of how I quickly discovered that Manitoba under the NDP had had its chance to be just that – and let it pass by, missing millions of dollars in investment, hundreds of jobs, and the opportunity to seed an industry.

The World Needs More Data Centers

datacenter_lgLet’s start with why making Manitoba into a high-tech hub piqued my interest. In my line work, part of my job is to stay on top of technology industry trends. In 2007, and then while I was in Asia in 2008, one theme that consistently emerged in tech news was massive investment in data centers.

Datacenters are where the internet actually resides. When you read this page, CNN.com, or DailyKos, check your email or upload a picture to Flickr, the computer that your web browser is talking to is in a datacenter – a large, warehouse-like structure full of towering racks of computers connected to the internet. Datacenters lease out space on the thousands of computers housed within their walls, making web hosting very inexpensive (compared to trying to do it yourself), and profiting on the margins that their economies of scale allow.

Microsoft, Google, Yahoo!, Apple, Akamai, Limelight, and a bunch of other companies have all announced multi-billion dollar datacenter investment plans in the last few years, to support the burgeoning growth of the newly media-centric video and photo heavy web.

They Are Expensive

With the theme of investment in datacenters, the news carried increasingly dire warnings about the runaway costs of datacenters – land, but mostly electricity for running thousands of powerful computers and keeping them cool enough to keep running. Take the leg searingly hot base of your laptop, pack 10,000 of them into a small room, and run them at maximum capacity 24/7/365, and you begin to appreciate the magnitude of the air conditioning requirements.

Its not just the need for lots of inexpensive power, either. PR-sensitivity for media savvy tech firms means that it needs to be clean, renewable power. And in this era of rolling Californian brown-outs and fickle consumers, it needs to be reliable.

The responses to these challenges are what caught my eye. Microsoft signed a memorandum of understanding with Siberia, where the cold climate would reduce cooling costs for much of the year. Google proposed putting data centers on giant barges and pumping cold water from the ocean floor for cooling, and using wave-power for electricity. Google sited a $600 million dollar data center in Omaha, on the basis of cheap, renewable-sourced electricity. Yahoo thought hard about it too, and eventually put $100M in. Amazon built a $100M facility in Boardman, Oregon on the basis of proximity to cheap hydroelectric power.

Errrr – That Sounds a Lot Like Manitoba

Manitoba has the cheapest electricity in North America, and its as green as can be (hydroelectric). Were well connected to the Internet grid. We have the schools to provide the right staff. We have space to site data centers – urban (heritage buildings, The Bay), suburban infill, or open prairie. The dollar (generally) makes siting in Canada advantageous, as does an easier compliance and privacy environment. And, we have an economy that values diversification.

I wondered why Manitoba wasn’t reaping huge windfalls in datacenter investment like the states just south of us, like Kelowna (which got its own $100M project last year), or like Nova Scotia (here and the converted Diefenbunker!). I even went so far as to meet with Conservative MP Rod Bruinooge, who expressed his support for the idea. I wasn’t the only one that saw the fit either:

A number of large data center operators are evaluating Manitoba, Canada as a possible location for major projects. Why? Cheap, renewable energy, and tons of it. With power costs driving many data center site location processes, and corporate mandates for “green” facilities, the central Canadian province’s ample supply of affordable hydro and wind power is attractive.

[From "Manitoba: New Frontier for Huge Data Centers?"]

Wow, I thought – they’re already on it, and I’ve been wasting my time.

Nope.

I called the provincial department of Science, Technology, Energy and Mines (STEM), and had a very nice conversation with a representative who told me that Manitoba had, in fact, been contacted by a number of large datacenter investors, and that we had declined to compete for their investments. Here’s why:

  1. Electricity: Manitoba Hydro would rather sell its power outside of the province (i.e.: the states), where it can do so at higher rates.
  2. Staffing Levels: Datacenters don’t require huge numbers of staff; the Omaha center above, for example, created only 200 jobs. The Province chose to focus its competitive energy on industries that employed more people directly, like (this is the real STEM example) call centers.

So: the NDP and Manitoba Hydro chose to keep Manitoba a hewer of wood and drawer of water, exporting our power south as opposed to using it to create value within our borders, and employing legions of Manitobans in low-income, entry level jobs, as opposed to planting the seed for a new, high tech sector in the province. We gave up potential hundreds of millions of dollars of capital investment, and the long-term spin-off and support industries that would flourish around datacenters. We gave up the chance to keep hundreds of new grads in Manitoba.

There’s a reason that other provinces and states are willing to compete for datacenter dollars and play the incentive game – its because technology and datacenters are an important part of the future economy. Manitoba under the NDP has opted out of that future.

So: Am I off-base here? What’s your take? Is datacenter investment worth competing for? Am I wrong in pointing my finger at NDP ideology?

Image Credit: ECN Mag

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