Cheap power and economic development

Manitoba was the only Canadian province that was competing with New Brunswick to attract call centres in the early 1990s. By the mid to late 1990s every province in Canada was trying to attract them.

Manitoba is now out front its the data centre attraction efforts.

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. Large power customers in Winnipeg paid an average of 3.6 cents per kilowatt hour in 2007, cheaper than the average rate in virtually every state in the U.S. except Idaho, as seen in our chart of state-by-state energy prices. That’s all clean, green power from Manitoba Hydro, which generates power from 14 hydroelectric generating stations throughout the province. Not green enough? Manitoba Hydro also purchases the output of a 99-megawatt wind farm in St. Leon, Manitoba to augment its hydro generation capabilities.

New Brunswick cannot compete with Manitoba with its power rates. I don’t know what the exact cents per kilowatt hour are in New Brunswick but suffice it to say it is at least 50% or more higher than Manitoba for large industrial users.

And that would translate into possibly several million a year in savings in Manitoba for a large data centre.

It would seem to me that peripheral places like New Brunswick should make every effort to be a low cost power location. It should be relatively easy way to generate competitive advantage (no pun intended).

That is why I must reiterate my concern over the strategy to generate power for the export market. The real strategy should be to find a way to develop competitive power rates here and market that advantage to data centres, large manufacturers, forestry firms, etc.