Data centres are moving in. Communities should read the fine print

Power demand rises, water use climbs and the jobs often disappear once the construction phase ends

Canadians in towns and cities across the country are waking up to the prospect of a new neighbour: the data centre.

In the United States, where data centre investment is in full swing, governments across the country are trying to lure developers to their areas with a mix of tax incentives and subsidies.

At the same time, some communities are expressing growing concern over the impact of data centres and fighting against their own governments to prevent them from being constructed.

As Canadians begin to experience their own data centre boom, we need to understand what we are getting into and what questions to ask when we invite data centres to be our neighbours.

Will my power bill go up?

Whether a data centre will increase your electricity bill is one of the primary concerns people raise when companies propose building a data centre in their community. There is no doubt that data centres are voracious energy consumers, particularly when clustered together. Residents close to “data center alley” in Northern Virginia—the world’s largest data centre market—have seen their power bills double as centres drive up demand for electricity.

Recognizing the costs these centres are imposing on residents, certain state governments are now requiring that developers foot the majority of the bill for grid upgrades and new generation costs. Canadians need to ask their own governments how they will be protected from similar rate increases.

What about water?

Data centres need water for the cooling systems that are required to control the intense heat created by high-powered processors. A mid-sized data centre consumes around one million litres of water a day, or about as much as 1,000 households. This means regions that are already under significant water stress, like Alberta and Saskatchewan, should seriously consider the wisdom of allocating already scarce water resources to data centres over other consumers.

Are they noisy?

The constant low-frequency drone of these facilities from fans, turbines and generators has reportedly disrupted sleep and caused health problems for some residents who live nearby. The problem is that most noise ordinances were not written with 24-hour data centre operations in mind. Decibel thresholds that might be reasonable during the day may need to be reconsidered to address the constant noise of these centres in the dead of night.

What about electronic waste?

In addition to water and electricity consumption, data centres also generate hazardous waste from servers, batteries, cooling systems and other hardware containing toxic materials. How these will be safely disposed of and at what cost is another important question communities need to ask.

Will it create jobs?

Job creation from data centres is front-loaded and limited. The construction phase creates the most jobs, but these are temporary. Once operational, data centres simply do not employ many workers. The Virginia government estimates that a typical-sized data centre employs 50 workers, with half of those usually contract workers employed in security, maintenance and janitorial work. Spin-off job creation is also limited, as highly specialized IT equipment usually cannot be sourced from local or even regional businesses.

Will they provide tax revenue?

Data centres can provide significant tax revenues as long as governments do not sacrifice those taxes in a bid to attract the data centre in the first place. Governments across the U.S. have forgone billions in taxes in a bid to lure data centre investment. Many are now second-guessing the wisdom of tax exemptions for a facility that may very well increase the cost of living for its surrounding residents.

As Canada enters its own data centre construction boom, we need to ensure that communities reap the full benefits of these investments while mitigating the costs. The U.S. has been a lucid example of how poor regulation and planning have turned communities against data centres. With smart policy and community input, Canada does not need to repeat America’s mistakes.

Simon Enoch is a senior researcher and Rachel Pettigrew is an assistant researcher with the Canadian Centre for Policy Alternatives. Simon is based in Saskatchewan.