Market Snapshot: Data centres show interest in operating in Labrador

Release date: 2019-02-13

Labrador currently has eleven data centres which can be used to mine cryptocurrencies. NL Hydro, Labrador’s electricity provider, has received a number of applications to supply electricity to new data centres. Currently, Labrador’s data centres use approximately 17 MW of power. NL Hydro has 1 763 MW of generation capacity. By spring 2018, the new applications to supply data centres totaled 275 MW. Currently, the remaining data centre applications waiting for service total about 326 MW of capacity.

One of the main reasons for this emerging demand is that Labrador has one of the lowest electricity rates in North America. Under Labrador’s current rate schedule, data centres requiring over 1 MW of power would pay the general rate of about 2 cents per kilowatt hour (cents/kW.h).Footnote 1 NL Hydro recently announced that general rates could increase by 4% in July 2019, mainly from increased fuel costs. NL Hydro recently proposed a Network Additions Policy to the Board of Commissioners of Public Utilities to help limit rate increases associated with transmission system upgrades and new load requests.

A comparison of prices for medium power users in selected North American cities

Source and Description

Source: Hydro-Québec, NL Hydro

Description: The figure shows Hydro-Québec’s estimated general electricity prices for medium-sized power consumers in selected North American cities. Labrador’s rate of around 2 cents/kW.h was added for comparison; this rate applies to non-residential consumption over 1 MW. Note that Labrador’s rate does not include all of the charges included in the other electricity prices, which include total charges for supply, transmission, and distribution. However, these additional charges for Labrador are still relatively small. After Labrador, the next lowest price is from Winnipeg, at around 6 cents/kW.h, followed by Montreal at 7 cents/kW.h, St. John’s and Vancouver at 8 cents/kW.h, and Chicago and Calgary at 9 cents/kW.h. Among the prices shown, Boston ranked highest at 25 cents/kW.h.

A data centre hosts the hardware systems used to handle the vast amounts of data generated every day by computer networks. Data centres, including cryptocurrency mining operations, need affordable electricity because they consume large amounts of power. Data centres also incur additional electricity costs to keep the equipment cool with air conditioning. Labrador also has advantageous weather to cool the equipment.

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