Data housing has become a critical issue for almost every industry sector as cloud computing and Software-as-a-Service (SaaS) have become pervasive even to the small business, compounded by growth in the Internet of Things (IoT), artificial intelligence (AI), and other data-intensive industries. Data creation is growing at a rate of 50% year over year, but industry is driven to spend less and impact the environment less. Meanwhile, data storage and residency is becoming a global challenge as regional privacy laws are enforced and security becomes a critical issue.

In this environment, Montreal has become a solution for global players such as Amazon Web Services (AWS), Google, Microsoft, and SoftLayer. Let’s take a look at the key advantages of Montreal as a data center and cloud destination.

Reason 1: Quebec’s Affordable Hydro-Electricity and Low Cost to Cool

Of all the major North American markets, Montreal boasts the lowest power costs for data center operations. According to the “North America Data Center Outlook” report by JLL, four times lower than in California, nearly four times lower than New York, and twice as low as Toronto where energy costs have almost doubled since 2006.

Quebec relies on hydropower, which provides stable electricity rates that are unaffected by fluctuating oil prices. Additionally, preferential rates are provided by Hydro Quebec for large power customers, which includes data centers. 

What’s more, Quebec-based data centers use less power than their counterparts, taking advantage of the naturally cold climate to cool their infrastructure and thereby cutting operating expenses.

Reason 2: Green Energy From Renewable Resources

Recognizing the challenge inherent in data storage growth and the associated environmental impact from energy consumption, technology giants are setting ambitious environmental responsibility targets. Google reached its ambitious goal of 100% renewable energy by 2017; AWS has set a goal of 50% renewable energy by the end of this year; and Microsoft — committed to “lean, green and accountable” business practices — has been carbon neutral since 2012. 

Almost 100% of the energy generated by Hydro-Quebec comes from hydroelectricity, a clean form of energy that produces greenhouse gas emissions that are 50 times lower than natural gas, five times lower than solar power, and about the same as wind power.

AWS Vice President of Public Sector, Teresa Carlson, cited cost and the availability of hydro-electric power as a key factor in the company’s colocation decision.

“We picked the area that we did because of the hydro power,” said Carlson in an interview with The National Post. “We did find them (Quebec) to be very business friendly.”

More broadly, Quebec delivers on advanced data center sustainability metrics put forward by The Green Grid, including Carbon Usage Effectiveness (CUE) and Water Usage Effectiveness (WUE).

As a package, reduced spending on power and carbon emission offsets could mean millions in potential savings over the life of a contract.

Reason 3: Strong Privacy Laws

Microsoft, Salesforce, and Amazon have all cited avoiding U.S. surveillance laws as reasons for investing in Canada. If customers head north for stronger privacy laws, they also head to Montreal for the affordable, clean energy and cool climate. And the EU’s top court striking down laws that governed data transfers between U.S. and European-based companies has made Canada a top choice for European organizations needing a North American footprint.

Additionally, Montreal is an exceptional business-friendly city, especially for American customers due to its proximity to New York and other major northeastern markets. Once resistant to providing tax incentives for new data centers, the Quebec government changed its tune at just the right time. The Province now has an impressive tax regime for technology businesses that makes even politicians in neighboring Ontario jealous.

Among the highlights:

  • Generous capital cost allowance rates for purchasing clean energy equipment
  • Up to $25,000 tax credit per employee for hiring a new IT employee
  • 30% tax credit on eligible R&D expenditures
  • 5% tax credit for labor costs in multimedia titles 

Attracted to Montreal by affordable, green power, its natural climate, strong privacy laws, and generous tax incentives, the presence of major cloud providers will greatly benefit IT and communications sector companies in the city while providing an exceptional launch point for technology startups, as well.