WABUSH, NL – In 2018 Newfoundland and Labrador Hydro imposed a moratorium on all projects on the Labrador Interconnected System that required more than 200 kW. Demand for power in the region from the mining, military and corporate sectors had increased, including a new player in block data centers.
Some showed up at Happy Valley-Goose Bay and Labrador West, raising concerns about noise and power consumption in the communities where they served. At Happy Valley-Goose Bay, the system was maxed out as the data centers used 10 percent of the city’s electricity, raising concerns that future capacity expansions would go entirely to the data centers, with fee payers paying the bill for the system improvements.
Rick Kennedy, Regional Manager of Gearboxes and Rural Operations for Labrador at Hydro, recently spoke to SaltWire Network about these issues and the changes that have been made since 2018.
“I think it was important for us to put the moratorium in place until we could get our feet under the feet of capacity and see if (data centers) are really serious about this,” he said. “You have an obligation to pay.”
What Kennedy means by the payment is the most recent Network expansion policy introduced by Hydro earlier this yearwhich requires that the electrical system upgrade costs a business requires be borne by them, not the fee payers. Essentially, Kennedy said, these upfront costs help weed out businesses that aren’t serious about staying long term and provide protection for the fee payers in the system.
Since the moratorium, Newfoundland and Labrador Hydro have received applications for around 50 projects in the region, including 30 for data centers. Now that the new policy is in place, Hydro is contacting these companies to see who else is interested.
Curtis Doran, CEO and Co-Founder of BlockLAB, said Labrador has tremendous potential for data centers. – Contributed
One of those who are very interested in BlockLAB, a Labrador-based blockchain infrastructure company with offices in Wabush and Happy Valley-Goose Bay. The five-year-old company, which started in a garage, currently has access to 10mW of power between the two locations, employs 25 people and is hoping for much, much more.
Curtis Doran, CEO and co-founder of BlockLAB, said his company applied for 1,100 mW of Newfoundland and Labrador Hydro electricity in four locations, the two current buildings and the new buildings in Churchill Falls and Muskrat Falls.
“We believe we are the solution to Newfoundland’s rate reduction problem. We have a capital partner worldwide who would build it and it wouldn’t cost the province a cent, ”said Doran. “We have big plans here and we’re just getting started. It’s the answer, the power is here. Let the muskrats take over, we’ll buy it all. If we didn’t have to pay the transfer costs for this part of the project, Muskrat Falls wouldn’t be so crazy. “
To put the 1,100 mW in perspective, the mines in Labrador West together consume around 300 mW. Doran said they will take whatever energy the province gives them and have been working on ways to extract the heat from the centers to use in other ways to give more back to the communities. For example, the heat from their building in Wabush powers a stove that heats Smokey Mountain Ski Lodge, and Doran said there are other uses for the excess heat, such as growing food.
“The biggest problem with growing food in Labrador is heat. You cannot afford to spend heat on growing food, but when the heat is free it is a decrease in our process and makes it viable. “
Doran said they are working to improve the face of the industry in Labrador that has been tarnished in the past by some night flight operations and those that did not go through the proper legal channels at their facility.
“Leave the muskrat power to us, we’d buy it all. If we didn’t have to pay the transfer costs for this part of the project, muskrat isn’t that crazy.” – BlockLAB CEO Curtis Doran
Doran said the Newfoundland and Labrador Hydro adding networks guidelines will help weed out some of the less scrupulous operations and ensure that only companies that are serious about staying in the area are started. Despite the upfront costs and the potentially increased cost of electricity from Muskrat Falls over electricity from Churchill Falls, Labrador tariffs and capacity are very attractive for data centers.
“Currently the industrial tax rate is 1.67 cents plus taxes. We could pay 2.5 and it’s still one of the cheapest on the planet for renewable, water-based electricity. “
Jonathan Anderson, Associate Professor at Memorial University, specializes in computer security and privacy, and uses many of the same techniques used on the blockchain. Anderson told SaltWire Network that he could see that Labrador had a lot of potential for data centers, but usually when people talk about data centers, two different things are mixed up.
One involves operations that are essentially cryptocurrency farms with little to no staff and that are of little use to a community, Anderson said, while the other is essentially a piece of infrastructure, a resource any type of computing system could go into, and there are people who are staffed to do things like general computer maintenance.
“Cheap electricity and cold weather, cooling costs are a big part of running a data center so I can see how Labrador fits in,” he said.
“When you have a large data center where you have multiple tenants but you have general computing where you need to have a lot of highly skilled technicians on site capable of troubleshooting network errors and so on. Job opportunities, training, things like that. If part of the result of setting up a data center is marketable capabilities, it can be very beneficial in an area. “
Anderson said that in the long run, as carbon prices rise and potential carbon tariffs applied at borders, there will be cause for large players to seriously consider building large data centers near existing hydropower plants have a lot of capacity and, like Muskrat Falls and Churchill Falls, will have large capacity in the future.