grand falls—windsor data center site evaluation

Grand Falls—Windsor Data Center Site Evaluation

Excite Corporation Grand Falls—Windsor, NL, Canada Summer 2013

Table of Contents

PN 470614_Report COPYRIGHT 2013 BY CH2M HILL Page 1 of 21

Contents1. Introduction & Background .............................................................................................................................. 3

2. Summary of Findings ......................................................................................................................................... 3

3. Assumptions ........................................................................................................................................................ 4

Visualization of Potential Data Centers ........................................................................................................... 4

4. Evaluation Criteria and Site Analysis .............................................................................................................. 6

Energy Cost, Source, and Availability ............................................................................................................. 6

Tax and Regulatory Criteria .............................................................................................................................. 7

Telecom/IT Connectivity .................................................................................................................................. 7

Water and Wastewater ....................................................................................................................................... 8

Land Availability and Building Cost ............................................................................................................... 9

Climate and Natural Hazards ........................................................................................................................... 9

Workforce Availability ..................................................................................................................................... 10

Other Factors ..................................................................................................................................................... 10

5. Resource Use and Sustainability: Performance Metric Analysis of the Site .................................................................................................................................................................... 11

6. Financial Analysis ............................................................................................................................................. 14

Assumptions ...................................................................................................................................................... 14

Observation and Conclusions ......................................................................................................................... 15

6. Area Maps .......................................................................................................................................................... 17

7. References and Supplemental Research ........................................................................................................ 21

Table of Contents


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Site Evaluation Findings


1. Introduction & Background CH2M HILL’s Industrial and Advanced Technology Business Location Analysis group was contracted to perform an independent evaluation of a potential data center site in Grand Falls-Windsor (GFW), Newfoundland and Labrador (NL), Canada. CH2M HILL was selected based on our site selection experience and our understanding of data center design and operating economics and site selection requirements. CH2M HILL visited GFW and the selected site area, interviewed specialists, used a reference design to compare potential performance metrics to similar designs at competing locations, and conducted a financial analysis (not including negotiated government incentives) of the site as compared to similar sites in competing locations.

2. Summary of Findings The charts and table below summarize GFW’s strengths and challenges as a potential data center location compared to competing locations analyzed as part of this study. Factors that require additional information and evaluation to determine whether they are strengths or challenges are listed in the Insufficient Data column. All data and information on GFW was provided by local economic development officials. To support this project, CH2M HILL traveled to GFW to tour the area and sites, and participated in meetings with officials. In preparing this report, CH2M HILL relied in part on data, information and statements provided by GFW and third parties and assumed them to be accurate and reliable, but which CH2M HILL did not independently verify.

See section 5 for analysis of Power Usage Effectiveness (PUE), Water Usage Effectiveness (WUE), and Carbon Usage Effectiveness (CUE)

Strengths Strengths Insufficient Data

Inexpensive electricity (less than 3 cents per kWh)

Electrical lines available near site for construction and ramp-up

Low carbon/green power (more than 95% hydroelectric)

Cool climate and potential for lower cost mechanical cooling systems

Potential for lower Power Usage Effectiveness, Water Usage Effectiveness, and Carbon Usage Effectiveness than competing locations

Low infrastructure disruption risk from natural disasters and extreme weather

Nearest substation reported no outages between 2006 and 2012.

Good national and international communications network connectivity and trans-continental connections outside of U.S.

Lower Project Net Present Value of costs than comparison locations (before incentives)

Degree of relative incentive impact (e.g. GFW/NL incentives compared to competing locations)

Site geotechnical conditions’ influence on construction cost

Challenges Perception of greater travel time

from major North American metropolitan areas than some comparison locations

Perception that local government is not as ready or familiar with large fast-track data center projects as comparison locations

0.00

0.50

1.00

1.50

2.00PUE

0.000.200.400.600.80

WUE (L/kWh)

0.00

2.00

4.00

6.00CUE (kgCO2/kWh)



3. Assumptions

A reference data center with the following characteristics was developed to allow for analysis of the GFW site’s competitiveness against potential competing locations: 10 MW IT Load serving a cloud-compute market 10-14 month build-out period Approximately $200 Million total investment in the first two years (building and IT equipment) 100,000 square feet (sf)/9,000 square meter (sm) building on a 15 acre site Employing 20 full time equivalent employees with average salary of approximately $80,000 Canadian

Locations against which the GFW site was compared: Toronto, Canada New York, USA New Jersey, USA Washington DC/Virginia, USA

Incentive packages offered by each government were not analyzed because a specific incentive package for the GFW site was not available. However, discussions with provincial and municipal government officials indicate that incentives are available in the form of wage rebates, training and relocation allowances, and grants and loans to offset capital equipment costs. These incentives, as well as those available through the Provincial Government’s EDGE Program are negotiated on a case-by-case basis. However, based on the requirements to qualify for the EDGE Program and verbal support from GFW and NL representatives, a project similar to the reference data center used in this report is very likely to qualify for government support.

Visualization of Potential Data Centers

The following renderings represent high-level conceptual designs for a data center that could be placed on the GFW site, corresponding to the assumptions used for the financial comparisons in this evaluation. They are based on a facility size and mechanical systems concept appropriate for the site.

Data Center Elevation



Data Center Aerial Renderings

The renderings above illustrate a 10 MW data center, 7000 square foot of office space with loading dock, cylindrical water tanks (backup water source for evaporative coolers), generators, roof-mounted air handling units, an electrical building (housing switchgear, transformers, uninterruptible power supplies, and distribution equipment), four stairwells, parking and access roads. This particular concept design is modular, meaning the data center could be expanded by adding additional sections to increase IT load as needed.

Stairs

Electrical support building

Backup generators

Water storage Loading dock

Office block

Rooftop air handling units with outside air economizers



4. Evaluation Criteria and Site Analysis

Many factors affect a data center’s location selection. These factors are described below, along with CH2M HILL’s evaluation of the GFW site for each factor1.

Energy Cost, Source, and Availability

Energy costs are a significant consideration in data center location due to their high energy consumption. The most competitive locations in North America have available power below $0.05 per kilowatt hour (kWh). The energy generation fuel source mix is also an increasingly important factor, as companies prepare for potential carbon reduction or carbon tax legislation, and look to leverage green energy sources for public support and global stewardship. In addition to energy costs and generation source, reliability is also a key factor, as highly reliable energy connections can create opportunities to reduce a data center’s investment in back-up generators and UPS equipment and the risk of downtime.

The GFW site is currently un-serviced (does not have onsite electric infrastructure or other infrastructure improvements). The nearest substation with access to Newfoundland & Labrador Hydro’s system, Stony Brook Terminal Station, is approximately 10km south (see map 2). If power were delivered from this substation via new transmission lines, energy could purchased from Newfoundland & Labrador Hydro at their “Industrial” rate tariff of $0.02891 per kWh with demand charges of $6.68 per month per kW of billing demand (based on anticipated annual maximum requirements). An annual Rate Stabilization Plan Adjustment (based on levelized system costs) can be applied to the standard industrial rate resulting in slight increases or decreases in tariff rates.

The cost to build transmission lines and a terminal station dedicated to the data center would be borne by the data center tenant, including maintenance and operations cost of that infrastructure. Newfoundland & Labrador Hydro has stated that financing options may be available to support electrical infrastructure extensions.

Another option for electricity is to wheel power through Newfoundland Power’s transmission lines already adjacent to the site (see map 4). In this case, “General Service” rates would apply with demand charges of $7.08 per kVA (December to March) and $5.58 per kVA (remaining months) and energy charges of $0.09048 per kWh for the first 100,000kWh, and 0.07934 per kWh beyond. While new transmission line construction cost would be avoided, a terminal station would still be required.

Power in Grand Falls-Windsor, like Newfoundland Island as a whole, comes from approximately 80% hydroelectric sources, and is planned to be near 100% hydroelectric in 2016 after completion of the Lower Churchill Falls project (work began in 2012) and a high voltage direct current link to the Mainland via Newfoundland is operational. The additional electrical load of a data center (based on the reference case for this project) is not anticipated to stress local power utilities, or influence rates.

The availability of “green” power in GFW may be seen as a cost savings to companies concerned about potential carbon reduction or carbon tax legislation in the US and existing carbon-related taxes in the European Union.

Electrical service reliability statistics from the supply lines to the Stony Brook Terminal Station over the period 2006 to 2012 are excellent. Newfoundland and Labrador Hydro reports that the Stony Brook

1 For more details on these criteria, please see Viability of Data Centers in Newfoundland and Labrador produced by CH2M HILL for the NL Department of Business in October 2010



Terminal station experienced zero outages over this period and is fed from 4 redundant 230kV transmission lines.

Tax and Regulatory Criteria

Global data center companies attempt to locate facilities in jurisdictions whose tax and regulatory climates benefit their business model. The short useful life of IT equipment in data centers results in very high ongoing capital reinvestment to keep data centers’ IT infrastructure efficient and competitive. It is not uncommon for data operators to reinvest 50 percent of their original capital investment in equipment upgrades every three years. The high levels of capital investment and rapid asset depreciation cause depreciation rules and property tax policy to have a significant impact on Total Cost of Ownership (in this analysis represented by the NPV of project costs) between locations. The following taxes and depreciation methods can vary significantly between locations: Sales tax Value Added Tax (VAT) Real and Personal Property tax Corporate income tax Depreciation methods on building and equipment

The financial impact of each tax is estimated in the financial analysis in Section 5. Based on input from local tax advisors, the following tax assumptions were used for GFW and NL:

HST/VAT that is applicable in GFW and NL is assumed to be fully recoverable and therefore zero net cost in the model. Different local rules that apply to financial institutions were not considered in this analysis.

Property and business taxes: $10.75 commercial rate and an $8.00 business tax rate per $1,000 of land and building assessed value, and no property tax on personal property (equipment). Under the Provincial Government’s EDGE Program incentives, these taxes would be rebated 100% for 15 years, followed by a five year rebate phase out period.

Corporate income tax was calculated for each location using specified depreciation methods for building and equipment. For GFW and NL, building depreciation method is 4% per year, using a half-year convention. For equipment, the infrastructure equipment category was assumed with 30% annual depreciation using a half-year convention. Income tax rates assumed are shown in Section 5. Under the Provincial Government’s EDGE Program incentives, provincial corporate tax and payroll tax would be rebated 100%, and federal corporate taxes rebated 50% for 15 years, followed by a five year phase-out of such rebates.

In general, the tax climate of GFW and NL is more favorable to data centers than the comparison locations in this analysis. However, many competing locations also offer tax abatements, tax holidays, and special depreciation schedules to make their locations more competitive in data center recruitment, and the relative impact of incentives is not included in our analysis. Discussions with provincial and municipal government officials indicate that Grand Falls-Windsor/NL can offer financial incentives to data center companies beyond those available through the EDGE Program.

Another potential regulatory advantage of GFW/NL is that it is located on North American fiber routes that may not be subject to USA PATRIOT Act.

Telecom/IT Connectivity

Data centers’ site selectors desire access to high-capacity fiber routes with capacity, multiple telecommunication carriers, and multiple physical fiber lines to ensure competitive rates and reliable



service should one carrier have a service interruption. The GFW site is not currently serviced by fiber, but can reportedly access fiber lines from multiple telecommunication carriers.

Bell Aliant’s offices and local fiber hub is very close to the site. Bell Aliant operates two physically diverse fiber routes connecting the island portion of Newfoundland and Labrador to mainland Canada, and a third secure fiber route across the Gulf of St. Lawrence with connectivity to Montreal, QC, and Toronto, ON through Halifax, their regional communications hub.

Eastlink, part of the Transgulf Consortium, reports that Grand Falls-Windsor is within a few kilometers of their network backbone currently lit with a 40 wave DWDM service that is 10, 40 and 100G capable. They also have multiple dark fibers available on their ring, although strand counts were unavailable. The Provincial Government has rights to some dark fiber on this network.

The Eastlink backbone interconnects back into their National network with connections into all the major Canadian Carrier Hotels such as 1250 Rene Levesque (Montreal, QB), 151 Front Street (Toronto, ON) and 555 West Hastings (Vancouver, BC), as well as connections into the US.

Rogers Communications, also part of the Transgulf Consortium, also provides telecom connectivity in the area of Grand Falls-Windsor. Both lit and dark fibers are available connecting to Roger’s fiber networks across Canada. According to a representative of the company, Rogers supports full Metro Ethernet Forum specifications for Ethernet access with speeds from 10Mbps to 10,000Mbps and can provide direct connectivity to several major cities in the US and Canada with latency around seven microseconds per route kilometer.

Roger’s provided the following latency statistics for their networks:

Corridor Propagation Delay (one way)

Grand Falls Windsor to New York City ~12 ms Grand Falls Windsor to Chicago, IL ~ 26 ms Grand Falls Windsor to Washington, D.C. ~14 ms Grand Falls Windsor to Seattle, WA ~ 31 ms

Water and Wastewater

Climate and data center design drive water consumption, but all designs require some level of water and wastewater services for employees, cooling, and for fire protection. Adequate water and wastewater discharge capacity has been reported by local economic development officials in proximity to the site (see map 4). Plans for improvements in the wastewater system are in place to keep pace with anticipated development of the area around the proposed site. Preliminary work has begun, and capital funds are budgeted in 2013 to update local wastewater capacity. The GFW sewage treatment facility is indicated on map 2 below.

Water and wastewater costs in GFW are not metered and based on usage, but instead evaluated as a 3 mills (0.3%) tax on assessed property value (land and building) plus a $350 flat rate per year. It is unknown whether the planned improvements will impact water and wastewater cost, but no increases beyond regular periodic Municipal tax increases are currently anticipated. More detailed assessment of how the site would be serviced by water and waste water would likely be required prior to any data center investment in the GFW site.



Land Availability and Building Cost

Data centers prefer large, level, relatively rectangular sites. Land should be free of barriers to development, and zoning should allow data centers. Local economic development officials indicate that the site is free of any sensitive environmental resource restrictions or overlays that would restrict data center site development.

The GFW site is part of a large area of currently un-serviced Crown Lands. As long as the land remains un-serviced, it may be sold by the town of GFW for $1 through the Provincial Government’s EDGE Program.

The site is zoned Industrial with no immediate existing neighboring uses, but if development proceeds according to the current plan, neighboring uses would likely be light industrial. Nearest existing neighboring properties include a large warehouse, career college, equipment rental, gas station, and courier service (see map 4). Land availability does not appear to be a constraint.

Residential/commercial power lines run along the NW and SE edges of the site. A multi-use trail runs along the edge of the larger Crown Lands area, but not adjacent to the GFW site. To the west of the Crown Lands area is a nature trail area (Corduroy Brook), and to the east are residential lots, though neither with shared boundaries.

The site falls about six meters in elevation towards the NW (see Map 3). In early June 2011 the ground was quite wet, with widespread standing water. According to local geologists, the area is underlain by sandstone/siltstone bedrock covered by several meters of till deposited directly by glaciers. It is composed of a mixture of pebbles, sand, silt and clay2.

Climate and Natural Hazards

Data center facilities located in cool climates may realize significant cost savings in the form of reduced energy demand to operate cooling equipment, and potentially in reduced cooling capacity requirements overall.

The GFW site’s climate has many advantages from this perspective. GFW’s distance from the coast, where ambient air is typically more humid and salty, has high potential to create design opportunities for simpler, lower cost cooling systems than comparison locations. Peak summer dry bulb temperatures are in the 27-29 degrees C (80-85 degrees F) range.

Because of the large financial investment to build a data center, the value of IT and facility equipment, and the significant losses that can be realized in the event of infrastructure disruption and unpredicted down time, data center companies avoid placing data centers in areas with high risks of extreme weather and other natural and manmade hazards.

Aside from a long snow season and occasional severe winter weather, GFW does not have a noted history of natural disasters such as tornados, earthquakes or hurricanes, according to Public Safety Canada’s natural disaster statistics. GFW has a Global Seismic Hazard Assessment Program (GSHAP) Ss value of 0.17 g3. See table below for comparison to other cities.

2 Information on the surficial geology of the area can be found at: http://www.nr.gov.nl.ca/nr/mines/geoscience/publications/currentresearch/1998/batterson.pdf and at http://gis.geosurv.gov.nl.ca/ 3 US Geological Survey. Approximations based on probabilistic 10%-in-50-year peak ground accelerations (PGAs) from GSHAP.



City Approximate Ss Grand Falls Windsor, NL 0.17 g Toronto, Ontario 0.28 g New York 0.31 g New Jersey 0.23 g Virginia 0.21 g Vancouver, BC 0.90 g San Jose, CA 3.03 g

Workforce Availability

While data centers are not major employers, they do require skilled IT staff to maintain the facility.

From local area interviews, it appears that GFW has sufficient educated IT workers to supply needed data center workforce. The area’s largest employer, Central Health, employs approximately 50 IT professionals, with about 20 in GFW.

Local area IT expertise may come from the College of the North Atlantic, a trade college with 17 campuses in Newfoundland and Labrador that runs an IT program; Keyin College, which offers an IT program; and Memorial University in St. John’s, which offers both computer engineering and computer science programs. Customized workforce trainings may be available as part of an incentive package with the government of NL.

Other Factors

Due to the limited exposure of data center projects to the region, GFW may appear remote to potential data center companies; however, transportation from the mainland to the Newfoundland Island is readily available by airplane or ferry. Gander (an hour drive from GFW) is the nearest major airport, and has flights to several major US and European cities, as does the St. John’s airport, approximately four hour drive from GFW. The Deer Lake airport is about two hours from GFW and has regular flights to Halifax and Toronto. Ferries run from Nova Scotia to Port aux Basques, on the SW corner of the island (see map 1).

Delivery of building materials and computer equipment may be slightly slower than to sites on the mainland, but with appropriate planning this should not be a serious impediment to building and operating a data center in GFW.

Long, cool winters make GFW a great location for efficient energy use, but may influence construction schedules more than in locations with more temperate climates. However, construction trades in GFW are accustomed to dealing with normal snow and winter weather conditions.

GFW and NL have targeted the data center industry for development. Through this and other reports, the local government is increasing their familiarity with the operating pace and business needs of the data center industry.



5. Resource Use and Sustainability: Performance Metric Analysis of the Site

The IT industry currently leads the world in both vision and best practices when it comes to sustainability. Eight of the top ten greenest companies are IT related according to Newsweek’s 2012 U.S. Green Rankings. The top enterprise data center companies all now have a corporate mission statement regarding sustainability, and executive level sponsorship to set and meet goals. The family of xUE resource metrics established by the Green Grid is the most widely adopted indicator of overall data center performance for resource use and sustainability. The metrics include Power Usage Effectiveness (PUE), Water Usage Effectiveness (WUE), and Carbon Usage Effectiveness (CUE).

These xUE metrics have been used to show the relative performance of a data center operating in Grand Falls-Windsor, Newfoundland compared to four other example data center locations. The basis of the calculations is a data center with a 10 MW IT load with an 86% IT equipment load factor. For each location in the comparison the facility design concept is tailored to meet the latest ASHRAE TC9.9 data center temperature and humidity conditions given the local climate profile. This results in a chiller based design being used for Ontario, New York, New Jersey and Virginia, and a direct evaporative cooling based design in GFW. Results from this analysis are given below and show Newfoundland to have significantly lower power, water, and carbon footprints.

Water, Wastewater, and Carbon Location Analysis

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40,000,000

80,000,000

120,000,000

160,000,000

Water, Wastewater and Carbonby Location

water (liters)

wastewater (liters)carbon (kg C02)



Power Usage Effectiveness

The PUE is an international metric for understanding and comparing overall data center energy efficiency. PUE is defined as the ratio of the total facility energy (power at the primary building energy meter) to the total energy consumed by the IT equipment (power delivered by the power distribution units (PDUs) to the IT equipment). The typical range of annual PUE is 1.3 to 3.0. The lower the PUE the lower the total cost of ownership (TCO). Calculations show a direct evaporative cooled data center located in GFW has the potential to achieve world class performance with PUE predicted to be as low as 1.18, significantly better than US average benchmarks which are currently around a PUE of 1.8.

PUE = Total Facility Energy (kWh) / IT Energy (kWh)

* The units of PUE are kWh / kWh or unitless

PUE Location Analysis

Water Usage Effectiveness

WUE characterizes water use from both data center site operations and source energy generation. WUE is defined as the ratio of total annual water usage to total IT equipment energy. Total annual water usage is based on both site water usage and the water use associated with source thermoelectric power generation. WUE will vary based the energy water intensity factor (EWIF) associated with the water used to produce energy. For a GFW data center the power source is existing hydroelectric generation. Water is used in the evaporative cooling solution. Calculations show a direct evaporative cooled data center located in GFW has the potential to achieve world class performance with WUE predicted to be as low as 0.03, which is extremely low when compared to other sites.

WUE = [Annual Source Energy Usage + Annual Site Water Usage]/ IT Equipment Energy = [EWIF x PUE] + Annual Site Water Usage/ IT Equipment Energy

* The units of WUE are liters/kilowatt-hour (L/kWh).

WUE Location Analysis

1.181.48 1.48 1.48 1.48

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1.00

1.50

2.00

Newfoundland Ontario New York New Jersey Virginia

PUE

0.030.15

0.41

0.640.70

0.00

0.20

0.40

0.60

0.80


WUE (L/kWh)



Carbon Usage Effectiveness

The CUE metric was developed to help the data center industry understand and reduce emissions associated with data center power consumption. CUE is defined as the ratio of the CO2 emissions caused by total facility energy to total IT equipment energy. CUE will vary based on the carbon emission factor (CEF) associated with the source of energy, which for GFW has been assumed to be 100% hydroelectric with zero associated carbon emissions. Calculations show that any type of data center concept in GFW will have an almost zero CUE and carbon footprint.

CUE Location Analysis

0.05

1.44

2.84 2.85

5.18

0.00

2.00

4.00

6.00


CUE (kgCO2/kWh)



6. Financial Analysis

To assess the cost competitiveness of locating a data center in GFW, CH2M HILL has reviewed the cost and income tax climate of locations that GFW might compete against for a large data center project. Using an assumed data center size, we estimated the expected capital expenditures and annual operating costs for a facility over a ten-year period. This analysis reflects these costs by year and summarizes the total Net Present Value (NPV) of key costs that vary by location (see chart 1).

Assumptions The base case assumptions used for all locations were: 100,000SF building $1,000/SF construction cost for total $100M facility cost, adjusted by building cost index specific to

each location $100M equipment cost, replaced every three years 20 employees, base salary using NAICS code 517 Telecommunications average cost for each location Electricity consumption for each location was adjusted based on location specific local climate and

facility design 10 yr time horizon for NPV calculations The key assumptions used in the cost model for each location: Key Assumptions: Newfoundland Ontario New York New Jersey Virginia

Construction cost index1 96.7 112.3 113.6 109.6 86.9

Labor - average salary $65,900 $55,100 $89,800 $97,300 $85,700

Electricity consumption (annual kwh)

89,201,746

111,912,105

112,052,967

112,060,603

112,069,304

Electricity cost/kwh2 $0.0297 $0.0870 $0.0603 $0.1071 $0.0677

Federal income tax rate 16.5% 16.5% 34.0% 34.0% 34.0%

Provincial/State income tax rate

14.0% 11.0% 7.1% 9.0% 6.0%

Sales tax on equipment3 n/a n/a 0.000% 7.000% 0.000%

HST/VAT tax4 refundable refundable n/a n/a n/a

Property tax rate - Building (per $ value)5

1.875% 1.825% 4.400% 1.700% 1.750%

Property tax rate - Equipment (per $ value)

0.000% 0.000% 0.000% 1.700% 4.500%

1 – RS Means, 2013 2 – US electricity prices from EIA, average industrial rates by state, Dec 2012. Ontario rate from Toronto Hydro, general service, monthly demand of 5000kW and above. Newfoundland rate from personal communication from Nalcor Energy, includes demand charge and per kWh rate. 3 – New York and Virginia offer sales tax exemptions which may require minimum capital investment and employment. For this analysis we have assumed that this project would qualify. 4 - HST/VAT is assumed to be fully recoverable. Special rules apply to financial institutions, however, which could change this assumption if user of data center is a financial institution. 5 – NL offers a rebate on property tax through the EDGE program. Many competing locations offer similar tax incentives.



Project NPV of Key Costs that Vary by Location

Observation and Conclusions Based on this cost model comparison, GFW does offer a significant cost advantage. This advantage is due predominately to the cool climate, low cost of electricity, lower tax burden, and some contribution from lower building costs. The key cost differences are: The cool climate in Newfoundland and the inland location of GFW allow for use of direct evaporative

cooling, resulting in lower electricity and water use. This gives the site the potential to house a data center with world-class PUE and WUE.

Availability of 100% hydroelectric power allows for the potential of a data center with a CUE and carbon footprint close to zero.

The GFW site’s electricity rate, which is over 63% cheaper than the average of the other four locations, combined with the 20% lower electricity usage possible in GFW, would save a data center approximately $6.4 million per year, or a NPV of more than $23 million over the ten-year period. This is a significant cost advantage over the other locations included in this model. Building costs are also estimated to be significantly lower in NL based on construction cost indices for all locations except Virginia. Virginia suggests the lowest building costs of the five locations compared.

$‐

$50.0

$100.0

$150.0

$200.0

$250.0

Labor

Property tax

State franchise or income tax

Electricity

Federal income tax

Building costs, cash basis

NPV of Key Costs that Vary by Location(in CAN $ Millions)



The comparison shows that equipment costs are similar across all locations except New Jersey. However, New York and Virginia offer sales tax exemptions (for qualifying data centers) as part of their incentive packages, mitigating any advantage GFW could claim by not charging sales tax.

Property taxes are much lower in NL compared to the US locations, but again these taxes are very often abated over a five to ten year period as an incentive to new companies.

While the combined federal and provincial/state income tax rates in NL are lower than the US locations, the overall impact of this advantage is not significant.

Labor cost only represent a small share of total data center cost and as a result the cost of labors do not amount to a sizeable difference between locations.

Most locations offer new companies various incentives to locate their business locally. These incentives typically include a combination of sales tax exemptions, property tax abatements, grants, loans, and tax credits. Based on the cost comparison and assumptions used (incentives have been noted, but not included in the financial model), the total value of the incentive packages of these other locations would have to exceed approximately $32 million (NPV) to fully eliminate GFW’s pre incentive cost advantage over Ontario, the closest comparison location. An incentive package of nearly $85 million in project NPV would have to be offered by New Jersey, the highest cost location in the comparison, to be cost competitive with GFW. The amount of these incentive packages would need to be equal to 12-32% of the project investment to make these locations cost competitive. Any incentives from GFW and NL (such as property and federal/provincial tax rebates available through the EDGE Program) would further increase this NPV of cost differential.



6. Area Maps The attached maps illustrate the location of the GFW site with respect to the town of GFW, adjacent businesses, roads, utilities, and other relevant landmarks, etc.

Map 1: Location of Grand Falls-Windsor on the Island of Newfoundland



Map 2: Location of site, nearest substation and water/sewage treatment facility in Grand Falls-Windsor



Map 3: Site, zoning and topography



Map 4: Site, power, water, and neighbors

References


7. References and Supplemental Research

Belady, Christian (ed.), Dan Azevedo, Michael Patterson, Jack Pouchet and Roger Tipley. (2010). Carbon Usage Effectiveness (CUE). Green Grid. Retrieved on 3/27/13 from http://www.thegreengrid.org/ ~/media/WhitePapers/CarbonUsageEffectivenessWhitePaper20101202.ashx

Compass International. (2013). Global Construction Costs Yearbook.

Datacenterpeople. (2013). Data Center Salary Whitepaper. DCD Intelligence.

Marine Atlantic. (2010). Marine Atlantic Commercial Traffic. Retrieved on 3/20/13 from http://www.marine-atlantic.ca/commercial-vehicles.asp

Newfoundland and Labrador, Department of Innovation, Trade and Rural Development. (nd). EDGE Program. Retrieved on 3/20/13 from http://www.intrd.gov.nl.ca/intrd/programs/EDGEProgramInsert.pdf

Newfoundland and Labrador. (2012), Lower Churchill Project. Retrieved on 3/20/13 from http://www.gov.nl.ca/lowerchurchillproject/default.htm

Patterson, Michael (ed.), Dan Azevedo, Christian Belady and Jack Pouchet. (2011). Water Usage Effectiveness (WUETM): A Green Grid Data Center Sustainability Metric. Green Grid. Retrieved on 3/27/13 from http://www.thegreengrid.org/~/media/WhitePapers/WUE

Public Safety Canada. (2010). Natural Hazards of Canada: A historical mapping of significant natural disasters. Retrieved on 3/21/13 from http://www.publicsafety.gc.ca/res/em/nh/hazardsmap.pdf

RS Means. (2013). Labor Rates for the Construction Industry, 37th Annual Edition.

Statistics Canada. (2011). Earnings, average weekly, by province and territory. Retrieved on 3/20/13 from http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/labr79-eng.htm

Statistics Canada. (2011). Average hourly earnings for salaried employees (paid a fixed salary) (SEPH), including overtime, unadjusted for seasonal variation, for selected industries classified using the North American Industry Classification System (NAICS), monthly (current dollars), Jan 1991 to Jun 2011. Retrieved on 3/20/13 from http://www5.statcan.gc.ca/cansim/

Uptime Institute. (2012). Uptime Institute Publications, Tier Standards. Available as of 3/20/13 from http://www.uptimeinstitute.com/publications

US Bureau of Labor Statistics. (2011). Quarterly Census of Employment and Wages, State and County Wages. Retrieved on 3/20/13 from http://www.bls.gov/cew/

US Energy Information Administration. (2012). Electric Power Monthly. Table 5.6.A. Average Retail Price of Electricity to Ultimate Customers by End-Use Sector. Retrieved on 3/19/13 from http://www.eia.gov/electricity/monthly/

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