Caisse de dépôt et placement du Québec (CDPQ) will contribute $103 million into the expansion of Vantage Data Centers’ Quebec City campus as part of a $179-million credit facility for the project.

The investment will be used to develop the third facility on the four-building campus, which is named QC2, to boost the computing capacity by 16 megawatts. It is expected to be complete by the spring of 2025.

QC2 will serve increasing demand for cloud services and computing power in Quebec and Eastern Canada from Vantage’s clients, a CDPQ release says.

The data centre is under construction by Quebec firm Pomerleau Inc. Designed as a 925,000-square-foot facility when fully built out, the campus is to offer an IT capacity of 86 megawatts.

"CDPQ's investment will play a crucial role in our expansion in Québec City and in fuelling our capacity to deliver high-quality digital infrastructure in the region," Maxime Guévin, Vantage Data Centers’ senior vice-president and general manager of Canada, said in the release.

The credit facility was structured and underwritten by Société Générale, a French investment bank and financial services group.

Vantage’s investments in Quebec

Headquartered in Denver, Colo., Vantage is a data centre developer with three campuses in Montreal: the 60,000-square-foot QC1 with 11 megawatts of IT capacity; QC4, a 320,000-square-foot location with 48 megawatts of IT capacity; and QC6, expected to offer 89 megawatts of computing power.

In 2022, Vantage announced it would invest $900 million into its Canadian operations to expand QC4 and start development on QC6.

Vantage says it has invested $1.7 billion into Canada.

"The surge in data-intensive technologies and cloud service adoption is reshaping the North American digital infrastructure market," Marc Cormier, executive vice-president and head of fixed income at CDPQ, said in the announcement. “This new investment in Vantage leverages CDPQ's global experience in financing critical digital infrastructure to support the delivery of this important local project."

This is the second investment the Quebec City-based institutional investor has made into Vantage this year. In May, CDPQ participated in a $1.1-billion financing to support Vantage’s expansion into Europe and the Middle East.

CDPQ had also participated in a $600-million incremental equity financing into eStruxture in 2021. That firm is a Montreal-headquartered cloud computing and data centre provider.

Quebec sees surge in data centre activity

Quebec has attracted interest from data centre operators for its plentiful and clean energy to power the electricity-hungry facilities. Datacenters.com says the province has 40 data centres, compared to 52 in neighbouring Ontario.

Datacenters.com cites tax benefits, affordable energy, a “robust telecommunications infrastructure” and close proximity to Canadian and U.S. businesses as major advantages. On the energy side, Quebec generates over 90 per cent of its power from hydroelectricity, conferring environmental advantages.

Vantage, for example, has committed to reducing its operational greenhouse gas emissions to net-zero by 2030, and had previously funded QC2 with a sustainability-linked offering by Société Générale as its first green loan.

Guévin specifically noted Quebec’s “green and affordable power options, rich connectivity, cool climate and business-friendly culture” as pros in 2022.

However, the province's power supply is not endless - and in fact has nearly reached capacity, attendees at the recent Montreal Real Estate Forum heard. Dave Rhéaume, executive vice-president – energy planning and customer experience at Hydro-Québec, said the days of surplus energy capacity are gone. Quebec has experienced major demand increases since 2020 due to decarbonization, the electrification of transportation and climate change.

“We had major surpluses in those (previous) years. Fifteen, 20 per cent of the energy produced in Quebec was exported because we didn’t have demand in Quebec,” Rhéaume said. But since then, “we’ve left this world” as electricity demands have increased.

“There’s really an explosion in demand in every market." 

At the same forum, Broccolini vice-president of real estate development James Beach noted: “The challenge is there’s only so much supply of clean hydro-electric power and right now there seems to be a propensity to associate job creation to megawatts of power.”

But such a policy has not applied to large energy consumers such as data centres that do not employ many people, he continued.

With ongoing increases in the use of complex computing for artificial intelligence that will boost demand for data centres, there is no immediate solution to balance the dilemma.