Alberta's Data Centre Advantage: A Growing Hotspot for Critical Digital Infrastructure

Written By David Macaulay, Sean Assie, Jessica Kennedy, Stephen Burns and Geoff Stenger

The rapid advancement of artificial intelligence (AI) and machine learning is reshaping industries worldwide, with Alberta is emerging as a key destination for AI investments. As nations compete to lead in this transformative field, Canada—and Alberta specifically—offers significant strengths.

Federal support is clear, with the Liberal government's Canadian Sovereign AI Compute Strategy and recent statements by Conservative leader Pierre Poilievre emphasizing bipartisan commitment to AI infrastructure. This ensures that, regardless of the outcome of the next federal election, Canada will prioritize the development of this critical sector.

At the provincial level, Alberta is leveraging its strong and growing technology sector to position itself as a leader. In 2024, the Alberta Government identified the data centre industry as central to its economic diversification strategy. This commitment was reinforced with the release of Alberta's AI Data Centre Strategy, which highlights the province's unique advantages and plans for supporting this vital industry.

Alberta's C$100-Billion Opportunity

The surge in cloud computing, AI and machine learning is driving unprecedented demand for data centres, which require vast amounts of computing power. With national security concerns tied to data storage, the United States and Canada must reduce reliance on foreign-located facilities. 

According to Alberta's strategy document, global demand for data centre capacity is expected to more than triple by 2030. Data centre development represents a potential C$75-billion to C$100-billion economic opportunity for Alberta, according to Invest Alberta CEO Rick Christiaanse. The province already hosts over 20 data centres near Calgary and Edmonton, with six additional projects in early stages. These include a C$750-million facility near Calgary and a C$70-billion project in Grande Prairie. 

This growth comes with immense energy requirements. Global projections estimate data centres could consume 1,400 TWh annually by 2030, highlighting the importance of aligning development with energy solutions. International developers and local power producers are taking notice, working to address the complexities of scaling these massive projects. Alberta's government remains committed to supporting developers as they navigate these challenges, cementing the province's role as a leader in the industry.

The Alberta Advantage 

The Alberta's AI Data Centre Strategy is an important element in the province's messaging to industry that not only is Alberta open for data centre and related digital infrastructure development, Alberta has substantial advantages over other jurisdictions which make this province ideally positioned for large data centre development. The strategy emphasizes the following key pillars:

• Scalable Power Generation Capability: Alberta is well-positioned to be able to develop the necessary generation to meet the 24/7 power availability requirements for data centre developers. Many other jurisdictions lack the capacity to provide the reliable power necessary to host large data centres. While the province is currently engaged in a review of certain aspects of the energy market, Alberta's energy-only market has, since inception, been reasonably effective in facilitating private sector investment in power generation. Alberta has a skilled and effective workforce with the capabilities to support new power development for this industry. As Canada's largest natural gas producer, Alberta has an abundant, reliable and affordable energy supply for power generation and has the geologic characteristics to enable carbon capture, utilization and storage, as needed. Alberta has tremendous solar and wind resources and is a hub for renewable energy development. Access to both reliable natural gas and low-carbon solutions can meet a variety of needs for data centre developers.
• Climate and Water Advantages: Data centres produce significant amounts of heat. The necessary cooling systems are critical to enhancing their performance and efficiency. The energy and water requirements for these cooling systems can be very high. Alberta's colder climate provides ideal natural cooling capability, lowering operating costs for data centres and reducing the environmental footprint. In respect of water access, Alberta has a well-established regulatory framework to allow developers to access the necessary water supply.
• Affordability and Taxation: Alberta is a comparatively affordable jurisdiction for data centre development. Natural gas and land costs are relatively low compared to other jurisdictions, which are material considerations given the large power requirements and land needs of data centres.  Development of data centres in Alberta offers a favourable Canadian to US dollar foreign exchange rate, which may enhance project economics for international investors. Further, Alberta's corporate income tax rate is competitive on a global scale and relatively low compared to other jurisdictions in Canada and many international peers.

Next Steps for Alberta in Attracting Data Centre Investment

Alberta's AI Data Centre Strategy outlines several proactive steps the province will take to position Alberta as a global leader in AI-driven data centre operations. The initiatives include:

• Regulatory Modernization: Alberta will conduct a review of regulatory timelines for data centre development, with a view to reduce red tape, increase certainty and shorten timelines. Recognizing the interplay between data centre and power generation development, the strategy commits Alberta to continuing to evaluate both off-grid and grid-connected power solutions for data centre developers to avoid compromising affordability and reliability of electricity for Albertans and industry.
• AI Data Centre Concierge Program: Alberta will establish a program for new entrants, streamlining pathways to partnerships and leveraging existing infrastructure and expertise.
• Economic Reconciliation and Indigenous Partnerships: Alberta will promote opportunities with Indigenous communities, through programs like the Alberta Indigenous Opportunities Program.
• Municipal Collaboration: Alberta will assist local governments in identifying opportunities and aligning resources to attract investment.
• Expanding AI Capacity: Alberta will make investments in new compute capabilities to support key industries and post-secondary institutions.
• Programming and Funding Innovation: Programs and funding opportunities to support AI-driven economy will be developed.
• Cooling Technologies: Alberta is committed to working with local companies developing new cooling technologies to integrate these technologies into data centres.

Legal Complexities and Our Expertise

We have a market leading energy and infrastructure practice and regularly advise on large, complex infrastructure and energy projects. Data centre projects will involve multidisciplinary legal skills including in respect of corporate and joint venture structuring, indigenous participation and financing arrangements, critical permitting and regulatory issues, complex commercial agreements including power purchase arrangements, fuel supply contracts, land lease or purchase arrangements (including potential foreign ownership of land issues), procurement, construction and long term service agreements, intellectual property issues, financing arrangements including complex security structures necessary to support the unique issues in data centre developments, and tax and cross border tax matters.

Regarding regulatory issues, data centre developers can expect substantial involvement with the provincial government and its agencies. While Alberta boasts the only deregulated electricity generation market in Canada, the regulatory regime applicable to power generators is in a transition phase. For instance, recent legislative amendments (addressed in our blog, Alberta’s Long-Awaited Electricity Statutes (Modernizing Alberta's Electricity Grid) Amendment Act is Proclaimed) allow industrial users such as data centres to supply their own power and export excess power to the grid; however, the applicable transmission tariff regime for such arrangements has not yet been determined. Moreover, issues related to the development of transmission and distribution infrastructure for the purposes of supplying power to behind-the-fence load continue to be raised in front of the Alberta Utilities Commission. Separately, the Alberta Electric System Operator—responsible for transmission planning and grid interconnections—also recently implemented a new interconnection process that will have implications for parties seeking to supply power to or obtain power from the grid. Notwithstanding self-supply configurations, data centres' high reliability needs mean the availability of and access to demand transmission service (i.e., power from the provincial grid) will likely be an important consideration. 

In respect of key commercial matters, data centre projects will involve complex long term power purchase agreement(s). These agreements will involve careful structuring of the credit and related security issues including an analysis of risks at various project levels (data center provider, hyperscaler and potentially end-use customer levels). The commercial structure will need to mitigate credit and interrelated technology risks associated with the projects, recognizing the unique elements of the data centre business and the speed at which technology changes.

Bennett Jones provides comprehensive legal solutions tailored to the specific needs of data centre project development. We have a deep team with the multidisciplinary areas of expertise necessary to support these projects. Explore our Energy, Infrastructure, Construction, Commercial Real Estate, Energy Regulatory, Tax and Intellectual Property practices for more information on the qualifications and experience of our various teams. 

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