Over the last few years, Alberta’s AESO has received proposals for fifty projects with a combined capacity of 20 GW. The development of those data centres, if approved, would result in $100 billion in capital expenditures related to building and accompanying IT infrastructure and construction.
It comes as no surprise that hyperscale developers prioritize Alberta. The province offers superior environmental and economic operating conditions, which is why long-term costs are lower compared to other provinces. The deregulated energy market is another primary reason why Alberta receives proposals for hyperscale data centres: the highly competitive, long-term power purchase agreements (PPAs) ensure access to high-capacity wind and solar resources, and low operational expenses.
A cold and dry climate contributes to energy affordability in Alberta, where extensive use of “free air cooling” allows for a significant reduction in mechanical cooling costs. Affordable land and a low-risk geographical location also make Alberta a strategic hub for global hyperscale data centres that plan to seize those opportunities.
Bill 8: Utilities Statutes Amendment Act (November 2025)
Consequently, the Alberta government endorses data centres to operate off-grid, minimizing the strain on the public grid. By employing the Bring Your Own Power (BYOP) model, data centres can mitigate reliance on existing grid capacity, which would accelerate their project timelines and provide a way for large-scale, self-sufficient energy solutions.
To ensure a reliable source of power is available for all consumers in the province, the Alberta government has introduced Bill 8 (Utilities Statutes Amendment) in November 2025.
Affordability and Utilities Minister Nathan Neudorf, who introduced the bill, stated that AESO will elevate applications from data centres that bring their own power sources. He added that new technologies like AI “will bring new industry, jobs and economic growth to the province,” while it is crucial for a utility system to keep adapting to changes.
The energy and water challenge
However, such energy-demanding infrastructures raise valid concerns about grid reliability and available power. Referring to “AI Energy Use: Why Does Artificial Intelligence Use so Much Electricity?”, generative AI uses much more energy than most people realize: for example, training a large language model like OpenAI GPT-3 requires nearly 1,300 megawatt-hours (MWh) of electricity, which equals the annual consumption of about 130 homes. Compared to a standard Google search, a single ChatGPT query consumes ten times more energy, exponentially spiking power consumption. Taking this into consideration, if all the data centre projects currently being reviewed by provincial regulators proceed, they would account for nearly double (or approximately 160%) of Alberta’s current total peak demand, which is typically around 12,000 MW.
The substantial amount of water required for cooling has become a significant public concern, as large-scale AI data centers can consume volumes of water comparable to a mid-sized Alberta municipality.
What Bill 8 is and why they are addressing this issue
Bill 8, the Utilities Statutes Amendment Act, would encourage and allow data centres to generate their own power. The newly proposed legislation would also mandate the builders to fund necessary transmission infrastructure upgrades. The reason is to support substantial electricity consumption by the data centres. Although still under consideration, Bill 8, the Utilities Statutes Amendment Act, will establish a new structure where data centres can meet their power needs without jeopardizing access to affordable electricity for Albertans.
To support the enactment of the Restructured Energy Market, Bill 8 would also update the electricity transmission policy and regulate the parameters of current hydrogen blending pilots.
Additionally, changes in Bill 8 would provide updates to the regulatory framework and transmission policies to encourage further investments in new developments in Alberta. The Utilities Statutes Amendment Act also provides further regulations and necessary adjustments which would allow for hydrogen-blending in Alberta’s natural gas system.
Overall, the new bill focuses on promoting and expanding the data centre industry in the province and is based on the Energy and Utilities Statutes Amendment Act tabled in April 2025, with an additional strategy that would optimize Alberta’s electricity grid.
The key changes expected from this Bill
Although still in progress, Bill 8, the Utilities Statutes Amendment Act, 2025 the changes that it would centers around expanding regulations and overall modernizing the province’s utilities systems, including the following:
- Integrating with Alberta’s plans to reform transmission cost assignment means that data centres will pay for any necessary upgrades instead of Alberta ratepayers.
- Supporting Alberta’s electricity grid, Bill 8 will encourage data centres to bring their own generation.
- Increase the authority of regulators to implement decisions on already existing data centres.
- Establish clear regulations for existing Alberta hydrogen-blending projects.
- Enhance utility infrastructure to ensure affordable and reliable services for all Albertans.
Bill 12: Financial Statutes Amendment Act (Data centre levy)
In addition to Bill 8, Finance Minister Nater Horner also presented the Bill 12 Financial Statutes Amendment Act, 2025, which would create a new levy on data centres. The levy is systematized to offer benefits to companies that contribute the most corporate tax revenue to the province. (When the bill was first introduced in August, the government stated that a new levy would be relevant to data centres which consume at least 75 megawatts of power.)
Considering that several international corporations applying to build data centers in Alberta employ strategies to move profits to other jurisdictions, thereby reducing their provincial tax costs. Nate Glubish, the Minister of Technology and Innovation, made it clear that the government views this practice as unacceptable.
As Bill 12 proposes, those levies will be deducted from corporate income taxes paid in Alberta. Computer equipment in hyperscale data centres would receive a two per cent levy (starting December 31, 2026). This levy applies specifically to tangible personal property such as racks, cabinets, trays, and other ancillary hardware used to house functional computer equipment.
Currently, there are no off-grid data centres expected to start building in Alberta. Bill 12 incorporates a clause where data centres will pay a one per cent levy on data centres if they generate their own power but are not connected to the electrical grid. Meanwhile, off-grid operations are not required to pay a levy. While the legislation aims to encourage self-supply, some industry groups have voiced concerns that the levy’s complexity and its timing could still negatively affect early-stage project economics.
AESO’s strategy for grid resilience
Taking into account that over the last year, AESO received over 19,000 MW of data centre connection requests (which is more than double Alberta’s current electricity supply), the organization has been developing a new long-term framework. Such a strain on the power grid is a pressing concern directly affecting Albertans. Hence, to meet the needs of Albertans without compromising system reliability, AESO has implemented a two-step strategy to connect large loads.
In What is Power Grid Reliability, and How Does it Impact Canadians? we noted that “operators work quickly to manage the transition without impacting current grid reliability, while it stays safe and affordable.” In Alberta, the system must react and change efficiently, especially with coal plants being consistently shut down.
To balance opportunities for industry investments and growth with grid safety and liability, Alberta Electric System Operator (AESO) has announced two phases of connecting loads and power capacity.
Phase 1: Interim measures (Starting July 1, 2024)
The phase would prioritize connecting hyperscale data centres and their large loads while using the current framework and available grid capacity. In this phase, the AESO establishes a one-time, temporary limit of 1,200 megawatts (MW), which is the maximum additional capacity without negatively impacting grid reliability. Importantly, all 1,200 MW of this interim connection limit has been successfully allocated. This temporary limit applies to projects that do not require system reinforcements or upgrades with a load project equal to or greater than 75 MW.
Phase 2: Long-term sustainable framework
This phase will connect future major users, such as hyperscale data centres, based on a newly developed framework. The AESO stated that in the second half of 2025, Phase 2 will establish the development of a scalable framework that the province needs to support continuing data centre growth.
Phase 2 will also present new reliability standards, ISO tariff redesign (including terms and conditions for service disconnection, backup generation and demand response), cost allocation reviews, and improved forecasting and planning.
The Restructured Energy Market (REM)
Shortly before the announcement of Bill 8, on August 27, 2025, the AESO released the final technical layout for the Restructured Energy Market (REM). In What the Restructured Energy Market (REM) Looks Like in Alberta we noted that “The ultimate purpose of REM is to ensure a robust and flexible energy supply that can adjust to the interconnected electric grid’s changing requirements while advancing clean energy/decarbonizing initiatives.”
The released document outlines the key features of the REM design, including New Pricing for the energy market to offer a price cap, Enhanced Day-Ahead Market for Operating Reserves and Locational Marginal Pricing. The adoption of Locational Marginal Pricing (LMP) is a critical component of REM, designed to send efficient price signals to developers and consumers based on grid congestion, further encouraging distributed generation.
The REM will also help control market power and create stable conditions for investment that improve reliability throughout Alberta. Through the REM system, AESO will implement effective and critical measures such as enhanced reliability (through new services and standards), short-term price protection, medium term investment incentives and a long-term power supply to ensure reliability.
Conclusion
Alberta is at a critical point of navigating the transformative economic potential of the hyperscale AI data centre against concerning pressure on its utility systems.
However, the systematization of the Utilities Statutes Amendment Act (Bill 8), the Financial Statutes Amendment Act (Bill 12), and the rollout of the Restructured Energy Market (REM) represent a fundamental shift in how the province manages large industrial loads. By incorporating the “Bring Your Own Power” (BYOP) model and implementing cost-causation for grid upgrades, the government aims to reduce risks of the massive capital expenses for Alberta ratepayers while maintaining grid integrity.
