Although Alberta proposed a comprehensible strategy to attract new investments in artificial intelligence data centres, there are weighty limitations and consequences to consider, especially concerning the natural resources and the impact on the electricity grid.
Can Alberta handle new data centres?
To regulate and support the growth of the technology sector, the Alberta Electric System Operator (AESO) has implemented a temporary limit on the number of new data centres added to the electrical grid to avoid unprecedented overload. Overall, AESO has been inundated with proposed projects for new data centres, where 29 of them would demand more than 16 gigawatts combined. (For instance, the city of Edmonton has a load of roughly 1.4 gigawatts.) They also state that even the additional 1.2 gigawatts would still create enough opportunities for billions of dollars in investment.
While Alberta’s government aspires to be North America’s top location for AI data centres, the benefits must outweigh concerns about resource consumption. CBC reports that late last year, Alberta Technology Minister Nate Glubish said he hopes to see $100 billion worth of artificial intelligence data centres under construction within the next five years.
The main argument is that although massive data centre growth could bring economic gains and infrastructure investment, these must be weighed against the strain on electricity and water. Achieving a smarter grid and driving decarbonization depends on careful management of these competing factors.
However, considering the current electrical system limitations, several proposed data centers had to be declined or postponed due to the high risk of compromising the grid’s reliability.
Despite Alberta’s appearance of resource abundance, electricity scarcity means that increasing data centre power use raises valid concerns about overall affordability and reliability. This is central to the main argument: can Alberta’s electricity grid sustainably support ambitious data centre growth without hurting consumers?
One of the recent examples of a coming data centre is Wonder Valley. A massive AI data centre park that will be located in the Greenview Industrial Gateway south of Grande Prairie, and is projected to become the world’s largest AI data centre. The project is estimated to exceed $70 billion over its lifetime and leverage Alberta’s access to become a leading spot for technology and innovation. At the same time, this data centre would need more than 8,000 acres of land and an astronomical amount of resources, such as energy and water.
The opposing sides of data centres, AI facilities, and the impact on the grid
Compared to traditional data facilities, AI centres require considerably more electricity. Traditional data centres typically use 5 to 10 megawatts of electricity, while modern AI facilities exceed 100 megawatts, a number which is equivalent to the annual consumption of 350,000 electric vehicles.
Due to current grid constraints, such massive electricity demands might be challenging to integrate. With Canada’s data centre market expanding, the projections are for rapid growth from its current 750 MW capacity to about 1.16 gigawatts by 2029.
In How Much Energy Do Data Centers Use, we mentioned that worldwide, data centers are predicted to make up at least 10% of global energy consumption by 2030. The plan for large-scale businesses and investors is to implement technological innovations and continue attracting connection providers. Alberta is not an exception.
In March 2025, Alberta had over 10 gigawatts of proposed AI facilities projects in pending interconnection requests.
At the same time, many people are concerned with the possibly rising cost of electricity.
The outcome depends on whether the grid can handle consistent power demands, as seen in places where renewable energy is expanding, and utilities’ infrastructure undergoes necessary upgrades. In those cases, data centres are seen as a favourable team player that helps to keep costs per unit of electricity down or offset bigger increases. That happens because the grid’s fixed expenses are spreading high costs over a larger total usage.
On the other hand, in places that rely on electricity supply from traditional hydro power systems, data centres could push prices up (British Columbia and Quebec, for example). While lingering at a comparatively low cost at the moment, the prices could quietly increase due to rising electricity demand, accelerating energy transition, and decreasing excess supply. In those cases, building more facilities, such as AI data centres, would mean new capital costs that would be expected to be paid over time. That would require distributing that cost among the energy bills of existing customers.
What about Alberta? If proposed and approved data centres will operate by using gas power, the emission is predicted to double, causing a loss of emission savings from the transition off coal-fired power.
Alberta would need to develop and propose energy plans that would not only include an irresistible desire for technological progress but also consider and evaluate economic growth opportunities. The residents are looking for plans that would assure them electricity affordability, emission reductions, and overall grid reliability without any unwanted surprises, such as power outages.
A Restructured Electricity Market (REM) project overview
However, we also see significant changes in Alberta’s electricity market when it comes to enhancing reliability and maintaining affordability amidst changing technology. The Restructured Energy Market (REM) developed by the AESO is the major program dedicated to modernizing and strengthening system performance. With increasing electricity demand, REM also helps to improve cost outcomes and support investments.
For example, AESO states that it will enable up to 1.2 gigawatts for the new large-load data centres in Alberta, which will continue until 2028. (The cap applies to large-load facilities that equal or exceed 75 megawatts.)
The REM project also focuses on updating Alberta’s electricity market with a new pricing system and reliability service. This develops a competitive market system alongside improving the performance of the grid and the affordability of energy costs.
In What the Restructured Energy Market Looks Like in Alberta, we discussed the project in depth, including a new pricing framework and major modifications.
Looking at REM market reforms, Albertans are hopeful for lower and steadier utility costs. A perfect example of one of those reforms is switching from using power generators a couple of hours beforehand to using their power 24 hours in advance, “which will help with any unforeseen circumstances where the grid may need more power.” Such a change provides system operators with precise information about available power, allowing it to respond to any fluctuations and reducing the risk of any grid alerts.
That will also help prevent price spikes, promising a more stable pricing market.
Data centres globally
According to IEA, excluding cryptocurrency mining, the estimated global data centre electricity consumption in 2022 was around 1-1.3% of global final electricity demand.
Considering this load, data centres’ energy use has grown somewhat moderately and with caution, requiring efficiency improvements in IT hardware and the establishment of more efficient cloud and hyperscale facilities. The undeniable progress and strong gains in efficiency (comparing the early 2000s to 2022), also increased energy use, over the past few years, growing steadily by 20-40% annually. Electricity demands by data centres of Microsoft, Google, Amazon, and Meta more than doubled between 2017 and 2021 (rising to 72 TWh), and it is highly likely to continue growing over the next years.
At the same time, even if data center electricity consumption on a global scale has increased only slightly, separate countries are seeing rapid growth of data center markets. This is particularly true in places like Canada, Ireland, and emerging markets such as India and Brazil. In Canada, the market is expected to grow by around 14-15% in investment over the next few years. Meanwhile, Ireland has become a major established EU spot for data centre growth, projected to make a significant percentage of the country’s total power use in the coming years.
In How Much Energy Do Data Centers Use, we noted that Europe “has quite a few data centers, but their largest is in Portugal, which is just shy of 75,000 square meters in size.” The Altice Portugal data centre is both the largest and one of the most sustainable facilities that produces solar energy on-site and has a rainwater collection system and a garden with over 600 trees.
India is another place that is driven by a huge population and increasing digitalization, which requires international companies to build data centres and host data domestically.
At the same time, just like in Alberta, the rest of the world that sees a rapid growth of AI data centres feels the immense strain on electric power grids.
Hyperscale facilities are clashing with traditional utility planning, and because of a massive load increase, in places like the United States, for example, data center demand is projected to require at least half of the total electricity growth by 2030.
In AI Energy Use: Why Does Artificial Intelligence Use So Much Electricity, we mentioned that “our current global use of electricity is only going to go up”. The environmental concern still stands: relying heavily on generative AI and other programs uses more electricity than a typical Google search. With the rising consumption of programs like ChatGPT, environmental problems are also rising exponentially.
Considering that AI workloads require higher power density (up to 100+ kW per rack), if not handled with a long-term plan, the growth of data centers can affect the grid due to disconnection risks. Additionally, to meet the rising power demand, those utilities often have no other choice but to take actions and run the facility on clean energy resources, which can lead to reliance on water and fossil fuels and higher consumer costs, by requiring the development of new infrastructures and managing grid strain.
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