As the increasingly broad application of artificial intelligence (“AI”) transforms business and society, Alberta is in a unique position to take the lead on developing and hosting the required infrastructure – generally referred to as “data centres” – to lead this transformation. In an important recent development, the Canada-Alberta Memorandum of Understanding (“MOU”), signed on November 27, 2025, includes provisions intended to reduce regulatory impediments to data centre development in the province. In addition, two recently introduced Alberta bills are also targeted at promoting data centre development. See the conclusion of this post for details and links.
This post updates our previous post of January 15, 2025. Some of the post is written from the perspective of that time, with the MOU and other late 2025 developments being summarized in the final section. For information on other aspects of the MOU, see our separate post on that subject.
What Are Data Centres?
A data centre is a facility that houses information technology (“IT”) infrastructure for the purposes of storing and processing data, generally taking the form of large warehouses. It is however the electricity supply and systems – including power subsystems, ventilation, cooling systems, fire suppression, and backup generators – that are key to both the economic viability and overall reliability of any data centre.
Data centres are critical to many businesses in Canada across various industries. For example, financial institutions, healthcare providers and cloud service providers such as Google Cloud and Amazon Web Services all use data centres for their day-to-day business activities. These activities may include email and file sharing, productivity applications, customer relationship management, databases, AI, and virtual desktops.
The development and construction of data centres is capital-intensive and often requires large tracts of land. The structuring and financing of these projects also often raises commercial and regulatory issues, including in relation to investments by non-Canadian entities.
How Are Data Centres Regulated?
Data centres use large amounts of electricity for computing and cooling systems, so a critical component of data centres is connection to an economical and reliable source of electricity. Electricity can generally be obtained in two ways: through connection to the power grid or through self-generation. Relative to other jurisdictions in Canada, and indeed in North America, Alberta is unique in having a deregulated electricity market, allowing data centres to negotiate power purchase agreements directly with power generators.
In Alberta, the power grid is planned and managed by the Alberta Electric System Operator (“AESO”). If a data centre proponent wishes to use electricity from the Alberta grid, it can apply to the AESO to connect. If a data centre proponent wishes to generate its own electricity, it must proceed through the Behind The Fence Process with the AESO. The latter will potentially involve applying for and obtaining certain designations that allow for self-supply of electricity.[1] Self-supply also assists data centres in targeting certain energy sources, such as renewable electricity, depending on customer preferences.
The Alberta government has recognized concerns with balancing the electricity needs of data centres with overall load in the province. In doing so, it has acknowledged the desire to ensure that the grid remains affordable and reliable, while encouraging data centres to “bring your own electricity” or partner directly with generators.[2] In this regard, the Alberta Minister of Technology and Innovation has stated, “What we have been telling people is, if you want the fastest approval times and the most certainty and control over your project, go off-grid, go behind the fence and bring your own power.”[3]
What Interest Is There in Data Centres?
There is a high demand for data centres in Canada due to cloud service providers and AI companies.[4] There are currently 239 data centres in Canada, 22 of which are in Alberta.[5] It is projected that global data centre electricity consumption will double by the end of 2026.[6]
Alberta is presently home to data centre giants such as Amazon Web Services and eStruxture Data Centres, with many new centres in various stages of development. The AESO has reported that there are at least six outstanding applications to connect data centres to the Alberta grid.[7]
In 2023, Amazon Web Services opened its Canada West computing hub in Calgary. This facility is estimated to support 1,300 jobs annually and Amazon Web Services plans to invest over $4 billion in Alberta through 2037.[8]
In October 2024, eStruxture Data Centers, a Montreal-based company that is the largest data centre provider in Canada, announced a new $750 million, 90-megawatt facility five kilometres north of Calgary, named CAL-3, to be developed close to another of its two existing Calgary-area data centres.[9] To date, CAL-3 will be the largest data centre in Alberta and is expected to be operational by the end of 2026.[10]
More recently, plans were announced to develop a hyperscale data centre[11] in the Municipal District of Greenview near Grande Prairie, Alberta. If developed, it would be the largest AI data centre in the world, worth more than $70 billion and expected to provide up to 7.5-gigawatts of capacity.[12]
In addition to those mentioned above, other projects of varying size and significance are regularly being proposed in Alberta.
What Operational Challenges Do Data Centres Face?
Data centres are not without operational challenges. They require access to significant land, skilled labour, and reliable electricity. Cybersecurity is a major consideration, as data centres constantly face cyber threats and the potential for data breaches. As data centres require constant cooling, a cooler climate can lessen the strain on cooling infrastructure. Alberta is uniquely positioned to address many of these operational challenges, with a cool climate and an availability of large amounts of reliable electricity, land, fibre-optic links, and a skilled labour force.
Government Incentives
Federal
On December 5, 2024, the Government of Canada announced its 2024 Fall Economic Statement which included a three-pronged “Canadian Sovereign AI Compute Strategy”. The strategy is intended to “increase domestic compute capacity, support the Canadian AI ecosystem and drive economic growth.”[14]
The first prong involves mobilizing private sector investment by launching an “AI Compute Challenge”, backed by a government investment of up to $700 million, which invites project proposals from companies and academia that:
- Build out or expand the capacity of commercial AI-specific data centres in Canada;
- Provide flexible and affordable compute offerings;
- Contribute to anchoring or growing Canadian AI champions; and/or
- Advance innovative and sustainable compute solutions.[15]
Applications are currently being accepted[16] with funds available over the next five years.[17]
The second prong of the Canadian Sovereign AI Compute Strategy involves an “investment of up to $1 billion to build public supercomputing infrastructure that will meet the needs of researchers, government and industry.”[18] Within that, the government is launching a call for proposals in the spring of 2025 to build, manage, and operate a “large sovereign supercomputing facility”. A smaller government-led secure computing facility is set to be established for research and development purposes, including national security. Additionally, up to $200 million will be allocated to expand existing public compute infrastructure to address immediate needs[19] over two years starting in 2025-26, including the following targeted investments:
- $85 million for the Digital Research Alliance of Canada to add additional compute capacity to its national network;
- $60 million for the AI institutes — Mila, Vector, Alberta Machine Intelligence Institute (“Amii”) — to provide compute capacity to their researchers and clients; and
- $30 million for the Vital real-time health computing infrastructure for Trials, Artificial Intelligence, and a Learning Health System (VITAL) to pilot a secure digital AI infrastructure to leverage Canadian health data.[20]
The third prong of the Canadian Sovereign AI Compute Strategy is the establishment of an AI Compute Access Fund of up to $300 million to support the purchase of AI compute resources by Canadian innovators and businesses, aimed at certain sectors including life sciences, energy, and advanced manufacturing. The AI Compute Access Fund is set to formally launch in the spring of 2025[21] and be available over three years.[22]
In addition to the Canadian Sovereign AI Compute Strategy, the Government of Canada Fall Economic Statement also announced that the government would be detailing a new program in Budget 2025 that would provide up to $15 billion in aggregate loan and equity investments for AI data centre projects that receive investment from one or more Canadian pension funds. To qualify, the Canadian pension fund must invest at a ratio of 2:1 of their own capital and become significant shareholders in an AI data centre project.[23]
Provincial – Alberta
Alberta’s AI data centre strategy, Powering the Future of Artificial Intelligence, released in December 2024, outlines the Province’s plan to attract AI data centres. The three pillars of Alberta’s AI data centre strategy are power capacity, sustainable cooling, and economic growth.[24]
In early 2025, the Province is set to implement the following initiatives to support the strategy:
- Regulatory modernization: Alberta will introduce policy and regulatory changes aimed at reducing red tape, increasing certainty, and shortening timelines for investment decisions and construction readiness for AI data centre development.
- AI data centre concierge program: Alberta will establish a concierge program to provide a direct gateway for investors and operators entering Alberta’s market.
- Economic reconciliation and Indigenous partnerships: Alberta will promote economic development and partnerships with Indigenous communities through programs like the Alberta Indigenous Opportunities Corporation.
- Municipal collaboration: Alberta will work closely with local governments to identify opportunities, offer support, and align local resources to attract investment and accelerate project implementation.
- Expanding AI and machine intelligence capacity: Alberta will invest in new compute capacities in key industries and post-secondary institutions to drive research, innovation, and economic growth while solidifying Alberta’s status as a hub for AI technology.
- Programming and funding innovation: Alberta will launch robust programs and funding opportunities to foster the development of new technologies, encourage entrepreneurship, and create a thriving ecosystem for the AI data centre industry.[25]
Looking to the Future: The November 25, 2025 Canada-Alberta MOU
On November 25, 2025, Alberta tabled two amendments to legislation that are targeted at promoting data centre development in Alberta (Bill 8 and Bill 12). Specifically, those amendments are targeted at “bring your own generation” data centres. On the heels of those proposed legislative amendments, Alberta’s vision of data centre development subsequently received a significant boost in the Canada-Alberta Memorandum of Understanding (“MOU”) announced on November 27, 2025. One of the major commitments from Ottawa in the MOU is the immediate suspension, in Alberta only, of the federal Clean Electricity Regulations (“CER”) pending the negotiation of a new carbon pricing agreement administered through Alberta’s TIER program, which agreement is to be finalized by April 1, 2026. It is anticipated that the replacement of the CER with a new agreement will make it substantially easier for proponents to pursue data centre opportunities in Alberta.
[1] These would be obtained from the Alberta Utilities Commission.
[2] Varcoe: TransAlta eyes data centre potential at Alberta sites | Calgary Herald.
[3] Varcoe: TransAlta eyes data centre potential at Alberta sites | Calgary Herald.
[4] Data centres are hungry for power, and Alberta is pitching itself as the place to build | CBC News.
[5] Market Snapshot: Energy demand from data centres is steadily increasing, and AI development is a significant factor, CER – Market Snapshot: Energy demand from data centres is steadily increasing, and AI development is a significant factor.
[6] Market Snapshot: Energy demand from data centres is steadily increasing, and AI development is a significant factor, CER – Market Snapshot: Energy demand from data centres is steadily increasing, and AI development is a significant factor.
[7] Varcoe: Huge data centre projects join Alberta's power lineup | Calgary Herald.
[8] AWS-Launches-Second-Infrastructure-Region-in-Canada - US Press Centre.
[9] New data centre will be one of Canada’s most powerful - The Globe and Mail.
[10] New $750M data centre to be built in Calgary area, largest in Alberta | Calgary Herald.
[11] Data centres typically fall within two categories: enterprise and hyperscale. The difference between the two categories includes, amongst other things, physical size, processing speed and capability and energy efficiency (power usage effectiveness).
[12] New data centre will be one of Canada’s most powerful - The Globe and Mail.
[13] Gryphon Digital Mining Signs Definitive Agreement for HPC/AI Asset Scalable to 4GW of Green Energy Through Natural Gas and Carbon Sequestration :: Gryphon Digital Mining, Inc. (GRYP).
[14] Canadian Sovereign AI Compute Strategy.
[15] Canadian Sovereign AI Compute Strategy.
[16] AI Compute Challenge.
[17] 2024 Fall Economic Statement, page 103.
[18] Canadian Sovereign AI Compute Strategy.
[19] Canadian Sovereign AI Compute Strategy.
[20] 2024 Fall Economic Statement, page 104.
[21] Canadian Sovereign AI Compute Strategy.
[22] 2024 Fall Economic Statement, page 103.
[23] 2024 Fall Economic Statement, page 122.
[24] Alberta's AI Data Centre Strategy - Powering the future of artificial intelligence, page 8.
[25] Alberta's AI Data Centre Strategy - Powering the future of artificial intelligence, page 11.
