Data centres are hungry for power, and Alberta is pitching itself as the place to build

Alberta is putting itself in the race for a slice of the soaring growth of data centres in North America. A pair of Alberta cabinet ministers set off for Silicon Valley last week with the sole focus of promoting the province as a "prime location" to build the physical structures that store and process our digital information. Major tech companies are scouring the world for available electricity, and the province isn't alone in trying to lure data centre investment.

Alberta also has some challenges compared to other provinces and U.S. states, including questions about how much pollution its natural gas-dominated electricity grid produces now and into the future. 

The opportunity is immense and the province has a unique offering, but there are also questions about what the overall impact will be of constructing the electricity-hungry centres required for the booming artificial intelligence sector.

And, while some cabinet ministers are enthusiastic about the massive investment opportunity, others are more cautious over what the ultimate impact will be on the province.

"We already have challenges with our electrical system," said Alberta Finance Minister Nate Horner, expressing caution about any unintended consequences that could impact utility bills.

"You really need to get an understanding of what the return on investment would be for the province," he said. "That's why we're digging into it."

Currently, the majority of data centres in Canada are located in Ontario and Quebec because of the large population of the two provinces, experts say. Quebec's low-cost renewable electricity, primarily from hydropower, has also helped attract investment.

There is strong demand in Canada for more data centres driven from two sources: cloud service providers and artificial intelligence companies. Data centres are filled with rows of computers and other machines used to store pretty much anything on your phone or computer such as pictures, music and more.

Alberta has set up a cabinet working group with aspirations to be Canada's top spot to attract the lucrative tech facilities. The province's Technology Minister Nate Glubish was one of the politicians who made the trip to Santa Clara, Calif. It's his second trip to Silicon Valley this summer.

"This is an excellent opportunity to promote Alberta as a prime location for AI data centres," he said, in a statement announcing the trip.

Already, some companies are eyeing up the province.

The number of applications received by the Alberta Electric System Operator (AESO) has increased over the past few months, the agency said, representing about 5,000 MW of data centre projects at the preliminary stages of development. It's uncertain how many projects will ultimately be built, but the province's grid currently has a capacity of about 21,000 MW. 

For Alberta, the financial opportunity is much larger than just the data centre itself, considering the province relies on natural gas power plants for the majority of its power. All those computing machines require a vast amount of electricity, which requires building more power plants and more natural gas production. The spin-offs could include higher employment, tax revenues and royalties collected by the provincial government on all the natural gas pumped out of the ground.

"The electricity demands right now in the world are increasing rapidly as we electrify everything. But at the same time it's been compounded by this evolution of data centres and artificial intelligence," said Michael Belenkie, the CEO of Entropy, a Calgary-based carbon capture company.