The Energy Disruptors: UNITE 2024 conference, held this week in Calgary, has shone a spotlight on the growing role of data centres in Alberta, bringing both opportunities and challenges for the province’s energy landscape.
A key theme emerging from the discussions is the potential impact of data centres on Alberta’s electricity grid and its ambitious decarbonization goals.
John Kousinioris, CEO of Calgary-based TransAlta, spoke about the electricity-intensive nature of data centres and how the increasing demand from these facilities could complicate efforts to decarbonize Alberta’s grid. “It’s going to be a challenge to hit all of the holistic targets that we have,” Kousinioris said during a fireside chat with John Stackhouse, a VP with RBC .
With federal targets aiming for a net-zero grid by 2035, the pressure is mounting to balance the demands of these data hubs with the province’s environmental goals.
Balancing Data Center Demand with Decarbonization Goals
Alberta, known for its deregulated electricity market, has been actively promoting itself as a prime destination for data centers, particularly those focused on AI. Just last month, Technology Minister Nate Glubish traveled to Silicon Valley to meet with major tech players like Meta, Amazon Web Services, Microsoft, and Salesforce, aiming to attract investment to the province. The province’s efforts have already resulted in at least six data-centre projects in early development stages with the Alberta Electric System Operator (AESO), with five of these submitted by Calgary-based Beacon Data Centres.
However, Kousinioris noted that the surge in electricity demand from data centres is likely to strain Alberta’s power grid, similar to issues seen in U.S. states such as Virginia, Texas, and California experiencing data centre booms. Building new energy generation capacity, whether through gas plants or wind turbines, typically takes two to three years to secure permits, which complicates efforts to meet growing electricity demands in an affordable manner while adhering to decarbonization targets.
Navigating Challenges in Alberta’s Deregulated Electricity Market
“Investors are focused on reliability and speed, and they want 99.9 percent reliability,” said Kousinioris, highlighting the challenge of providing such reliability in a green way with the current energy infrastructure. Despite the federal government’s push for clean energy, Kousinioris pointed out that decarbonization isn’t the top priority for investors looking at Alberta’s data centres. Instead, reliability and affordability are the driving factors.
Alberta’s power grid has faced challenges in recent years due to extreme weather events, further emphasizing the need for a robust energy strategy to support new developments. While nuclear power has been suggested as a potential solution to the energy needs brought on by data centres, Kousinioris indicated that significant reforms would be required in Alberta’s electricity market, which currently operates on an energy-only model where generators are paid solely for the energy they produce.
As Alberta continues to position itself as a hub for tech investment, the influx of data centres presents both an exciting opportunity for economic growth and a complex challenge in balancing the energy requirements with the province’s decarbonization goals.
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