Canada’s Largest A.I
Nancy Lanthier
Special to The Globe and Mail
Published December 31, 2024
Canada’s leading data centre provider, eStruxture Data Centers, will develop its largest facility in Alberta, a province that wants to be – but is far from – a critical hub for this type of infrastructure.
Expected to power up by fall 2026, eStruxture’s new $750-million, 90 megawatts (MW) operation, located near Calgary, will be the Montreal-based company’s third data centre in the area. The seven-year-old firm owns 12 other data centres in the larger industry markets of Montreal, Toronto and Vancouver.
“Our business wasn’t built by waiting but by leading from the front,” Todd Coleman, president and chief executive officer of eStruxture Data Centers, says about the company’s “massive investment in Alberta.”
Growing need for data capacity
As large computer warehouses that store, process and manage data for digital applications, data centres are measured by the amount of power provided. In part owing to the explosive growth of artificial intelligence-based software, new data centres require more power than they did previously. For example, a ChatGPT query uses 10 times the amount of power than an internet search.
Until recently, nearly all Canada’s 239 data centres – including 22 in Alberta – each delivered less than 20 MW of power, making eStruxture’s new 90-MW data centre, dubbed CAL-3, one of the country’s most powerful. Once fully built, CAL-3 will contribute to eStruxture’s total 125 MW in data centre capacity in the Calgary area – enough to power about 100,000 homes or the entire city of Thunder Bay.
“CAL-3 strengthens our commitment to fuelling the province’s digital economy,” Mr. Coleman says. “We are super-addicted to data, and it’s just multiplying.”
Mr. Coleman says AI data centres are somewhat “geographically agnostic,” with some key site requirements being high-speed internet, land and loads of “dependable power” to avoid potentially catastrophic data-processing failures related to health, finance, telecommunications, transportation, manufacturing and more. He acknowledges that Alberta offers a strong competitive advantage when it comes to its available land, fibre-optic connectivity and strong and reliable power capacity.
Alberta’s push for innovation
Home to a still-nascent tech ecosystem, Alberta has been working to position itself as an innovation hub. For instance, the province implemented a regulatory sandbox for financial technology in 2022, allowing certain participants to be temporarily exempt from some laws so they can test new products and services.
The Alberta government also recently announced a new data centre attraction strategy that’s intended to “reduce red tape and create a business-friendly environment,” helping the province to expedite its goal of becoming “North America’s destination of choice for AI data centres.”
Touting the province’s “affordable, reliable natural gas supply,” Alberta’s Minister of Technology and Innovation, Nate Glubish, says the province could attract $100-billion in investment in five years. “Alberta has an open door and an open mind” about data centres, Mr. Coleman says. “We’re plowing new ground as we speak, and we’ve been super-appreciative of the conversations that we’ve had with [Alberta] Premier [Danielle] Smith and her government.”
Bringing data centres to Alberta
In 2021, Alberta’s estimated generating capacity totalled to 16,024 MW, the fourth highest in Canada, according to the Canada Energy Regulator. Of the province’s energy mix, 81 per cent came from fossil fuels, while the rest came from renewable sources, such as wind, hydro and solar in 2022, reported the Alberta Electric System Operator, the province’s utility.
“I love the narrative of Alberta saying, ‘You won’t let us ship out our energy, so we’re going use it right here,’” says David Cervantes, executive vice-president at commercial real estate firm CBRE and practice leader at the firm’s National Data Centre Solutions Group, referring to pipeline limitations. “Alberta is offering gigawatts of power to the global data-centre market at a time when there’s a global energy crisis – when people are less precious about the energy’s profile.”
According to CBRE, North American data centre construction is up 70 per cent from 2023 – a record high. Vacancies have also dropped to a record low of 2.8 per cent, and lease rates, averaging $174.06 per kilowatt a month, have increased 45 per cent since 2021. Demand for new facilities with enough energy to power AI capabilities is likely to make smaller markets like Calgary more desirable, the report says.
Balancing data and gas-powered energy
Canada’s data centres use 1 per cent of the country’s energy, according to Natural Resources Canada. However, if all 20 to 30 proposed data centres in Canada are approved, they’re expected to account for 14 per cent of the country’s power usage by 2030, with Alberta’s 12 proposals using nearly half of it, the Royal Bank of Canada’s Climate Action Institute says.
One of Alberta’s proposed facilities is an ambitious plan by Canadian entrepreneur and TV personality Kevin O’Leary to develop the world’s largest AI data centre that’s near Grand Prairie, Alta., and worth more than $70-billion. If built, it could provide 7.5 gigawatts of capacity.
To help justify its growing use of natural gas, the Alberta government has supported carbon capture companies like Calgary-based Entropy Inc. The organization’s two-year-old carbon capture and storage facility at a gas plant in the Grand Prairie area has collected more than 90 per cent of an electricity turbine’s greenhouse gas emissions. Entropy is also building another carbon capture project for a larger turbine at the site and is working on developing a carbon capture facility for a gas-powered turbine for an undisclosed Alberta data centre.
“The provincial government has done a really nice job of getting the regulatory framework in place for carbon capture, including the development of carbon sequestration hubs – the areas where CO2 can be injected into the ground,” Entropy CEO Sanjay Bishnoi says. “Our vision is to be North America’s premier infrastructure company focused on ultralow-carbon power from natural gas.”
