What is happening with AI data centre development in Canada, according to our experts

The rapid growth of artificial intelligence has driven demand for data centres because AI systems need massive amounts of computing power. There are several development projects under way in Canada, with plans for many, many more including plans to build a $13-billion-plus artificial intelligence data centre in Sturgeon County, Alta.

On Aug. 20, business reporter Joe Castaldo and national reporter Joe Friesen answered reader questions about the data centres slated for development in Canada, why some have faced public backlash and the reasons behind Ottawa’s AI push.

Readers asked how data centres are built, how Canadians are opposing AI data centres and why Alberta is pushing for data centre growth. Here are some highlights from the Q&A.

How AI data centres work

What is an AI data centre, and what are they used for?

Joe Castaldo: AI data centres differ from data centres that are used for cloud computing applications and file storage. They usually contain sophisticated computer chips called graphics processing units, which draw a lot of electricity. AI data centres are used for building AI models, such as those that power chatbots like Claude and ChatGPT. They’re also used for running these applications. So when you ask ChatGPT a question, it is processed by an AI data centre. They’re also valuable for scientific research. One of the federal government’s priorities is to ensure university and college researchers have access to AI data centres to work on health care applications, materials science and other areas.

What is the legal process required for AI data centres to be built?

Castaldo: There are numerous hoops these projects may have to go through, and it will vary depending on where it is. At the municipal level, there could be issues with zoning, like does this patch of land need to be rezoned to accommodate a data centre? That’s where you might see council get involved.

Provincially, there is a process for applying for grid connections. Ontario’s recent data centre playbook, for example, lays out some priorities for that, such as economic benefits and environmental guidelines, though it’s still in development, and we don’t know all of the details yet.

There could be environmental assessments as well. In general, these assessments are triggered by the characteristics of the proposal–not the fact that it’s a data centre–so more rigour could be applied to some projects than others.

Worth noting that the Alberta Utilities Commission rejected a massive gas plant/data centre proposal in the town of Olds recently because it was located too close to town. Residents have been irate over that proposal all year.

In general, due to more awareness and public opposition, we’re seeing authorities applying more scrutiny.

What kind of infrastructure is required by a data centre, and how much electricity and water?

Castaldo: It will depend on the data centre. AI data centres require a lot more electricity than ones for cloud storage. So think 50 megawatts and above. That’s enough to power roughly 40,000 homes. Meta’s Alberta data centre complex is around one gigawatt, which is huge. There is land too, of course. There may be additional infrastructure required, such as fibre optic cable, transmission lines, etc. Water is another resource. The amount required depends on the cooling methods. Some older data centres use evaporative cooling, which consumes a lot of water. The industry is moving to closed-loop systems, where water circulates and is reused. That consumes less. The tradeoff, however, is more power consumption. In Alberta, the government wants data centre companies to “bring their own power” meaning they and/or partners need to build new generation capacity with natural gas. They don’t want projects drawing from the provincial grid.

Albertans raise concerns, demand specifics on safeguards at second town hall on AI data centres

Canadians’ opposition to AI data centres

If the planning of a data centre is between a government and the private sector, what is a regular Canadian to do about it if they disagree on its development?

Joe Friesen: What we’ve seen in several communities across Canada is that citizens have started to organize to slow or stop AI data centre development. They’re doing it with many of the democratic tools we’d recognize from other political battles – petitions, community meetings, letter writing campaigns, in person demonstrations etc., to make their views known to their elected representatives. We haven’t yet seen many elections fought on this issue in Canada, at least so far as I know, but it may not be far away. And my impression is that political leaders are listening. Citizens are expressing a lot of concerns about this new technology, and AI data centres are a focal point for that energy.

What do people opposing these data centres want? If there’s no stopping their development, are they asking for any middle ground solution?

Friesen: It’s an interesting point, because many people who oppose having a data centre in their community might also say that they’re not necessarily opposed to AI, and see its potential benefits.

What strikes me is how diverse a range of views you encounter among the opponents of data centres. It’s not easy to generalize them. Some don’t like the technology at all and say they never use it. Some do use it but don’t like the idea of a data centre in their community. Some just think the tradeoffs aren’t worth it, that the number of jobs created by a data centre won’t outweigh the potential environmental costs.

Majority of Canadians oppose government support for AI data centres, poll shows

Data centres development in Alberta and beyond

Why is Alberta so keen on attracting AI companies to the province?

Castaldo: A few reasons. The bottleneck for data centres is access to power. Alberta has lots of natural gas that could be used to power data centres, and that means economic benefits for the province (that also means more emissions, however). Other provinces that have traditionally been home to data centres such as Quebec, Ontario and British Columbia don’t have much spare electrical capacity, so that makes Alberta attractive. The province also talks about the jobs associated with data centre construction and operation, as well as taxation revenue. There’s a notion too that data centres will create more of a tech scene in Alberta, which is a bit speculative. Just because you plop a data centre somewhere doesn’t mean it’s going to attract tech companies. But the bottom line is the province sees this as an economic opportunity.

Will data centres drive up electricity prices in Alberta? If they do, would it just be around the project or could it impact the whole province?

Castaldo: The province has allotted excess grid capacity to a couple of projects. As for new data centres, proponents will have to essentially build their own generation capacity. The Meta data centre in Sturgeon County is really only happening because Pembina Pipeline and its partners are building a massive new gas plant to feed electricity back to the grid.

The reason the province is doing this is so that electricity prices don’t rise for consumers and other businesses. Elsewhere, Ontario has proposed charging data centres more than the standard industrial electricity rate. I think governments are quite attuned to the risks and are pursuing models that won’t drastically raise prices. We’ll have to see how it all plays out, of course.

Mississauga, Ont. is talking about pausing data centre development. Why and what can Canadians elsewhere learn from it? Was there a coordinated campaign?

Joe Friesen: In Mississauga, my understanding is that city council voted to prepare a bylaw that would enact a one-year pause on data centre development that will be voted on next month. In nearby Oakville, they did pass a one-year moratorium on new data centre development earlier this month. And in Hamilton, a vote on a moratorium was defeated at city council several weeks ago. These initiatives are designed to give local governments time to catch up with the speed with which these developments are coming at them, and for which they aren’t necessarily prepared. They want to study what the implications will be on a number of fronts, from water use to electricity to noise. They’re also looking to provincial governments for guidance – Ontario, for example, just issued its playbook for data centres last week.

In some communities, there have been active citizen campaigns that have caught the attention of politicians. In Hamilton, for example, very large crowds turned up to protest at city hall. With municipal elections coming in the fall, AI data centres are likely going to be prominent issues in some places.

Ontario proposes data-centre framework, including higher electricity rate for large projects

How many people does it take to run a completed centre? Would it be a benefit to local communities?

Castaldo: Data centres employ a lot of people during construction, and fewer people when they’re up and running. Meta said that its Alberta data centre will employ 3000 people at the peak of construction and about 300 once it’s operational.

There’s taxation revenue, and Big Tech companies are also promising to invest back in communities as a gesture of goodwill, such as donating to non-profits. Some politicians are promoting the sovereignty aspect – we need Canadian owned and controlled infrastructure to compete in AI, and reduce reliance on the U.S.

The benefits of data centres tend to be more diffuse-like, we’re having this conversation virtually right now because of data centres and other technology – but it is locals who have to contend with the possible downsides.

Alberta minister met with jeers at AI data centre town hall

Why do we really need them? Is this simply because we have to remain competitive with the rest of the world? What will these data centres actually do?

Castaldo: The federal government has made a case for this. AI is a potentially transformational technology with huge implications for the economy, jobs, defence and so on. The country that controls AI can see big economic gains and influence over other countries, the thinking goes. Canadian companies need access to data centres in order to build and run AI applications, and there is huge demand for access. The government does not want companies and researchers to be shut out. So having Canadian-owned and controlled data centres is seen as crucial to ensure that Canada can reap the benefits of AI. The government also wants to lessen dependence on U.S. technology companies. That has been a big concern in the Trump era. So having data centres here, under Canadian law, can ensure access and that sensitive data won’t cross the border. This what AI minister Evan Solomon means when he talks about “sovereign AI.”