Alberta data centre could cause power bills to spike, report says

A data centre under construction north of Edmonton could raise power bills by between $270 and $460 annually for Albertan households, according to a new report by the Pembina Institute, an energy think tank.

The facility north of Edmonton, announced by tech giant Meta in July, is expected to begin operating in two to three years’ time. David Pickup, director of Pembina’s electricity program, said its startup will be equivalent to adding a city the size of Calgary to the grid.

While a natural gas-fired power plant will also be constructed at the same site to help power the facility, Mr. Pickup said Alberta’s rules allow data centres to connect to the grid prior to bringing their own dedicated generating units online. This temporary mismatch could cause consumer electricity rates to spike – an effect that would be repeated if Alberta is successful in attracting more data centres.

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“It’s just simple economics that if you have more demand and you don’t have more supply, prices go up,” he said.

Meta dismissed Pembina’s methodology and conclusions; in a statement, spokesperson Julia Perreira said they were “based on hypotheticals and assumptions.” A spokesperson for the provincial government, which has aggressively courted data centres for the past two years, accused Pembina of fearmongering.

It’s the latest scuffle in an intensifying global debate about the consequences of data centres’ massive electricity needs, how they’re satisfied and who pays.

Meta announced in July it was breaking ground on a $13-billion AI data centre in Sturgeon County. It’s described as a 1,000-megawatt facility, which is roughly equivalent to the consumption of a city with one million residents, or the output of a large nuclear power plant. According to the Canada Energy Regulator, Alberta’s existing generating capacity amounts to about 16,000 megawatts.

A recent influx of hyperscale data centres across North America, intended to supply the massive computing power required for artificial intelligence applications, has raised fears of surging prices and declining grid reliability. Like other North American jurisdictions, Alberta has responded by pursuing a policy known as “bring your own power,” which seeks to compel developers to pay for any additional power generation and transmission infrastructure required to supply new data centres.

In this case, Edmonton-based Capital Power recently announced it had entered into an agreement to provide 250 megawatts of capacity and energy to Meta’s data centre, beginning in the second half of 2028.

Meanwhile, a new 932-megawatt gas-fired power plant known as the Greenlight Electricity Centre (backed by partners Pembina Pipeline Corp. and Morgan Stanley Infrastructure Partners) will be constructed on-site to provide power exclusively to Meta’s facility. That will enter service in the second half of 2030.

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Ms. Perreira wrote: “Here’s the truth: Meta pays the full cost of energy upgrades and electricity that our Sturgeon County data centre will use – those costs will not be passed on to Albertans.”

However, critics contend that the “bring your own power” approach doesn’t guarantee a neutral impact on electricity prices. That’s because data centres can be built faster than power plants. Pembina’s report asserts that in its early years, Meta’s facility will draw all of its power from Alberta’s grid, leading to tightening supply-demand conditions.

Ashli Barrett, press secretary for Alberta’s Minister of Affordability and Utilities RJ Sigurdson, pointed out that Albertans have a variety of options when buying electricity. They can procure it through fixed-rate contracts, or through a default rate set by the Alberta Utilities Commission. Albertans would have to explicitly opt out of fixed rates to experience the volatile rates highlighted in Pembina’s report, she asserted.

“Pembina Institute’s analysis is designed to intentionally fearmonger and divide Albertans by mischaracterizing how Albertans pay for power, conflating wholesale rates with the retail rates that Albertans actually pay,” she wrote.

The Alberta Electric System Operator, which operates Alberta’s grid, made a similar point but acknowledged that data centres could raise wholesale electricity prices. Gillian Barnett, its vice-president of law and customer projects, noted in a written response to questions that Albertans don’t pay wholesale electricity prices.

“Alberta’s electricity market naturally creates an ebb and flow of prices through the fundamental principle of supply and demand,” she added.

“Higher demand from new load, including data centres, is expected to raise pool (wholesale) prices, which is anticipated to attract new supply, thereby lowering pool prices.”

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Other major participants in Alberta’s power markets appear to share Pembina’s concerns, however.

EPCOR is a major Edmonton-based utility company that, among other things, delivers electricity to Edmonton and nearby neighbourhoods. In a submission to the AESO earlier this year, EPCOR warned that “the addition of data centre load to the Alberta interconnected electric system, within or outside the BYOG [bring your own generation] process, is likely to have material, and perhaps unintended consequences, to the electricity price signal with anticipated negative impacts to Alberta consumers.”

Said Mr. Pickup: “Everyone’s kind of agreed that this will increase energy prices, certainly at the wholesale level, and then also at the retail level.”

Other North American grid operators are struggling with how to accommodate data centres’ massive energy needs. The largest such body, PJM Interconnection LLC, manages the grid in more than a dozen U.S. states including New Jersey, Illinois, Michigan and Ohio. Customers within PJM are already experiencing rising electricity rates along with rapid, massive data centre development in places like northern Virginia; the relationship between those two phenomena has become a subject of considerable controversy.

The Data Center Coalition, which represents the industry, acknowledged in a report published in May that data centre expansion is one factor inflating power bills, particularly in PJM’s region. But it said those facilities have “become an easy focal point” that has distracted attention from other contributing factors, including industrial reshoring. It said quantitative studies to date have yet to uncover evidence that U.S. data centres have been subsidized by other power users.