Bell Canada aims to quadruple capacity of data centre operations in Saskatchewan

BCE Inc. (BCE-T) is planning to quadruple the capacity of its artificial intelligence data centre operations in Saskatchewan, with ambitions to provide up to 1.2 gigawatts of compute power across three new facilities in the province through a series of investments that could top $5-billion.

The expansion, proposed through a non-binding memorandum of understanding with the province, would build on the company’s current 300-megawatt project currently under construction in Sherwood, Sask., and will follow the same structure, where Bell will build the physical facility and arrange for power and internet connections. Commercial partners, meanwhile, will provide the compute technology.

The company is in “advanced discussions” with potential partners for “some of the capacity,” Mirko Bibic said in an interview. While he declined to say how much capacity was currently spoken for, he said the company “won’t have trouble over time filling the 1.2 gigawatts.”

The company made the announcement Monday afternoon at the Invest in Saskatchewan Forum in Toronto with chief executive officer Mr. Bibic, Saskatchewan Premier Scott Moe and Prime Minister Mark Carney. Global investors have gathered in the city for the two-day Canada Investment Summit to assess opportunities to deploy capital in the country.

As for timing, Mr. Bibic said the company will start building incrementally on sites around Sherwood as soon as it has “signatures on paper” and the necessary local permits.

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Bell is spending $1.7-billion on the initial facility, an amount which should be seen as a benchmark for each of the next three facilities, the company said earlier this year. Mr. Bibic noted those costs could be higher owing to inflation. This suggests Bell could invest upward of $5-billion if it reaches its capacity target.

The extra costs do not change the company’s capital expenditure or leverage goals, Mr. Bibic said. The company has been doubling down on its AI division, Bell AI Fabric, as a high-growth area as its earnings growth from telecom have slowed and it works to pay down its $37.5-billion in long-term debt.

The total capital investment for the project, including Bell’s data centre build, the cost of power generation and the amount that tenants will pay to other companies for compute technology, such as chips, could exceed $50-billion, Bell said. The company’s existing tenants are two American firms, Coreweave and Cerebras, who will source their AI hardware from Nvidia.

The company does not have any outside investors in place for the project, although Mr. Bibic said he is open to considering partners for Bell’s AI Fabric division.

Data centre construction in Canada and around the world has attracted criticism from the public, with concerns about water and energy consumption, carbon output, as well as land use and noise. While 46 per cent of Canadians believe data centre development is a good thing, only 42 per cent support their construction in their own province, according to a July poll by Ledger.

To address environmental concerns, in early September the federal government set out a list of responsible data centre principles, which Bell has signed on to.

Provinces, too, have introduced requirements. Under its new data centre framework, Saskatchewan, like Alberta, requires companies to “bring their own power.” These measures are intended to prevent new infrastructure from straining the grid and increasing costs for consumers.

Unlike the first data centre, which will draw electricity directly from the provincial energy grid managed by SaskPower, Bell plans to partner with a number of natural gas power providers to generate energy “behind the meter,” meaning the energy will not run through the grid first.

Bell is looking to work with several Saskatchewan Crown corporations for the project, including TransGas, a wholly-owned subsidiary of SaskEnergy, which will provide power to the data centres. SaskTel will provide fibre connectivity.

If fully built, Bell’s total power consumption for its data centres in the province would be equivalent to about one fifth of the SaskPower’s total available generation capacity of 6.1 gigawatts, according to its latest annual report.

The data centres will use closed-loop cooling technology, which does not draw on municipal water, Bell said. This is in contrast to evaporative open-loop systems being used in some major U.S. data centres, which have been widely criticized for their heavy water use.

The company will also need to navigate a series of local permitting requirements. Bell expects to build the new facilities “in or around the same areas” as the initial project, which earlier this year generated protests and pushback from the local community.

“We still have work to do in terms of approvals,” Mr. Bibic said. “We’re already hard at work with the various levels of Premier Moe’s government.”

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In order to gain the public’s confidence on data dentre projects, Canadian businesses will need to show that they are addressing environmental and social concerns, said Cohere co-founder and CEO Aidan Gomez, speaking at a Canadian Venture Capital & Private Equity Association conference Monday morning. Cohere is a leading AI developer and one of Canada’s most valuable technology companies.

“We have a cold climate, we have clean energy. We are very well positioned to become a superpower in data centres to the world,” Mr. Gomez said.

They also present an opportunity for Canada to build more leverage in its international relationships, he said.

“If we are the supplier of compute to the world, that is an incredible leverage point for Canada.”