Alberta Introduces Temporary Limits on New Data Centre Projects Amid Surge in Proposals

The Alberta Electric System Operator (AESO) has announced a temporary cap on the number of new large-load data centres that can be connected to the province’s electrical grid. This decision comes in response to an unprecedented surge of project proposals that could overwhelm Alberta’s energy infrastructure.
Currently, AESO has set a limit of 1.2 gigawatts for new data centre projects that require large-load connections, specifically those consuming 75 megawatts or more, until 2028. This cap is necessary to ensure the province’s energy grid remains stable as it grapples with an influx of proposals, some of which are vastly larger than what Alberta’s system can currently support.
According to AESO CEO Aaron Engen, the 29 proposed data centre projects would demand more than 16 gigawatts of electricity—far exceeding the grid’s capacity. To put this into perspective, AESO notes that the city of Edmonton uses about 1.4 gigawatts per day, demonstrating the sheer scale of demand.
“Alberta cannot possibly connect all those proposed data centre projects in the short term,” Engen said. “We need to develop an approach to approve data centre connections that, No. 1, don’t negatively impact grid reliability; No. 2, that can facilitate data centre investment development as early as 2027-28.”
The decision to limit new large-load data centre connections is part of AESO’s effort to preserve grid reliability while still encouraging investment in the province’s rapidly expanding data centre sector. Engen emphasized that the cap would still allow for up to 1.2 gigawatts of new capacity to be added, which could unlock billions of dollars in investment and provide room for some development.
“This is a very competitive industry right now and people want to get real estate, want to be built, want to have something operating as soon as possible,” Engen explained. “That’s why we’re talking about just freeing up 1.2 gigawatts of supply for people to get some development today.”
The rapid growth of the data centre industry is largely driven by the increasing demand for artificial intelligence (AI), cloud computing, and other data-intensive applications. In late 2024, Alberta Technology Minister Nate Glubish expressed hope that the province would see $100 billion worth of AI-focused data centres under construction within the next five years. These centres are typically filled with computer servers that develop and train large-scale AI models.
Alberta’s deregulated electricity market has made the province particularly attractive to data centre operators, who can take advantage of off-grid power generation. If data centres set up their own generation capacity, they would not need AESO to facilitate these projects, which could allow for even more development outside the grid’s constraints. Engen noted that the “bring-your-own-generation” concept could be a sensible approach for the industry to continue growing.
To manage the overwhelming number of proposals, AESO has filtered the 29 projects down to 15 that are currently under review. Rob Davidson, AESO’s Vice President of Grid Reliability, Projects, and Planning, explained that more projects may be eliminated from consideration depending on their ability to secure letters of support from municipalities and provide financial security.
As the proposals continue to be reviewed, AESO will need to assess the potential impact of each data centre on the grid’s capacity. It is still unclear how many of the proposed projects are related to AI, cloud services, or cryptocurrency, but each will require careful analysis to determine its feasibility.
While the data centre sector promises significant economic growth for Alberta, the balance between fostering innovation and ensuring grid reliability remains a delicate challenge. As the province works to manage the influx of proposals, AESO’s approach will help guide the future of Alberta’s data centre industry while safeguarding the stability of the electrical grid.
The implications for local areas such as Chestermere and Langdon, where data centres are often proposed due to their proximity to Calgary, could be significant, as these projects could impact local infrastructure and energy needs. AESO’s ongoing review process will likely determine how these projects move forward and whether they will have any lasting effects on the region’s energy systems.