Varcoe: TransAlta eyes data centre potential, prepares Alberta sites to be ‘turnkey ready’.
Power generators are eyeing the potential for data centres to set up shop in Alberta, with TransAlta Corp. saying Tuesday it’s talking with major proponents looking for places to host these facilities.
But as more companies consider the province, it also raises questions about what it could mean for Alberta, the overall power market — and consumers — if an influx of energy-hungry facilities eventually join the grid.
On Tuesday, the Calgary-based company released its third-quarter results and announced plans to temporarily mothball its 401-megawatt Sundance 6 gas-fired generating unit for up to two years, beginning in April.
TransAlta indicated it is considering the units for potential future development tied to data centres or to enhance grid reliability.
The province’s largest power generator is also in talks about potential data centre developments in Alberta.
John Kousinioris, CEO, told analysts on a conference call:
We are in discussions with multiple hyperscalers who are potentially interested in our Alberta energy campuses. We’re also progressing several initiatives to ensure our sites are turnkey ready for data centres.
“However, while we see great potential in our Alberta thermal (generating) sites, given the more immediate fundamentals of the market in 2025, we’ve taken the prudent financial decision to temporarily mothball Sundance 6.”
The UCP government is striving to bring data centres into Alberta, attracting billions of dollars of outside investment and new high-tech jobs to the province.
Data centre developers say access to available electricity, and the ability to move quickly to get approval for such centres, are key considerations when deciding where they will locate them.
The largest data centre provider in the country, eStruxture Data Centers, announced last week that it’s developing a $750-million, 90 MW facility just north of Calgary.
The rise of AI applications and large language models requires significant computing power, a recent Canada Energy Regulator report noted.
Such centres, generative AI and cryptocurrencies used about 460 terawatt-hours of electricity worldwide in 2022. That amount is expected to double by the end of 2026, according to the International Energy Agency.
Most facilities require constant 24-7 power supply. Electricity consumption in data centres is primarily needed for cooling systems and computer servers.
There are increasing signs of interest in the province by developers.
More than 5,000 megawatts (MW) of potential electricity load is now in the Alberta Electric System Operator’s project lineup, seeking to connect to the province’s transmission system.
(It’s worth pointing out that last January, total power demand in Alberta peaked during a wicked cold snap at 12,384 MW.)
While the growing number of proposed projects in the queue is not a sure sign they will all be built, it does highlight the potential.
Edmonton-based Capital Power confirmed last week it has two such project applications in the AESO queue , for a total of 1,500 MW of load for new data centres, to be co-located at the Genesee Generating Station in Alberta.
Yet, if a number of these projects proceed, what will it mean for the power grid or electricity prices, which dropped sharply in late 2023 and this year after soaring earlier this decade?
Alberta was hit with emergency grid alerts amid tight supplies earlier this year, but analysts note electricity prices have fallen this year and supply is increasing with more renewables and gas-fired generation coming online in 2024.
In July, Premier Danielle Smith said data centre developers should “bring your own electricity” or consider partnering with a generator to secure sufficient power for their projects.
Kousinioris noted the government is supportive of data centres coming into the province, with ministers travelling to Silicon Valley to pitch Alberta as a potential place to build AI-focused facilities.
“What’s going to be required here is balance. So having a lot of load come into the jurisdiction — in a way that has a significant impact on power pricing by tightening up the market — is something that I think the government and the AESO was probably leery of,” he said.
“They want to make sure that the grid remains reliable. So when you hear things like bring your own power … that’s code for, let’s do this in a balanced way and make sure that the system remains affordable, reliable, and we continue to sort of decarbonize it.”
Alberta Technology Minister Nate Glubish said the province will not make any decisions on data centre attraction that would destabilize the grid or harm the affordability of power for consumers.
Nate Glubish, Alberta Technology Minister, said:
What we have been telling people is, if you want the fastest approval times and the most certainty and control over your project, go off-grid, go behind the fence and bring your own power.
“We need to make our decisions here based on what’s best for Albertans and for Alberta ratepayers and for the stability of our grid.”
Analyst Carson Kearl of energy analytics firm Enverus said the five gigawatts of project applications before the AESO is “probably a ceiling” for data centres construction in the province in the 2020s.
But the pace of development will depend on access to electricity — and if hyperscalers want access to natural gas or renewable power.
“If it does become a story of bring-your-own power, we have the resource to fire the generation, and it’s just a matter of tying that resource — in the form of natural gas — to new power plants,” he said.
“If it looks like the interconnection of one of these data centres is going to increase prices significantly, then it just won’t go through. So that’s why the bring-your-own-power argument is so strong.”
READ the latest news shaping the data centre market at Data Centre Central
Varcoe: TransAlta eyes data centre potential, prepares Alberta sites to be ‘turnkey ready’. source
