Supersized data centres are coming to Canada. One province is at the epicentre

A new national AI strategy by the federal government this week comes at a time when the country is confronting a wave of new high-powered data centres, while public sentiment could be souring on the impacts of the new technology.

Data centres have long been under-the-radar for many Canadians, but that’s about to change.

New research from York University points to a dramatic shift in data centres in the country: The ones being built now have 10 times the capacity of what's come before, which is driving up concerns about the land, water, and energy they consume.

Alberta is at the epicentre with available energy, incentives, and open arms by the government.

The research shows the rapid growth in the sector; active data centres have a combined capacity of 1.6 gigawatts, while all of the proposed projects would inflate that number to 13.2 gigawatts.

Meanwhile, public suspicions are growing.

New polling from Angus Reid shows 68 per cent of respondents would oppose a large AI data centre being built within a few blocks of their home, with rural Canadians slightly more resistant (73 per cent) compared to those living in cities. (67 per cent).

This week, the state of Florida launched a lawsuit against OpenAI alleging that ChatGPT is unsafe, while the White House is tightening regulations on the sector after previously loosening rules. Even the Pope recently spoke out about the dangers of AI.

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Federal AI minister Evan Solomon has pushed back against both strict opponents and those who over-hype the technology, instead emphasizing the need to balance expansion with safety, fairness, and pragmatism.

Data centres are common in most cities, often with a capacity of about five megawatts. The much more advanced data centres, known as "hyperscalers" that power the AI-boom, can use about 100 megawatts of capacity.

Currently, there are only five hyperscale data centres in the country, with two in B.C. and the others in Ontario, Quebec, and New Brunswick.

There are 96 more of the facilities announced or under construction, according to the York University research.

Traditional data centres are often located in large cities, so they can serve clients quickly, such as retail stores or businesses that require low latency.

However, the hyperscalers can be located further away, since they are often used to train AI models.

"They basically need ... a lot of cheap land so you can imagine this is going to be far away from city centres. They need access to energy and access to water so this is kind of pushing them out into the outskirts within our provinces,” said Lyndsey Rolheiser, an urban economist and assistant professor at the Schulich School of Business at York University.

Not only are the data centres moving to more rural locations, but the search for cheap land and abundant energy is leading many projects to focus on Alberta.

In fact, about 41 per cent of active data centres are in Ontario, while only about ten per cent are in Alberta, according to Rolheiser’s latest research, which was based on proprietary data and still needs to be peer reviewed, a process where it is examined by independent experts.

However, those figures change “dramatically,” said Rolheiser, when looking into the future.

If all of the proposed or under construction projects are completed, then Alberta would be home to 90 per cent of the country’s data centres.

Not every proposed project will be built, but the figures show the wave of interest in Alberta because of its deregulated electricity system, cheap natural gas-powered electricity, and a provincial government that’s actively trying to grow the sector by providing financial incentives.

In the past, data centre developers favoured provinces offering low-emission electricity, but as Quebec, B.C. and Ontario have introduced legislation constraining grid access, the higher priority now is finding any type of available power.

"The most dramatic finding is that the places where energy is relatively cheap to generate, and more generation is happening from renewables, are the places where it is becoming more difficult for data centres to be situated,” said Rolheiser.

The booming data centre sector isn’t always welcomed and suspicions are growing, even with the promise of jobs and an influx of tax dollars for local communities.

At an open house for a proposed data centre last month, residents took turns voicing a plethora of concerns to the provincial utility regulator at a hotel conference room in Olds, about 90 kilometres north of Calgary.

"It's unacceptable to endure the possibility of a natural gas power generation plant and a data centre that is going to be the largest in Canada, to be proposed here. It's absolutely unacceptable and not something we're willing to tolerate,” said resident Bek MacIntosh.

The proposed Olds data centre complex would end up being 10 times the size of any other facility currently operating in Canada.

Other issues raised include the emissions and noise of the proposed facility, as well as years of construction, which has some residents ready to list their houses for sale, said Geoff Davidson, while some businesses are “looking to relocate out of town.”

Many residents feel the lack of information acutely, since they’ve struggled to get straight answers to questions about noise levels, water use, impacts to town such as traffic levels and property values.

“There were very vague conversations at town council meetings. There was no heads up. There was no consultation,” said Janae Johnson.

In Vancouver, hundreds of people marched in a weekend protest against two planned AI data centres, raising concerns about the amount of water and energy such facilities can use, especially as the city faces regular water restrictions.

"There's not really a good spot for a data centre. No matter where we put data centres, especially the AI ones, the environmental impacts are going to be significant,” said organizer Torin LaRocque.

Water cooling has sparked concerns especially in the Western U.S. states where there are limited amounts of water. Lake Tahoe's utility company had to find a new source of power because the electricity supplier plans to divert city power to data centres.

Data centre developers are increasingly trying to find ways to be more efficient with water or using a closed-loop system similar to a car radiator.

Some companies are investing in off-grid power generation to avoid straining electricity grids. Others are choosing to pay to ensure utility costs don’t increase for nearby communities.

"We recognize the challenges people are raising and we're investing to solve them,” said Matt Milton, president of Microsoft Canada.

“We will pay our share for energy and we will ensure that electricity rates do not go up for Canadians,” said Milton. He also said Microsoft is using new techniques to reduce water use.

Alberta is “optimal” with many advantages including its fibre optic network, skilled workforce, and the provincial government’s approach of being open for business, said Todd Coleman, founder and CEO of eStruxture, a Montreal-based company, which is building its third data centre in the province in a rural area just north of Calgary.

The latest facility will be Alberta's “first truly hyperscale, large scale data centre” at 90 megawatts, said Coleman, who said the company is already considering developing a fourth project in the province.

Some data centres do use too much water and power, and produce too much noise, but Coleman said modern data centres are able to mitigate those problems. His facilities are clean, quiet and don’t use any water besides for “sinks and toilets.” Instead, there's a closed-loop glycol cooling system.

The industry is often painted with a “broad brush,” he said, yet it’s worth continuing to listen to public concerns.

“We got to continue to work together,” he said. "Whether it's misinformation or even the right information, the questions just haven't been answered. It's on all of us to get out there and take their questions, address them openly, make sure we're working towards solutions.”

The Angus Reid poll was an online survey of 1,803 adults between May 7–11. The poll had a margin of error of +/- 2 percentage points, 19 times out of 20.