Smith touts natural gas as key to Alberta’s AI ambitions as proposed data centre sparks concerns in small community

Premier Danielle Smith says natural gas will be key to Alberta’s ambitions of becoming Canada’s artificial intelligence hub, but experts and residents say the strategy raises questions about emissions, electricity demand and how large-scale developments could affect communities.

At the New North America Summit this week, Smith said natural gas will be critical to powering the enormous electricity needs of artificial intelligence data centres, arguing that nuclear and hydroelectric projects can take years or even decades to build, and that wind and solar require backup generation.

“Natural gas is going to be foundational to underpinning the growth of data centre development, and we’re sitting on an ocean of it,” she said.

The comments come as Alberta pursues a goal of attracting $100 billion in data centre investment by 2030.

The rapid growth of artificial intelligence is driving enormous demand for computing power and electricity, prompting companies to search for ideal locations to build.

“There’s a lot of interest on the investment side of the market in generative AI and all of these new tools that are coming to the forefront,” said Kent Fellows, an economics professor at the University of Calgary.

He explains that companies deciding where to locate are looking for regions where it is easy to cool data centres, electricity is inexpensive and connectivity is strong.

“Alberta checks those boxes fairly well on all three.”

Poised to dominate Canada’s data centre buildout

Lyndsey Rolheiser, an urban economist at York University, said Alberta is poised to dominate Canada’s planned data centre buildout.

“It’s about 90 per cent of the total capacity that will be going to Alberta,” she said.

Fellows added Alberta’s abundant supply of inexpensive natural gas is another competitive advantage.

“Natural gas is in many cases a byproduct of crude oil production,” he said. “So, when we have production in the oilsands, there’s some natural gas that gets produced there.”

The province has also adopted policies that appeal to developers, said David Pickup, electricity program director at the Pembina Institute.

“Instead of having a grid connection and drawing power from the grid like any other sort of typical industrial consumer, they’re saying, ‘Okay, you can come to Alberta and you build a power plant kind of next to your data centre and plug that in,’” he said.

But Pickup said recent developments are challenging the notion that natural gas is the only reliable source of backup power.

He pointed to Ontario’s latest energy auction, where battery projects won every contract, as evidence that alternatives are becoming increasingly competitive.

“Here and around the world, from Texas to Australia, renewables paired with batteries are proving to be reliable, lower-cost solutions for meeting growing electricity demand,” he said.

“They’re quick to deploy, already working at scale, and offer real energy security.”

Pickup said Alberta’s natural gas approach raises broader questions about Canada’s climate ambitions.

“There’s this sort of tension between Canada really wanting to push its advantage as a clean energy supplier, in terms of growing electricity demand, doubling it over the next 25 years, and really powering that in a clean way,” he said.

“What we’re really concerned about is both the impacts on emissions, and our emissions goals over the next 25 years.”

The broader debate is playing out in the town of Olds, where a proposed $10-billion AI data centre development has sparked opposition from some residents.

Synapse Data Center Inc. wants to build a sprawling data centre campus and its own natural gas power plant on land east of town.

Resident Bek MacIntosh said she worries about emissions, low-frequency noise and safety.

“What we’re facing is the same power generation as what facilitates all of Edmonton,” she said.

“If we’re going to be proceeding with technology that is very high-risk, given the AI questions, the bubble, the lack of regulations on data centres and AI itself, then we need to be prioritizing residential properties and communities and protecting them from the harms of what the project in totality entails.”

Rolheiser said communities are often left trying to understand highly technical projects with limited information.

“What I am seeing, though, is kind of an information vacuum where there’s not a lot of information for the public to digest in terms of what is being developed in their neighbourhoods and communities,” she said. “Because of that, you’re seeing a lot of backlash.”

Synapse CEO Jason van Gaal said Alberta operates under “an exceptionally robust regulatory environment,” and that actions taken by some U.S. projects that have raised public concerns would not be permitted in the province.

“We hear our communities loud and clear, and we share their high standards. Community, compliance and safety are a primary focus,” he said in a statement.

van Gaal said the $10-billion project is expected to create more than 1,000 permanent jobs, 2,000 construction jobs and make Synapse the Town of Olds’ largest corporate taxpayer.

Olds Mayor Dan Daley said council sees significant economic potential in the proposal, but has also raised concerns with regulators about environmental impacts, noise and residents’ quality of life.

“There is economic development and an increase in tax revenue for the town, but also employment that would take place because of this, both in the construction stage and then in the ongoing operations of the facility,” he said.

“But our stand has always been that if this can’t be built safely and responsibly and not hinder the lives of our citizens, we don’t want it.”

The proposed power plant remains under review by the Alberta Utilities Commission.

The commission said this week it has not suspended its review of Synapse’s application but has paused certain procedural steps while it prepares a second round of information requests for the company.

The commission said it will provide an update on next steps after receiving Synapse’s responses.