AI, Natural Gas Jump-Start Canada's Data Center Gold Rush

The once-sluggish Canadian data center market is experiencing a sudden surge in planned development, a potential wave of massive artificial intelligence facilities that would redraw the nation’s data center map. 

Still, industry leaders question how many of these planned projects will actually come to fruition.

While Canada’s entire data center inventory amounts to just a single gigawatt — smaller than many individual data center projects underway in the U.S. — in the past year alone, developers have begun exploring projects across Canada that together total around 30 times that capacity, according to Cushman & Wakefield data presented at Bisnow’s DICE: Canada event this month.

The epicenter of this unexpected avalanche of planned development isn't in Ontario or Quebec, Canada’s two largest markets, but in Alberta, a previously marginal market where a growing coterie of developers is pursuing gigawatts of massive AI-oriented campuses.  

While industry leaders at the DICE event said they expect to see a rise in data center construction across Canada, exactly how quickly — and how many — projects in the country’s development pipeline will come to fruition remains an open question.

“The amount of interest in the Canadian market for developing new data center capacity has exploded, and most of this has all happened in the last 12 months,” Cushman & Wakefield Associate Vice President Michael Borron said at the event, held at the DoubleTree by Hilton Toronto Downtown.

“We haven't seen the increase in construction numbers yet that have come from all of these applications, so right now there’s a rush to bring this supply to market and convert this interest in development into real projects.”

Until now, the U.S.’ data center gold rush hadn't extended north of the border. While data center development surged in the U.S. throughout 2023 and into 2024, adding the equivalent of a second New York City to the nation’s power grids, Canada instead experienced a drop in new construction. 

Although Canada has always been a much smaller data center market than the U.S., that gap widened significantly in recent years.

At the end of 2024, supply in U.S. primary data center markets had jumped 34% year-over-year to more than 6.9 GW. Canada, by contrast, barely added 100 MW nationwide last year, a growth rate close to 13%, according to Cushman & Wakefield. 

Yet over the past 12 months, Canada has seen its data center development pipeline suddenly swell, with a growing number of planned projects in the country’s traditional data center hubs and digital infrastructure hinterlands like Saskatchewan.

Borron expects Canada’s total inventory to at least double by 2030, with Cushman & Wakefield projecting close to 1.5 GW of new development. 

In the longer term, far more than that is being planned. According to Borron, the Ontario market has groups looking to build 10 GW of data centers, while Alberta has seen 16 GW of interest, more than the capacity of the province's entire grid today. 

“That's a lot of potential data centers,” Borron said. “There’s going to be a vast amount of growth across Canada for new deployments.”

Alberta has emerged as the epicenter of this wave of planned data center growth, with leaders looking to bring $100B in data center investment to the province in the coming years. 

While the entire Alberta market has just 80 MW of inventory today, Alberta Electric System Operator announced this month that 29 data center projects are seeking grid connections in the province. The utility said it will be able to provide 1.2 GW of power to new projects by 2028.

The first large-scale data center slated to come online in Alberta in the months ahead is a 90 MW facility in Calgary from Canadian firm eStruxture. Expected to come online next year, the project will briefly be the province’s largest data center.

Soon, however, it will be dwarfed by a handful of AI campuses leading the industry’s charge into Alberta. 

In January, venture capital firm Nadia Partners launched data center subsidiary Beacon AI Centers, which is planning 4.5 GW of capacity on more than 2,500 acres in Alberta. Beacon’s project would be spread across several 400 MW facilities with on-site power and grid connections, several of which the company says will be in operation by 2027.

Gryphon Digital Mining in January acquired an 850-acre Alberta industrial site with plans to build a natural gas-powered data center that the firm says could eventually scale to 4 GW. Weeks later, AI developer Crusoe inked a deal with Kalina Distributed Power to develop data centers alongside three 170 MW gas power plants.

A massive data center proposal backed by Kevin O’Leary, the celebrity entrepreneur known as “Mr. Wonderful,” calls for 58 gas-powered data centers totaling 8.5 GW in northwest Alberta. 

These projects are spearheading a hyperscale AI surge across the prairies of western Canada that few in the data center sector saw coming.

“Three years ago, if somebody said there's going to be a big data center — forget about a gigawatt, even just 100 MW — in Alberta, you would have been laughed out of the room,” said Jeffrey Moerdler, a longtime data center attorney and member at Mintz.

These projects all utilize on-site natural gas power generation, a growing trend among hyperscale developers amid grid constraints across North America.

Alberta is the epicenter of Canada’s oil and gas industry. Its government has urged data center firms to pursue behind-the-meter power deals to avoid placing stress on the province's power grid, with Premier Danielle Smith telling developers last year at an economic conference to “bring your own electricity, bring your own generation … partner with a generating company.”

Such proactive engagement with the data center industry has helped draw development to Alberta, industry leaders said. The province prioritized data centers as a cornerstone of its economic development efforts, developing a regional AI data center strategy that has helped spark the influx of projects.  

One particularly impactful element of that strategy, Equinix Managing Director Marc Mondesir said, has been the province’s data center “concierge” program, in which state officials work with data center firms to connect them with potential power providers and other infrastructure providers. 

“This concierge service that Alberta has created is largely to create matchmaking between operators and utility providers,” Mondesir said. “They're very, very proactive in their approach there. They’ve hired people that actually understand the technology, and it makes it a lot more feasible to create matchmaking opportunities that will actually become practical and viable projects.”

Beyond Alberta, the accelerating growth of the Canadian data center market is a product of more than just opportunistic overflow from the power-constrained U.S., Mondesir said. While that is part of the picture, there are other factors pushing demand toward Canada. 

One such growth driver is rising demand for “sovereign AI” from Canadian companies — AI models trained on Canadian data to provide better outputs for Canadian customers, hosted on computing located in Canada and thus subject to the country’s privacy rules.

End users have increasingly focused on spreading their IT infrastructure across a diverse geography to reduce risk. And U.S. power constraints and volatile trade policy have pushed large tenants around the world to look for alternative locations to deploy workloads that once would have been hosted in primary U.S. markets.

Canada has been a major beneficiary of this trend, industry leaders said at the DICE event.

Still, they said that how much of this massive flood of proposed capacity actually reaches the construction phase remains to be seen. There was broad consensus that much of it may never materialize, at least not anytime soon. 

Part of the problem is power. While there may be access to large blocks of power in Alberta, other provinces are experiencing the same power pinch as U.S. hubs. In Ontario, the provincial grid operator has indicated it will only be able to connect 1.6 GW of data center capacity by 2035, according to Cushman’s Borron. 

Quebec, traditionally a hyperscale hotbed, now requires government approval for any grid connection more than 5 MW. According to Mondesir, data centers are way down the Quebec government's priority list when it comes to allocating this energy amid a power shortage impacting residents and the province’s manufacturing sector. 

But even in areas like Alberta, where power is relatively abundant, panelists expressed doubt that the massive proposed AI campuses will reach the multiple-gigawatt scale developers claim. There’s a real question of whether developers’ eyes have been bigger than hyperscale tenants’ stomachs, particularly far from major markets in western Canada.  

Skepticism was directed toward O’Leary’s plans for 58 data centers in a remote part of Alberta. Beyond the questions of whether there is enough demand for that amount of computing power, Galaxy Data Centers Managing Partner Dave Misra said few operators or tenants would want to deal with the headaches of staffing and maintaining a facility that is a seven-hour drive from the nearest midsized city.

“Some of these projects are real, some of this is not real. I certainly don't think we have the demand for 58 data centers in such a remote location,” Misra said. “Some of this capacity that's coming online is going to be absorbed, but some of these are fake data centers — they’re just announced but never materialize.”