Alberta government proposes levy on AI data centres

The UCP introduced a bill that will make it easier for tech companies to build data centres as long as they don't draw power and water from the public grid.

The Alberta government is looking to make it easier for tech companies to open data centres as long as their operations don’t draw power and water away from public infrastructure.

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The legislation tabled Tuesday, which is part of the Utilities Statutes Amendment Act, proposes a levy on data centre computer hardware of up to two per cent that would apply to data centres of 75 megawatts or greater, to be deductible from corporate income taxes paid in Alberta.

“We want to make sure that the projects that do proceed are going to be in the provincial interest, in the public interest, and that means they need to pay their fair share of taxes,” said technology and innovation minister Nate Glubish. “We want to encourage projects that bring their own power.

“This is good for all Albertans because it will bring more power generation to Alberta. It will build resilience in our grid, and ultimately will lead to the economic activity we want to see without any of the negative side effects.”

The levy will be set at two per cent for any facility that is grid-connected and grid-reliant and one per cent for any facility supplying their own electricity but still connected to the grid for redundancy in case of power supply failure, said Glubish.

There will be no levy on any facility that is completely disconnected from the province’s grid.

Data centres that are able to generate their own power will be prioritized by the government going forward so that a strain isn’t put on Alberta’s electricity grids or natural resources.

AI data centres house computer processors which increase artificial intelligence processing power and data storage. The centres rely heavily on large amounts of electricity and require cooling, using as much water as a mid-sized municipality.

• Largest AI data centre in the world to be built in northwest Alberta

Utilities minister Nathan Neudorf says fears about a so-called “AI bubble” are unfounded as Alberta wouldn’t be on the hook financially if an AI data project were abandoned – akin to the situation with orphaned wells.

“While investment bubbles may come and go on different technologies … the way we’re setting this up, where proponents bring the power they need to use and they set up those agreements, Alberta is quite insulated against those potential futures,” said Neudorf at a press conference Tuesday afternoon. “If there are market ups and downs, as there are with every market, it’s not the public purse that’s responsible. It’s private investment.”

The province said it’s basing its rules on issues raised in previous data centre locations where centres drove up power costs and used large water quantities.

The Utilities Statutes Amendment Act will also modernize Alberta’s electricity market policy while working to keep power affordable, said the province.

Tuesday’s legislation will apply to future projects while previous projects have been approved with existing grid capabilities factored in.

According to the Alberta Electric Systems Operator, there are 37 “data load” proposals in various stages of approval. The province said it is unrealistic to assume all projects will be completed.