Latest news with #AESO
Globe and Mail
3 days ago
- Business
- Globe and Mail
Alberta grid operator's power cap could thwart province's AI data-centre ambitions, critics say
Alberta's grid operator is putting an interim limit on the amount of electricity it will provide to new data centres after a massive surge in requests for power from developers. But the approach could thwart the provincial government's ambition to become a home for the energy-hungry infrastructure that is necessary to run artificial-intelligence models and applications. The Alberta Electric System Operator said on Wednesday it is allotting 1,200 megawatts of electricity for large-load projects, such as data centres, through to 2028. But around 29 data-centre projects are requesting to be connected to more than 16,000 megawatts of electricity – which is more than the province's peak consumption. 'Alberta cannot possibly connect all that,' said AESO chief executive officer Aaron Engen during a media briefing. The electricity cap is necessary to ensure the grid, which transmits power to homes and businesses, remains stable and reliable, he said. The allotment, which is less than 10 per cent of overall demand, still allows projects to come online soon, he added. Alberta wants to attract massive data centres to power generative AI. But current infrastructure can't handle their near-endless demand for electricity AESO has identified 15 projects for consideration to connect to the grid in the near-term, and developers are required to show proof of financial security and letters of support from the municipalities in which they intend to operate. Qualifying developers will receive a pro rata share of the 1,200 megawatts. The United Conservative government in Alberta announced a strategy in December to attract data-centre operators in response to the global boom in AI. Building and running AI models requires large amounts of electricity, and the province has an abundance of untapped natural gas for generation. Alberta is overhauling its energy market. Here's what's happening, and why Technology and Innovation Minister Nate Glubish has also spoken of attracting hyperscale customers, the term for large tech companies such as Google Inc. and Meta Platforms Inc. that are the biggest developers and users of AI. 'We heard clearly from data centre proponents that they needed clarity from [AESO] on how this capacity would be distributed,' Mr. Glubish said in an e-mailed statement Wednesday. 'Today's announcement delivers that clarity.' But Edmonton-based Capital Power LP, which operates generation facilities in Canada and the United States, said AESO's approach will undermine the goal of turning Alberta into an AI data-centre hub. 'We've got a bit of a bust here,' said Pauline McLean, the company's chief legal officer. 'I don't think it's actually going to meet the government's policy objectives.' Capital Power has a proposed data-centre campus in Alberta for up to 1,500 megawatts that is geared toward hyperscale customers, who require hundreds of megawatts of power. But under AESO's methodology, the project could be allotted less than 250 megawatts. 'We simply will not attract those customers,' Ms. McLean said. AESO's criteria should be more stringent, she said, and consider how data-centre proposals align with the provincial government's goals, whether First Nations communities are involved, and what upgrades to transmission infrastructure are needed. Editorial: Free the market for renewable energy in Alberta That could allow for power to be spread out among a smaller number of data centres, but each one having more capacity. The provincial government has said that its preference is for data-centre operators to generate their own power, rather than rely heavily on the grid. AESO's Mr. Engen said that concept makes 'perfect sense,' but added the industry is competitive and the goal is to have new data centres operating as soon as possible. Ms. McLean, too, said building new generation capacity would take years. 'This puts Alberta in a less competitive position. Tech firms are looking for power and looking for power now,' said Shaz Merwat, energy lead at the Climate Action Institute at RBC. 'But it's hard to push back on prudence,' he added, referring to AESO. Longer term, the province remains attractive for development, partly because of the government's support for data centres, he said. TD Cowen analyst John Mould said in a note Thursday that AESO's allocation approach and the lack of clarity beyond 2028 could limit the potential for large data centres. 'A lack of runway could dissuade initial investment,' he wrote. Beacon AI Centers, which plans to develop six large data-centre campuses in Alberta, said AESO's process has not changed its views of the province's potential. 'We remain extremely bullish on Alberta,' said CEO Josh Schertzer in a statement. Alberta isn't the only province dealing with electricity constraints. Ontario's provincial government introduced legislation this week to better handle dozens of data-centre proposals that would require up to 6,500 megawatts of electricity, or close to 30 per cent of peak demand. Utilities are currently required to connect data centres to the grid regardless of the economic benefits or energy requirements, the government said. With the proposed bill, unveiled by Minister of Energy and Mines Stephen Lecce, the province wants to instead prioritize projects 'that maximize benefit to the Ontario economy and work force,' according to a government news release.
CBC
3 days ago
- Business
- CBC
Alberta's power grid 'cannot possibly connect' all proposed data centres, system operator says
Social Sharing The Alberta Electric System Operator (AESO) is introducing temporary limit on how many new data centres can be added to the electrical grid, as the province experiences un unprecedented surge of project proposals. AESO, the independent operator of Alberta's electrical grid, will enable up to 1.2 gigawatts for new large-load data centres in Alberta until 2028. The cap applies to large-load projects that equal or exceed 75 megawatts. But the 29 proposed projects would demand more than 16 gigawatts combined, a level of demand the province has never experienced, said AESO CEO Aaron Engen. "Alberta cannot possibly connect all those proposed data centre projects in the short term," said Engen. "We need to develop an approach to approve data centre connections that, No. 1, don't negatively impact grid reliability; No. 2, that can facilitate data centre investment development as early as [2027-28]." To illustrate the level of demand Alberta is seeing, AESO noted that the city of Edmonton uses roughly 1.4 gigawatts per day. AESO added that it believes the additional 1.2 gigawatts could still unlock billions of dollars in investment in data centres. But Engen said the agency cannot connect new projects if they would compromise the grid's reliability. AESO's limit, he added, is meant to preserve the system's integrity provincewide, while still enabling some data centre development. "This is a very competitive industry right now and people want to get real estate, want to be built, want to have something operating as soon as possible," Engen said. "That's why we're talking about just freeing up, if you will, [1.2 gigawatts] of supply for people to get some development today." Late last year, Alberta Technology Minister Nate Glubish said he hopes to see $100 billion worth of artificial intelligence data centres under construction within the next five years. The centres are typically filled with computer servers used to develop and train large-scale artificial intelligence models. The Alberta government has also highlighted the province's deregulated electricity market as a draw for operators, who can use it for off-grid power generation. If the generation is completely off grid, it doesn't come to AESO to facilitate these applications. But Engen agreed that the bring-your-own-generation concept makes perfect sense, and that data centres setting up their own power generation could be a sensible way to develop more projects. AESO has filtered the number of proposals to 15 through the organization's process for consideration. Rob Davidson, AESO vice president of grid reliability, projects and planning, said more projects could be filtered out over the next month. "It will be all dependent upon each of those projects' ability to get letters of support from their municipality and produce their financial security," Davidson said. AESO doesn't know yet how many of the project proposals are for AI, cloud services or cryptocurrency, he said. But before approving them, the organization will need to understand the operations of each centre and how they would impact the grid.
CBC
3 days ago
- Business
- CBC
AESO proposes short-term limit on power for new large-load data centres amid Alberta's unprecedented demand
The Alberta Electric System Operator (AESO) is introducing temporary limit on how many new data centres can be added to the electrical grid, as the province experiences un unprecedented surge of project proposals. AESO, the independent operator of Alberta's electrical grid, will enable up to 1.2 gigawatts for new large-load data centres in Alberta until 2028. The cap applies to large-load projects that equal or exceed 75 megawatts. But the 29 proposed projects would demand more than 16 gigawatts combined, a level of demand the province has never experienced, said AESO CEO Aaron Engen. "Alberta cannot possibly connect all those proposed data centre projects in the short term," said Engen. "We need to develop an approach to approve data centre connections that, No. 1, don't negatively impact grid reliability; No. 2, that can facilitate data centre investment development as early as [2027-28]." To illustrate the level of demand Alberta is seeing, AESO noted that the city of Edmonton uses roughly 1.4 gigawatts per day. AESO added that it believes the additional 1.2 gigawatts could still unlock billions of dollars in investment in data centres. But Engen said the agency cannot connect new projects if they would compromise the grid's reliability. AESO's limit, he added, is meant to preserve the system's integrity provincewide, while still enabling some data centre development. "This is a very competitive industry right now and people want to get real estate, want to be built, want to have something operating as soon as possible," Engen said. "That's why we're talking about just freeing up, if you will, [1.2 gigawatts] of supply for people to get some development today." Late last year, Alberta Technology Minister Nate Glubish said he hopes to see $100 billion worth of artificial intelligence data centres under construction within the next five years. The centres are typically filled with computer servers used to develop and train large-scale artificial intelligence models. The Alberta government has also highlighted the province's deregulated electricity market as a draw for operators, who can use it for off-grid power generation. If the generation is completely off grid, it doesn't come to AESO to facilitate these applications. But Engen agreed that the bring-your-own-generation concept makes perfect sense, and that data centres setting up their own power generation could be a sensible way to develop more projects. AESO has filtered the number of proposals to 15 through the organization's process for consideration. Rob Davidson, AESO vice president of grid reliability, projects and planning, said more projects could be filtered out over the next month. "It will be all dependent upon each of those projects' ability to get letters of support from their municipality and produce their financial security," Davidson said. AESO doesn't know yet how many of the project proposals are for AI, cloud services or cryptocurrency, he said. But before approving them, the organization will need to understand the operations of each centre and how they would impact the grid.
Globe and Mail
3 days ago
- Business
- Globe and Mail
Alberta is overhauling its energy market. Here's what's happening, and why
Alberta is overhauling its energy market through a suite of changes aimed at making the system more reliable and affordable – a gargantuan task that involves a raft of reviews, consultations, and legislative and regulatory changes. One of the largest drivers of that transformation is the development of the Restructured Energy Market. The REM process is examining the main rules and principles that govern Alberta's electricity market in an effort to ensure that the system remains as reliable and affordable as possible. The REM is being overseen by the Alberta Electric System Operator, which operates the province's power grid. The United Conservative government tasked the AESO with developing a new system for how the electricity market operates following years of volatile prices and, later, shortages that led to provincewide outages and pleas for consumers to power down. The REM redesign process began as the Market Pathways initiative, launched on Aug. 1, 2023. In March of 2024, however, the government changed its directive to the AESO. It asked for a much broader overhaul, which was renamed the REM. Alberta's power system is unique in Canada in that it has no central or Crown power provider. Instead, private companies run the plants that feed electricity into the grid. The AESO works with the industry and the government to manage and plan that market. Alberta restructures utilities rules ahead of major power market overhaul The overhaul comes as jurisdictions across North America grapple with how to meet rocketing demand for electricity. Industries are becoming increasingly electrified to reduce carbon emissions, and governments are trying to attract power-thirsty data centres. Alberta, for example, is aiming for $100-billion of investment over a few years. Electricity generation technology has changed dramatically over the past few years. First, coal-fired power plants, which ran 24/7, were phased out. Most producers pivoted to natural gas-fired power stations, which present more flexibility and, for the most part, provide reliable – and cleaner – electricity, no matter the weather. Then came what Matt Davis, the vice-president of policy with Edmonton-based Capital Power, called the 'spectacular build-out' of wind and solar. 'I don't think there's enough appreciation of what that actually does to the system and how challenging it is to operate.' All those changes, coupled with the growing use of batteries to store power and improve reliability, has completely changed the the way Alberta's grid operates. 'Obviously the sun comes up in the morning and goes down at night. We know the wind doesn't always blow,' said Jason Wang, a senior electricity analyst with Pembina Institute, a think tank. 'It's important for electricity markets to be able to make sure it's an even playing field for all types of generation, but also for that reliability to be maintained.' Those in Alberta's utilities sector say that the complexity of the REM review is off the charts – particularly when combined with other changes happening around the same time, including new transmission regulations, local access fees and distribution. It's not easy, agrees Alberta's Affordability and Utilities Minister Nathan Neudorf. 'But we thought, 'If we're going to undertake this work, there's no point in doing it half-measure,' he says. 'If we were going to do some significant portions, why don't we do it fully – completely engage with stakeholders and make this adjustment all at the same time – so that we don't have to go through this multiple times over multiple administrations.' Report finds Alberta's restrictive renewables policies dampened investment Opinion: Free the market for renewable energy in Alberta Alberta wants a new market in place by 2027. Other jurisdictions such as Texas, Ontario and California have undertaken similar reviews, but took much longer to implement changes. Alberta could have taken its time, Mr. Neudorf says, but industry urged speedy completion of the task to avoid prolonging the market uncertainty that undermines investment. But Pembina's Mr. Wang reckons the accelerated timeline has created more uncertainty – particularly when combined with the government's seven-month ban on renewable power project approvals in August, 2023. 'In a different world, the government could have said, 'We want to make market changes, but they won't be implemented until 2030, maybe even like 2034, 2035,' so that they were slowly phased in. Then investors would have short-term certainty, and they would have that longer-term certainty.' The REM was initially to be completed by May, but that timeline has been pushed back owing to the scale of the exercise and concerns of the utilities sector. For example, AESO scrapped a mandatory day-ahead market rule that would have had participants agree a day ahead of time on the price and the duration of power production, and which industry said was far too complex. Reliability and planning standards will likely be implemented within the next year, and Mr. Neudorf anticipates that most of the decisions around the REM will be made by this summer. The province has already tabled Bill 52, which allows changes to be made at a rapid clip, rather than going through another year of public consultations. More legislation is slated for fall or spring. For the Athabasca Chipewyan First Nation, the REM raises broader economic concerns. The community has been investing in renewable power installations in Southern Alberta since around 2018. But the price of power from its renewables sites dropped significantly; in the final quarter of 2024, revenue was down roughly 12 per cent, says Jason Schulz, Athabasca Chipewyan's executive director of strategic advisory services. Promised power transmission infrastructure was never built to support renewable energy projects either, he says, which caused congestion on the grid. Electricity 'pretty well just gets dumped' as a result, he says, adding that the REM is unlikely to change that, given the distribution model being considered. Still, he's hopeful the REM will be a good news story for those in the power sector. With some positive decisions and others yet to be determined, he says, 'time will tell.' Capital Power's Mr. Davis is pleased the REM process has recognized the value of dispatchable, flexible generation capacity, be it batteries or gas-fired generators. 'There's more of an inherent acknowledgement that there is additional value to those resources because they provide critical reliability attributes to the system.' Bob Myles, chief executive of Calgary-based Canadian Utilities Ltd., says he's much more optimistic about the REM today than he was six months ago, given how much the AESO is listening to industry. 'There were a lot of doubters for a long time, that a lot of the comments were not being heard,' he says. 'Do we have everything figured out yet? No, there's still some issues that could have significant negative impacts on generators. But I believe now we're heading in the right direction, in a better direction.'
CBC
4 days ago
- Business
- CBC
AESO proposes short-term limit on power new large-load data centres amid Alberta's unprecedented demand
The Alberta Electric System Operator (AESO) is introducing temporary limit on how many new data centres can be added to the electrical grid, as the province experiences un unprecedented surge of project proposals. AESO, the independent operator of Alberta's electrical grid, will enable up to 1.2 gigawatts for new large-load data centres in Alberta until 2028. The cap applies to large-load projects that equal or exceed 75 megawatts. But the 29 proposed projects would demand more than 16 gigawatts combined, a level of demand the province has never experienced, said AESO CEO Aaron Engen. "Alberta cannot possibly connect all those proposed data centre projects in the short term," said Engen. "We need to develop an approach to approve data centre connections that, No. 1, don't negatively impact grid reliability; No. 2, that can facilitate data centre investment development as early as [2027-28]." To illustrate the level of demand Alberta is seeing, AESO noted that the city of Edmonton uses roughly 1.4 gigawatts per day. AESO added that it believes the additional 1.2 gigawatts could still unlock billions of dollars in investment in data centres. But Engen said the agency cannot connect new projects if they would compromise the grid's reliability. AESO's limit, he added, is meant to preserve the system's integrity provincewide, while still enabling some data centre development. "This is a very competitive industry right now and people want to get real estate, want to be built, want to have something operating as soon as possible," Engen said. "That's why we're talking about just freeing up, if you will, [1.2 gigawatts] of supply for people to get some development today." Late last year, Alberta Technology Minister Nate Glubish said he hopes to see $100 billion worth of artificial intelligence data centres under construction within the next five years. The centres are typically filled with computer servers used to develop and train large-scale artificial intelligence models. The Alberta government has also highlighted the province's deregulated electricity market as a draw for operators, who can use it for off-grid power generation. If the generation is completely off grid, it doesn't come to AESO to facilitate these applications. But Engen agreed that the bring-your-own-generation concept makes perfect sense, and that data centres setting up their own power generation could be a sensible way to develop more projects. AESO has filtered the number of proposals to 15 through the organization's process for consideration. Rob Davidson, AESO vice president of grid reliability, projects and planning, said more projects could be filtered out over the next month. "It will be all dependent upon each of those projects' ability to get letters of support from their municipality and produce their financial security," Davidson said. AESO doesn't know yet how many of the project proposals are for AI, cloud services or cryptocurrency, he said. But before approving them, the organization will need to understand the operations of each centre and how they would impact the grid.
