Why Alberta’s data centre power plan leaves renewables out

Alberta’s proposed rules for data centres seeking grid connections would admit natural gas generation while excluding renewables, hybrid facilities and standalone storage. Clean energy advocates say the approach could raise costs and emissions; the Alberta Electric System Operator says gas can meet data centres’ around-the-clock power needs.

CTV News Edmonton has reported:

Alberta’s proposed rules for connecting data centres to the provincial grid would allow natural gas-powered projects, while excluding renewables, hybrid facilities and standalone energy storage. The Alberta Electric System Operator (AESO) says dispatchable gas generation can meet data centres’ continuous demand and operate without grid access. Clean energy advocates argue that storage paired with wind and solar could provide reliable power at lower cost and with fewer emissions.

The proposal, issued in June as part of the next phase of AESO’s Bring Your Own Generation (BYOG) process, says gas-fired thermal generation can function in all weather conditions, handle high electric loads and pass an “electrical island” test. That test means a facility can supply stable electricity without relying on the grid. AESO says renewables, hybrid facilities and standalone storage do not meet those requirements.

Solar Alberta Executive Director Heather MacKenzie said the proposal runs against decisions being made elsewhere. “There are jurisdictions like Germany and Ireland that are going in the exact opposite direction. They’re saying, ‘Bring your own power, it must be renewables.’ So Alberta is basically going against that trend globally,” she told CTV News Edmonton.

MacKenzie described the proposal as “short-sighted,” given advances in battery storage. Pairing batteries with wind and solar could provide dependable supply, she said. “You can simply require that batteries be combined with solar and wind and then you actually have the most reliable form of electricity because batteries can be turned on in a moment’s notice,” she said.

Energy Storage Canada (ESC), a national trade association, was among more than two dozen stakeholders that submitted feedback on the proposal. ESC policy manager Robert Tremblay said the AESO should immediately allow batteries capable of supplying power for eight hours to take part. “The position we put out is that immediately the AESO should be allowing eight-hour batteries to participate,” he told CTV News Edmonton. “The longest time there’s been these kinds of runs of scarcity has been seven hours in the last 10 years.”

Tremblay said restricting eligible generation to natural gas prevents competition. “That will lead to inefficient outcomes and higher costs.” The Pembina Institute, a clean energy think tank, also urged AESO to take a “technology agnostic approach.” It argued that renewables, storage and dispatchable thermal backup could match natural gas at lower cost and with fewer emissions.

David Pickup, the institute’s director of electricity, said expanding gas generation for data centres and other uses could reverse gains made by moving away from coal. “If we’re ramping up the use of natural gas for data centres but also for other things, really those emissions that we saved by getting off coal are really going to come back in a big way,” he told CTV News Edmonton.

Alberta fully phased out coal-fired electricity in June 2024, six years ahead of schedule. The province estimates that the phaseout helped avoid 290 million metric tons of greenhouse gas emissions between 2015 and 2030. That amount is equivalent to the annual use of more than 67 million gas-powered vehicles, according to the U.S. Environmental Protection Agency’s greenhouse gas calculator.

Pickup said a new natural gas plant connected to Meta’s data centre in Sturgeon County would produce about 10 per cent of Alberta’s total electricity emissions once it comes online. The data centre is expected to require about 1,000 megawatts (MW), a demand comparable to that of the entire city of Edmonton. “We’re really in the era of climate change impacts today and continuing to and even growing the amount of emissions that we have is only going to exacerbate those impacts going forward,” Pickup said.

Large data centres are being asked to supply their own generation, although AESO is allowing some companies to connect to the grid temporarily. The province says companies have requested about 20,000 MW of power for data centres. AESO has allocated 1,200 MW so far, and its June proposal says the next intake round can accept applications for up to 1,600 MW of grid capacity.

Utilities Minister RJ Sigurdson defended the province’s environmental oversight and its reliance on natural gas for these projects. In an interview last month, he told CTV News Edmonton that people in Alberta and across the country could be assured “we have the most strict environmental standards and air monitoring.” He said the government regularly reviews the issue and considers where generation should be located. Before approval, a company must model its emissions and show they would remain within Alberta’s Ambient Air Quality Objectives at every location around its site, the province says.

Sigurdson said Alberta’s plentiful natural gas is attracting investment and that companies need a dependable supply. “What they need is predictable, reliable and something they know can work 24/7, 365 and right now, natural gas is the most secure and affordable energy that they can build to be able to supply these data centres,” he said.

He also argued that temporary grid power makes sense because Alberta sometimes generates far more electricity than it uses. “This has been received really well by the proponents that are looking to invest in Alberta because it gets them what they call ‘speed to power’ and gets them to market quicker.” Sigurdson said Alberta has “very diverse power generation” and “supports all technologies.” Companies with data centres that are not connected to the grid can choose any technologies they want, he said. “That’s an independent business decision by these data centres,” he said. “The conversations that I’m having is that they’re looking at all those as options in the future.”

AESO’s deadline for feedback on its proposal was in mid-July. The operator initially said it expected to release the BYOG framework in August, but a September update moved the expected release to this fall. AESO declined an interview and said in a statement that renewables, hybrid facilities and standalone storage cannot offset a data centre’s round-the-clock demand in the way dispatchable gas generation can.

“Data centres are free to use renewables and storage to supply their facilities if they decide to limit their load needs from the grid or not to connect to the grid at all,” AESO said. It added that “new technologies or performance improvements may allow more qualifying types in the future.” The operator said it would share more information with stakeholders this fall and make it publicly available online. The report is the second part of CTV News Edmonton’s series on data centres in Alberta.