First Nations express concern about Alberta's data-centre strategy in open letter to province
Four First Nations chiefs wrote an open letter to Premier Danielle Smith and other government members on Thursday arguing the methodology used by the Alberta Electric System Operator (AESO) 'risks pitting smaller entities against each other for an insufficient share' of electricity.
'Alberta's current framework is capping our potential at the very moment we should be unleashing it,' the letter states.
The letter was signed by the chiefs of Enoch Cree Nation, Alexis Nakota Sioux Nation, Alexander First Nation and Paul First Nation. Some proposed data centres in the province are located on the First Nations' territory.
'We're not on the sidelines. We are ready to invest and to help build,' said Chief Tony Alexis of Alexis Nakota Sioux Nation in an interview.
In December, the provincial government launched an AI data-centre strategy to entice companies to build in Alberta, emphasizing its abundant natural gas resources for power generation.
Alberta wants to attract massive data centres to power generative AI. But current infrastructure can't handle their near-endless demand for electricity
The sales pitch may have worked too well. There are 29 projects requesting to be connected to more than 16,000 megawatts of electricity, which exceeds the peak consumption in Alberta.
AESO said earlier this month it had identified 15 projects for consideration to connect to the grid, and that qualifying developers will receive a pro rata share of a total of 1,200 megawatts through to 2028. To qualify, developers have to show proof of financial security and letters of support from communities in which they intend to operate.
'The current policy slices new power capacity into portions too small for global tech giants,' Mr. Alexis said.
Companies such as Microsoft MSFT-Q, Amazon AMZN-Q and Meta Platforms META-Q are among the biggest developers of AI, and require energy-hungry data centres to build and run the technology. By spreading out electricity among too many projects, the First Nations chiefs contend that Alberta may not be able to attract these companies.
Canada's first AI Minister Evan Solomon on his plan to scale up the industry
Paul Poscente, chief executive of Axxcelus Capital Advisory and investment adviser to Alexis Nakota Sioux Nation, said that AESO should rethink how it distributes electricity to allow for larger projects in the near-term. 'You need these big anchor tenants, at least one or two of them,' he said. 'We can provide for a bunch of these small guys in Phase 2.'
The Premier's office referred a request for comment to the Minister of Affordability and Utilities. 'The short-term 1,200 megawatt limit is not a cap. It will enable data centre projects in advanced stages of planning and development to get started, while government works to develop a long-term framework,' wrote spokesperson Ashli Barrett in an e-mail, adding the government supports AESO's approach.
Aaron Engen, the chief executive of AESO, said that even the large U.S. tech companies do not require massive amounts of electricity from the start. 'This concept that you've got to have 1,000 megawatts out of the gate or you've got nothing, it's not true,' he said. Companies can scale up over time, such as by building their own power generation or striking an agreement with an electricity producer.
Mr. Engen said he had to keep the process fair as well. 'We as Albertans should be a little uncomfortable when the AESO or anybody in a position like us tries to pick winners and losers,' he said.
AESO had to consider grid reliability and the potential cost of system upgrades to accommodate large electrical loads when devising its allotment strategy, Mr. Engen said, adding that it's looking at the next phase of development. 'It's about finding ways to facilitate everybody.'
Capital Power LP CPX-T, which operates power generation assets in Canada and the U.S., made the same criticism as the First Nations chiefs earlier this month. The Edmonton-based company has a proposed data-centre campus for up to 1,500 megawatts, but could receive less than 250 megawatts under AESO's methodology.
The provincial government, however, has been clear that its preference is for data-centre operators to supply their own power generation, so as not to overload the grid and ensure electricity prices remain stable.
But some companies have argued that building new generation assets will take years, and there is a global race to build data centres for AI.
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