The fast-growing demand for data centres in Canada can help safeguard data sovereignty, enable Canadian AI development and boost productivity across a range of industrial sectors.

At the same time, data centres consume huge amounts of power and water, emit greenhouse gases and don’t create as many long-term jobs as traditional manufacturing facilities.

Those are some of the tradeoffs Canadians should consider in deciding how many data centres should be built, where they should be located and how to manage their impacts, experts said during a Transition Accelerator webinar titled: “Data Centres: Catalyst or Challenge for Canada’s Energy Sector?”

“Canada already hosts over 230 data centres but new AI-focused facilities mark a real step-change in scale,” said webinar moderator Jane McDonald (photo at left), a Transition Accelerator board member. The Transition Accelerator is a pan-Canadian organization that works with others to identify and advance viable pathways to a prosperous, competitive and net-zero emissions Canada in 2050.

Canada’s low-cost, non-emitting electricity mix, cold climate and digital talent are attracting interest in building data centres from tech giants such as Amazon Web Services, Microsoft and Google, McDonald said.

Research by RBC estimated that if all the data centre projects currently being reviewed by provinces proceed, these facilities would account for 14 percent of Canada’s total power needs by 2030, she said. “This is a very significant source of demand and it’s a big change for [Canada].”

 The growth in data centres also is occurring when electricity demand is increasing due to amount of electrification that will be required to support the clean energy transition. Most experts think Canada will need to triple its current amount of clean electricity generation to achieve net-zero emissions by 2050.

“We’re seeing new [electricity] demands and new [data centre] growth, not just here in Canada but globally,” said Taylor Briggs (photo at right), principal, public policy at Amazon Web Services (AWS), the cloud computing arm of Amazon.

“There’s a digital shift going on and an explosion of generative AI in the last two years. That’s leading to a lot of the demand that we’re seeing today,” he said.

 AWS, which has been in Canada since 2010, opened its first data centre in Montreal in 2016. The company opened a new data centre in Calgary in 2023 and plans to build other new data centres in Canada.

AWS plans to invest about $24.7, including capital and operating costs, in data centres in Canada over the next 12 years, Briggs said.

Ontario’s electricity system operator expects data centres to account for 13 percent of new electricity demand in the province by 2035, according to a report by the Canadian Climate Institute.

Overall demand on Ontario’s electricity grid is forecast to grow by 75 percent by 2050, said Elissa Downey (photo at left), senior manager, strategic initiatives at Ontario Power Generation (OPG).

Hydro Québec has identified data centres as the largest new line item in its 2023 supply plan over the next 10 years.

 As of March 2025, Alberta has more than 10 gigawatts of proposed data centre projects in the grid-interconnection queue. The Alberta government wants the developers to set up natural gas turbines and use gas-generated electricity to power the data centres, which would increase the province’s GHG emissions.

"I think data centres are here [and more are] coming,” Downey said. “At the same time, electrification is coming and so is the energy transition.”

“If anything, we need to be very proactive about our planning” for future electricity demand and delivery, she said.

For OPG, data centres represent an electricity load growth opportunity that must be balanced with other load-growth opportunities, such as the energy transition and electrification, which will also put major demands on Ontario’s electricity systems, Downey said.

In Ontario, the provincial grid is legislatively obligated to connect large loads, so there’s no constraint on connecting data centres, she noted.

However, in Quebec, which was seeing large electricity demand from crypto mining operations over the last five years, large loads wanting connection must now seek provincial government approval.

In contrast, Alberta has an aggressive strategy to attract $100 billion investment over a few years in data centres to the province, including a concierge to help companies navigate the complexity of connecting to the grid.        

Concerns about data centres’ environmental impacts and profit-driven business model

Mél Hogan (photo at right), associate professor of film and media at Queen’s University and host of the podcast The Data Fix, brought to the webinar a very different perspective on data centres than the other panelists.

“I’m not convinced that AI is here to stay, in part because of the way its business model is set up currently,” she said.

When it comes to data centres, “these kinds of expansion projects are really part of this ongoing [extractive] and colonial project of nation-building. I think this is a very political project.”

Hogan argued that there aren’t many direct benefits to communities where data centres are located. “[They] don’t create many jobs. The emissions are pretty terrible.”

The activism against data centres is increasing, she noted. “People don’t want to live near data centres and that’s happening everywhere in the world.”

But AWS’s Briggs pointed out that data centres support the creation of AI that will stimulate innovation and lead to increased productivity and economic gains.

“Our AWS AI technology is supporting small startups all the way up to big enterprises such as Zoom,” he said.

“If Canada is going to be a leader in innovation and a leader in AI and address some of the very serious concerns that many of us have around productivity, we need to have digital infrastructure,” Briggs said. “We can’t reach our potential without that digital infrastructure.”

AWS’s development of its $4.3-billion cloud computing data centre in Calgary created about 1,000 direct and indirect jobs, through construction, facility maintenance, electricity needs and other support services in Canada by 2027, according to the company.

“I think that those jobs are probably pretty meaningful to the individuals that are working there,” Briggs said.

Small and medium-sized business in Canada, which currently have an adoption rate of only about four percent – much lower compared with other OECD countries – will be able to increase productivity through AI, Briggs said.

“Data centres are going to become a critical part in supporting the broader economy, just like roads and bridges or a transportation network,” he said.

Downey said while data centres have negative environmental impacts, building them in Canada helps establish data sovereignty, especially since Canada’s relationship with the U.S. has changed.

“We want to ensure that there is a certain base level and amount of language models and training by data centres in Canada, so that we can train Canadian AI on Canadian data and those models can live in Canada and benefit Canadians,” she said.

“You can’t revolutionize and support healthcare needs from an AI perspective unless that solution lives in Canada,” she added.

“Having these data centres here as our economy changes [means] hopefully we are able to create an ecosystem and not have this brain drain of talent going to the U.S. We can keep those resources here in Canada and building out the economy here.”

No guarantee data stored in foreign-owned data centres in Canada is safe

However, while storing data in a Canadian data centre is the first step to ensuring Canadian data stays home and under Canadian law, it doesn’t mean the data is safe from foreign access, especially when it’s in transit or accessed by third-party contractors, according to Ontario-based ThinkOn, a Canadian cloud services provider.

Most major cloud providers, like Amazon, Microsoft and Google, are U.S.-based companies that rely on foreign third-party contractors to manage data, ThinkOn noted in a blog.

“But even if your data is stored in a Canadian data centre, it may still be subject to foreign laws, including the [U.S.] CLOUD Act, which allows access to your data without your knowledge or consent.”

“As Canadian organizations increasingly depend on the big three [tech companies], the risk to data sovereignty grows. When your cloud provider answers to another country’s regulations, your data security isn’t truly in Canadian hands,” ThinkOn said.

Hogan also noted that cloud companies take over land and water resources at a scale that is for generative AI or “some future imaginary [technology] that tends to benefit those companies and other extractive industries.”

“AI is today, right now, very harmful. The potential is in the future and harms are very present,” she said.

“From my perspective, we need to slow down this entire conversation and that no amount of water is worth contributing to cloud companies, given the way [AI development] is playing out right now,” Hogan said.

Briggs, however, said AWS is “really thoughtful” about its requests for power and also has several large solar and wind projects supplying power to its data centres, helping to offset the facilities’ emissions.

AWS’s goal is to power all its global operations with renewables by 2030 and to be net-zero by 2040, he added.

Downey said: “I do think AI is here to stay, whether we like it or not. I don’t necessarily see society as being able to slow it down. I think that would impact our productivity.”

 There needs to be continuous learning as AI-focused data centres are built and electricity demand grows in Canada, she said. “As we learn about the value that AI does or doesn’t provide, we need to be willing as a society to shift and put some of those guardrails up.”

Since energy is a provincial jurisdiction, webinar moderator McDonald suggested there’s a need for a framework to help guide how Canadians think about AI and data centres and balance increasing power demands with long-term societal goals.

Downey said she’d like to see greater collaboration across the energy sectors, with  distributors, transmitters, generators and system operators working together to come up with a  concept of a framework for how to make such decisions.

“It comes down to collaboration across the sector and defining what are those goals that we want to go after and how can we do it in a sustainable way and still provide reliable and affordable power,” she said.

Briggs agreed, saying: “We want to get the energy policy right and we want to be really thoughtful about where we build our infrastructure and the impact that has in the communities that we work in.”

But Hogan urged people need to disentangle the technology and definition of AI from the cloud companies. “I don’t think we should be investing in cloud companies’ conception of AI where [they’re] scraping the contents of the internet.”

“The way that it has just been done with no ethical guardrails – just scrape everyone’s data,” Hogan said. That approach to AI just “uses us as fuel for its own machine.”

The issue is about educating people around the hype and the marketing of AI versus, for example, a set of AI applications that are very specific and scientific and trained on in-house large language models that produce benefits for all of society, she said.

“I think we should have a clear set of values that we work towards, and maybe [a mindset that] technology is not going to fix everything,” Hogan said.

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