If done right, the rapid growth of artificial intelligence and the data centres that support it presents a unique economic opportunity for Alberta and Canada. But, as we argue in this submission to the Alberta Electricity System Operator’s (AESO) Bring Your Own Generation (BYOG) consultation, realizing this opportunity will depend on a flexible, affordable, and reliable approach to electricity planning.
Over the past two years, data centre connection requests have grown substantially in the Alberta, rising from 5 gigawatts (GW) in early 2024 to 20 GW in late 2025. For context, Alberta’s all-time peak electricity demand is 12.8 GW, set in 2025.
The AESO’s current BYOG framework, effectively requires data centre developers to power their operations using increasingly expensive natural gas power plants, when a combination of variable renewables, energy storage and dispatchable thermal backup could provide comparable outcomes at a lower total cost and with lower emissions.
Further, given the current long lead times on natural gas turbines (and therefore natural gas power plants), alternative options such as wind, solar and energy storage provide an opportunity for faster time to power while proponents wait for turbine deliveries. This single-source dependency introduces new risks to Alberta’s electricity grid in the form of affordable rates and secure energy for consumers and businesses across Alberta.
In light of these risks, the Pembina Institute recommends that the AESO:
- Reconsider its stance on only allowing thermal generators (i.e. natural gas)
- Adopt and incentivize large industrial electricity loads (i.e. data centres) to bring their own flexibility – including demand side management and energy storage
- Open the BYOG framework to include all-types of generation and demand side flexibilities and take on a technology agnostic approach to generation
As Alberta’s electricity demand grows, the most resilient and cost-effective path forward is no reliance on any single technology. Instead, the Pembina Institute recommends the AESO look to and incentivize a combination of wind, solar, energy storage, demand flexibility and gas to power new data centre load while maintaining a reliable and affordable electricity system for all Albertans.
