Alberta’s Developing Regulatory Regime for Data Centres – Part 1

This article is the first of a two-part series on Alberta’s evolving data centre regulatory framework. A follow-up article will examine the AESO’s final BYOG process once it is released in late July or early August 2026, depending on the extent of feedback received.

Federal Canadian AI Strategy

Canada’s approach to AI is increasingly shaped by the goal of maintaining and strengthening economic sovereignty.

Canada’s National Artificial Intelligence Strategy: AI for All reflects this ambition, emphasizing the development of “sovereign Canadian AI” through investment in domestic compute, cloud, connectivity, data, and talent.[1] These initiatives seek to support domestic capacity – including large-scale data centres and a national AI supercomputer – with the result that Canadian data and AI systems are governed under Canadian values.

In parallel, Powering Canada Strong: A National Strategy for an Electrified Canadian Economy identifies data centres as a key driver of future electricity demand and an essential component of economic competitiveness.[2]

Together, these strategies reinforce the close relationship between AI growth, energy policy, and infrastructure development.

To advance these strategies, the federal government has engaged with Alberta, resulting in an agreement to co-operate on large-scale data centre investment.[3]

Alberta’s AI Data Centre Strategy[4]

In December 2024, Alberta released Alberta’s AI Data Centre Strategy: Powering the Future of Artificial Intelligence, positioning the province to capture growing demand for AI infrastructure.[5] The strategy aims to establish Alberta as a leading North American hub for data centre investment by leveraging its inherent structural advantages, including abundant natural gas resources, a competitive tax environment, a cold climate, and a business-friendly regulatory framework.

The strategy is built on three core pillars:

1. Expanding dispatchable power generation;
2. enabling efficient and sustainable cooling; and
3. fostering economic growth through investment and job creation, aided by Canada’s lowest tax regime.

Beyond these pillars, the strategy emphasizes regulatory certainty, streamlined approvals, and coordinated infrastructure planning to accelerate project development.

Current Status of Data Centres in Alberta

Data centre development in Alberta is accelerating rapidly, with dozens of major projects announced and significant activity underway in the Alberta Interconnected Electric System (“AIES”) connection process. Alberta accounts for over 90% of planned data centre capacity in Canada.[6]

To manage this demand, the Alberta Electric System Operator (“AESO”) established the Large Load Integration program, a phased initiative to connect high-capacity projects to the grid. Phase 1 of the program has fully allocated 1,200 MW of capacity to projects progressing toward connection.[7] Phase 2A of the Large Load Integration program introduces a “bring your own generation” (“BYOG”) framework, enabling developers to self-supply power or pair their projects with new generation resources. Under this model, developers can secure grid access by committing to develop or contract for dedicated generation capacity, rather than relying solely on existing supply. This approach is designed to address grid constraints by ensuring that large new loads are matched with corresponding new power sources.[8]

Recent Legislative Developments in Alberta

To support the BYOG framework and implement the pillars of Alberta’s AI Data Centre Strategy, Alberta introduced legislative reforms, including:

• Bill 8 – Utilities Statutes Amendment Act, 2025, which amended the Electric Utilities Act to enable the BYOG framework and gave the Ministry of Affordability and Utilities (“MAU”) regulatory authority to specify which provisions of the Electric Utilities Act and its regulations do not apply to data centres;[9]
• Bill 12 – Financial Statutes Amendment Act, 2025 (No. 2), which introduced mechanisms for levies on data centres based on the amount of electricity received from the AIES;[10] and
• Bill 17 – Fiscal Measures Statutes Amendment Act, 2026, which provided additional fiscal measures to support the regulatory framework.[11]

On June 9, 2026, the MAU released the Data Centre Regulation,[12] (the “Regulation”) establishing a comprehensive framework governing how large data centres connect to and operate within the AIES. The Regulation places a strong emphasis on reliability and system adequacy.

The framework centers on the classification of “large data centres,” defined as facilities with demand of 75 MW or more (or less, subject to adjustment by the AESO). This classification enables enhanced oversight and allows the AESO to treat related facilities as a single integrated project where appropriate.

A key feature of the Regulation is the concept of “tethering,” which links data centre development directly to new, expanded, or underutilized generation or storage resources.[13] Projects may only be designated as tethered where proponents commit to associated supply that meets or exceeds their demand. This effectively operationalizes the BYOG model and is intended to ensure that large loads are supported by co-equal generation.

The Regulation reinforces this approach through its system access framework. Tethered projects receive priority in system access processing but cannot obtain system access service at levels exceeding their associated generation capacity until that generation is in service. For projects not yet able to meet full tethering requirements, a limited “bridged” framework permits temporary access for up to three years, subject to AESO conditions and potential suspension or termination if requirements are not met.

In addition, the AESO is empowered to impose system access service criteria (including site control, permitting, financing, and zoning approvals), ensuring that only advanced projects proceed through the connection process. During periods of supply constraints, large and bridged data centres may also be prioritized for curtailment.

AESO Transmission-Connected Requirements Guide

Complementing the regulatory framework, the AESO released its Guide to Connection Requirements for Transmission-Connected Data Centres on June 12, 2026.[14] The Guide sets out how data centre developers may connect to Alberta’s transmission system.

At a high level, developers must comply with existing system rules and meet project‑specific requirements set by the AESO. This includes providing detailed information about how the facility will operate and interact with the AIES so the AESO can model the facility’s behaviour and assess impacts under both normal operations and system disturbances.

The Guide generally requires developers to design facilities in a way that avoids large, sudden changes in electricity demand and ensures the site can operate reliably under a range of conditions. In practice, this means building in redundancies, planning for interruptions, and coordinating closely with the AESO during operations.

Overall, the Guide makes clear that data centres are expected to actively manage their electricity use and integrate responsibly into the broader power system.

Conclusion

Alberta’s regulatory framework for data centres is rapidly evolving to align with both national AI objectives and the province’s own economic and energy priorities. Through a combination of strategy, legislation, regulation, and technical guidance, Alberta is establishing a model that links industrial-scale digital infrastructure development with power system reliability and investment in new generation.

The Lawson Lundell team has extensive experience advising Canadian and international clients on the corporate, real estate, energy, regulatory and infrastructure matters associated with data centre development in Alberta. If you have questions about data centre projects, regulatory requirements, power procurement, site acquisition, or related matters, please contact a member of our team.

This article is provided for informational purposes only and does not constitute legal or professional advice. Readers should seek specific legal advice before acting on any information contained in this article.