AI compute infrastructure

The opportunity

The proliferation of artificial intelligence (AI) worldwide is driving rapid growth in the global market, as governments and companies look to benefit from the anticipated $10 trillion in productivity gains produced by AI over the next decade. However, realizing those gains will require an estimated $7 trillion of investment in AI infrastructure, prompting countries to invest heavily in data centres and other digital infrastructure¹.

On June 4, 2026, the federal government released its National Artificial Intelligence Strategy: AI for All (the AI Strategy), outlining a framework for developing Canada’s AI capabilities while protecting Canadian jobs, privacy, and security. The federal government aims to bolster Canada’s AI compute capacity to meet increasing domestic demand, estimated to reach 5.5 gigawatts (GW) among commercial users by 2030. The AI Strategy aims to leverage government AI workloads and attract private capital to support construction of AI data centres capable of providing 850 megawatts (MW) of AI compute capacity by 2030.

Provinces are also positioning themselves for investment in AI infrastructure. Alberta is already seeing results, with major data centre developments underway. Ontario is building out its own framework to attract large-scale projects. Federal financing support has expanded to include digital infrastructure, with billions designated for AI data centres. At the same time, proponents must adapt to new challenges in procuring energy, securing regulatory approvals, and approaching public buy-in.

This primer examines these dynamics and how investors can navigate them.

Market entry and investment strategies

AI Strategy alignment and government-supported projects. The AI Strategy supports the development of Canada’s sovereign AI infrastructure and strengthens Canada’s position in the global AI market. It also identifies government-supported projects to expand compute capacity and attract private investment.

In addition to the AI Strategy, the federal government has announced initiatives to support large-scale data centres. In January 2026, the federal government announced a call for proposals for large-scale data centres with a capacity of more than 100 MW. Selected proponents would enter into a memorandum of understanding with the federal government to “explore mechanisms to establish large-scale AI data centres in Canada for commercial use.” Following that process, the federal government is advancing work with TELUS to increase compute capacity in British Columbia by more than 60,000 GPUs by 2032 through a proposed Sovereign AI Factory cluster².

Alberta as a leading jurisdiction. Provinces continue to develop and clarify rules for AI data centre development and investment. Alberta currently leads the country by providing certainty about how data centre loads are regulated in the province. The Alberta government’s AI Data Centre Strategy, released in December 2024, outlines various initiatives to position the province as a global leader in data centre operations, including a comprehensive review of AI data centre regulatory timelines and working with municipalities to identify opportunities for data centre investment³. Alberta has also established a concierge program to provide a “direct gateway” for investors and operators entering Alberta’s market, connecting proponents with the appropriate regulators and government subject matter experts⁴.

Alberta continues to strengthen regulatory certainty for data centre development. In June 2026, Alberta released its Data Centre Regulation (Alberta Regulation 117/2026) under the Electric Utilities Act, which distinguishes between “tethered” data centres (associated with a dedicated generation facility) and “bridged” data centres (requiring transitional grid supply). The Alberta Electric System Operator must prioritize system-access requests for tethered data centres, consistent with the province’s stated “bring-your-own-power” approach, under which proponents must bring their own generation source so as not to burden Alberta’s electricity grid. The regulation supports major compute investments. In June, Meta announced its first Canadian data centre campus located in Sturgeon County, central Alberta, representing an investment of more than $13 billion, one of the largest private-sector investments in Canadian history⁵.

Ontario writes the Playbook. Ontario is positioning itself as a potential growth jurisdiction for data centres. In August, Ontario released the Data Centre Playbook, a proposed framework outlining how the province plans to evaluate large-scale data centres against the government’s objectives: driving economic growth, keeping Canadians’ data in Canada, and delivering benefits to local communities. The Playbook affirms that data centres are “critical infrastructure” and provides clarity on how the government intends to evaluate data centre opportunities and attract investment to bolster Ontario’s compute capacity. Ontario expects to release the final version of the Playbook, which will support its AI Industrial Strategy, this fall.

Financing and capital structures

• In Budget 2025, the federal government announced its intention to enable Canada Infrastructure Bank (CIB) to invest in AI infrastructure projects. CIB has since expanded its mandate beyond broadband to include investments in AI data centres and related infrastructure, and the operational management and energy systems that support them. CIB views this digital infrastructure as a priority sector and has designated $5 billion for it⁶.
• The federal government has also allocated funding for AI compute infrastructure. Programs such as the AI Compute Challenge have provided more than $2 billion in investment in AI compute capacity⁷. Further initiatives, such as the Artificial Intelligence Sovereign Compute Infrastructure Program (SCIP), support sovereign public AI compute infrastructure for researchers and innovators. Although eligibility for SCIP closed in June, the program will provide up to $890 million to support the design, construction, and operation of compute systems over seven years beginning in 2026 and 2027.

Key risks and how to manage them

Achieving public buy-in

Jurisdictions across North America have begun considering broad moratoria on data centre construction while studying environmental, energy, and rate impacts, including in traditionally developer-friendly data centre markets such as Texas, suggesting a reshaping of the data centre landscape. In Canada, municipalities such as Mississauga and Oakville have enacted one-year moratoria on data centre development while conducting comprehensive reviews of the sector. Rocky View County in Alberta has similarly enacted a moratorium, but it has not set a timeline. Although developers and investors should remain cognizant of local opposition, municipalities also recognize the increasing economic benefits that these projects can provide. For instance, Hamilton and Burlington’s municipal councils rejected proposed moratoria, arguing that they would deter investment in the cities, including developments involving post-secondary institutions⁸. Investors should engage stakeholders early and often, so that they understand and can benefit from project economics and local community benefits.

The federal government announced Canada’s Responsible Data Centre Development Principles in September 2026 to establish a common national framework for how data centres are built. These national principles are intended to complement existing provincial, territorial, municipal, and Indigenous regulatory processes. The principles set five expectations of data centre projects: that they create lasting local benefits; do not shift electricity costs to Canadians; minimize water use and environmental impacts; be transparent about local impacts; and bring strategic value to Canada⁹. Twenty-three AI and digital infrastructure companies are signatories to the framework.

Licensing and regulatory approvals

Investors should recognize that no two data centres are alike. Any acquisition or development requires comprehensive due diligence to understand the nature of the facility being acquired or built, and the applicable regulatory framework. The diligence should address whether the facility will serve a single customer, multiple tenants in a large co-location centre, researchers, or AI deep-learning workloads. Investors should use a full diligence checklist to confirm that a proposed data centre has the necessary zoning, local-government engagement, and environmental permits—all of which are essential to its success. Data-centre diligence is not merely a traditional real-estate exercise; it is multifaceted, touching on environmental matters, power supply, municipal approvals, and technology contracting.

Procuring energy

Data centres require a steady, reliable, and substantial power supply. Jurisdictions increasingly view data centre electricity consumption as a key driver of future electricity demand. The Ontario Ministry of Energy estimates that pending applications to connect data centres could exceed 10,000 MW in aggregate, roughly 40% of Ontario’s current peak demand of roughly 25,000 MW¹⁰.

Building the infrastructure needed to support these facilities—through a grid connection or a dedicated power supply—presents both challenges and opportunities for investors.

Although developers can engage in the regulatory process to establish a grid connection, including obtaining approvals to expand or modify the grid for such a project, several provinces (including Alberta, Ontario, and Saskatchewan) increasingly prioritize data centre projects that build or acquire their own captive generation facilities. Investors and developers must consider both the electricity source and the regulatory requirements for direct power, including property ownership and licensing to generate and sell electricity.

In Ontario, the government is considering establishing a new data centre rate class for billing purposes that would remove data centres from participation in its Industrial Conservation Initiative. The program encourages large commercial customers to reduce peak-hour demand by investing in behind-the-meter solutions or entering into power purchase agreements (PPAs) with renewable generation sources. Although the proposal remains in draft form, investors should monitor the proposal for potential impacts on project economics and electricity costs, and consider alternative financial contracting methods.

Competition, foreign investment, and sovereignty considerations

Investors and data centre developers should assess whether their projects may be reviewed under Canadian competition and foreign-investment laws. Acquisition transactions above certain financial thresholds may be subject to mandatory pre-merger notification requirements under the Competition Act. Investors should also consider acquisitions by non-Canadian entities, which may be subject to mandatory pre-closing approval requirements or post-closing filings under the Investment Canada Act, or provincial foreign ownership of land considerations. For more information, see our primer on reviews under the Investment Canada Act.

Governmental financing and support initiatives are also increasingly incorporating sovereignty requirements for these projects. For example, under SCIP, project proposals had to demonstrate Canadian ownership or legally enforceable control through the full lifecycle of the facility. Data centre investors should assess whether they will be subject to additional reporting, review or governance requirements.

The opportunity

In Canada, before making decisions where they may affect asserted or established Aboriginal or treaty rights (such as issuing regulatory approvals or making land-use decisions), the federal and provincial governments have a duty to consult Indigenous groups, and, where appropriate, accommodate them. Because data centre projects may affect water and land resources, or otherwise engage the duty to consult, proponents should engage Indigenous communities early to support meaningful participation in project development.

Indigenous communities can also provide local knowledge, labour, and workforce-development support. For example, Bell Canada announced its 300 MW AI data centre in Sherwood, Saskatchewan, in partnership with George Gordon First Nation. The project is expected to generate approximately $12 billion in economic benefits. The agreement between Bell and George Gordon First Nation focuses on Indigenous procurement participation and workforce development, and enables heat reuse in a development project by George Gordon Developments, which is 100% owned and operated by the First Nation¹¹. Such partnerships can provide significant economic benefits to local communities, while also furthering Indigenous reconciliation.

Offering equity ownership in projects to Indigenous communities is increasingly being used by proponents to garner support for major projects, and to reduce risk, by sharing the economic benefits with impacted Indigenous peoples. We expect that these investment opportunities will continue to grow as large-scale energy and infrastructure projects continue to be a national priority, including in the AI buildout.

All dollar amounts in this primer are C$ unless indicated otherwise.