Alberta’s plans for a new “server tax” on AI data centres and energy rationing could hamper the province’s efforts to attract new investment in digital infrastructure, industry executives claim.

Last week, the United Conservative Party (UCP) government announced it will launch a two per cent levy on the computer hardware in data centres of 75 megawatts or more that are connected to the power grid at the end of 2026.

Firms planning data centres in the province are looking for clarity on how the levy will work, warning that it could deter their customers and delay projects. “Things like this cause people to press ‘pause’ for a little bit,” said Todd Coleman, CEO of eStruxture, which has two existing data centres in Calgary and has begun construction on a 90-megawatt third. 

Amazon Web Services (AWS) and Sovereign Digital Infrastructure both said they’re seeking more details on the new levy. Amazon’s cloud arm has committed to invest $4 billion in Alberta between 2023 and 2037, said Nicole Foster, director of global AI and ML policy at AWS. That includes a new cluster of data centres in Calgary. Sovereign, meanwhile, is developing a data centre in Northern Alberta with the Woodland Cree First Nation that’s set to be powered by a new 650-megawatt natural gas plant.

The UCP government said the levy resulted from a six-week consultation with industry. Coleman said the measure still came as “a surprise,” because the government only recently finished surveying firms. 

The final design of the levy could impact which projects get built in the province. Coleman said officials have described it as a “server tax” in meetings. AI data centres are typically filled with millions of dollars worth of advanced chips and networking equipment, meaning the levy could be a significant cost. 

Firms like eStruxture use a co-location business model, providing buildings and power connections into which cloud service providers and large companies install their own hardware. Those clients would have to pay the levy, which could decrease demand for data centre space in Alberta, Coleman said. 

The levy could also affect a large number of projects. While few current data centres would exceed the 75-megawatt threshold, firms are building larger facilities to meet AI’s hunger for processing power. The Alberta Electric System Operator (AESO) has received applications for at least 19 proposed projects of 100 megawatts or more. 

The levy will only apply to grid-connected facilities. Alberta is encouraging data centre operators to bring their own power, primarily by partnering with electrical utilities to set up new plants that burn natural gas. Sovereign, Crusoe and Gryphon Digital Mining have all announced plans for such facilities. Despite this, most data centres still need grid hookups, either because they’re not located right next to the power plants generating their energy, or as a backup option to ensure the servers never go down, Coleman said. 

Alberta has been courting investment in data centres over the last year, touting its deregulated energy market and the availability of natural gas. More recently, provincial authorities have moved to manage the growth of AI infrastructure. Finance Minister Nate Horner said last week the new data centre levy would “ensure that Albertans got a fair deal” from any new facilities. The AESO is also limiting the amount of electricity available for large-load projects like data centres, citing power demand that far exceeds supply.

Pauline McLean, chief legal officer at Edmonton-based Capital Power, said the firm is concerned about Alberta’s “ability to catalyze this nascent industry” and leverage the province’s “competitive advantages.” She reiterated the company’s concerns about the new AESO process for allocating electricity.

eStruxture’s Coleman is still optimistic about building data centres in Alberta, citing its business-friendly climate and positive past discussions with provincial officials. The firm isn’t yet altering its plans in the province, but the levy could impact other developers, he said, adding that it’s “early days to be talking about a tax on an industry that really hasn’t arrived yet.”