The federal government is in talks to back Telus’s plans for a major new cluster of data centres in British Columbia, the first project under Ottawa’s strategy to encourage the building of large-scale AI infrastructure across Canada. 

Telus will expand an existing data centre in inland Kamloops, B.C., to up to 25 megawatts, and convert a facility in Vancouver to focus on AI compute, adding 26 megawatts starting in the fourth quarter of next year. The largest chunk of processing power—up to 100 megawatts—will come from a new data centre in downtown Vancouver that Telus plans to start bringing online in 2029.

All told, the firm claims it will have 150 megawatts of capacity powering over 60,000 graphics processing units (GPUs), specialized AI chips, by 2032. Telus says it has so far secured 85 megawatts of electricity from BC Hydro for the project. Real estate firm Westbank will be involved with the two Vancouver facilities.

Ottawa and Telus did not announce a final deal on Monday, or disclose the amount or terms of the federal funding that could be made available to the firm. 

The November 2025 federal budget gave AI Minister Evan Solomon the power to negotiate non-binding memoranda of understanding with firms building and financing digital infrastructure in Canada. Between mid-January and mid-February, the innovation department sought proposals for federal support for data centres of over 100 megawatts.

Solomon has previously signalled that backing could take the form of the federal government buying compute capacity for its own internal needs from data-centre operators. Ottawa’s flagship Strategic Response Fund also has money to help pay for AI infrastructure. Deals have included a $240-million award for Cohere to buy processing power from a new CoreWeave facility in Cambridge, Ont.

Ottawa’s backing for the Telus project represents “concrete action to build sovereign AI capacity here in Canada,” Solomon said in a statement. He added that the benefits will include giving businesses and researchers access to compute, “while keeping Canadian data, intellectual property and economic advantage on Canadian soil.” 

Telus CEO Darren Entwhistle said the new B.C. data-centre project is a response to market demand. 

While rival Bell is renting out its new AI data centres to neoclouds like CoreWeave and Cerebras, Telus buys chips for its own cloud service. Telus entered the AI compute market last March, adding an initial 500 GPUs to an existing facility in Rimouski, Que. The firm says that capacity has now sold out, so it’s adding more in its home province of B.C.

Telus says some of the heat given off by the AI infrastructure in the new Vancouver data centre will be fed into the city’s downtown system for warming buildings via a pipe network. It also claims it will mainly use recycled water and employ closed-loop cooling equipment to minimize environmental impact. Residents in some Canadian communities where new compute facilities are proposed have expressed opposition over concerns about their energy and water use. 

The B.C. government is rationing power to new data centres, making builders compete for capacity. In February, BC Hydro opened its first two-year allocation, offering up to 400 megawatts in total for all such projects across the province.