Budget 2025: What It Means for Data Centre Developers

The Bottom Line

Budget 2025 offers data centre developers an attractive baseline: Alberta's 8% corporate tax rate, no provincial sales tax on equipment purchases, a deregulated electricity market with prices trending lower, and a $834 million Technology and Innovation budget. Natural gas at $2.50/GJ supports competitive power generation costs. However, the budget does not introduce a data centre-specific incentive program, tariff uncertainty could increase the cost of imported IT equipment, and the Renewable Electricity Program signals continued government engagement in the electricity market.

Top Measures That Affect You

1. 8% corporate income tax rate maintained, the lowest among major Canadian provinces. No provincial sales tax applies to equipment or material purchases, a significant advantage when outfitting data centre facilities with hundreds of millions of dollars in IT infrastructure.

2. Electricity prices trending lower: The Renewable Electricity Program (REP) requires government to make payments to operators when actual prices fall below contracted strike prices. REP payments are forecast at $82 million per year in 2025-26 through 2027-28, indicating the government expects electricity prices to remain below contracted levels. Lower power prices directly reduce your operating costs.

Natural gas at $2.50/GJ (forecast), more than double the 2024-25 level but still providing competitive generation economics. Natural gas-fueled generation remains a cost-effective option for data centre power supply, whether through the grid or co-located generation.

Technology and Innovation operating budget at $834 million, with capital investment of $698 million over three years. This includes broadband expansion, government digital modernization, and cloud platform investments that create demand for local data centre capacity.

$48 million for Broadband Strategy capital grants in 2025-26, supporting connectivity infrastructure expansion across Alberta. Better connectivity drives demand for data services and distributed computing capacity.

Investment and Growth Fund at $45 million over three years, available for economic diversification and business attraction. Data centre projects may be eligible for support under this fund.

Invest Alberta Corporation at $17 million per year for investor and business attraction. The Corporation has been actively marketing Alberta as a data centre destination.

Direct Financial Impact

Power costs: Data centres in Alberta benefit from a deregulated electricity market where pricing reflects supply and demand rather than regulated rates. With electricity prices trending below REP strike prices, the current price environment is favorable. The Rate of Last Resort was introduced in January 2025, giving consumers (including commercial operators) another pricing option. The government is spending $4 million in 2025-26 on consumer awareness initiatives explaining electricity plan options.

Capital costs: No provincial sales tax on equipment is a major advantage. A $100 million data centre build avoids roughly $7-8 million in sales tax that would apply in BC, Ontario, or Quebec. However, the assumed 15% U.S. tariff on goods (with Canadian retaliation) could increase the cost of imported servers, networking equipment, and cooling systems if the tariff persists.

Corporate tax: At 8% provincially (23% combined with federal), your operating profits face a lower tax burden than in most competing jurisdictions. For large-scale operations generating significant revenue, this compounds into meaningful savings over time.

Water costs: Data centres with water-cooled systems benefit from Alberta's water management infrastructure. The Capital Plan includes $164 million for the Water Management Infrastructure Program. However, you should engage early on water allocation for large-scale operations.

Labour: Alberta's workforce is growing (population growth at 2.5%) and the new tax bracket makes compensation more attractive. However, unemployment at 7.4% is primarily in non-tech sectors, and competition for IT talent remains intense.

Service Changes

Government digital modernization: The province is investing in reducing cyberattack vulnerability, application sustainment, modern digital services, and cloud-based platforms. This government investment in cloud infrastructure creates anchor demand for Alberta-based data centre capacity.

Clean Hydrogen Centre of Excellence: $10 million over two years. If you are interested in hydrogen-powered data centres or clean energy integration, this initiative may offer collaboration opportunities.

TIER (Technology Innovation and Emissions Reduction): Nearly $646 million over three years for emissions reduction and clean technology. If your data centre incorporates waste heat recovery, renewable energy, or other emissions-reducing technologies, TIER programs may provide funding support.

Affordability and Utilities: Operating expense increasing to $160 million, including the Renewable Electricity Program and consumer awareness initiatives. The ministry is modernizing Alberta's utility systems, which affects how data centres access and are charged for electricity.

Industrial building construction: The budget notes that major industrial projects including Dow's $11.6 billion Path2Zero project are driving industrial construction activity, alongside data centre and logistics developments. This signals that Alberta's construction sector is experienced with large-scale industrial projects relevant to data centre builds.

What's Missing

No dedicated data centre incentive program: Unlike jurisdictions such as Virginia, Texas, or Quebec, Alberta does not offer data centre-specific tax abatements, sales tax exemptions on electricity, or accelerated depreciation programs. The general low-tax environment is competitive, but targeted incentives are absent.

No AI or high-performance computing strategy: Despite Alberta's AI research strengths and the growing demand for GPU-dense facilities, the budget does not detail a specific AI infrastructure strategy or incentive for AI-capable data centre builds.

Electricity transmission investment unclear: While the deregulated market is functioning, the budget does not detail specific transmission infrastructure investments that would support large new industrial loads from data centres in particular locations.

Water allocation policy not addressed: Large-scale data centres require significant water resources for cooling. The budget funds water infrastructure broadly but does not address the water allocation framework for new industrial users, which can be a bottleneck for project approvals.

Carbon accounting for data centres: The TIER program covers large industrial emitters, but the budget does not clarify how data centres' electricity-related emissions will be counted or what obligations may apply as facilities scale up.

No mention of land availability or fast-track permitting: The budget does not include a streamlined permitting process or land bank for data centre developments, which are offered by competing jurisdictions.

Key Dates

Date	What Happens
January 1, 2025	New 8% personal tax bracket takes effect; Rate of Last Resort introduced
April 1, 2025	New fiscal year; Technology and Innovation budget begins
2025-26	REP payments forecast at $82M (lower electricity prices)
2025-26	$48M Broadband Strategy capital grants flow
2025-26	Tariff baseline: 15% on goods, 10% on energy
2025-26 to 2027-28	$698M in technology capital invested
2025-26 to 2027-28	$45M Investment and Growth Fund available
2025-26 to 2027-28	$646M TIER spending on clean technology

Where to Get Help

Invest Alberta Corporation: For data centre investment proposals, site selection support, and government introductions, visit investalberta.ca.

Technology and Innovation: For the Innovation Employment Grant, broadband strategy, and digital economy programs, visit alberta.ca/technology-and-innovation.

Affordability and Utilities: For electricity market information, the Rate of Last Resort, and utility modernization, visit alberta.ca/affordability-and-utilities.

Alberta Utilities Commission: For electricity market regulation and interconnection requirements, visit auc.ab.ca.

TIER programs: For emissions reduction incentives and clean technology support, contact Environment and Protected Areas.

Budget documents: Full details at alberta.ca/budget-documents.