Budget 2025: What It Means for Data Centres
Alberta Budget 2025 backs data centres with $698M Technology and Innovation capital plan and AI Data Centre Strategy, but lacks dedicated funding.
Technology and Innovation capital plan
$698M over 3 years
Alberta Broadband Strategy
$301M over 2 years
Digital Accelerator Program
$93M over 2 years
Sector Impact Summary
Data centres represent an emerging strategic priority for Alberta, and Budget 2025 signals the government's intent to position the province as a premier destination for AI-driven data centre investment. The Ministry of Technology and Innovation receives $834 million in operating expense and a $698 million three-year capital plan, collectively providing the digital infrastructure foundation that data centre operators require. The Alberta AI Data Centre Strategy, referenced in the ministry business plan, aims to attract private investment in AI data centres and build the province's AI capacity.
However, the budget does not include large dedicated capital appropriations specifically for data centre infrastructure. Instead, the approach relies on enabling investments -- broadband connectivity, digital government platforms, and cybersecurity infrastructure -- combined with Alberta's natural competitive advantages: abundant energy, cold climate for cooling, competitive electricity costs in a deregulated market, and a growing technology workforce. The $301 million Alberta Broadband Strategy and $93 million Digital Accelerator Program are the most directly relevant capital allocations, creating the connectivity backbone that data centres depend upon.
The Technology and Innovation ministry's total expense rises to $1,010 million in 2025-26, an increase of $80 million from the prior year. This increase reflects re-profiled Broadband Strategy capital grants ($48 million), government technology modernization ($42 million), and Innovation and Research program funding ($3 million). The ministry's mandate encompasses both the public-sector digital transformation and the policy framework for attracting private technology investment, including data centres.
Key Budget Measures
Technology and Innovation operating expense: $834 million. Covers government technology modernization, cybersecurity, cloud-based platforms, and the policy framework for technology sector development including the AI Data Centre Strategy. (Source: Government Estimates 2025-26)
Alberta Broadband Strategy: $301 million over two years ($106 million in 2025-26, $194 million in 2026-27). Aims to connect every community in Alberta to broadband services by the end of fiscal year 2026-27. This connectivity infrastructure is foundational for data centre operations. (Source: Capital Plan Details by Ministry 2025-28)
Digital Accelerator Program: $93 million over two years ($53 million in 2025-26, $40 million in 2026-27). Supports digital transformation projects across government and the broader economy. (Source: Capital Plan Details by Ministry 2025-28)
One IMT Enterprise Priorities: $118 million over three years. Funds enterprise-wide information management and technology priorities across government. (Source: Capital Plan Details by Ministry 2025-28)
One IMT Critical Infrastructure: $67 million over three years. Addresses critical IT infrastructure requirements including cybersecurity, server management, and data centre operations within government. (Source: Capital Plan Details by Ministry 2025-28)
Alberta AI Data Centre Strategy: no dedicated budget line. The strategy is referenced in the ministry business plan as a policy priority but does not appear with a specific financial allocation. The government is working with partner ministries and stakeholders to attract private investment. (Source: Ministry Business Plans 2025-28, Technology and Innovation)
Funding Changes
| Item | 2024-25 Forecast | 2025-26 Estimate | Change |
|---|---|---|---|
| Technology and Innovation total expense | $930M | $1,010M | +$80M |
| Broadband Strategy capital grants (re-profiled) | N/A | $106M | Re-profiled |
| Government technology modernization | N/A | +$42M | Increase |
| Innovation and Research programs | N/A | +$3M | Increase |
(Source: Fiscal Plan 2025-28, Expense, p.91)
Capital Investment
The Technology and Innovation capital plan totals $698 million over three years, with the following data-centre-relevant allocations:
- Alberta Broadband Strategy: $301 million ($106M, $194M, $0M) -- universal broadband connectivity enabling data centre operations.
- Digital Accelerator Program: $93 million ($53M, $40M, $0M) -- digital transformation supporting the technology ecosystem.
- One IMT Enterprise Priorities: $118 million ($49M, $35M, $35M) -- enterprise technology platforms.
- One IMT Critical Infrastructure: $67 million ($20M, $21M, $26M) -- cybersecurity and server infrastructure.
- Mainframe Modernization: $22 million ($6M, $9M, $7M) -- legacy system replacement.
- Innovation Infrastructure Maintenance: $16 million ($7M, $7M, $2M) -- research facility upkeep.
(Source: Capital Plan Details by Ministry 2025-28)
Risks
No dedicated data centre capital funding. While the AI Data Centre Strategy is a stated policy priority, the budget does not include specific, dedicated capital appropriations for data centre infrastructure. The strategy appears to rely primarily on attracting private investment rather than direct government spending.
Electricity capacity constraints. Data centres require reliable, abundant, and affordable electricity. Alberta's deregulated electricity market provides competitive pricing, but grid capacity and transmission infrastructure may need significant expansion to accommodate large-scale data centre development.
Tariff impacts on technology equipment. U.S. tariffs of 15% and Canadian retaliatory tariffs could increase costs of imported servers, networking equipment, cooling systems, and other data centre hardware, potentially affecting the business case for Alberta-based facilities.
Competing jurisdictions. Other provinces and U.S. states are aggressively pursuing data centre investment with more generous incentive packages. Quebec offers low-cost hydroelectric power, and several U.S. states provide substantial tax incentives that Alberta's strategy must match or overcome with other advantages.
Opportunities
Alberta positioned as AI data centre destination. The government is actively working to attract private investment in AI data centres, promoting Alberta's competitive advantages including energy abundance, cold climate, competitive costs, and proximity to Western Canadian markets.
Competitive energy advantage. Alberta's abundant natural gas supply, growing renewable capacity, and deregulated electricity market could provide competitive energy costs for power-intensive data centre operations. Natural gas prices are forecast to be higher but remain competitive for gas-fired generation.
Cold climate natural cooling. Alberta's northern location and cold climate provide natural cooling advantages that can significantly reduce data centre energy consumption and operating costs, a key differentiator in a sector where cooling can represent 30-40% of energy costs.
Broadband connectivity foundation. The $301 million Broadband Strategy investment creates the connectivity infrastructure that data centres require, with the goal of universal broadband access by 2026-27.
Growing technology ecosystem. Alberta Innovates supports AI, clean energy, and next-generation technologies including quantum computing. Alberta Enterprise Corporation invests in early-stage technology companies. These ecosystem supports enhance Alberta's attractiveness for data centre operators seeking a technology talent pool.
What's Missing
The budget is notably silent on several elements critical to a successful data centre strategy. There are no specific tax incentives, land grants, or infrastructure subsidies targeted at data centre operators. There is no detailed plan for electricity grid expansion to accommodate data centre power demand, which can range from 50 megawatts to over 500 megawatts for a single facility. The budget does not address water usage policies for data centre cooling or the regulatory framework for large-scale industrial electricity consumers. There is no benchmark or target for data centre capacity (in megawatts or square footage) that the province aims to attract, making it difficult to assess the strategy's ambition.
Net Assessment
Data centres receive strong policy attention but limited direct financial commitment in Budget 2025. The $698 million Technology and Innovation capital plan creates enabling infrastructure, particularly through broadband and digital programs, but the AI Data Centre Strategy lacks a dedicated budget allocation. Alberta's competitive advantages in energy, climate, and costs are real, but converting policy intent into investment outcomes will require more concrete incentive mechanisms and grid infrastructure planning than this budget provides.