Large Load Integration on Alberta’s Electricity Grid: The AESO’s Proposed Approach for Data Centre Connections

Written By Martin Ignasiak, Shawn Munro, David Macaulay, Jessica Kennedy, Larissa Lees and Erin Allison

The growing data centre industry continues to be a focal point of the Alberta Government’s economic diversification strategy. Policy work aimed at attracting data centre investment to the province is ongoing and interest in data centre development is high, resulting in an unprecedented amount of connection requests being submitted to the Alberta Electric System Operator (AESO) to obtain power from the grid.

On June 4, 2025, the AESO announced its approach for “large load integration”, referring to the interconnection of large data centre projects seeking power from Alberta’s electricity grid. The approach seeks to address the impacts of data centre interconnection requests on grid reliability.

Our previous blog post, Alberta's Data Centre Advantage: A Growing Hotspot for Critical Digital Infrastructure, discussed the significant demand for data centres, Alberta’s opportunity to meet that demand, as well as the next steps for Alberta in attracting data centre investment. This blog provides an overview of the AESO’s new large load integration approach, and particularly its strategy for initial load allocation, taking place this summer, to enable data centre interconnections in the near term.

Data Centre Electricity Demand

In a stakeholder information session held on Wednesday, June 4, 2025¹, the AESO indicated that there are currently 29 data centre connection applications for firm Demand Transmission Service (DTS) progressing through the AESO Connection Process. These applications represent over 16,000 megawatts (MW) of cumulative requested DTS from the Alberta grid. For context, Alberta's current peak demand level is approximately 12,000 MW.

The significant cumulative demand of these projects exceeds existing and expected new supply on the Alberta grid. In a December 4, 2024, press conference regarding Alberta’s new data centre strategy, Minister of Technology and Innovation Nate Glubish emphasized the importance of off-grid infrastructure (sometimes referred to as a “bring your own generation” approach) for initial scaling of data centre projects². However, new generation may not be available in a timely fashion for some projects and, due to their high reliability requirements, most large data centres will require a grid connection and associated supply contract regardless of whether they have their own on-site supply. Moreover, in a recent decision, the Alberta Utilities Commission created significant impediments for those seeking to engage in the self-supply of electric energy³.

The AESO has determined that, due to the significant volumes requested and the unique load behaviours of data centre projects, it cannot connect all of these data centre projects in the short-term while preserving grid reliability. Accordingly, the AESO is implementing a phased approach to large load integration that is intended to facilitate some data centre development in the near term while ensuring that the Alberta grid can handle the system requirements associated with data centre projects.

The AESO has set an interim DTS capacity limit of 1,200 MW for large load data centre projects seeking in-service dates in 2027 and 2028, representing the amount of large load that the AESO has determined can be reliably connected by 2028. This capacity will be allocated to data centre project developers in the first phase of the AESO’s large load integration approach, as detailed below. The AESO intends to revisit the interim capacity limit calculation and advance a long-term large load integration framework in the second phase of the approach.

The AESO’s large load integration approach is, at this time, focused on large loads associated with data centre projects where the requested load is beyond what is accounted for in the AESO’s typical load growth forecast. Distribution area load requests and projects that are requesting DTS in an amount less than 75 MW are not being considered as part of the large load integration process nor does it apply to energy storage projects.

The AESO’s Large Load Integration Approach

Phase I: Interim Limit Assignment Process

In Phase I of the large load integration approach, the AESO will allocate the 1,200 MW interim DTS capacity limit among data centre projects on a pro rata basis by early July 2025 (referred to as the Limit Assignment Process). The AESO will give priority to those data centre projects that are more advanced in the AESO Connection Process, are ready for near-term connection and that can be accommodated by the current grid.

Specifically, the Limit Assignment Process applies only to those projects with a requested aggregate load of 75 MW or greater at a single site and an in-service date requested in 2027 or 2028. The AESO is also only considering projects that have advanced to the stage of the AESO Connection Process at which connection studies are taking place. Connection of the project must not require enhancements or upgrades to the existing transmission system. The AESO has indicated that there are 15 projects that meet these initial applicability requirements and may go through the Limit Assignment Process.

In order for projects to qualify for allocation of the limited DTS capacity in the Limit Assignment Process, project developers must satisfy all of the following criteria by June 30, 2025:

• the developer must provide the AESO with a letter from the applicable municipality or county that expresses support for the project and confirms that any required zoning and permitting for the project are already in place or on track to be in place.
• the developer must provide the AESO with financial security consisting of (i) security for two months of tariff billing under the DTS contract, and (ii) security for the full amount of the applicable payment in lieu of notice (PILON) (i.e., the charge that applies if the contracted start date is delayed). Although security for the PILON is not typically collected at the time of execution of a DTS contract under the AESO Connection Process, project developers in the Limit Assignment Process will be required to provide security for the full PILON payment in order to demonstrate financial viability and commitment. Specific security requirements will be based on the AESO’s estimate of the MW amount that will be assigned to the developer in the event its requested MW are qualified in the Limit Assignment Process, and will be trued up at the time of execution of a DTS contract. This financial security is anticipated to be material, which the AESO estimated to be $14 million for every 100 MW of DTS capacity.
• power flow results from connection studies must demonstrate that system reinforcement (enhancements or upgrades) is not required to connect the requested load for the project.

Capacity assignments will be offered to project developers with qualified projects on a pro rata basis, considering each developer’s qualified MW amount compared to the total amount of qualified MW. If developers do not accept their offer, then the offered capacity will be re-offered to other developers with qualified projects on a pro rata basis. For developers that have multiple qualified projects, once capacity has been assigned to the developer then it may, subject to certain limitations, distribute its assigned MW across its qualified projects. This potential re-allocation of assigned MW within a portfolio will be capped at a demand volume that does not trigger the need for system reinforcements, including at both individual project and regional scales.

Tight timelines apply in this Phase. Project developers with projects being considered for qualification are currently being contacted by the AESO with details regarding the Limit Assignment Process. The project qualification requirements set out above, including the provision of financial security, must be met by June 30, 2025. The AESO will be issuing initial assignment offers by July 7, and proponents must decide whether to accept those offers by July 14. The AESO intends to then issue DTS contracts by July 21 to be executed no later than August 4. If project developers miss any deadlines in the Limit Assignment Process, then their allocated MW will be reassigned to other developers.

Once the Limit Assignment Process is complete and DTS contracts are in place, the AESO will issue proposals to proceed to all projects with executed contracts. Those projects will continue to move through the AESO Connection Process. Concurrently, the AESO is developing large load interconnection technical requirements, which are anticipated to apply to all large load connections that are subject to the Limit Assignment Process as well as on a go-forward basis.

Phase II – Development of a Long-term Large Load Integration Framework

Due to grid reliability considerations, the AESO has indicated that additional large loads, beyond those projects that are assigned capacity in the Limit Assignment Process, cannot currently be connected to the grid absent new generation and/or transmission infrastructure or new tariff or market tools. At this time, the AESO has not determined what additional capacity may be made available for large loads in the longer term.

Any data centre projects that are not selected in the Limit Assignment Process, as well as any new connection requests for large load beyond the amount allocated in the Limit Assignment Process, will only be able to progress through the AESO Connection Process up until the end of Stage 2 of the AESO Connection Process. This will include scoping activities and the completion of studies to determine how the projects will connect to the grid and any system impacts and required reinforcements. However, at the end of Stage 2, the projects will be placed on hold and will not proceed in the Connection Process until the AESO has advanced its Phase II work to prepare a long-term large load integration framework.

The AESO’s long-term large load integration framework will include implementation of NERC large load standards, as well as potential Independent System Operator (ISO) Tariff changes, enhancements to the AESO’s long-term forecasting and planning, and/or Connection Process changes. The advancement of further data centre projects will depend on the progression of this work. AESO stakeholder engagement on the long-term large load integration framework is anticipated to start in the second half of 2025.

Conclusion

The AESO's new large load integration approach marks a significant first step in managing the growing demand from data centre developments in Alberta. With timelines already in motion and limited DTS capacity available, project developers face a competitive and time-sensitive process.

In Phase I of the approach, the allocation of only 1,200 MW of DTS capacity on a pro rata basis will likely result in material capacity reductions for most (or all) of the projects that are qualified in the Limit Assignment Process. Some of the potentially eligible data centre projects currently in the Connection Process are being advanced by the same developer, and those developers with multiple qualified projects may be able to re-allocate their assigned DTS capacity among their qualified projects.

While the interim framework provides short-term clarity, the long-term implications for the provincial data centre industry, Alberta's transmission system and the regulatory landscape remain to be seen as the AESO advances its large load strategy.

Bennett Jones will continue to monitor regulatory and policy developments related to Alberta’s data centre opportunities. If you have any questions about the specific needs of your business and the impacts of these developments, please contact the authors of this post or a member of the Bennett Jones Energy Regulatory, Power & Renewables or Energy practice groups.

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