Capital Power says newly retooled Alberta plant poised for data centre opportunities

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This article was published 26/02/2025 (583 days ago), so information in it may no longer be current.

EDMONTON – Electricity producer Capital Power Corp. says its recently retooled Genesee Generating Station positions the company well to seize data centre opportunities in Alberta. 

The power plant southwest of Edmonton now runs entirely on natural gas instead of coal after a $1.6-billion multi-year project, allowing it to boost its capacity by around 60 per cent while cutting greenhouse gas emissions by 40 per cent. 

Chief executive Avik Dey urged analysts on a quarterly earnings conference call to be patient as they await details on a potential data centre project drawing power from Genesee.

“I can appreciate that many of you are wondering when we will have a formal announcement on this front,” Dey said Wednesday. 

“Navigating the size and complexity of these projects takes time, but we continue to progress.”

Alberta’s technology minister has said the province hopes to see $100 billion worth of artificial intelligence data centres under construction in the next five years. The massive operations require an immense amount of electricity to run and cool off computer servers. 

In December, the province announced a “concierge program” for major tech firms looking to navigate the regulatory process and set up shop in Alberta. Technology Minister Nate Glubish said at the time that the province is an ideal spot because its deregulated electricity market allows power generators to strike deals to supply private companies directly. 

Glubish said anything that compromises the reliability and affordability of Alberta’s grid would be a “no-go zone.” 

A December report from the Royal Bank of Canada’s Climate Action Institute found if all data centre projects currently going through the regulatory approval process across the country were approved, they would account for 14 per cent of Canada’s power needs by 2030.

“Canadian regulators are reviewing data centre applications with an estimated combined capacity of 15 gigawatts — enough to power seven out of 10 homes nationwide,” the report reads, adding Alberta-based projects represent 6.5 gigawatts of capacity.

Dey said Alberta has a lot of things going for it when it comes to data centres, including a surplus of land, temperate climate, supportive regulatory backdrop and excess power supply. 

A project of 1.5 gigawatts — comparable to the daily power usage of the entire City of Calgary — or larger is “achievable” for Capital Power, Dey said, but it would have to be undertaken in phases. 

“The Genesee Generating station is extremely well positioned for the opportunity we are pursuing.”

He later added in a question-and-answer session with analysts that it used to be that the United States had a more developed data centre market than Alberta, but that’s been shifting. 

“Only in the last six months have hyperscalers and data centre providers really expanded their aperture to start looking at Alberta,” Dey said. 

On potential U.S. tariffs, Dey said his company shouldn’t see much of a hit. 

“Our business is largely insulated from the impact of potential U.S. tariffs, with fuel purchased and power sold to local markets,” he said. 

“Our Canadian and U.S. businesses operate independently, with separate, high-quality counterparties in each country. Our long-term contracts and hedges not only stabilize our cash flow, but who we sell our product to over time.”

For the last three months of 2024, Edmonton-based Capital Power brought in $240 million in net income attributable to shareholders, or $1.75 per diluted share, up from $97 million, or 74 cents per diluted share in the same period a year earlier. 

Revenues and other income for the quarter decreased to $853 million from $984 million during the fourth quarter of 2023. 

For all of 2024, Capital Power had net income attributable to company shareholders of $699 million, or $5.15 per diluted share, down from $744 million, or $6.04 per share in 2023. 

Annual revenues in 2024 were $3.78 billion, down from $4.28 billion. 

Adjusted funds from operations — a measure the company uses for its ability to generate cash from operating activities to fund capital expenditures, debt repayment and dividends — were $182 million for the last three months of 2024, or $1.38 per share. A year earlier, it brought in $162 million, or $1.38 per share. 

For all of 2024, adjusted funds from operations were $817 million, or $6.34 per share, down from $819 million, or $6.99 per share. 

Companies in this story: (TSX: CPX)

— by Lauren Krugel in Calgary.