Alberta’s AI data center dreams run into global shortage of gas turbines

Alberta’s AI data center dreams run into global shortage of gas turbines

The Alberta government has big ambitions for AI data centers, but those dreams will have to contend with the harsh reality of a heated global competition for electricity.

Around the world, there is a shortage of turbines used in natural gas power plants, as more and more electricity generation is built to feed hungry data centers. Estimates for wait times to obtain the critical components are now upwards of five years. Prices have also increased dramatically.

That has serious implications for Alberta’s plan to attract $100 billion in data center investment over the next four years, not only in terms of how quickly the facilities can be built, but also at what cost.

As if to drive the point home, the province joined private industry on July 2 for the announcement of the $4.6 billion Greenlight natural gas power plant, which is 2.6 times more expensive than a similarly sized power plant completed by the same company two years ago. That plant will feed electricity to a $15 billion Meta data center.

“We’re definitely seeing the impact of that turbine supply crunch,” Will Noel, senior electricity analyst with the Pembina Institute, tells The Narwhal.

These power plants burn natural gas, a source of the potent greenhouse gas methane, to spin turbines that generate electricity. Natural gas power generation accounts for approximately 77% of Alberta’s electricity grid.

The turbine shortage comes on the heels of the province’s overhaul of its electricity market, a move that has stalled power plant investment as companies wait for more certainty before committing. It also follows the government’s crackdown on renewable power generation, which decimated the market for wind and solar in Alberta.

Data center developers face lengthy waits and a highly competitive process if they want to connect to Alberta’s grid but can move quickly if they build their own power supply, which the grid operator requires to be natural gas, at least for now.

The operator, in response to questions from The Narwhal, said that’s because developers must be able to meet their power demand at all times.

“Renewables and stand-alone storage are currently excluded because of weather dependency and duration limitations,” a spokesperson said by email. “As of now, they are not qualified to reliably offset a data center’s around-the-clock draw the way dispatchable gas generation can.”

New technologies could change that, according to the operator.

If the proposed data centers don’t already have their turbines ordered, it’s going to be a long wait.

Noel says it’s unknown how many of the 41 data center proposals in Alberta as of July 7 have finalized designs and parts on order. It’s also not known if any will eventually connect to the grid.

“This is obviously speculation,” he says, “but I imagine most of these data centers don’t have turbines ordered.”

Summary

• The Alberta government is hoping to attract $100 billion in data center investment to the province over the next four years. If built, the data centers would require enormous amounts of electricity to operate.
• With a cap on how much electricity data centers can purchase from the provincial grid, most will have to generate their own power by burning natural gas, a fossil fuel.
• A global surge in demand for natural gas plant infrastructure is driving up costs and extending wait-lists, calling into question how realistic Alberta’s data center ambitions are.

The global turbine shortage

Across the world, but particularly in the U.S., data centers are being built at a furious pace. That, along with a broader turn to electrification and production challenges, is creating a bottleneck for turbines and additional power plant components.

A report from Bloomberg says the cost of building a natural gas plant in the U.S. increased 66% between 2023 and 2025, while the time it takes to complete construction has increased 23% in the same time period.

The pressure to build and the lack of components are creating bidding wars on turbines and swelling the bottom lines for turbine manufacturers.

GE Vernova, one of the few large-scale turbine suppliers, saw significant growth last year and into 2026, and has a backlog of orders that account for 100 gigawatts of potential power supply. (For reference, that’s nearly one-third of the electricity the entire city of Calgary uses in a year.)

All three of the major turbine suppliers are reporting delays.

That supply crunch has led some data center developers in the U.S. to go to extreme lengths to get power, including repurposing old jet engines.

Noel calls those fixes “inefficient and very costly,” but notes “the revenue they’re getting from the data centers is outstripping the extra cost, so they’re just kind of doing what they can to get any power on site as fast as possible.”

In Alberta, a power surplus could quickly evaporate

There is nothing to that extent happening in Alberta, which quickly instituted a hard cap on how much power was available to data centers from the existing power grid.

The Alberta government has embraced the AI boom as a way to increase demand for the province’s vast natural gas reserves.

“Jurisdictions that can provide reliable and affordable power will have a serious advantage in attracting investment, and with our vast natural gas resources and mature industrial infrastructure, that is exactly what Alberta can offer,” Premier Danielle Smith said while announcing the recent Greenlight project.

The Alberta Electric System Operator, which manages the province’s private grid, allocated 1.2 gigawatts of power to data centers through a competitive process that ended with two developers allowed to tie into the grid.

Another round will dole out additional power and the system operator recently announced data center developers planning to build their own power plants could temporarily tie into the grid while those plants are being built, up to 1.6 gigawatts.

The operator said by email that the “bridging provision” is a “general mechanism accommodating a time gap (up to three years) between a load being ready to operate and its generation being fully built and in service for any reason.”

It is up to the developer to ensure it has the necessary power after that three-year window, and if there is a power shortage during those three years, data centers using the bridging provision would be the first to have electricity curtailed.

The province also has a healthy cushion of extra power after a buildout of capacity prior to market reforms and a renewable crackdown. But that won’t necessarily last.

Noel points to the insatiable data center demand and resulting supply crunch, combined with population growth and increasing electrification, as pressures on the system.

“And then we’ve got the old coal plants that were converted to run on gas — those are coming up soon on their end of life,” he says. “So I think mid-2030, if we don’t kind of deal with this now — whether it’s more gas or more renewables or whatever — I think there’s a real possibility that we will go from flush with power to just scraping by again.”

The office of Alberta’s minister of affordability and utilities, RJ Sigurdson, didn’t reply to specific questions about the turbine shortage and its impacts, but said the government prioritizes the “well-being of Albertans” and “will not compromise the reliability or affordability of the electricity that millions of Albertans, Indigenous communities, and our local industries depend on.”

The minister’s office said the government “does not prescribe a specific generation technology for powering data center projects.” It said the decision by the grid operator to limit generation to natural gas at this time is an independent decision by the arm’s length body.

The Alberta Electric System Operator says its role is to ensure the safety and reliability of the grid, and it does not track whether private developers have ordered the necessary equipment.

So what does this all mean for Alberta’s AI data center dream?

The Narwhal reached out to all of the big natural gas generators in the province to see if they were being impacted by turbine delays and cost increases, but received no responses. Emails to two data center developers, Beacon Data Centers and Synapse, also did not get a response.

It can be difficult to assess how the various companies could be impacted by the current race for power plant components, but applications to the Alberta Utilities Commission, the regulator for power plants, provide some insight.

Synapse, which hopes to start construction on a data center near the town of Olds in October, hasn’t disclosed who will build its turbines, but says once final decisions are in place, it could have them on site within a month. It plans to use modular generators, operating alone, before completing construction of a full system while the project is online.

In the company’s application to Alberta Environment and Parks, Synapse says it will use generators from Alberta-based Eco Power Equipment, which specializes in portable gas generators. Eco Power said it doesn’t manufacture turbines.

Another data center moving through the regulatory process is Beacon Data Centers’ Indus project, southwest of Calgary.

Its application to the regulator shows details on turbine components and has a target of Dec. 31, 2028, for completion of the project, pending approval.

Alberta’s electricity market overhaul stalls investment as companies wait for more certainty

As those projects move through the regulatory process, large electricity generators remain cautious about building new projects to help keep the lights on.

There are also questions about how the data center boom could impact prices. Premier Smith says the Greenlight project could help bring down transmission costs, which ultimately show up on electricity bills. Noel agrees that’s possible.

But the flip side is increased demand for natural gas, and the trickle-down of massive cost increases for building power plants could potentially increase electricity or heating bills.

“I think everyone’s kind of sitting and waiting to see how the [restructured electricity market] plays out,” Noel says.

“In 2028, we’ll phase out the old market and bring in the new, and maybe then we’ll start to see investment, but that’s a pretty long time.”

This story was produced by The Narwhal and reviewed and distributed by Stacker.