TELUS is pushing ahead with plans for a major AI data-centre cluster in British Columbia after being selected under Ottawa’s large-scale AI data-centre initiative. But the project is raising questions about who will ultimately control that infrastructure and whether BC’s clean power grid can absorb the electricity demand.

The project announced Monday with federal backing, would start with 85 megawatts of power from BC Hydro and scale to 150 megawatts, and over 60,000 NVIDIA GPUs, by 2032.

It includes three sites: an AI facility in Kamloops launching later this year, a Mount Pleasant location opening in 2026 and expanding through 2028 and a 10-storey data centre near BC Place set for 2029.

Earlier this year, BC Hydro initiated a two-year competitive process to allocate up to 400 megawatts of power to the sector.

In an email to Canada’s National Observer, Chris Madan, vice-president of product and head of TELUS Sovereign AI Factories, said the company is trying to “scale quickly” after its first AI facility in Rimouski, Que., sold out within months of opening.

“Our vision is to advance much-needed infrastructure Canada needs to compete in – and win – the global AI race,” Madan said.

Madan said Ottawa has identified TELUS as the first of over 160 projects to advance under its large-scale AI data-centre initiative.

No federal funding has yet been committed to the initiative, but the Ottawa-endorsed project could give Canadian researchers, companies and public institutions more control over sensitive data and digital infrastructure. It’s also bringing fresh scrutiny over who owns the infrastructure, who benefits from it and what local communities will be asked to take on to make that vision possible.

‘Sovereign’ AI

Countries are increasingly worried about becoming dependent on foreign-owned AI systems in the same way many became dependent on foreign energy, manufacturing or supply chains, said Milind Kandlikar, a professor of public policy at the University of British Columbia.

Access to computing power, data processing and critical digital services could be shaped by external commercial or political interests, he added. “If the entire economic system starts depending on these tools, and all these tools are then located in another country, that can threaten your sovereignty,” Kandlikar said.

Rahul G. Krishnan, an assistant professor at University of Toronto who develops machine learning tools in health care, said Canadian AI infrastructure could be especially useful for researchers handling sensitive data. Health data is difficult to move across borders and is subject to strict privacy rules, so having computing power within Canada could help researchers train and test AI systems without relying entirely on foreign cloud providers such as OpenAI, Anthropic or major US cloud platforms, where data may be processed outside the country.

“If we want to have a fair shot at building ourselves, having access to computes is really, really important,” Krishnan said.

A domestic data-centre cluster is meant to reduce Canada’s dependence on US tech giants such as Google and Microsoft, said Blayne Haggart, a political science professor at Brock University and senior fellow at the Centre for International Governance Innovation.

“The issue for Canada isn’t sovereignty at all costs, or for the sake of sovereignty,” Haggart said. “The problem is, we have the United States as a neighbour that we can’t trust anymore.”

But Haggart said putting a data centre in Canada does not automatically mean Canada controls it. The servers may be inside Canada but the technology, software, customers or parent companies behind the project could still be foreign.

He said Ottawa needs to be clear whether the infrastructure will mainly support Canadian firms, public institutions and researchers or whether it will serve foreign companies operating through Canadian sites or partnerships, with control over the technology, data, customers and profits remaining elsewhere.

“Are they going to be Canadian companies?” he said. “Are they going to be American companies that have been maple-washed as Canadian companies?”

Haggart said the economic case for data centres also needs scrutiny. Unlike auto plants or other large manufacturing projects, data centres do not usually employ large numbers of workers once they are built. The bigger gains often go to a smaller group of people who own or control the data, intellectual property and digital systems.

Madan said the TELUS infrastructure will be fully Canadian-owned and operated, with Canadian control extending across every layer of the project, including facilities, networks, hardware, data and jurisdiction.

Power demand and environmental concerns

Madan said Kamloops was chosen because TELUS already has a Tier III, LEED Gold-certified data centre, connected to BC Hydro’s hydroelectric grid and TELUS’ fibre network, allowing it to be converted faster than building from scratch. Vancouver was selected for its tech workforce, startup ecosystem and Asia-Pacific links through subsea cable infrastructure.

Urban AI facilities can support AI tools that need very fast response times, while connections to district energy systems downtown could allow waste heat from the data centres to replace natural gas heating in nearby buildings, he added.

The BC facilities will use direct-to-chip liquid cooling and closed-loop water systems to reduce water use by up to 90 per cent. At the downtown site, excess heat would be fed into the Creative Energy facility below, reducing the steam plant’s energy needs and cutting the data centre’s cooling energy use by up to 80 per cent compared with traditional data centres.

Kandlikar said that gives the downtown site an advantage over Mount Pleasant because it sits above existing district energy infrastructure, but he added it remains unclear whether the project will deliver the promised savings once it is operating.

AI data centres are becoming a major new source of electricity demand. The International Energy Agency projects global data-centre electricity use will more than double by 2030, reaching about 945 terawatt-hours or just under three per cent of global electricity consumption.

Kandlikar added major AI infrastructure investments could become “stranded assets” if technology or demand shifts faster than expected, much like long-term fossil-fuel projects now facing uncertainty as countries move toward cleaner energy.

Rachel Kitchin, senior corporate campaigner at Stand.earth said many of these deals are negotiated behind closed doors under non-disclosure agreements, leaving communities unaware of energy use or environmental impact until decisions are nearly finalized.

BC Hydro is already under pressure to supply electricity for homes, transportation, buildings and industry, while also responding to growing demand from AI and data-centre projects. “Putting energy demand into a kind of AI, data centres for the sake of a sort of AI flop, is maybe not the highest priority for BC residents,” she said.

BC’s cap on data‑centre electricity requests could be useful if it forces companies to show why their projects deserve power ahead of other needs, she said.

Closed-loop cooling could reduce water use, but it does not eliminate all environmental risks. Kitchin said some systems are filled with per- and polyfluoroalkyl substances (PFAS) often called “forever chemicals” because they do not break down easily, which are linked to long-term contamination concerns.

Because data centres operate continuously, the sound does not stop in the way regular industrial or construction noise might, so Kitchin said noise should also be part of the review.

Backup generators are also noisy and create air pollution, and those risks aren’t always clearly disclosed to residents nearby, she said. Communities in the United States have complained about constant noise from cooling systems, backup diesel generators and other machinery.

“AI data centres are running 24-7,” she said. “This is 10 storeys downtown of computer servers running around the clock.”

— This article was originally published by Canada’s National Observer