Canadian independent power producer Capital Power has signed a deal with a data center developer in Alberta to advance a 250MW electricity supply agreement.

The company inked a binding Memorandum of Understanding (MoU) with an undisclosed data center developer to negotiate the power supply agreement, with an expected start date in 2028.

The company has said it will likely power the facility using its 1.8GW natural gas-powered Genesee Generating Station, 71km (44 miles) southwest of Edmonton, Alberta.

"Now more than ever, we see an opportunity to grow our business as a result of structural growth in power demand driven by the AI infrastructure boom and the growing need for reliable and affordable energy," Capital Power chief executive Avik Dey said in a news release.

In addition, the company also signed an MoU with Apollo Funds to form a $3 billion US investment partnership to buy merchant natural gas assets across the United States.

Apollo is to commit $2.25bn in equity, with Capital Power providing the remaining funds. Capital Power is expected to operate the acquired plants and receive management and performance fees.

Alberta is fast becoming one of Canada’s data center hubs, due to its ample land and vast reserves of natural gas. In total, approximately 29 data center projects are seeking a grid connection in the province.

Earlier this month, it was reported that the province had introduced a new bill to incentivize the development of self-powered data centers, creating a framework that would fast-track projects if they came with secured power.

The plans follow the introduction of an interim approach to large load connections announced in June. The approach is expected to enable the connection of up to 1.2GW of new large load projects between now and 2028. The 1.2GW limit is based on the maximum additional load the grid can serve without negatively impacting its overall reliability.

Since then, there has been a proliferation of data center developers seeking to power their operations with on-site generation in the province.

This has taken the form of both small-scale modular deployments, such as Radiant Ridge Energy’s plan to deploy a 3MW natural gas-powered modular hydrocooled data center at a Nordcon gas production site. As well as large-scale plans, such as Crusoe’s agreement with natural gas-fired power provider Kalina Distributed Power to develop multiple colocated AI data centers powered by natural gas power plants in Alberta.