Powering AI: Electricity and GDP Growth 2025-2035

Key finding: Global electricity use by data centres is projected to more than double by 2030, reaching ~945 TWh/year — slightly more than Japan's entire current power consumption. The nations that can supply those watts, cleanly and affordably, stand to capture the economic returns of the AI build-out.

Global Link Between Power and AI Computing Growth

Artificial intelligence's rapid growth is tightly intertwined with electricity availability. Data centres — especially those running AI workloads — are voracious power consumers, and their energy demand is soaring alongside advances in AI. Globally, electricity use by data centres is projected to more than double by 2030, reaching about 945 TWh (terawatt-hours) per year — slightly more than Japan's entire current power consumption. The International Energy Agency (IEA) reports that AI-specific data centres will drive much of this increase, with power demand from AI-optimized centres quadrupling by 2030. A single modern AI data centre can consume as much power as 100,000 homes, and the largest upcoming facilities will use 20× that amount.

This trend reflects a clear correlation: as more electric power becomes available (and affordable), AI computing capacity expands, enabling larger models and more pervasive AI services. Conversely, power constraints can bottleneck AI growth. A U.S. analysis found data centres (largely driven by AI and cloud services) could grow from ~3–4% of national power use today to ~12% by 2030, requiring over 50 GW of new power capacity. Without ample electricity and grid infrastructure, the potential of AI cannot be fully realized. In short, computational progress in AI is increasingly limited by power supply. As one report put it, "electricity supply is the most acutely binding constraint on expanded computational capacity." This global dynamic sets the stage for Canada's opportunity: leveraging its power resources to fuel AI growth.

Canada's Power Generation Outlook (2025–2035) by Province

Canada's electricity grid is dominated by clean power (over 80% from non-emitting sources) and is poised for significant expansion to meet future demand. Total generation was about 625 TWh in 2021, and is expected to rise substantially by 2035 with electrification and population growth. Below is a breakdown of current generation and forecasted additions by province, highlighting "surplus" power that could be available for new uses like AI data centres.

• Quebec (QC) — Current: ~196 TWh/year (≈94% hydroelectric), with large legacy hydro dams. Historically, Quebec holds a surplus (exporting ~30–35 TWh to the U.S. in recent years). New by 2035: Quebec is adding 4 GW of wind by 2030 and exploring a new big hydro project, which could add on the order of 15–20 TWh of annual output by the mid-2030s. However, domestic demand is rising — Hydro-Québec's latest supply plan identifies AI/data centres as the single largest new demand item of the next decade. Even so, with expansions Quebec is likely to maintain some exportable surplus capacity that could be redirected to power AI centres.

• Ontario (ON) — Current: ~145 TWh/year (mix of ~54% nuclear, 24% hydro, 8% natural gas, and ~14% wind/solar). Ontario relies on a large nuclear fleet (Bruce, Darlington, Pickering) and gas peakers to meet peak demand. New by 2035: Ontario is refurbishing its nuclear stations to keep 10+ GW of baseload through the 2040s. It plans Canada's first grid-scale SMR (300 MW) by ~2029, and is procuring new natural gas and renewables (several GW of wind, solar, and storage). The provincial grid operator (IESO) projects data centres (mostly AI-driven) will constitute 13% of all new electricity demand by 2035. Ontario's challenge will be balancing these new high-tech loads with other electrification (EVs, manufacturing) — but new capacity (likely ~5–8 GW added by 2035) is in progress.

• British Columbia (BC) — Current: ~66 TWh/year (≈95% hydro). BC has large hydro assets and traditionally a modest surplus. New by 2035: The Site C dam (1.1 GW) comes online ~2025, adding ~5 TWh yearly. BC has limited easy hydro expansions left, so further growth will come from wind, solar, and storage projects, supported by federal clean-power funding. BC Hydro has actively courted data centres with low-cost renewable electricity, even offering special rate discounts (fully subscribed by 2023). By 2035, BC's demand will grow (EV adoption, etc.), likely using up most of Site C's output — but some surplus hydro power in off-peak seasons could be dedicated to new AI data hubs.

• Alberta (AB) — Current: ~52 TWh/year (formerly ~36% coal, 44% natural gas in 2021; now shifting as coal plants retire). New by 2035: Alberta is phasing out coal by 2030, replacing it with new high-efficiency gas plants and a boom in wind and solar. Onshore wind and solar capacity is expected to more than triple from ~3 GW to 10+ GW by 2035, given its deregulated market and strong investor interest. Total generation might reach ~60–70 TWh by 2035 as demand grows. Notably, Alberta is a hotspot for proposed AI data centres — as of early 2025 over 10 GW of data centre projects are in the interconnection queue. The province's abundant natural gas and open grid make it amenable to large off-grid data centres using dedicated gas generation (a "bring your own power" model). Alberta's potential surplus lies in its untapped gas capacity and vast wind/solar potential.

• Manitoba (MB) — Current: ~38 TWh/year (≈97% hydro). Manitoba recently added the Keeyask hydro station, creating a surplus that it exports to the U.S. and Ontario. New by 2035: Manitoba may add some wind power and enhance interprovincial grid ties, but demand growth is moderate. It will likely continue to have clean power surplus (several TWh/year) that could supply new industries like data centres. Manitoba's low-cost hydro electricity is a strategic asset for attracting AI facilities, though scale is smaller than QC or BC.

• Atlantic Canada — Nova Scotia (NS) generates ~8–9 TWh/year (2022: 44% coal, 19% natural gas, ~30% renewables) and New Brunswick (NB) ~12 TWh (one nuclear reactor, some coal/gas, hydro, and wind). New by 2035: NS and NB must replace retiring coal — NS is targeting 80% renewable electricity by 2030 (adding wind farms and importing hydro via the planned Atlantic Loop), while NB is exploring a 300 MW SMR by ~2035 at Point Lepreau. Newfoundland & Labrador (NL) already produces ~40 TWh (mostly Churchill Falls hydro, largely exported) and is now eyeing offshore wind for green hydrogen and the long-delayed Gull Island hydro project (possibly post-2030). Surplus potential: Atlantic provinces historically lacked big surpluses (NS even imports power), but NL's huge hydro and future wind could supply new East Coast data centres by the 2030s.

• Saskatchewan (SK) — Current: ~24 TWh (coal and gas heavy, ~36% coal in 2021). New by 2035: SK will retire conventional coal by 2030 and add combined-cycle gas, wind/solar, and likely share the 300 MW SMR project with NB (target ~2035). Its grid will grow to ~30 TWh with cleaner sources but little surplus — new generation will mainly meet its own growing demand (including some AI/data centre interest around Saskatoon).

• Territories & Others — These have very small grids (e.g., Yukon ~0.5 TWh, mostly hydro). Their contribution to AI power is minimal, though Yukon and the Northwest Territories have some isolated hydro that could support small data facilities (for example, blockchain or edge computing in cold climates).

Nationally, Canada's installed capacity is projected to grow from ~149 GW in 2021 to ~170 GW by 2035 (baseline scenario), with wind and solar seeing the fastest growth (onshore wind jumping from 14 GW in 2021 to ~36 GW by 2035; solar from 4.5 GW to 26 GW). Total annual generation is expected to increase to roughly 700–800 TWh by 2035, up from ~625 TWh in 2020. Much of this new output will replace phased-out coal and meet new electrification demands (EVs, electric heating, industrial electrification). Hydropower and nuclear will remain the backbone (hydro ~400+ TWh/year, nuclear ~80–100 TWh with refurbishments), while renewables (wind, solar) climb to ~150+ TWh by 2035. Importantly, provinces like Québec, BC, Manitoba, and NL are anticipated to still have exportable clean power surplus in this period — a strategic resource that could be redirected to domestic AI data centres instead of exports.

Allocating Surplus Power to AI Data Centres: The 20% Scenario

If Canada dedicates a significant share of its growing power supply to AI-centric data centres, the economic payoff could be substantial. To illustrate, consider Canada's potential new power "surplus" coming online by 2025–2035. Suppose Canada adds on the order of 150 TWh of annual generation by 2035 (through new hydro, wind, solar, nuclear and gas projects) beyond current levels. Dedicating 20% of that new capacity to AI data centres would allocate about 30 TWh/year to AI computing.

• Energy allocation: 30 TWh/year is roughly equivalent to a continuous power draw of about 3.4 GW of data centre load (since 1 GW running 24/7 yields ~8.76 TWh per year). In practical terms, that could power on the order of 30 large-scale AI data centres of ~100 MW each, or a mix of several hyperscale cloud campuses. This is a huge increase — for perspective, Canada's entire data centre industry was only ~750 MW in 2023. It is ambitious but conceivable given the pipeline of proposals: regulators are already reviewing 15 GW of data centre projects (≈100+ TWh/yr) across Canada, and Alberta alone has ~20 GW of informal proposals queued up. A 3.4 GW allocation (≈20% of new supply) is well within these bounds, representing a scenario where some but not all proposed centres materialize.

• Provincial breakdown: This 20% allocation might be drawn from the provinces with the largest surpluses and expansion plans. For example, Québec could redirect a portion of its export hydro (say 5–10 TWh) to local AI servers instead; BC and Manitoba might contribute a few TWh each from their surplus; and Alberta/Ontario could purpose-build new gas or renewable generation for, say, 5+ TWh each dedicated to data centres. Such a strategy would consume only a fraction of each province's growth. For instance, Hydro-Québec exported 34.6 TWh in 2024 — using 20% of that export capacity for AI (~7 TWh) could power several big data centres in Quebec. Alberta's upcoming renewable and gas projects could similarly reserve a slice for, say, a 500 MW AI compute park near Calgary. In all cases, the remaining 80% of new power would still go to core needs (homes, EVs, industries), so this level of AI investment need not starve other sectors of electricity. It represents a diversification of demand: carving out part of Canada's clean-energy growth to directly produce "intelligence" (AI services) instead of kilowatt-hours for export.

• Feasibility: Technically, allocating ~30 TWh to AI by 2035 is plausible if the grid expansions stay on track. The steady, high utilization of data centres can even be an advantage — their 24/7 demand can improve grid economics by consuming nighttime or seasonal surpluses. Indeed, in regions like California, large data centre loads have helped stabilize rates by absorbing excess renewable output. Canada's case would be similar: using surplus hydro/wind at off-peak times to feed AI compute could yield revenue without requiring new peak capacity. Still, careful planning is needed to avoid straining local grids (AI centres can demand 100+ MW in one location, which may require transmission upgrades).

Calculation — 20% surplus example: As a simple calculation, if Canada reaches ~800 TWh generation by 2035 (about +175 TWh over 2021), that "new" 175 TWh is the potential surplus available for new loads. 20% of 175 TWh is 35 TWh — aligning with the ~30 TWh ballpark used above. In terms of GDP, 35 TWh of electricity used productively is not just electricity sales (worth perhaps $2–3 billion), but the foundation for tens of billions in digital output (as discussed next). The bottom line is that on the order of 20–40 TWh/year could realistically be channelled into AI computing by 2035, given Canada's resource base. That level of energy could support world-class AI infrastructure on Canadian soil, with commensurate economic returns.

GDP Impact of Powering AI — Potential Gains for Canada

Investing electricity into AI-specific data centres is economically analogous to fuelling a high-productivity engine. The GDP gains would come from multiple angles.

• Direct investment and jobs: Building and operating data centres is a massive capital enterprise. If Canada realizes even a portion of the proposals in the queue, it would mean dozens of new facilities and billions in construction. Recent estimates indicate that ~20–30 new hyperscale data centres (roughly corresponding to the 15 GW under review) would bring about $100 billion in capital expenditures for construction and IT equipment. This alone is an enormous stimulus — $100B spread over, say, 10 years (2025–2035) is $10B/year, creating jobs in engineering, construction, and manufacturing (servers, electrical equipment). For scale, $10B is about 0.4% of Canada's GDP per year (Canada's 2023 GDP is in the $2–2.5 trillion range). These projects also generate long-term operational jobs and local property tax revenues.

• Digital services output: Once online, AI data centres contribute to GDP through the services they provide — cloud computing, AI model training and inference, data storage, etc. Much of this would be counted in the information and communications technology (ICT) sector of GDP. If Canada becomes a regional AI compute hub (as its cheap clean power and cold climate encourage), companies like Amazon, Google, and Microsoft will route more of their cloud services through Canadian facilities, capturing a greater share of the booming AI cloud market domestically. For context: in 2023 the big three cloud providers spent more on data centres than the entire U.S. oil & gas industry spent on upstream investment — roughly 0.5% of U.S. GDP in data centre spend. If Canada hosts, say, 5% of global AI cloud infrastructure by 2030, that could translate to tens of billions in annual economic activity (cloud service revenues, support services, and related R&D).

• Productivity and innovation boost: Perhaps the largest GDP impact comes from productivity gains enabled by AI across the whole economy. By making abundant AI computing power available, Canada can accelerate AI adoption in all industries, with a multiplier effect on GDP. A recent study by Accenture/Microsoft estimates that generative AI could add $187 billion to Canada's GDP annually by 2030 through productivity improvements and new services — roughly an 8% increase in GDP (equivalent to adding an entire finance sector to the economy). Realizing this requires widespread AI use in businesses, which in turn depends on accessible computing resources. Allocating power to AI data centres is literally powering those productivity gains. By 2035, if Canada fully embraces AI, its GDP could be ~6–10% higher than it would be otherwise.

• Competitive advantage & foreign investment: Canada's abundant clean power offers a strategic advantage — cheap, low-carbon electricity is a magnet for data centre investment. Provinces like Quebec and B.C. have advertised their renewable power and attracted global tech giants (AWS, Google, Microsoft, IBM) to set up cloud regions in Canada. Alberta's affordable natural gas and open market also draw interest for off-grid data centre parks. By allocating power to these uses, Canada can pull in foreign direct investment in the tech sector, diversifying the economy and keeping Canadian data and AI innovation onshore. An RBC analysis noted that local AI data centres strengthen Canada's position in AI by ensuring data sovereignty and cybersecurity and by deepening the talent pool. In the emerging AI-driven economy, being a net exporter of AI services and technology — rather than just raw resources — could significantly improve Canada's trade balance and GDP.

In summary, dedicating a share of Canada's new power generation to AI data centres could yield sizable GDP gains. We would see direct economic activity in constructing and running the centres (on the order of $100B in the next decade) and even larger indirect benefits as AI capabilities enhance productivity across industries (potentially $100+ billion per year by 2030). These figures suggest a strong return on utilizing surplus power for AI.

To tie back to the 20% surplus scenario: if ~30–35 TWh powers AI centres, and those centres in turn enable, say, $100B in value, that's roughly $2.8 billion of GDP per TWh allocated — an extremely high yield compared to most industries. Even if only a portion of that value is captured as GDP, it underscores that the GDP boost from electrifying AI is real and significant. Governments are taking note: Canada's federal Budget 2024 invested $2.4B in AI adoption and infrastructure, seeing it as a pillar of future growth.

Conclusion

Is it worth allocating a significant chunk of Canada's power generation to AI data centres? All signs point to yes. Canada has the clean power resources and upcoming capacity to do so, and the global correlation between electricity and AI growth suggests that those who provide the watts will reap the rewards. By 2035, if 20% of Canada's new electricity supply is harnessed for AI, the country could become a major AI compute hub, fuelling innovations domestically and abroad. The result would likely be higher GDP and productivity, new high-tech jobs, and a strengthened foothold in the digital economy of the future. In essence, converting electrons into AI computations could be one of the highest-value uses of Canada's energy surplus — a strategy to power both our data centres and our economic engines forward.

Sources: Current and projected power data from federal and provincial reports; AI data centre demand and investment figures from RBC Economics and the Canadian Climate Institute; global AI energy trends from the IEA, WEF, and McKinsey; AI economic impact estimates from McKinsey and Accenture/Microsoft Canada, among others, as cited above.