Data centres are driving massive electricity demand in the US, with projections of 2-4x growth in just a few years. In Canada, the footprint is smaller but the same pressure is building.
The standard narrative is that data centre growth will drive up everyone’s energy bills. But it’s not inevitable, and in some cases, it’s backwards.
We spoke with Sam Hasty, a Partner at climate tech fund Active Impact Investments, to go beyond the headlines and unpack what's actually happening with data centre energy demand and what they’re seeing in the market.
A recent Lawrence Berkeley National Lab study found that when electricity loads grew, prices sometimes dropped. Most of our electricity bill covers fixed infrastructure costs that exist whether you use one kilowatt-hour or a million. When you spread those fixed costs across more demand, average prices can fall.
That doesn’t mean data centres will automatically lower bills, and other factors like rebuilding infrastructure from extreme weather or upgrading aging equipment bring their own costs. But it shows how load growth alone doesn’t determine affordability - the choices about who pays and how infrastructure gets funded do.
Three main areas where this matters:
Bilateral agreements between data centres and utilities (e.g. PPAs or transition tariffs) can shift who pays for grid upgrades. When large customers fund their own transmission connections, residential customers avoid those costs.
Virtual power plants could unlock capacity in the existing system by coordinating distributed resources (e.g. home solar, EV charging) but utilities aren’t incentivized to roll them out at scale, making business models uncertain.
Data centre demand for clean, baseload power is accelerating nuclear development - funding SMR designs, restarting plants like Three Mile Island - pulling forward technologies that weren’t economically viable just a few years ago.
As much as a booming data centre market is pushing these forward, a lot of it comes down to design choices about who pays and how. Some jurisdictions require new large loads to cover their own infrastructure costs. Others spread them out across all customers.
Canada’s public utility model tends to prioritize reliability and affordability (which is a good thing - it keeps our lights on and prices low). But that can create barriers for new models like VPPs or industrial PPAs that could help absorb some of this load growth and soften the impact on energy bills.
For founders building solutions in this space, Sam offered a clear takeaway: understand where incentives actually lie, not where they should lie.
“If you're not being brutally honest with yourself as a founder about where incentives lie, you can still get stuck … you can have great pace when you're selling into utilities … But there's this harsh reality that there are still a bunch of hurdles to this being incentivized properly as a business model.”
Check out the full interview where we unpack the incentives at play in the grid, why some grid tech startups stall despite strong customer interest, and how Sam evaluates teams trying to sell into utilities.
Building or investing in data centre energy, cooling, or grid infrastructure? We're putting together a research report on data centre sustainability and want to hear from Canadian founders and investors navigating this space. Hit reply if you want to compare notes.
INTERVIEW
How Data Centres are Reshaping the Grid with Sam Hasty, Active Impact Investments
TALKING POINTS
Why data centre load growth is fundamentally different from EVs and heat pumps
The counterintuitive relationship between electricity demand and prices
How AI demand pulled nuclear back onto the table
Why solar and storage can beat natural gas on deployment speed
Canada's structural advantages for data centres & the regulatory barriers holding Canada back
How new grid tool are helping utilities adapt to a changing grid
Why virtual power plants struggle with incentive structures
The Stockdale Paradox and what it means for climate tech founders
How to separate signal from noise in hype-driven markets
Why asking hard questions early matters more than keeping "positive vibes"
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Takeaways
A few things that stuck with me from our conversation:
The Stockdale Paradox: The most effective founders keep an optimistic belief in a positive outcome while simultaneously acknowledging the harsh realities of the situation. It’s a mindset that keeps you grounded in the world as it is - not as you wish it to be - without getting discouraged.
Agency: The outcome is not predetermined. Higher electricity demand does not automatically mean higher bills. There are 1000s of choices along the way about how we integrate new load, update infrastructure, and how those costs are shared. These are political and policy decisions that need active engagement.
Canada’s advantage: From our colder climate to clean energy supply, we’re well positioned to be a data centre leader - and to do it with lower emissions, water use, and community impacts. Strategic regulatory updates - PPAs, pre-permitting, and grid connections - can give us an edge.
Justin
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