IPPSA 2025 and Alberta's New Market: If They Build It, Who Will Come?

Written By David Macaulay, Jessica Kennedy and Larissa Lees

Once again, it was a great opportunity to attend the Independent Power Producers Society of Alberta (IPPSA) Annual Conference and to meet with industry, government and regulatory authorities on issues facing our electricity sector in Alberta last week. This year, policymakers and industry leaders tackled some of the biggest shifts facing Alberta's electricity sector in decades. From sweeping market design changes and evolving transmission policy to the rise of AI-driven demand and new opportunities amid the Canada-US trade crisis, the discussions reflected a sector on the brink of transformation.

Alberta is no stranger to change, but the pace and scale of what's unfolding today is the most significant since the market was competitively restructured in the late 1990s.

This blog captures some of the key themes and insights from the 2025 IPPSA Conference.

The Pace and Drivers of Change

The Minister of Affordability and Utilities (Minister) remained steadfast in advancing the restructured energy market (REM), including day ahead commitment. The Minister highlighted the priority of making final decisions on the market and transmission policy changes, including the development of the initial set of ISO rules and required legislative changes, in mid-2025. However, others emphasized caution in respect of the scope of the changes and concurrent implementation plan, advocating for a phased approach to market and transmission policy changes.

Many of the key design decisions regarding congestion management and the pricing framework remain outstanding. The Minister remained open to feedback and engagement with industry, including exploring alternatives to the market-based congestion management mechanism discussed in the Minister's December 2024 direction letter.

While there appeared to be consensus that Alberta has adequate generation supply for at least five years, many participants noted that this supply cushion could evaporate with the growth in demand from the data centre industry and ongoing policy uncertainty that is likely to delay investment in new generation. Additionally, speakers discussed implementation risks arising from the bespoke REM design and needs for specialized information technology solutions. They advocated for simpler design choices used in other jurisdictions to enable the use of existing off-the-shelf technologies. These challenges and risks appear to be driving the government to continue with its expedited implementation strategy to implement the REM by 2027.

Reliability and affordability continue to be key drivers for policy makers, with "investibility" coming into the forefront of the conversation. Industry repeatedly cautioned against policy that would undermine existing investments, instead advocating for grandfathering or strategies that recognize incumbency to support investibility in Alberta's electricity market. Policymakers continue to recognize those risks, as reflected in the Minister's December direction letter, which expressly requires the congestion management mechanism to "recognize incumbency", and the AESO's recent exploration of locational marginal pricing and assigning transmission rights.¹

Data Centre Opportunities

Alberta remains an ideal jurisdiction for data centre expansion with the abundance of energy resources, a decentralized electricity market and a natural climate (i.e., cooling) advantage, resulting in significant interest from data center developers. Currently, there is over 13 gigawatts of potential data centre projects expressing interest in Alberta, which is more than the province's current peak demand of approximately 12.4 gigawatts. This is elevating concerns about supply adequacy, grid reliability and the need for new generation and transmission to support such large loads.

The Alberta Government is working on policies to manage data center development, recognizing the need to categorize different types of data centers based on factors like size, reliability needs, and ability to ramp power usage. This includes consideration of the approaches in other jurisdictions, like Virginia and Texas. A speaker from the Alberta Government confirmed it is exploring whether to develop a comprehensive data centre development policy, similar to the Industrial Systems policy developed for the oil and gas industry in the 1990s.

The potential rapid growth of data centers is also outpacing traditional AESO transmission planning processes. The AESO and utilities are currently reevaluating existing policies and procedures in order to accommodate and account for such large load requests, with a goal of balancing data center growth with other grid priorities, including maintaining reliability for existing customers. The Minister implied that there may be an upper limit of transmission capability available for grid-connected data centres. This view coincides with the AESO's recent suggestion that the AESO may not be advancing projects through the connection process in the normal course, signaling that there may be a divergence from Alberta's "first come, first serve" transmission allocation policy for data centres to a "fair" allocation methodology for the existing "spare" capacity on the system.

Data centre proponents continue to be actively engaged in driving creative solutions for the electricity sector, including exploring "bring your own power", offering load response and flexibility, and openness to locational signals that reduce impacts to the electricity grid. In respect of behind-the-fence or "bring your own power" solutions, increased demand for natural gas from data centres could lead to opportunities for expanding natural gas infrastructure and potentially increasing overall gas sales in the province. However, others highlighted that this rising demand may have other implications in respect of the ability of the natural gas system to meet sudden spikes in demand, particularly during extreme weather events, that could potentially impact reliability for other gas consumers.

While policymakers and data centre proponents from all jurisdictions continue to grapple with the scale and pace of growth, there continues to be active and collaborative engagement in enabling the growth of the data centre industry in Alberta.

Net-Zero Ambitions: Nuclear Generation Opportunities & CCS

The potential of nuclear generation and small nuclear reactors continues to be explored by policymakers, as it remains an attractive option for carbon-friendly, reliable generation. Speakers commented on Canada's historic strength in nuclear development and relative abundance of uranium reserves—including the ongoing development of the world's largest uranium mine in Saskatchewan. However, the regulatory timelines for nuclear power plants remain challenging and the significant upfront capital costs are not currently tenable given the substantial policy changes underway in Alberta and federally.

Similar comments were shared with respect to carbon capture and storage technology deployment, which requires robust and reliable pricing signals for carbon emissions abatement. However, speakers highlighted: (1) the ability to construct natural gas generation in the short term in a manner that allows for the addition of carbon capture solutions at a future date, facilitating the future deployment of the technology; and (2) the fact that some industrial consumers are choosing to decarbonize using carbon capture despite the absence of certainty on carbon pricing.

The roles of these and other technologies – such as pumped hydro storage—in Alberta's electricity sector continue to be evaluated as part of a broader strategy to balance reliability, affordability and sustainability in the energy system.

Canada's Opportunities for Interprovincial and International Trade

In light of the risk and imposition of tariffs on Canada from the United States, there was renewed optimism in respect of a national approach to energy development and resilience. Former Canadian Prime Ministers, the Right Honourable Stephen Harper and the Right Honourable Jean Chrétien engaged in a fireside chat, offering insights into Canada's political and regulatory landscape and its influence on the energy sector. There was notable alignment that the current trade crisis with the United States represents a national opportunity to focus Canada's efforts on resource development, reducing inter-provincial trade barriers and international trade diversification.

A key point of discussion at the IPPSA Conference focused on the role of electricity interties in strengthening Canada's energy resilience. Interties could enhance grid reliability, support neighboring jurisdictions during times of need, and enable stronger trading relationships between provinces—maximizing the potential of intermittent power generation. Increased connectivity within Canada could also help reduce dependency on the United States and diversify energy sources. However, significant challenges remain, including economic viability, interprovincial trade barriers, and the need for greater provincial cooperation before new intertie projects can move forward.

The broader message was clear: to advance national infrastructure projects and expand trade, all levels of government must work effectively together. While there are various pathways to strengthening Canada's economic resilience in response to the trade crisis, one key takeaway stood out—never waste a crisis.

Our lawyers actively monitor these regulatory and policy advancements and how the changes may impact market participants. Should you wish to discuss any of the information or issues addressed in this post, please contact the authors of this post or the Bennett Jones Energy Regulatory and Power & Renewables teams.

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