Canada’s next artificial intelligence (AI) bottleneck may not be chips. It may be a power socket the size of a small city. A new federal electricity strategy estimates Canadian AI data centres could require three to five gigawatts (GW) by 2030. If Canada can’t generate and deliver that electricity, the servers, jobs, and billions in investment can simply travel somewhere with a shorter extension cord.
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The power behind the prompt
Every AI prompt sends processors racing through enormous amounts of data. Those processors consume electricity, network equipment moves the information, and cooling systems stop the building from becoming the world’s most expensive toaster. The International Energy Agency (IEA) says electricity use by AI-focused data centres surged 50% in 2025, while total data-centre consumption could more than double by 2030.
Canada can’t solve that problem with one future reactor and a hopeful thumbs-up. Data centres need dependable generation, transmission connections, backup capacity, and sometimes battery storage. They may secure that supply through long-term contracts, turning rising AI demand into years of relatively predictable cash flow for the right Canadian energy stocks.
Investors should therefore look beyond the company promising the cleverest chatbot. Existing plants, available land, grid connections, and the ability to provide electricity around the clock could become extremely valuable. Two TSX companies offer different ways to buy that opportunity, although only one has already placed a major AI customer on the contract.
CPX signed on
Capital Power (TSX:CPX) owns approximately 12 GW of natural-gas, renewable, and battery-storage generation across North America. Flexible gas plants can operate when needed, making Capital Power stock useful when a data centre would prefer not to tell customers the wind stopped halfway through their spreadsheet.
In July, Capital Power stock signed an energy-supply agreement exceeding 10 years with Meta. It will provide 250 megawatts (MW) for the technology giant’s new Alberta data centre beginning in the second half of 2028. The agreement includes capacity and energy payments, giving Capital Power stock contracted cash flow rather than merely hoping higher demand lifts market prices.
Second-quarter adjusted earnings before interest, taxes, depreciation, and amortization rose 9% to $351 million. Management also increased the dividend for a 13th consecutive year. At roughly $63.90, the new $2.82 annual payment yields 4.4%. The shares aren’t cheap, while outages, debt, natural-gas prices, and delayed construction remain risks. Still, AI demand has already moved from management’s presentation into an actual contract.
TA waits for permission
TransAlta (TSX:TA) operates gas, hydro, wind, solar, and battery assets across Canada, the United States, and Australia. Its Keephills site in Alberta already has generation, transmission access, water infrastructure, and plenty of land, saving a prospective data-centre developer several rather important errands.
TransAlta, CPP Investments, and Brookfield are advancing an initial 230-MW data centre there, with TransAlta serving as the exclusive site and power provider. Later phases could raise the total load to one gigawatt. Second-quarter free cash flow reached $143 million, although that was down from $177 million a year earlier as weaker Alberta prices weighed on results.
At about $17.13, TransAlta shares sit roughly 32% below their 52-week high. That discount could close quickly if the parties sign binding agreements, but the current memorandum remains subject to commercial negotiations and regulatory approvals. The company also recently issued $350 million in shares for a U.S. acquisition, reminding investors that exciting growth can arrive carrying dilution and debt.
Bottom line
Capital Power stock is my better buy now because the Meta agreement already provides a customer, timetable, and long-term commercial structure. I would build the position gradually among other Canadian dividend stocks.
However, TransAlta offers greater rerating potential if Keephills reaches a binding agreement, but I would keep it smaller until that happens. Once every data-centre contract is signed and every spare megawatt has been claimed, investors probably won’t receive today’s prices on their electricity bill.
