The Canadian province of Alberta has confirmed it will introduce a 2% levy on computer hardware used in large data centers, a move that could reshape how operators view the province as a hub for digital infrastructure. The levy, set to take effect on December 31, 2026, will apply to facilities with a load of at least 75 megawatts.

According to the Alberta government, the levy is not intended to be a permanent additional cost. Once a data center turns profitable and begins paying corporate taxes, the 2% charge will be offset. However, operators are already questioning whether the measure will dampen the province’s growing appeal as a destination for new projects.

Why the Levy Matters

Data centers rely on high-performance systems, including powerful servers, extensive SSD arrays, and optimized storage racks designed for cloud computing. These facilities often operate on thin margins in their early years, as hardware costs represent the bulk of their upfront investments.

For operators, a 2% levy on such expensive equipment could shift the balance when deciding where to build. Rival jurisdictions across North America are aggressively competing to attract data center investment, often offering tax breaks and incentives. Alberta’s new approach could give competitors an edge if operators perceive the province as less cost-effective.

Alberta’s Energy Advantage

Despite the uncertainty, Alberta has been gaining attention as a favored location for digital infrastructure. The province’s relatively cheap natural gas supplies have made it attractive for energy-intensive facilities, with more than two dozen data center proposals, representing over 12,000 megawatts of demand, already submitted to the Alberta Electric System Operator.

This surge in interest reflects confidence in Alberta’s abundant energy availability. However, the new levy may introduce a critical variable into decision-making. If the extra costs offset the benefits of cheap energy, operators might reassess whether the province offers a long-term competitive advantage.

A History of Restrictions

This is not Alberta’s first attempt to regulate the pace of data center development. Earlier in 2025, the provincial grid operator capped new connections for “large load projects” at 1,200 megawatts until 2028. The cap sparked opposition from indigenous communities, who argued that such restrictions blocked opportunities for them to invest in digital infrastructure and benefit from the growing data economy.

When combined with the new levy, these measures signal a tightening regulatory environment. For investors, long-term planning becomes more complicated when both grid access and hardware costs are subject to provincial controls.

Balancing Growth and Costs

For Alberta, the levy serves a dual purpose: Ensuring that large-scale operators contribute more directly to provincial revenues, while addressing concerns about the rapid pace of energy-hungry data center growth.

But the question remains: Will the measure simply push companies to look elsewhere? Neighboring provinces or U.S. states could become more attractive if they offer lower costs or fewer restrictions. Alberta now faces the delicate task of balancing its desire for revenue with its ambition to remain a competitive destination for data center expansion.

Also Read: UN: AI Fuelled 150% Rise in Tech Giants’ Data Centre Emissions

As the deadline for the levy’s implementation approaches, operators and policymakers alike will be watching closely. The outcome may determine whether Alberta strengthens its position as a digital hub or loses ground to rivals willing to offer a more open playing field.

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Source: techradar.pro