Two of Alberta’s largest proposed artificial intelligence data-centre developments have encountered major setbacks within days of each other, although neither project has been formally cancelled.

The Alberta Utilities Commission denied an application Monday for a 1,400-megawatt natural gas power plant intended to serve a proposed data centre in Olds.

Four days earlier, Sturgeon Lake Cree Nation secured a preliminary court victory allowing its challenge of a water licence associated with the proposed $70-billion Wonder Valley data-centre development near Grande Prairie to continue.

The two decisions involve separate projects, regulatory bodies and legal issues.

In Olds, Synapse Real Estate Corp. applied to construct a natural gas generating facility that would have supplied electricity exclusively to a proposed data centre. The power plant would not have been connected to Alberta’s electricity grid.

The development would have included 20 natural gas combustion turbines, 10 steam turbine generators and 600 emergency diesel generators. The diesel units would have provided another 1,800 megawatts of backup capacity.

The combined power plant and data-centre infrastructure would have covered approximately 273 acres, or about 10 per cent of the Town of Olds.

In its Aug. 17 decision, the AUC found that Synapse had not demonstrated that the selected location was in the public interest.

The proposed site boundary was approximately 30 metres from the first row of residential properties across a road. Synapse identified more than 700 homes within 800 metres of the development.

The commission considered the project’s potential economic benefits, the town’s support in principle and proposed measures intended to address noise, air quality and other effects. It concluded that those measures could not resolve the underlying concern about placing a power plant of that size beside an established community.

Synapse also failed to provide a compelling explanation for selecting the Olds location when other sites farther from populated areas had been considered, according to the decision.

Approximately 1,500 interested parties applied to participate in the regulatory proceeding. The AUC granted standing to 919 interveners, including the Olds Residents for Responsible Development Group.

The commission did not hold a full hearing before issuing its decision. It determined that enough information was already available to decide the location was unsuitable and that continuing the process would require participants to incur unnecessary time and expense.

The AUC decision applies to the proposed power plant, not directly to the data centre. The commission regulates electricity generation facilities but does not approve or regulate data centres.

The Town of Olds said it has not received a development permit application for the proposed data centre. Synapse also has an environmental application before Alberta Environment and Protected Areas.

The power plant rejection nevertheless creates a significant obstacle because the proposed generating facility was designed to supply the data centre with its electricity.

The decision was Synapse’s second attempt to obtain AUC approval. Its first application was closed in March because of errors, incomplete information, inconsistencies and deficiencies in its public consultation work.

The Wonder Valley development in northern Alberta is facing a different challenge.

O’Leary Digital Limited has proposed developing an AI data-centre industrial park at the Greenview Industrial Gateway south of Grande Prairie. The company has placed the estimated investment at $70 billion.

Sturgeon Lake Cree Nation is seeking a judicial review of a Water Act licence issued by Alberta to the Municipal District of Greenview in April 2025.

The licence authorizes the municipality to divert as much as six million cubic metres of water annually from the Smoky River.

The First Nation argues the Alberta government failed to meet its duty to consult before approving the licence. Sturgeon Lake Cree Nation has Treaty 8 reserve lands along the river and members exercise Treaty and Aboriginal rights in the area.

O’Leary Digital asked the Alberta Court of King’s Bench to dismiss the judicial review application. The company argued it was directly affected but had not been properly served with the court documents.

In a decision filed Aug. 13, Justice P.K. Johal dismissed the company’s request. The judge also denied its alternative requests to participate as an intervenor or be added as a respondent.

The decision does not invalidate the water licence or stop construction of the proposed data centre. It allows Sturgeon Lake Cree Nation’s underlying challenge to proceed, with a hearing expected in December.

The court will then consider the First Nation’s arguments concerning the water licence and Alberta’s consultation obligations.