New research from York University shows that data centre construction in Canada is undergoing a step-change in scale. Active data centres have a combined capacity of 1.6 gigawatts, while all proposed projects would push that figure to 13.2 gigawatts. The AI-driven need for electricity is bringing renewable power developer Brookfield Renewable Partners (TSX:BEP.UN) into a clearer demand growth channel.
The York University research points out that data centres now under construction have 10 times the capacity of earlier projects. That expansion is raising concerns about land, water and energy consumption. Alberta has become the centre of this wave because of ample energy supply, streamlined regulation and supportive government policy.
A typical data centre has capacity of roughly five megawatts. Hyperscale data centres that support the AI boom can use about 100 megawatts. Canada currently has only five hyperscale data centres, located in British Columbia, Ontario, Quebec and New Brunswick. Another 96 such facilities have been announced or are under construction.
The data centre expansion directly increases demand for stable, large-scale electricity. Brookfield Renewable Partners is one of the beneficiaries of this trend. Listed on the TSX, the company is a high-quality dividend stock with a record of returning capital to shareholders through rising distributions. Its renewable energy business has the foundation to support long-term dividend growth.
The AI buildout is driving large-scale data centre development, and operators need reliable power supply. This creates new demand for renewable developers that can bring large projects online quickly. Brookfield Renewable is one of the world’s major developers of low-cost, fast-to-market solar and wind projects. It also owns a substantial hydroelectric portfolio that provides clean, dispatchable baseload power. The company is expanding battery storage operations, an area that offers further growth as electricity consumption rises.
These generation assets, combined with long-term agreements with technology giants, position Brookfield Renewable to capture the increase in electricity demand from data centre expansion.
Brookfield Renewable generates most of its operating cash flow from power purchase agreements. About 90% of these contracts have an average remaining term of around 12 years, providing strong revenue visibility. Around 70% of revenue is linked to inflation, helping protect profitability when costs and prices rise. The stock offers a dividend yield of more than 4.8%.
The company expects annual funds from operations growth of about 10%, supporting a targeted annual dividend increase of 5% to 9%. Capital recycling is another competitive advantage. When demand for infrastructure assets is strong, the company brings contracted, cash-flow-generating projects into operation, realizes value from development and operational improvements, and then reallocates capital toward higher-return growth opportunities.
Overall, rising electricity demand, long-term contracts, inflation-linked revenue and a portfolio of quality assets provide a foundation for sustainable dividend growth. Data centre expansion, the focus on energy security and the shift toward electrification are likely to keep supporting long-term demand for renewable energy, creating room for Brookfield Renewable to grow earnings.
