As artificial intelligence (AI) continues to reshape the global economy, an unprecedented surge in data center development is sweeping across North America. At the heart of this transformation stands TC Energy, a Canadian energy infrastructure giant, whose ambitious investments and strategic partnerships are positioning it as a key player in the AI-driven energy revolution. Yet, while the company’s stock currently sits at a “Hold” rating, many analysts may be underestimating the long-term value TC Energy brings to an industry where energy security and technological progress have become inseparable.
According to recent reports from AINVEST and Morgan Lewis, the scale of the data center boom is staggering. In 2025 alone, an estimated $475 billion will be spent on data centers in the United States, with projections soaring past $5 trillion domestically and $7 trillion globally over the next five years. This surge is fueled by the insatiable appetite for data processing power required by modern AI platforms and cloud computing—a demand that shows no sign of slowing down.
Recognizing both the opportunity and the challenge, the US administration announced its AI Action Plan in July 2025, introducing a suite of measures to accelerate data center construction. The plan includes federal funding, streamlined permitting, and expedited environmental reviews, all designed to clear the way for rapid infrastructure growth. Meanwhile, the US Department of Energy is actively soliciting bids from the private sector to build AI infrastructure data centers on federal lands in states such as South Carolina, Tennessee, Kentucky, and Idaho. These steps underscore the national urgency to keep pace with the technological demands of the AI era.
But as the backbone of this digital transformation, data centers are not without their risks. The sheer complexity and scale of these facilities—often sprawling campuses with thousands of computer servers, advanced GPUs, and intricate cooling systems—create a host of insurance and operational challenges. Builders risk insurance, for example, has become a critical safeguard during the construction phase, protecting against loss or damage to property, materials, and equipment. As Morgan Lewis highlights, adequate coverage must account for loss not only onsite but also during storage or transit, and should include provisions for lost income and additional costs stemming from delays.
Once operational, data centers face an entirely different set of vulnerabilities. Commercial property insurance must be meticulously structured to cover every aspect of the operation—from the physical buildings and infrastructure to the expensive computer equipment and business personal property. The definition of “covered property” can vary widely, and exclusions for issues like water intrusion, flood damage, or equipment breakdowns can leave operators exposed. Business interruption coverage is equally essential, given that data centers run 24/7 and any outage—especially one caused by power failures or system interruptions—can result in massive financial losses. Contingent business interruption coverage is also increasingly important, covering losses triggered by disruptions at separate, interconnected properties within the global supply chain.
Cyber insurance has emerged as another non-negotiable component of the risk management toolkit. Data centers are prime targets for data breaches, ransomware, and system failures, and as AI technologies evolve, so do the associated risks. Insurers are beginning to introduce “AI exclusions” in their policies, making it more important than ever for operators to negotiate terms that address these new threats. Liability coverage is also under scrutiny, especially as data center construction projects spark disputes with local communities. The recent backlash against a proposed $30 billion campus in Mooresville, North Carolina—driven by concerns over noise, vibrations, and environmental impact—illustrates the potential for legal and reputational challenges in this space.
Amid this complex landscape, TC Energy’s role is especially significant. The company’s $900 million Northwoods expansion of the ANR pipeline system, set to add 400 MMcf/d of capacity by 2029, is a direct response to the Midwest’s growing demand for power to support the AI data center boom. This project, underpinned by 20-year contracts, ensures stable long-term cash flow and demonstrates a proactive approach to meeting the needs of hyperscale data centers.
TC Energy’s broader $34 billion reinvestment plan through 2025 is even more telling. Over 60% of this capital is earmarked for decarbonization initiatives, including the development of hydrogen infrastructure, nuclear energy via Bruce Power, and electrification of operations. These investments align not only with global sustainability goals but also with the unique energy requirements of AI-driven industries, where reliability and scalability are paramount. Bruce Power’s impressive 99% availability rate is a testament to the operational excellence required in this new era.
Despite these forward-thinking moves, TC Energy’s “Hold” rating reflects lingering concerns among analysts. Short-term metrics—such as a projected EBITDA CAGR of 5–7% between 2024 and 2027, a revised 2025 EPS estimate of $3.52, and questions about the long-term viability of the pipeline business—have led to a cautious stance. However, these figures may not fully capture the company’s strategic positioning. TC Energy’s pipeline systems currently deliver 30% of North America’s daily natural gas consumption, with Pennsylvania alone accounting for a quarter of its output. This entrenched infrastructure makes the company a critical enabler of both the energy transition and the ongoing AI revolution.
Operational efficiency is another area where TC Energy is leveraging technology to its advantage. By integrating AI into predictive maintenance and demand forecasting, the company is reducing costs and maximizing asset utilization—an approach that improves margins and ensures reliability. Financially, TC Energy maintains a disciplined balance sheet, with a debt-to-EBITDA ratio of 4.8 times as of Q2 2025, matching its 4.75 target. Its 5.4% dividend yield, supported by a payout ratio of 70–75% of free cash flow, offers income stability for investors while preserving flexibility for future growth.
Looking ahead, the company’s Multi-Year Growth Plan (MYGP) aims to add 1.0 Bcf/d of incremental throughput by 2030, supported by build multiples of 5–7 times. Projects like the Southeast Gateway pipeline and East Lateral XPress (ELXP) are designed to support both LNG export and industrial demand, further solidifying cash flow resilience. Notably, TC Energy’s collaboration with Microsoft to develop 10.5 GW of renewables by 2030 demonstrates its commitment to both technological progress and decarbonization. Since 2019, the company has reduced methane emissions by 12%, underscoring its efforts to address environmental concerns.
For investors, TC Energy represents a unique hybrid: a utility with the scale to support AI’s energy requirements and the financial discipline to sustain dividends. While regulatory shifts and the pace of decarbonization remain risks, the company’s diversified capital allocation and progress in emissions reduction offer meaningful mitigation.
As the world races to build the infrastructure that will power the AI age, TC Energy stands out not just as a participant, but as a foundational enabler—bridging the gap between clean energy, technological innovation, and long-term value creation.
