TC Energy targets data centre power boom with three new pipeline projects

TC Energy Corporation approved C$700 million of natural gas pipeline expansions as rising electricity demand from data centres and gas-fired power generation created new opportunities across the company’s North American network. The Calgary-based energy infrastructure company, which trades on the Toronto Stock Exchange and New York Stock Exchange under $TRP, reported second-quarter comparable EBITDA of C$2.95 billion, an increase of 12% from the prior-year period. Net income attributable to common shareholders increased to C$987 million, or C$0.95 per share, while comparable earnings rose to C$984 million, or C$0.94 per share. TC Energy Corporation now expects full-year comparable EBITDA near the upper end of its C$11.6 billion to C$11.8 billion guidance range. The results strengthen the company’s regulated and contracted growth outlook, although its C$6 billion-plus annual capital program and long-term leverage target make project discipline as important as the volume of new infrastructure it approves.

The three newly approved projects include two United States expansions backed by 20-year take-or-pay contracts and an additional expansion within the NOVA Gas Transmission Ltd. system in Western Canada. TC Energy Corporation has now sanctioned approximately C$3 billion of new projects during the first seven months of 2026.

The company also completed approximately C$1.8 billion of projects during the first half, including the Bison XPress natural gas project, the Valhalla North and Berland River expansion and the refurbishment of Bruce Power’s Unit 3 nuclear reactor. Another C$1.6 billion of capital is expected to enter service during the second half.

Why TC Energy’s C$700 million pipeline expansion is tied to data centre electricity demand

The largest newly sanctioned project is the Central Virginia Capacity expansion on TC Energy Corporation’s Columbia Gas system. The approximately US$300 million project is designed to provide as much as 0.4 billion cubic feet per day of additional pipeline capacity for new natural gas-fired electricity generation supporting data centre development.

The project has anticipated service dates in 2028 and 2030, indicating that capacity will likely be introduced in stages as associated power-generation demand develops. TC Energy Corporation expects a build multiple of approximately 6.4 times, calculated by dividing the required capital investment by the project’s expected comparable EBITDA.

The Clark project will expand the Columbia Gulf system at an estimated cost of US$100 million. It is intended to provide up to 0.3 billion cubic feet per day of firm transportation capacity to an existing natural gas-fired power plant beginning in 2028.

The two United States projects are supported by 20-year take-or-pay contracts and have a combined expected build multiple of approximately 5.8 times. Under a take-or-pay arrangement, customers generally commit to paying for reserved capacity even when they do not use the full contracted amount, reducing TC Energy Corporation’s exposure to short-term commodity prices and pipeline utilization.

This commercial structure is central to TC Energy Corporation’s investment model. The company is not directly betting that natural gas prices will remain high. It is building infrastructure tied to long-duration demand commitments from utilities, generators and other customers that require dependable transportation capacity.

Artificial intelligence and cloud-computing facilities are increasing the need for continuous electricity generation in several United States markets. Natural gas-fired plants can provide dispatchable power when renewable generation is unavailable, creating new pipeline opportunities near regions experiencing large data centre developments.

TC Energy Corporation estimates that North American natural gas demand could increase by approximately 51 billion cubic feet per day between 2025 and 2035. The company expects liquefied natural gas exports, gas-fired electricity generation and industrial development to be the primary drivers. This is management’s forecast rather than a guaranteed demand outcome, but the newly signed 20-year contracts provide more concrete support than an industry projection alone.

The third new project consists of approximately C$100 million of expansion facilities under the NOVA Gas Transmission Ltd. system’s Multi-Year Growth Plan. The facilities are expected to enter service in 2028 and provide additional capacity as Western Canadian demand grows from electricity generation, data centres, liquefied natural gas exports, industrial activity and oil sands production.

The Greater Edmonton Area capacity offering launched in March was fully subscribed for approximately 0.26 billion cubic feet per day. TC Energy Corporation is marketing other delivery opportunities that together represent approximately one billion cubic feet per day of potential incremental throughput across Alberta and border connections.

The opportunity is attractive because most projects can be built within or alongside existing pipeline corridors. In-corridor expansions generally require less construction, permitting and environmental disturbance than entirely new long-distance pipeline systems, although they remain subject to regulatory approvals, consultation and execution risks.

How United States and Mexico pipelines drove TC Energy’s 12% EBITDA increase

TC Energy Corporation’s comparable EBITDA increased by C$323 million to C$2.95 billion during the second quarter. All four operating segments reported higher comparable EBITDA, although growth was strongest in the United States and Mexico natural gas pipeline businesses.

United States Natural Gas Pipelines generated comparable EBITDA of C$1.22 billion, an increase of approximately 12% from C$1.09 billion. The improvement reflected additional contracted sales, stronger earnings from existing assets and the effect of translating United States dollar income into Canadian dollars.

Daily average flows across the United States network increased 5% to 27 billion cubic feet per day. Deliveries to liquefied natural gas export facilities climbed 13% to 3.9 billion cubic feet per day, demonstrating that export growth is already increasing the utilization of TC Energy Corporation’s existing infrastructure.

The Gillis Access system set an all-time delivery record of 1.5 billion cubic feet on July 3, while North Baja delivered a record 886 million cubic feet on June 17. These records indicate that demand growth is reaching individual pipeline corridors rather than remaining limited to long-term forecasts.

TC Energy Corporation also placed Bison XPress into service during the first half. The US$400 million project, in which the company’s share is approximately US$200 million, increased reliability on the Northern Border system and added up to 0.3 billion cubic feet per day of transportation capacity.

Mexico Natural Gas Pipelines reported comparable EBITDA of C$409 million, up 28% from C$319 million. Segmented earnings more than doubled to C$397 million, although average pipeline flows declined to 3.4 billion cubic feet per day because of adjustments to system flows.

The difference between higher earnings and lower physical flows illustrates the importance of contract structures, project commissioning and currency movements. Pipeline profitability does not always move directly with quarterly throughput because customers may pay for reserved capacity and regulatory or contractual adjustments can affect recognized earnings.

Canadian Natural Gas Pipelines produced comparable EBITDA of C$961 million, an increase of 4%. Average deliveries rose 1% to 24.2 billion cubic feet per day, while western receipts on the Canadian Mainline increased 4% to 4.6 billion cubic feet per day.

TC Energy Corporation also received approval from the Canada Energy Regulator for a negotiated Canadian Mainline settlement covering January 2027 through December 2030. The multiyear settlement provides greater regulatory visibility for an important system connecting Western Canadian supply with central and eastern markets.

Why Bruce Power Unit 3 strengthens the economics of TC Energy’s nuclear investment

Bruce Power returned Unit 3 to commercial operation on June 12 following a major component replacement program that began in March 2023. The reactor entered service seven months earlier than the schedule committed to Ontario’s Independent Electricity System Operator and remained within its approved budget.

TC Energy Corporation’s share of equity contributions to the Unit 3 program was approximately C$1.1 billion. The project was completed at a cost approximately 15% lower than the previous Unit 6 refurbishment, showing that Bruce Power and its contractors applied experience from the earlier project to improve productivity.

The company said the early and lower-cost delivery is expected to return approximately C$150 million to Ontario electricity customers through the Independent Electricity System Operator. The benefit-sharing arrangement demonstrates how project savings can support both investor returns and regulated customer economics.

The refurbishment included the first use of robotic tools on a reactor face during the reconstruction of a CANDU nuclear reactor. Bruce Power and its partners also completed calandria tube removal 11 days ahead of schedule, establishing a new CANDU refurbishment record.

Bruce Power achieved 98.5% availability during the second quarter and reported no forced outage days. High availability is financially important because nuclear plants carry substantial fixed costs, while each additional operating day allows the facility to generate more electricity under its long-term arrangements.

The next refurbishment, involving Unit 4, remains on schedule and budget, according to TC Energy Corporation. Strong execution on consecutive units could reduce uncertainty around the remaining life-extension program and support a more predictable return profile for TC Energy Corporation’s investment.

Ontario’s Independent Electricity System Operator also approved another C$300 million for impact-assessment and pre-development work on the proposed Bruce C expansion. The funding will support environmental assessment, Indigenous and community engagement, workforce planning and site preparation rather than construction of the proposed reactors.

Bruce C could eventually add substantial nuclear capacity, but it remains a long-term development opportunity rather than a sanctioned power project. Environmental reviews, government decisions, technology selection, contracting and financing would all be required before construction.

TC Energy Corporation’s nuclear exposure complements its natural gas pipeline portfolio. Data centres and industrial facilities require dependable electricity, creating potential demand for both gas-fired generation and non-emitting baseload nuclear power. The company is therefore positioned to benefit from power-demand growth through fuel transportation and electricity generation.

Can TC Energy fund its growth program while reaching its leverage target?

TC Energy Corporation expects 2026 capital expenditure of between C$6 billion and C$6.5 billion before adjusting for non-controlling interests. Net capital expenditure is forecast at between C$5.5 billion and C$6 billion.

The company spent C$1.12 billion during the second quarter and C$2.43 billion during the first half, down from C$1.38 billion and C$3.19 billion, respectively, during the corresponding 2025 periods. Lower first-half spending partly reflected the completion of the Southeast Gateway pipeline and several ANR projects during 2025.

Net cash provided by operations reached C$2.22 billion during the quarter and C$4.82 billion during the first half. Comparable funds generated from operations were approximately C$2 billion for the quarter and C$4.33 billion for the first six months.

Operating cash generation covers a significant portion of the investment program, but TC Energy Corporation must also fund dividends, debt maturities and contributions to jointly owned assets. The company therefore continues to target a long-term debt-to-EBITDA ratio of 4.75 times.

The planned C$700 million of new projects appears consistent with that discipline because the two United States expansions are supported by 20-year contracts and require relatively modest capital compared with the scale of TC Energy Corporation’s existing network.

Project build multiples still involve forecasting risk. Construction costs can rise, service dates can move and expected EBITDA may take longer to develop. The value of the expansion program will depend on achieving the forecast capital costs and placing capacity into service when customers require it.

The board declared a quarterly dividend of C$0.8775 per common share for the quarter ending September 30, equivalent to C$3.51 annually. The payment is scheduled for October 30 for shareholders of record on September 29.

$TRP shares traded near US$67.36 at the latest July 30 check, almost unchanged from the previous close after reaching an intraday high of US$70.99. The muted net movement suggests the stronger earnings and project announcements were balanced by valuation, capital-spending and leverage considerations, although the reason for an intraday market move cannot be established conclusively.

The second-quarter results support the view that TC Energy Corporation’s regulated and contracted assets can deliver growth without direct dependence on natural gas prices. Sustaining that investment case will require the company to repeat Bruce Power’s project execution across a substantially larger pipeline capital program while continuing to strengthen its balance sheet.

Key takeaways from TC Energy’s second-quarter results and pipeline expansion

• TC Energy Corporation approved C$700 million of new natural gas pipeline projects, taking total sanctioned growth investment announced during 2026 to approximately C$3 billion.
• The Central Virginia Capacity project will provide up to 0.4 billion cubic feet per day for new gas-fired electricity generation supporting data centre development.
• The Central Virginia and Clark projects are backed by 20-year take-or-pay contracts, reducing exposure to short-term commodity prices and utilization changes.
• Comparable EBITDA increased 12% to C$2.95 billion, while comparable earnings rose to C$984 million or C$0.94 per share.
• TC Energy Corporation expects full-year comparable EBITDA near the upper end of its C$11.6 billion to C$11.8 billion guidance range.
• United States pipeline flows rose 5%, while deliveries to liquefied natural gas export facilities increased 13% to 3.9 billion cubic feet per day.
• Bruce Power’s Unit 3 refurbishment was completed seven months ahead of the schedule committed to Ontario’s electricity-system operator and at a 15% lower cost than Unit 6.
• TC Energy Corporation placed approximately C$1.8 billion of projects into service during the first half and expects another C$1.6 billion during the remainder of 2026.
• Annual capital expenditure is forecast at C$6 billion to C$6.5 billion, making the 4.75-times debt-to-EBITDA target an important constraint on future expansion.
• $TRP shares were broadly unchanged at the latest check, indicating that investors welcomed the execution but continue to weigh the company’s large capital requirements and leverage.