On August 13, 2026, the Ontario government released its proposed Economic and Strategic Assessment Framework for New Data Centres and its draft Data Centre Playbook (Playbook), for comment. The proposal builds on Bill 40, the Protect Ontario by Securing Affordable Energy for Generations Act. Under forthcoming regulation, data centres will be required to obtain government approval before connecting (or reconnecting) to the electricity grid. The applicable size and other regulatory thresholds have not yet been established.
The proposed Playbook will inform the government’s approval of data centres through a two-part assessment:
Separate Rate Class
Separate from the Playbook’s two stage approval process, Ontario is also proposing a new Global Adjustment (GA) rate class, potentially called “Class C” for new data centres above a prescribed threshold. The ERO posting has used demand greater than 1 MW as a potential example, however the final threshold has yet to be determined.
Data centres placed in the new rate class would not be eligible to participate in the Industrial Conservation Initiative (ICI) and reduce GA charges. The stated objective is to ensure that new data centres bear the full cost of electricity and there will be no transferring of costs to existing ratepayers. Existing data centres would potentially be grandfathered within the current Class A or Class B framework, although the proposal indicates that existing “data centres would be required to attest to not mining cryptocurrency to be eligible for Class A.” This attestation proposal appears to indicate that the government intends to move forward with a 2022 regulatory proposal seeking to prohibit cryptocurrency mining facilities from participating in the ICI program.
Characteristics of a Preferred Project
The draft framework also provides an indication of what attributes the province considers most important when comparing projects. These include facilities that are preferably Canadian-owned and operated; maintain sensitive Canadian data within Canada; strengthen cybersecurity and domestic control of critical digital infrastructure; support Ontario and Canadian suppliers; and make computing capacity available to Ontario businesses and small and medium-sized enterprises. The province will also favours project that provide local employment, training and infrastructure benefits, while minimizing demands on municipal services and incorporating on-site generation or other measures that reduce their impact on the grid.
Environmental and community engagement will also form a critical part of the assessment. The government has highlighted closed-loop or waterless cooling, direct-to-chip cooling, noise-reduction engineering and waste-heat recovery as examples of modern technologies that could reduce water consumption, noise, emissions and other local impacts. The draft regulation identifies these technologies as preferred approaches, although it does not establish binding performance thresholds.
WHAT ONTARIO’S DATA CENTRE PLAYBOOK MEANS FOR DEVELOPERS AND TENANTS
In my previous article on data centre siting, I argued that power is the new land: for developers a site has limited development value if the required electricity cannot be delivered within an acceptable timeframe and at an acceptable cost. Ontario’s proposed framework takes that argument one step further. Electricity access would no longer be determined solely by whether a project can technically connect to the grid. The province would also consider whether the project represents a sufficiently valuable use to Ontario.
Tenants will not usually lead the grid-connection process, but they will inherit its costs and constraints. The first question should be whether the facility’s electricity charges are fixed or passed through, followed closely by whether the facility is expected to fall into Class C. As Class C would change the GA Adjustment treatment, not the entire electricity bill, tenants should understand how commodity, transmission, distribution, regulatory and connection-related costs will be calculated and allocated under the agreement. On-site generation and batteries also warrant a closer look. If the facility intends to use these resources to manage grid demand, the tenant should understand whether that strategy could involve curtailment, workload shifting or different backup arrangements; and whether those operating assumptions align with the contracted power requirements.
The Playbook comes in response to significant interest in the province to develop and expand data centres. The province estimates that proposed data centre connection requests could exceed 10,000 MW. The IESO’s 2026 Annual Planning Outlook is forecasting data centre electricity consumption increasing from 4.5 TWh in 2027 to 22.6 TWh by 2050 under its reference scenario.
The government has indicated that this consultation is a component of a larger digital-economic policy strategy, stating that they will release the final Data Centre Playbook to support the broader upcoming AI Industrial Strategy this fall.
What remains unresolved?
The Playbook establishes Ontario’s direction, but many of the rules that will determine project viability remain open. The consultation gives developers, tenants, utilities and other stakeholders an opportunity to shape those details.
Ontario is not alone in reconsidering how large computational loads should access the grid. On the same day Ontario released its proposed Playbook, PJM filed a different large-load framework[1]. PJM would track loads of 50 MW or more and provide a path for unsupported new loads to connect, but make them subject to earlier curtailment during capacity shortages. Ontario is proposing to assess whether projects represent a sufficiently valuable use of grid capacity; PJM is focused more narrowly on whether new demand is supported by sufficient supply. [Companion article: How Ontario and PJM Are responding to Data Centre Growth - https://www.poweradvisoryllc.com/reports/how-ontario-and-pjm-are-responding-to-data-centre-growth)
The proposal is open for comment through Environmental Registry of Ontario notice 026-0853. ERO feedback is due by 11:59 p.m. on September 12, 2026. See Appendix for key consultation questions.