After more than a decade working inside Ontario's electricity system, and now advising developers, utilities, and large electricity users across Canada, I have learned that the first question about a data centre site is no longer simply, "Is there suitable land?" It is, "Can the project secure the power it needs, on the timeline and commercial terms its business case assumes?"
There is no shortage of debate about whether, where, and on what terms data centres should be built. Municipalities are scrutinizing data centres' electricity and water use, local infrastructure needs, community benefits, and environmental impacts. Hamilton, for example, recently considered a proposed one-year pause on new AI data centres, though council ultimately rejected it. While these concerns deserve serious attention, in my view, data centres are here to stay.Therefore, the more practical question is how to connect, develop and expand them responsibly, efficiently, and in a way that creates clear value for the communities and electricity systems that host them. Canada remains a compelling destination, with strong economic fundamentals, political stability, access to low-carbon electricity, and proximity to major markets. But the rules are changing quickly, and a promising site can unravel if electricity is treated as a late stage technical detail.
Historically, successful projects were driven by access to land, fibre connectivity, and tax incentives. Today, successful development depends on three interrelated workstreams: siting, grid connection, and electricity supply.
Keeping these workstreams distinct helps developers identify where a project is constrained, who controls the decision, and what must happen next:
Electricity Due Diligence
One of the most common misconceptions is that a facility's historical electrical design, the grid's current ability to accommodate load, and a utility-confirmed allocation of megawatts are the same thing. They are not. A facility may have been designed for a particular load even though the local distribution or transmission system can no longer serve that load without further study and upgrades. Until the utility confirms the connection scope and the required megawatts are reserved or contracted, the project's path to power remains uncertain. The result may be higher capital costs, longer development timelines, and greater uncertainty around tenant attraction and project execution.Before acquiring land or an existing facility, developers should investigate the following across all workstreams:
As electricity becomes a primary driver of project economics and timelines, integrated due diligence across siting, grid connection, and electricity supply is becoming a prerequisite for successful investment.
Ontario, Alberta, and Québec: Three Markets, Three Regulatory Models
While Canada is often viewed as a single market, developers quickly discover that each province has its own regulatory framework, utility structure, and connection process.
Ontario: Managing growth while protecting reliability
The province offers a large customer base, strong fibre connectivity, and relatively low-carbon electricity (90% clean energy). At the same time, Ontario's electricity system is experiencing unprecedented demand growth, increasing the province's need for dependable supply during peak periods and creating grid constraints in some locations. Although the province has committed to approximately 6,000 MW of new nuclear generation, it will not be in service until the mid-to-late 2030s or later. The near-term question is therefore how Ontario will meet growing electricity needs before that new generation is available. Demand growth could increase the value of natural gas generation, while also encouraging earlier mitigation measures such as energy efficiency, demand flexibility, and storage (See: Sharing the Load).
The IESO's July 2025 technical paper, “Large Step Loads: Spotlight on Data Centres and Electric Vehicle Supply Chain” illustrates the scale and location-specific nature of this challenge. It reports data-centre connection requests of up to 750 MW at a single connection point and notes that projects seeking to connect in the GTA will likely require significant transmission reinforcements. It also highlights uncertainty around project timing, size, and location - reinforcing why a grid connection inquiry is not the same as a confirmed path to power.
Recent policy developments demonstrate that the province is taking a more active role in determining how large loads connect to the grid. Under Bill 40, the Protect Ontario by Securing Affordable Energy for Generations Act, the province established authority to impose additional connection requirements on certain large load facilities and to align electricity infrastructure decisions with broader economic objectives, including:
Bill 40 is enabling legislation: it creates the legal authority for additional requirements, but many operational details are still forthcoming. These could address load shifting, renewable-energy requirements, deposits or letters of credit, cost responsibility, and a dedicated data centre rate.
At the operational level, the Independent Electricity System Operator (IESO) has also introduced “Technical Requirements for Large Computational Loads” such as AI data centres and large-scale computing facilities, reflecting growing concerns regarding reliability, system operations, and load behaviour.For developers, this means that siting, grid connection, and electricity supply are no longer simply engineering and procurement exercises. They are increasingly strategic and regulatory issues.
Alberta: Speed and flexibility meet grid and supply challenges
Alberta continues to attract significant interest because of its competitive electricity market, business friendly environment and access to natural gas, and potential for comparatively flexible development pathways, when compared to other provinces.
Meta's July 2026 announcement has moved that opportunity from prospect to proof point. The company broke ground on its first Canadian data centre: a 1 GW, campus in Sturgeon County representing an investment of more than $13 billion. Meta has said it will fully fund the new generation and grid infrastructure required for the project and match the facility's electricity use with 100% clean and renewable energy.
The project's power strategy is as important as its scale. It includes a long-term energy supply agreement with Capital Power beginning in the second half of 2028 for 250 MW of capacity, the commitment to make power available when required, and the associated energy consumed over time. It also includes new generation and transmission infrastructure planned with Greenlight Limited Partnership, AltaLink, Capital Power, and the AESO. The project illustrates how large-load development is increasingly tied to a coordinated portfolio of grid connection, contracted electricity supply, dedicated infrastructure, and clean-energy procurement.
At the same time, Alberta is confronting an unprecedented volume of large-load proposals. The AESO's connection requirements and Large Load Integration Program reflect the need to manage reliability, transmission capability, resource adequacy, and the pace at which projects can connect. For developers, Alberta offers significant opportunity, but a credible power strategy must address not only where electricity will come from, but also whether and when the grid can connect the project, who will build and pay for enabling infrastructure, how supply and price risk will be managed, and how sustainability commitments will be delivered.
Québec: Clean Power Meets Strategic Allocation
For years, Québec’s low-cost hydroelectric system made it one of North America’s most attractive jurisdictions for energy-intensive industries. That advantage has not completely disappeared: Hydro‑Québec continues to offer reliable, renewable electricity at comparatively competitive rates. However, the end of the province’s electricity surplus, growing electrification needs, and increasing demand from large industrial customers have fundamentally changed how new projects are evaluated.
New projects and load additions requiring 5 MW or more must now obtain authorization from the Québec government before they can be connected by Hydro‑Québec or another distributor. Applications are assessed comparatively, with the government and Hydro‑Québec seeking to maximize the economic, social, and environmental benefits generated by each megawatt allocated. Developers are expected to demonstrate optimized electricity requirements, strong energy-efficiency measures, opportunities for alternative or self-supply, and the potential to recover and use waste heat. [1]
Electricity costs may also change significantly. Hydro‑Québec has proposed a new data-centre tariff applicable to facilities with an authorized maximum demand of at least 5 MW. The proposed tariff is 13 cents per kilowatt-hour in constant 2026 dollars, compared with an estimated average of 6.82 cents under existing rates. Eligible existing customers would receive a declining transition discount, increasing their effective rate from approximately 8.06 cents in 2026 to the full 13-cent rate by 2030. Hydro‑Québec argues that the new rate should reflect the cost of procuring incremental electricity supply while ensuring that existing customers do not subsidize data-centre growth.Importantly, the tariff remains a proposal rather than an approved rate. As of July 2026, the Régie de l’énergie proceeding (R-4333-2026) remains active, with a public hearing scheduled for October 1–9, 2026. The final rate, transition arrangements, and implementation date could therefore change.
Siting: Community support is now a critical path item
One of the most common siting mistakes is assuming that community engagement can wait until after a site has been secured. Increasingly, municipalities, First Nations and other Indigenous communities, economic-development agencies, and local stakeholders want to understand how a project will affect and benefit the region.
Questions commonly include:
Developers that engage communities early often experience fewer delays, stronger relationships, and greater project certainty. Community support is no longer merely a communications exercise; it is a core part of siting strategy.
Connection and supply: The best megawatt is the one you don't need
Historically, developers focused on securing the largest possible grid connection. Today, utilities and regulators are increasingly asking a different question: How efficiently will that electricity be used? As demand for grid connections and electricity supply grows, energy efficiency and demand flexibility are becoming competitive advantages. This includes:
Energy efficiency can also create benefits beyond the data centre itself. The IESO has identified an opportunity to use data-centre “waste heat for district energy,” citing examples in Ireland, Denmark, Sweden, and the Netherlands. Where suitable local infrastructure and nearby heating demand exist, waste-heat recovery could support surrounding residential or commercial development and strengthen a project’s community value proposition.
For developers, efficiency can reduce electricity consumption, the requested connection size, operating costs, and project risk. For utilities, it can reduce the generation and grid infrastructure required to serve new load. For communities, efficiency also demonstrates responsible stewardship of scarce energy resources.
The most successful data centres of the future may not be those with the largest electrical connections, but those that maximize the value of every megawatt they consume.
Conclusion
Canada presents a compelling opportunity for data centre development. Few jurisdictions can match the country's combination of political stability, clean electricity, skilled labour, and access to major North American markets.
After years of working on system planning, load forecasting, demand-side resources, and grid connection issues, my view is simple: the strongest projects do not treat electricity as a box to check after a site has been selected. They integrate siting, grid connection, supply, efficiency, and community value from the outset. Power is the new land, and developers who secure it responsibly, efficiently, and collaboratively will be best positioned to succeed. If you are evaluating a Canadian site, testing whether a claim of "power available" is truly bankable or trying to understand how provincial rules may affect your development strategy, I would welcome the conversation. These are often the questions that determine whether a project advances, stalls, or becomes much more expensive than expected.
[1] https://www.quebec.ca/agriculture-environnement-et-ressources-naturelles/energie/production-approvisionnement-distribution/autorisation-projet-electrique?