How are provincial energy regulators and operators navigating increasing demand for data centre grid connections?

 
As demand for energy to power AI accelerates, investment in the infrastructure needed to maintain is also on the rise. We review the current state-of-play for data centre demand in key areas in Canada.

Ontario

The data centre industry in Ontario is growing and is expected to make up 13% of new electricity demand in the next 10 years. Already, over 6,500 MW of new data centre projects are requesting grid connection, a figure representing almost 30% of Ontario's peak 2024 demand¹. In response, the Ontario government has proposed Bill 40 which, if passed, would direct the OEB to create new criteria that data centres must fulfil before they may connect to the grid². While the regulations have not yet been announced, they are expected to prioritize economic development and job creation. This may be indicative of a more cautious approach to increased demand in this area.

Alberta

Alberta is positioning itself to become a hub for data centre activity in Canada, offering reduced red-tape and low corporate taxes³. Data centre connection requests have skyrocketed in the past year. The cumulative requested load of 200 MW in Q1 2024 has risen to 11,879 MW in Q1 2025, a 5800% increase⁴. To meet these new demands, the Albertan government is encouraging the development of additional natural gas generation facilities. Effective December 31, 2026, a new 2% levy will also be applied on computer hardware for all data centres of 75 MW or more requesting connection to the grid. This levy will be "fully offset against provincial corporate income taxes"⁵.

Nuclear

Nuclear generation is the backbone of Ontario’s low-carbon electricity grid, differentiating the province from jurisdictions such as Alberta, where new data centres will largely be powered by natural gas⁶. For hyperscalers facing ESG scrutiny, Ontario’s nuclear fleet is a meaningful draw.

Unlike in the United States, we are not seeing privately operated, off-grid nuclear facilities built to serve data centres in Canada⁷. Canada’s regulatory and market context makes this very unlikely in the near term: the Canadian Nuclear Safety Commission takes a more prescriptive licensing approach, provincial utilities dominate generation, and merchant nuclear developers have little space to operate.

Looking forward, small modular reactors (SMRs) could provide dedicated supply for hyperscale campuses. Ontario Power Generation’s DNNP, targeted for 2029 and early 2030s, will be the first bellwether⁸. But timelines are long, and financing, supply chains, indigenous consultations and public acceptance remain material hurdles.