Ontario is moving to tighten the rules governing new data centre development as the province seeks to attract technology investment, expand artificial intelligence infrastructure and keep Canadian data stored domestically without shifting additional electricity costs to households.
The provincial government has launched the framework for its Data Centre Playbook, a policy tool intended to assess proposed data centre projects based on their economic contribution, data-security benefits and investment in host communities. The framework also proposes higher electricity rates for large new data centres and prioritizes projects capable of generating their own power.
The initiative is expected to become an early component of Ontario’s forthcoming artificial intelligence strategy, which the government says could help generate $122 billion in economic growth by 2035 and create more than 17,000 jobs annually.
Ontario Sets New Rules for Data Centre Investment
Premier Doug Ford said the province wants to capture the economic opportunities associated with growing demand for digital infrastructure while keeping Canadian information within the country.
“Ontario has a choice: we can build the economy of the future and ensure Canadians’ data remains in Canada, or we can get left behind and risk Canadians’ data being sent to the U.S. and elsewhere,” said Premier Doug Ford. “Through our new Data Centre Playbook, our government is choosing to build the economy of the future to generate billions in economic growth and create thousands of new jobs, while ensuring new data centres play by the right rules and pay the full cost of electricity. Any data centre investment will need to invest significantly in local communities and pay more for electricity so no energy costs are passed on to hardworking families.”
Under authorities enacted through the Protect Ontario by Securing Affordable Energy for Generations Act, the Minister of Energy and Mines will have final authority over which large-load facilities, including data centres, can connect to Ontario’s electricity grid.
Three Pillars Will Guide Data Centre Approvals
The Data Centre Playbook will assess proposals using three principal criteria: economic development, data security and digital sovereignty, and community investment.
Projects will be expected to deliver significant capital investment, employment and tax revenue while supporting domestic supply chains and business productivity. The government will also favour developments that strengthen Canadian control over critical data and protect personal information.
Data centre developers will also be expected to provide financial and non-financial benefits to host communities, including infrastructure improvements, employment opportunities and workforce training.
“As demand for digital infrastructure continues to grow at an unprecedented pace, our government is taking bold action to ensure Ontario’s interests remain protected and prioritized,” said Vic Fedeli, Minister of Economic Development, Job Creation and Trade. “The Data Centre Playbook will serve as a strategic assessment tool, ensuring that projects looking to break ground in Ontario offer significant economic, security and community benefits.”
Large Data Centres Could Face Higher Electricity Rates
Ontario says it will provide only non-financial support to attract data centre projects, relying instead on advantages including its electricity system, available land, climate and skilled workforce.
Under the proposed framework, new data centres larger than one megawatt would be placed in a separate electricity rate class and pay more than the rate available through the industrial program for large power users. Projects that develop their own electricity generation would also receive priority.
“We have designed a system that protects families and ensures data centres pay for complete cost of power — every single cent. To make this point, Ontario will be introducing a new higher electricity rate for data centres, in addition to prioritization for projects that generate their own power. While we work to attract investment and store Canadian data on Canadian soil, we have strong guidelines that safeguard families every step of the way.”
– Stephen Lecce
Minister of Energy and Mines
The province also plans to apply environmental requirements covering issues such as water consumption and noise. Projects using closed-loop cooling systems that require virtually no water during operation will be prioritized.
Ontario Links Data Centres to Broader AI Strategy
Ontario currently has nearly 450,000 technology workers across 26,000 businesses, including more than 1,600 AI-related companies. The province says it has secured tens of billions of dollars in technology investment since 2018 across AI, fintech, cybersecurity and quantum technologies.
“The Data Centre Playbook is another important step in strengthening Ontario’s position as a global technology leader. It builds on our work to strengthen digital trust and protect data security, while attracting the investments that will help drive Ontario’s future growth.”
– Stephen Crawford
Minister of Public and Business Service Delivery and Procurement
“As part of our generational buildout of Ontario’s energy system, we’re attracting the best talent in the world to support digital infrastructure growth across the province. Combined with our integrated energy plan, the Data Centre Playbook will ensure that we are powering the energy needs of value-adding data centres that directly support our communities, economy and job creation while protecting ratepayers and the people of Ontario.”
– Sam Oosterhoff
Associate Minister of Energy-Intensive Industries
The government has opened a 30-day public consultation through the Environmental Registry of Ontario and Ontario Regulatory Registry. Feedback will be used to refine the framework before the final Data Centre Playbook is released as part of Ontario’s broader AI Industrial Strategy.
The final strategy is expected to focus on attracting investment, developing the workforce, protecting intellectual property and building the infrastructure required to support Ontario’s expanding digital economy.