An Addendum To "Connecting Data Centres In Ontario: Key Considerations And Challenges"

This article was originally published in Energy Regulation Quarterly. View the original publication: An addendum to 'Connecting data centres in Ontario: key considerations and challenges, October 2025 – Volume 13, Issue 3, 2025.

In the previous issue of Energy Regulation Quarterly, our article, Connecting data centres in Ontario: key considerations and challenges explored the various regulatory requirements and considerations for developing and connecting data centres in Ontario. The article highlighted the importance of parties staying vigilant to regulatory and legislative changes impacting connection processes and cost responsibility and understanding the implications of the Market Renewal Program's (MRP's) changes to the Ontario wholesale electricity market administered by the Independent Electricity System Operator (IESO). Since its publication, several announcements have been made which will affect data centre connectivity in Ontario. This addendum highlights the key policy and legislative changes energy sector should be aware of.

On June 3, the government introduced Protect Ontario by Securing Affordable Energy for Generations Act, 2025 (Bill 40), which explicitly addresses data centre connectivity¹. While Ontario's electricity grid is based on the foundational requirement to provide non-discriminatory access (i.e., that any participant may connect regardless of its identity or features), Bill 40 creates an exception to this access right for "specific load facilities" connecting to Ontario's electricity grid².The proposed section 28.1 of the Electricity Act, 1998 outlines that transmitters or distributors shall not connect (or reconnect) a "specified load facility" onto the electricity system unless connection requirements that are specified in the regulations are met³. A "specified load facility" is defined as a facility or class of facilities "that is a data centre" and meets criteria set out in regulation⁴. At time of publication, this bill has only passed first reading and no regulation has set out any specified connection requirements. However, if Bill 40 passes, data centre proponents looking to connect to Ontario's grid could be subject to additional requirements soon.

On June 12, the government published its first Integrated Energy Plan, Energy for Generations: Ontario's Integrated Plan to Power the Strongest Economy in theG7 (the Plan)⁵. The Plan, which is statutorily required under the new Affordable Energy Act, 2024, articulates several new programs and initiatives to deliver "affordable, secure, reliable and clean" energy⁶. In relation to data centres, the Plan references the forecasted increase in demand from the data centre industry and well as newly introduced Bill 40. Specifically, the Plan highlights the proposed Bill 40 and how it "would allow Ontario to manage electricity connection requests and prioritize data centres that deliver real local, strategic and economic benefits—not just power consumption"⁷. This objective aligns with Bill 40's proposal to introduce new purposes of the Ontario Energy Board Act and Electricity Act to support economic growth, and may offer insight into the policy objectives that future connection requirements under the Regulation may seek to advance. Given these details, and noting that the applicable requirements are not known at this time, data centres proponents should consider ways to demonstrate their economic potential in the region they wish to connect in.

The regulatory landscape for data centre development and connectivity in Ontario continues to evolve. With the introduction of Bill 40, the release of Ontario's first Integrated Energy Plan, and increased market experience following IESO's Market Renewal Program, data centre proponents must remain attentive to emerging requirements and public policy shifts. While the full implications of these changes are still unfolding—particularly as regulations under Bill 40 have yet to be released—available information suggests that it may be important for data centre proponents to demonstrate economic value to secure grid access. Proponents should continue to monitor developments closely and engage early with the OEB and IESO to navigate the emerging framework effectively.

Footnotes

1. Government of Ontario, Ontario Securing Affordable Energy for Future Generations, June 3, 2025.

2. Legislative Assembly of Ontario, Bill 40: An Act to amend various statutes with respect to energy, the electrical sector and public utilities, Schedule 1, section 28.1, June 3, 2025.

3. Ibid.

4. Ibid at section 28.1(1).

5. Government of Ontario, Energy for Generations: Ontario's Integrated Plan to Power the Strongest Economy in the G7, June 2025.

6. Ibid at 6.

7. Ibid at 22.

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