Ontario’s Draft Data Centre Playbook: Implications For Investors, Operators, And Developers

Digital infrastructure operators in Ontario are capitalizing on Canada’s growing reputation as a premier data centre jurisdiction. Demand for grid access in the province has increased substantially, with an interconnection queue potentially reaching 10,000 MW. In response, on August 13, 2026, the province released its draft Data Centre Playbook (the “Playbook”).

The Playbook operationalizes the provincial government’s final approval authority over grid connections for prescribed large-load facilities from the Protect Ontario by Securing Affordable Energy for Generations Act (Bill 40). Under the proposed framework, the traditional “first-come, first-served” interconnection model would give way to an assessment model that weighs both technical feasibility and alignment with provincial priorities on economic development, digital sovereignty, and community benefits.

Here is what developers, hyperscale operators, investors, and power providers should know about the proposed framework.

Key points

• Dual-track review:

Applications must clear both a technical/financial System Impact Assessment (evaluating grid reinforcements and self-generation) and a Strategic Priority Assessment (evaluating digital sovereignty, local economic value, and community and environmental benefits).

• New electricity rate class:

  A proposed “Class C” rate class for new data centres over 1 MW will impose higher electricity rates and disqualify them from the cost-saving Industrial Conservation Initiative (“ICI”).

• No direct financial subsidies:

  Ontario will only offer non-financial incentives (concierge services, expedited permitting) rather than direct cash subsidies for new data centre developments.

A proposed dual-track review

The Playbook proposes a dual-track evaluation process to determine whether a data centre will be approved for connection:

• System Impact Assessment:

This evaluates the technical feasibility of the connection, the broader impacts on grid reliability, and the proponent’s plans for on-site generation (referred to as “bring your own power” or “BYOP”). This assessment lens aims to ensure full cost-recovery commitments, pledging that developers fund any necessary local transmission and generation upgrades.

• Strategic Priority Assessment:

  For projects that pass the technical and financial requirements, particularly in areas where grid capacity is highly constrained, the province will evaluate proposals against three core strategic pillars (detailed below). This assessment will also determine whether a project receives non-financial government support, including permitting facilitation and dedicated concierge services.

Community benefit, data security and economic development as strategic pillars

To successfully secure a grid connection, new large data centre proposals must demonstrate substantial financial and non-financial value to the province across three pillars:

• Advance economic development:

The province is looking for projects that create durable, high-value economic benefits. This includes creating long-term jobs (including training and apprenticeships), generating new tax revenues, supporting domestic supply chains, and providing vital compute access for Ontario-based small and medium-sized enterprises (SMEs).

• Protect data security and digital sovereignty:

  The Playbook emphasizes data residency and control as priority considerations. The framework favours projects that advance Canadian control over sensitive data and critical digital infrastructure. Proposals will be evaluated on their alignment with both provincial and federal cybersecurity objectives, with a stated preference for Canadian-owned and operated facilities.

• Invest in communities and earn public confidence:

  Data centres must deliver meaningful benefits to host municipalities while minimizing impacts on local infrastructure capacity. The province also expects developers to deploy advanced technologies to mitigate environmental footprints. Explicitly encouraged mechanisms include closed-loop and waterless cooling, direct-to-chip liquid cooling, noise-reduction engineering, and waste-heat recovery systems that can heat nearby buildings.

Power procurement economics: Full cost absorption and non-financial supports

The Playbook reinforces the government's position that ratepayers will not subsidize data centre infrastructure. Data centres will be required to support the full cost of their electricity consumption, as well as the capital costs of necessary grid reinforcements.

Separately, but concurrently, Ontario is proposing a dedicated electricity rate class (e.g., “Class C”) for new data centres with a capacity exceeding 1 MW. This proposed rate would be higher than the rates paid by traditional industrial customers in Class A or Class B. Notably, this means new data centres over the 1 MW threshold would be excluded from participating in the Industrial Conservation Initiative (“ICI”), a demand-response program that allows large consumers to significantly lower their Global Adjustment costs by curbing consumption during peak grid demand hours. Existing data centres currently enrolled in the ICI program would, however, be grandfathered in.

To offset grid reliance and expedite access to power, the province is strongly encouraging BYOP solutions, signaling that developers who can independently supplement their power needs will be viewed much more favourably.

In addition, the Playbook makes clear that Ontario will not be offering direct financial incentives to attract new data centre investment. Instead, the province intends to leverage its existing structural advantages: a low-carbon electricity grid, geographic and political stability, and favourable climate conditions.

Takeaways for the industry

For developers and investors, the proposed framework clarifies how projects will be evaluated. Grid connections will no longer be granted on a first-come, first-served or purely technical basis. To secure approval, and project financing, proponents must integrate site selection, power procurement, community benefit commitments, and data governance planning from the outset.

The draft Playbook remains subject to change. Public comments are being accepted through the Environmental Registry of Ontario (ERO) and the Ontario Regulatory Registry until the close of the 30-day consultation period, which began on August 13, 2026.

If you have a data centre project in development or under consideration in Ontario, now is the time to evaluate how the proposed Playbook may affect your site selection, power procurement strategy, and project timeline. Our Energy and Infrastructure teams are actively tracking these regulatory changes and can help you successfully position your project for approval under the new framework.

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