Powering AI: Canada’s evolving electricity grid connection policies Powering AI: Canada’s evolving electricity grid connection policies

Artificial intelligence (AI) is reshaping Canada’s electricity systems. The data centres required to support AI, and other expanding applications, are queuing for new grid connections across the country and requesting an unprecedented amount of power. With limited grid capacity and supply in the near term, provinces are being forced to reconsider long-standing grid connection policies.

Given the importance of AI to the economy, there is a critical need for data centres and supporting infrastructure. Policymakers need to resolve how to balance the needs created by a rapid build-out of these data centres against potentially competing objectives such as decarbonization, grid reliability and electricity affordability. The emerging policy positions that are being formulated across key provinces will shape the future of grid connections for data centres and other large electrical loads as we move into 2026 and beyond.

Queuing for connection

For decades, Canada’s electricity systems have been built using “first come, first served” policies that treat the review of new load connection applications as a purely technical exercise based on the principle of non-discriminatory access for all electricity users. When electricity demand increased at a predictable pace and utilities could supply grid expansions and new generation within a comparable time frame, with the assistance of independent power producers, these policies served Canadians well.

Today, AI-driven demand for electricity has completely changed this landscape. A single data centre can require as much power as a medium-sized city. Moreover, the requested levels of power cannot be delivered by utilities within the accelerated time frames that are being sought to allow users to capitalize on current AI opportunities. In some provinces, the amount of power requested by data centre developers alone exceeds the total amount of power otherwise required by the entire province. Such unprecedented demand requires generation capacity to double, as well as necessitating a massive grid expansion. These demands are happening in parallel to other growth demands on the power grid, including from electric vehicle adoption and related infrastructure. In response, provinces are redesigning connection policies to reconcile the onslaught of connection applications with their evolving resource supply plans. Also in play are broader societal objectives, including data sovereignty, economic and industrial strategy, and environmental impacts.

Québec enacts new framework

Québec’s abundant, low‑emission hydroelectricity remains a powerful draw for data centres. Nonetheless, its available capacity is limited at present pending the aggressive growth in renewables described in Hydro-Québec’s Action Plan 2035.  In June 2025, the National Assembly, despite controversy, enacted Bill 69: An Act to ensure the responsible governance of energy resources and to amend various legislative provisions. This measure, among others, continues an increasingly stringent oversight regime for new grid connections that began in 2023. Pursuant to this regime, the Minister of Economy, Innovation and Energy must authorize any new load of five megawatts (MW) or more.

The Minister’s authorization requires consideration of the technical feasibility, economic benefits, and social and environmental impacts of a requested connection. The implications of these criteria may result in the attachment of conditions to the authorization. This framework has been designed to ensure that scarce capacity is allocated to projects that are aligned with provincial energy and industrial policy objectives, while preserving system reliability.

Alberta launches new large load integration program

Facing an unprecedented number of new connection applications, the Alberta Electric System Operator (AESO) launched the two-phased Large Load Integration Program in June 2025. Phase 1 set an aggregate cap of 1,200 MW for large loads requesting power of 75 MW or more prior to 2028. This cap represents the estimated amount of power that could be allocated to data centres without adversely impacting costs to existing ratepayers or grid reliability.

Eligibility for this limited capacity was restricted to projects that had already progressed through the initial stages of the connection process and met other requirements. All eligible participants who opted into Phase 1 were to receive a pro rata share of the 1,200 MW. However, it became apparent that the allocations would be far less than the power required by all eligible participants. As a result, all but two participants pulled out of the program, and the available capacity was allocated to those two projects. Until 2028, no other data centres requiring greater than 75 MW will be able to connect to the grid.

The AESO has now embarked on Phase 2 of the program, a policy-focused, multi-year endeavour. This phase will define durable pathways to integrate additional large loads into Alberta’s grid while maintaining reliability and ensuring the fair allocation of transmission costs. Changes to government policy and interconnection rules will be implemented based on consultations occurring over the next two years. Collectively, the program signals a disciplined approach to managing the electrification demands of proposed data centres.

To assist the AESO in managing data centre interconnection requests, the Alberta government recently introduced Bill 8, the Utilities Statutes Amendment Act, 2025. If passed, the Minister and the AESO can introduce regulations and rules respecting data centres outside of the typical rule-making process to, among other things, accelerate the grid interconnection process for data centres who Bring Your Own Generation (BYOG).

Ontario also adopting a new framework

Current forecasts indicate data centres could account for 13% of new electricity demand in Ontario by 2035. As in Québec and Alberta, the demand for new connections in Ontario already far exceeds available grid capacity and supply. To address this challenge, in June 2025 the Ontario government introduced Bill 40, Protect Ontario by Securing Affordable Energy for Generations Act. This bill, if passed, will establish a new regime for connecting specified load facilities, including data centres. Forthcoming regulations will require transmitters and distributors to apply a screening framework that emphasizes the connection of projects that deliver clear economic, strategic, security and community benefits.  

British Columbia prioritizes power for natural-resource projects

British Columbia is also experiencing unprecedented growth in requests for power. In addition to requests for data centres, significant power is required for new mining, oil and gas, liquified natural gas, manufacturing, forestry and hydrogen projects. To promote projects that will provide the most benefits to its citizens, the British Columbia government has introduced Bill 31, Energy Statutes Amendment Act, 2025. This bill, if passed, will enable the government to establish procedures, rules, limits, prohibitions and charges specific to cryptocurrency mining, data centres and the production of hydrogen for export outside of Canada.  

The government has stated that it plans to make the temporary ban of the connection of cryptocurrency mines permanent. It also intends to launch a competitive call for projects in 2026 that will limit the allocation of power for a two-year period to 300 MW for AI, 100 MW for data centres and an amount to be determined for hydrogen export projects. Projects for other purposes, such as natural resource developments, will not be subject to any limitations.

Power demand and policy change in the future

Canada’s pivot from purely technical, first come, first served provincial connection policies to more selective policy‑aligned frameworks marks a structural change in how large loads — especially data centres supporting AI — will access the grid in the future. While provincial pathways differ, Québec’s ministerial authorization regime, Alberta’s staged integration program with capacity limits, and Ontario’s and British Columbia’s developing frameworks collectively point to several common themes. These include recognition of scarce near‑term grid capacity and supply, the need to protect reliability and affordability, and the prioritization of projects demonstrating clear economic benefits.

All of these themes reflect national priorities likely to be influenced by the newly-constituted federal Ministry of Artificial Intelligence and Digital Innovation. As we move into 2026 and beyond, proponents of large load-demand projects should expect to have to satisfy more rigorous and expanded evidentiary requirements in new connection applications. They should also anticipate greater emphasis on siting, community engagement and contributions to grid adequacy. As provincial policies continue to evolve, broad strategic planning will be decisive for securing timely grid access in this AI-driven era of electricity system expansion.