A new fight is brewing in Ontario’s tech and energy sectors as Premier Doug Ford’s government moves to control which data centres can access the province’s electrical grid. The restrictions, announced Tuesday at Queen’s Park, create a tiered access system that critics say could reshape the province’s digital economy landscape.
“This isn’t about limiting growth, it’s about responsible growth,” said Energy Minister Todd Smith during the announcement. “We need to ensure our electrical capacity serves Ontarians first—their homes, their hospitals, their schools—before massive computing facilities drawing power equivalent to small cities.”
The proposed regulations establish three categories for data centres seeking grid connections. Top priority goes to facilities supporting critical infrastructure like healthcare networks and financial systems, followed by Canadian-owned operations serving domestic markets. International technology giants, particularly cryptocurrency mining operations, would face the strictest limits.
The decision comes as Ontario faces growing pressure on its electrical grid. According to the Independent Electricity System Operator (IESO), data centre power requests have quadrupled since 2022, now representing potential demand equivalent to powering 1.5 million homes.
At the Markham Tech Hub, where I spoke with several industry representatives, the mood was tense. Sarah Kavanagh, director of the Canadian Cloud Computing Association, worries about unintended consequences.
“The government is creating winners and losers through regulation instead of letting the market decide,” Kavanagh said, gesturing toward the office windows overlooking a construction site where a major data facility has been halted mid-development. “Some projects have been in planning for years, with millions already invested.”
The restrictions mirror similar measures in Ireland and the Netherlands, where rapid data centre growth strained local infrastructure. However, tech industry advocates argue Ontario’s approach lacks nuance by treating all data facilities as equal power consumers.
Mississauga-based data centre architect Jamie Chen explained the technical oversimplification. “Modern Canadian-designed facilities use sophisticated heat recapture systems,” he told me while sketching a cooling diagram on his notepad. “The government is using outdated power consumption models that don’t reflect current efficiency standards.”
The timing has raised eyebrows among political observers. Recent polls from Abacus Data show the Ford government trailing in GTA ridings where technology sector employment has been growing. Some see these regulations as an attempt to address consumer concerns about rising electricity costs ahead of next year’s provincial election.
“Voters care about their hydro bills, not server farms,” said political strategist Eleanor Mahoney. “The government’s own internal polling likely shows electricity affordability remains their vulnerability, especially in suburban battlegrounds.”
Environmental groups have offered cautious support for the measures. Greenpeace Canada’s energy coordinator Dale Robertson called it “a step in the right direction” but questioned why similar restrictions aren’t being applied to other energy-intensive industries.
“Data centres make convenient targets because they’re new and somewhat mysterious to the average person,” Robertson said during a phone interview. “But if we’re serious about managing electricity demand, we need comprehensive industrial policy, not just targeting the tech sector.”
For communities like Stratford and Kingston that have actively courted data centre development as part of economic diversification efforts, the regulations create new uncertainty. Mayor Brandon Cooper of Stratford expressed frustration during Tuesday’s council meeting.
“We’ve spent three years developing an innovation corridor strategy,” Cooper said. “Now Toronto makes a unilateral decision that leaves our economic development plans in limbo.”
The Ontario Chamber of Commerce released a statement calling for a more collaborative approach. Their analysis suggests the restrictions could delay up to $7 billion in planned technology infrastructure investment, potentially pushing projects to Quebec or New Brunswick, where electricity policies remain more accommodating.
When I visited Hydro One’s system control centre in Barrie, engineers offered a more complex picture of the grid challenges. Shift supervisor Maryam Khouri showed me displays tracking provincial power demands.
“See these demand spikes? They’re becoming less predictable,” Khouri pointed to a monitor showing real-time consumption data. “It’s not just about total capacity—it’s about stability and being able to forecast needs accurately.”
The legislation includes transition provisions for projects already underway, with a six-month grace period for developments that have secured municipal permits. However, several major tech companies including Microsoft and Google have already indicated they’re reviewing their Ontario expansion plans in light of the announcement.
Ministry documents obtained through freedom of information requests reveal internal government disagreement about the policy approach. A memo from the Economic Development Ministry warned that data centre restrictions could “significantly impair Ontario’s competitiveness in digital industries” and recommended incentives for efficiency improvements instead of access limitations.
As evening settled over the provincial legislature grounds, I watched tech workers and energy sector employees debate the announcement at a nearby pub. The conversation reflected the complicated balancing act facing the province—how to maintain reliable electricity for homes while accommodating growing digital infrastructure needs.
“We all want affordable electricity,” said network engineer Darren Williams, nursing a pint. “But we also want good tech jobs and competitive digital infrastructure. I’m not convinced we can’t have both with smarter policy.”
As implementation details emerge in coming weeks, one thing is clear: Ontario’s approach to data centre electricity access will have lasting implications for its position in the digital economy—and for the political fortunes of those making these consequential choices.
