What to know
- Ontario launched an initial Data Centre Playbook to guide municipalities on approving future facility proposals, with projects required to provide economic and community benefits and cover their full electricity costs for approval.
- New centres using more than one megawatt would face higher electricity rates, while the province will encourage facilities to generate their own power and establish separate rate classes.
- The framework prioritizes water-efficient and quieter facilities, including waterless or closed-loop cooling. Projects taking more than 50,000 litres of water per day require an environmental permit, while existing noise limits range from 40 to 60 decibels.
- Ontario will not provide financial incentives for data centres and will assess proposals based on economic development, digital sovereignty and community investment. The framework is still being developed, with a 30-day public consultation underway before the final playbook is released.
As data centres come to the forefront of artificial intelligence and technological innovation, Ontario has laid out new rules to ensure the growing industry isn’t an expensive investment for the province or its residents.
The provincial government launched the new Data Centre Playbook on Thursday, in order to help municipalities looking to develop a large computing facility determine which proposals would be able to move forward.
Electricity usage regulations
Under the initial framework, any new data centres would have to provide economic and community benefits, while also footing the entire bill for all electricity the building uses.
The province says data centres will be required to cover the costs associated with serving their electricity needs, rather than shifting those costs onto taxpayers.
The projects will be encouraged to build their own power generators.
Additionally, those using more than one megawatt of electricity will be expected to pay a higher rate than the industrial rate program in place for large electricity users.
Water usage regulations
Additionally, new data centres must follow Ontario’s strict environmental standards around water consumption and noise.
While the playbook didn’t specify how many litres of water a new development is regulated to use, they said they will be prioritizing projects with closed-loop and waterless cooling systems, an alternative to an evaporative cooling system, which uses large amounts of cool water without reusing the supply to prevent machinery from overheating.
Data centres would also remain subject to Ontario’s existing water-taking requirements. Facilities taking more than 50,000 litres of water per day may require provincial authorization, depending on the circumstances.
Ultimately, the province said it will target proposals that plan to use virtually no water during operation.
How Ontario plans to address noise
Noise emitted from data centres can affect surrounding residential areas and residents’ quality of life.
Ontario’s existing guidelines set sound-level limits for stationary sources, including industrial and commercial facilities, at between 40 and 60 decibels, or to match the ambient background noise, whichever is loudest.
The playbook says noise can also be reduced through quieter cooling equipment, acoustic enclosures and strategic placement of mechanical equipment.
Data centres will also have to comply with Ontario’s existing rules governing noise from stationary sources.
Further provincial support and regulations
Ontario said it would not provide any financial support to attract future data centre investments, and will instead only offer non-financial support that exists, including Ontario’s clean and reliable electricity system, ample available land, cooler climate, and skilled workforce.
The province said the playbook is an early initiative and key enabler of the province’s forthcoming AI strategy. They expect the growing industry to generate $122 billion in economic growth by 2035 and create more than 17,000 new jobs on a yearly basis.
“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,” Premier Doug Ford stated in a news release.
The current framework is based on three main assessment pillars: economic development, digital sovereignty and community investment.
Under the framework, proposals will be assessed against criteria including economic development, digital sovereignty and community investment.
Ford also said the creation of future data centres will help Canadians’ data remain in the country and protect critical information.
Data centres constructed within residential communities would also need to ensure that the community sees significant benefits, such as investment in local infrastructure, workforce training, job creation and economic growth.
Canada’s growing AI industry and the concerns around it
The new playbook for data centre development comes as municipalities across Ontario question how the infrastructure would impact the environment.
On Tuesday, Oakville council passed an interim control bylaw that would pause the development of new data centres, as the town assesses what needs to be implemented in future projects to allow sustainable function without environmental harm.
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Toronto City Council also passed a motion in July, requesting the Ontario’s government establish a province-wide framework by early 2027 to manage the impacts of large AI data centres.
With the growing AI industry in Canada, Ontario is home to around 450,000 workers in tech, who are involved across 26,000 businesses. More than 1,600 companies have also reported being involved in using artificial intelligence, according to the province.
The government says it has also secured billions in instruments related to the technology sector since 2018.
As the framework is put into action, it is not final.
While the province has not disclosed a release date for Ontario’s final Data Centre Playbook, the province has opened a 30-day public consultation with the Environmental Registry of Ontario and the Ontario Regulatory Registry to get the ball rolling.
Those concerned with the initial playbook are able to give the province feedback, who are then able to use the data to refine the framework before the final playbook is released.
