Canada’s Blind Spot: The Case for Data Centres as an Economic Multiplier

For years, data centres have been persona non grata in jurisdictions across Canada due to their massive energy needs but few direct jobs. If you had a few hundred megawatts available, why not send it to a manufacturing facility? By typical land economic metrics, data centres yield poor job-per-hectare and energy-to-job ratios. Electricity would be better allocated to a manufacturing plant that directly creates hundreds of jobs rather than a data centre that produces only a handful. 

Given this dynamic, Quebec withdrew power from a data centre serving the blockchain industry and now requires ministerial authorization for projects over 5 MW. Ontario faced controversy over bitcoin mining operations in the North, alongside warnings from electricity market participants and regulators that data centres could pose risks to grid stability. 

The paradigm has shifted overnight. Data centres linked to artificial intelligence (AI) have emerged as a strategic priority for global investors and a key driver of the digital economy. Without AI driving new investment, the global stock market would be anemic. Data centres’ economic multiplier extends far beyond direct job creation at facilities, yet their broader role is often undervalued in public debate.  

Despite the current enthusiasm, large policy challenges remain while the possibility of a market bubble looms. New public consultations have been announced by both the Province of Ontario and the federal government. If the data centre industry lacks advocacy for its broader economic benefits, short-term thinking may result in stifled economic opportunity. 

One of the central challenges facing decision makers is how to facilitate and manage land-use and energy policy that enables the development of new data centres. The framing of data centres in this context is a clear, simple decision point for elected officials. However, the ratio of immediate jobs-to-electricity supplied is a narrow assessment that overlooks the benefits and necessities of competing in the modern digital economy. 

Data centres can be viewed through a more essential lens than traditional land-use projects for three compounding reasons: 

1. Data sovereignty: If data is stored outside of Canada, concerns have been expressed that jurisdictional reach would expose Canadian citizens and companies to foreign surveillance and undermine Canadian privacy protections
2. Data security: The management of a data centre results in the robustness of cybersecurity measures, resilience against outages, and the ability to mitigate risks from state or non-state actors
3. Economic multiplier: Location determines where capital investment, property tax revenue, and skilled jobs are realized. If data processing critical to Canadian industries occurs offshore, the intellectual property and economic multiplier effects also flow abroad, weakening domestic competitiveness

Like many sectors in Canada, data centres will be impacted by both federal and provincial regulatory bodies. Data sovereignty and governance have fallen under federal jurisdiction while electricity allocation and land use falls squarely under provincial jurisdiction. The data centre sector needs to develop a government relations strategy that accounts for both jurisdictions. 

Current Federal Environment 

Canada lacks a clear strategy for AI and for data centres. The Artificial Intelligence and Data Act (AIDA) tabled in 2022, represented the most significant attempt to regulate the governance of AI and associated data practices. From a data centre perspective, AIDA sought to define obligations around the collection, storage, and processing of data when tied to “high-impact AI systems.” The Act implicitly recognized that the location and management of data storage impacts privacy, security, and economic sovereignty. However, AIDA was never passed. 

More recently, on September 29, 2025, The Honourable Evan Solomon, Minister of Artificial Intelligence and Digital Innovation, announced that by year end his ministry will table a refreshed AI strategy. This strategy will consider a 26 member AI Strategy Task Force focused on 8 priorities identified by the Minister. The public is also invited to provide input during a 31 day consultation period, ending October 31st. 

The priorities include: 

1. Research and Talent
2. Adoption Across Industry and Government
3. Commercialization
4. Scaling Champions & Attracting Investment
5. Safe AI & Public Trust
6. Education & Skills
7. Infrastructure
8. Security

For companies planning investments in Ontario and beyond, this means federal oversight will likely evolve to encompass not just AI applications, but the infrastructure layer of the digital economy. Developers will need to anticipate federal requirements around sovereignty, security, and trusted AI, even as electricity allocation and land use rules remain under provincial control. 

Current Provincial Environment 

In Canada, Ontario leads the data centre market with over 80 facilities already built. On September 5, 2025, the province announced a consultation on proposed amendments to the Electricity Act, 1998 and related statutes that would give the government authority to regulate and restrict the connection of “specified load facilities.” The proposal focuses on how Ontario can create a framework for connecting data centres to the grid. This includes:  

• Adding “economic growth” to the mandates of the independent Electricity System Operator and Ontario Energy Board 
• Establishing deferral and variance accounts to spread costs if new rules affect procurement 
• Providing transmitters or distributors an ability to not connect or reconnect certain load facilities from its transmission system or distribution system unless connection requirements that are specified in the regulations are met 

Stakeholders have until November 4, 2025 to provide comments on the proposed amendments, creating an important opportunity to shape how Ontario balances economic development, electricity system reliability, and fair cost allocation. 

Ontario should consider: 

• Developing evaluation criteria that recognize both direct and indirect economic contributions of data centres 
• Enabling flexible interconnection models, including temporary curtailment and non-wires solutions such as behind-the-fence generation and storage 
• Providing transparent cost-allocation rules so communities and ratepayers are not unfairly burdened by speculative load growth 
• Integrating federal sovereignty and governance factors into siting and approval processes