Canada's data centres on the grid and off-the-meter

It's no secret that the demand for data centres is at an all-time high in Canada. But building them is one thing; securing power for them is another, with its own restrictions and liabilities.

Canada's data centre industry is facing mounting pressure on electricity networks, causing load restrictions with provincial providers, and prompting sprawls outside of industrial hubs. 

According to a report from Arizton, the Canadian data centre market was valued at $10.4 billion in 2024 and is expected to reach $16.8 billion by 2030. Initiated by cloud services, now fueled by artificial intelligence.

Power availability has become one of the most significant constraints on new data centre development, according to Jim Tsaknis, Vice President, Broker at Colliers Canada. The surge in computing workloads, particularly those associated with AI training, is forcing operators and utilities to rethink how large facilities interact with the grid.

He said Colliers clients, which range from local cloud providers to multinational tech firms, are looking for facilities in major hubs, including a cluster of data centres north of Toronto in the city of Markham.

"If you look at the current capacity in Toronto, we're just shy of 500 megawatts, which is substantial, and that's grown over the last 25 years," Tsaknis added. "The challenge is creating the power. In Alberta, obviously well endowed with natural gas. - it's going to be interesting to see how many players are going to be doing behind-the-meter."

Behind-the-meter energy solutions in data centres are enabled with the capacity to generate their own power on-site or nearby, bypassing the public utility grid. 

Large Canadian companies are diversifying beyond traditional hubs to train Artificial Intelligence models. This week, Bell Canada announced plans to build the country's largest AI data centre outside Regina, Saskatchewan. In other news, Synapse Data Centre Inc. has proposed a 1,000 megawatt data centre in rural Alberta, which would have more power capacity than any data centre in the Toronto and Montreal regions.

Global firm Equinix operates 16 Canadian data centres in British Columbia, Alberta, Manitoba, Ontario, and Quebec, as well as a 5,000-square-foot site in New Brunswick. All the company's Canadian data centres are located near metropolitan centres.

Marc Mondesir, Managing Director at Equinix Canada, told TechDay Canada that the location of the company's data centres depends on the infrastructure connecting servers to client operations. Unlike many AI factories, latency is a huge factor.

"What you need to really be able to benefit from in this digital economy is interconnection. The ability to connect to clouds, to connect to AI and connect to other customers. That's where interconnections come in, the physical interconnections between these data centres. So when we look at entering a market we not only look at the the availability of space and power, but the ability to create networks," he said.

Mondesir added that sustainability is also key, albeit a necessary factor, as loads are putting some provincial systems under stress. Notably, in Alberta last spring, the Alberta Electric System Operator announced that large load projects (data centres) would be limited to 1,200 megawatts until 2028.

But grid management tactics are not new since the "data centre boom." Canadian regulators have been attempting to avoid grid failures for over a decade.

In 2010, the Ontario government introduced the Industrial Conservation Initiative (ICI) to incentivise large electricity consumers to shift their consumption to off-peak hours. In other words, if industrial consumers (including data centres) shifted to optimal times, they would have the option to earn credit based on Global Adjustment rates for the top five peak-demand hours each year, rather than on a volumetric basis.

While the program started off with a threshold of five megawatts per consumer, it was then reduced to three megawatts in 2015 and again to one megawatt in 2017.

Tsaknis says data centre operators often opt to transition off-grid to internal power generation during peak hours, when the cost is lower than the grid rate.

"When you go to these peak shedding periods, you transition off of the grid onto your batteries, so it seamless, you spin up your generators, get them to the power levels that are necessary of what the equipment is currently using, then taking them off batteries and put them on that generator," he said. 

At Equinix, data centres need to be set up to offer full redundancy on any aspect of the supply chain, from electricity voltage to cooling 

"All of our equipment is redundant to a factor of two. So for every generator required to support our customers, there is an equal generator that exists just to play the role of redundancy," said Mondesir. Backup systems are put in place when grid coverage is interrupted to keep systems running despite uncontrollable grid outages.

Canada's data centre sector remains comparatively small relative to the United States, even as investment accelerates. But Canada's power is generally greener, particularly in Quebec.

"Quebec is an attractive market for us, not only because of the price of electricity, but because of the green nature of that electricity. A lot of the time when you're talking about generators they're fueled by another source of energy that may not be quite as clean as what we might be able to get off the grid."

This month's energy report from the Canada Energy Regulator lists Quebec as one of the greenest energy producers, with over 85 per cent of generation thanks to hydroelectric facilities, as well as a strong wind power presence.

Hydro-Québec also offers the lowest industrial power rates in the country as of January 2026, providing an additional incentive for the data centre economy.

Looking to the future, it seems more power will be needed, but the Canadian government is aiming to do so in a more sustainable way. High Voltage Direct Current lines, for example, will enable inter-provincial energy trade at the fastest speeds to date, but nevertheless at higher costs.