Ontario is proposing a new electricity framework for data centres that would require large projects to pay more for power, adding another layer of scrutiny to an asset class already facing tighter municipal controls across the province.

Under the proposed Data Centre Playbook, new facilities larger than one megawatt would pay a higher rate than the industrial program available to large electricity users. The province also wants data centres to cover the full cost of their impact on the electricity system and is considering measures that would encourage developers to provide their own generation.

“Any data centre investment will need to invest significantly in local communities and pay more for electricity,” Premier Doug Ford said.

Projects would also be assessed against environmental standards covering water consumption and noise, with Ontario indicating it would prioritize facilities using closed-loop cooling systems that consume virtually no water during operation. The province says it will not offer financial incentives to attract projects.

The framework comes as the development landscape for data centres is shifting in Ontario, particularly in the Greater Toronto Area.

Mississauga wants a temporary freeze on new data centres while it studies zoning, infrastructure capacity and environmental and economic impacts. The review comes as Prologis Canada seeks approvals for a roughly 220,000-square-foot data centre on Tenth Line West.

Oakville adopted a one-year pause this week as it develops a planning framework. The town is the proposed location of HIVE Digital Technologies’ planned 320-megawatt AI computing campus, a project the company has valued at C$3.5 billion.

The provincial proposal signals that power availability, pricing and local infrastructure impacts are becoming central development considerations alongside land and connectivity. Ontario has previously estimated data centres could account for about 13 per cent of new electricity demand in the province by 2035.

The framework is open for public comment for 30 days before Ontario finalizes the playbook.