Connecting Data Centres to the Grid: Alberta's New Regulatory Framework and Emerging Canadian Trends

Alberta’s new Data Centre Regulation (Regulation) makes significant headway for connecting data centres to the province’s electricity transmission grid, while marking a departure from certain long-standing regulatory principles. The Regulation reflects the bespoke considerations governments must balance when evaluating digital infrastructure connections and may inform approaches in other provinces.

Alberta’s Data Centre Regulation

The Regulation was issued under Alberta’s Electric Utilities Act on June 9, 2026, and provides a framework for how the Alberta Electric System Operator (AESO) will process requests by large data centres (75 megawatts or more, unless otherwise determined by the AESO) for access to Alberta’s transmission grid. The Regulation aims to manage the connection of these and other similar large digital infrastructure loads in a way that protects grid reliability and supports prudent cost allocation and system planning, all while incentivizing data centre development as a form of economic growth.

Implementation of the Regulation will require the AESO to issue new rules, likely to be developed following the AESO’s Phase 2A engagement. Stakeholder feedback is being accepted until July 13, 2026.

The Regulation establishes two classes of large data centres, including tethered data centres and bridged data centres.

• Tethered data centres: A tethered data centre is associated with an existing or proposed dedicated generation facility [Regulation, s 5(1)] capable of supplying the data centre’s maximum demand [Regulation, s 5(4)].
• Bridged data centres: A bridged data centre requires immediate electricity supply from the grid on a transitional basis, for up to three years and up to a prescribed maximum demand, before it is paired with dedicated generation and designated as a tethered data centre. A total of 1,600 megawatts of grid capacity has been allocated for bridged data centres.

The AESO must prioritize system access service (SAS) requests from tethered data centres over those from bridged data centres, consistent with Alberta’s “bring your own generation” (BYOG) mandate [Regulation, s 6]. Further, if the AESO determines there is insufficient electricity supply to meet system demand at any time, bridged and then tethered data centres will be the first to be curtailed before other market participants [Regulation, s 10]. These elements of the Regulation represent a significant departure from the open-access principles that generally govern service in most other provinces.

In another departure from well-understood regulatory principles, when approving a new rule made under the Regulation, the Alberta Utilities Commission must not consider what is traditionally viewed to be the overarching legislative requirement to support the fair, efficient and openly competitive (FEOC) operation of the electricity market [Regulation, s 11]. This may be a source of criticism from existing market participants that are bound by FEOC requirements, depending on the nature of any new or amended rules.

The prioritization of data centres with their own power supply, coupled with the Regulation’s triaged curtailment framework, is Alberta’s solution to balancing grid reliability and capacity with the unprecedented demand driven by prospective data centre connections. While data centres proponents are generally willing to incur substantial capital costs, they are typically reluctant to accept material curtailment risk. As such, the BYOG connection stream may prove to be a strong incentive for investment in dedicated resources, which can serve as both a long-term capital investment and a backup electricity source in times of curtailment. BYOG assets may be expanded or upgraded contemporaneously with the growth of the associated data centre or, depending on the fuel type, be used to supply other customers through virtual power purchase agreements with new loads or other commercial agreements.

Siting Considerations 

While not expressly designed to address siting, the Regulation does have related implications. For example, the AESO can treat multiple data centres as a single data centre for the purpose of determining total load demand if certain criteria are met, including location on the same or adjacent land parcels. The discretion afforded to the AESO by the Regulation to require municipal zoning approvals (among other things) prior to system access may also inform siting decisions [Regulation, s 7(1)].

More broadly, siting is one of the defining challenges facing data centre development across the country. As land parcels in urban centres become increasingly saturated, it remains to be seen whether any Canadian jurisdictions will impose specific siting requirements. This could, for example, relate to prime agricultural or municipally owned lands similar to the approach in Alberta following the end of the moratorium on new renewable energy projects, or in Ontario for Independent Electric System Operator (IESO) procured power generation facilities.

In the meantime, data centre developers are finding new solutions to enable more flexible siting options. For instance, some data centres are moving away from evaporative liquid and air-cooling systems and toward closed-loop systems using engineered fluids to mitigate or even eliminate the need for a nearby continuous water supply and associated environmental permitting, potentially shortening development timelines.

Technical Connection Requirements

Alberta and Ontario have recently advanced technical requirements for data centre connections.

The AESO published the Guide to Connection Requirements for Transmission-Connected Data Centres (Guide) for data centres seeking to connect to Alberta’s transmission system on June 12, 2026. The Guide is intended to help data centre developers understand the technical requirements associated with connecting to Alberta’s transmission system. The Guide applies to all existing and future data centres connected to Alberta’s transmission system, regardless of size.

Similarly, Ontario’s IESO has recently issued its Technical Requirements for Large Computational Loads Connecting to the Ontario Power System document. The document includes both the existing technical requirements for general load facilities and introduces new technical requirements to address potential adverse impacts on system reliability caused by the specific load behaviours of large loads associated with data centres and other digital infrastructure.

The IESO’s technical requirements apply to all transmission-connected data centres, but, unlike in Alberta, they apply to data centres greater than 10 megawatts connected to a distribution system. Like the SAS process in Alberta, new or modified digital infrastructure loads in Ontario must undergo the system impact assessment (SIA) process with the IESO. As part of the assessment process, both the IESO and the AESO require proponents to submit data centre project development plans (including ramping schedules) and single-line diagrams with voltage details.

Looking Ahead

The Regulation advances the province’s objective to incentivize data centre development while minimizing pressure on the grid. Prioritizing connections for tethered data centres, providing a “bridging” period to accommodate the timing realities of generation development and allowing multiple adjacent parcels to be treated as a single data centre site all serve this objective.

It remains to be seen whether data centre proponents will view these incentives as sufficient in the face of curtailment risk and are likely to consider whether such risk can be effectively managed through, for example, the development of sufficient energy storage.

In the meantime, it is reasonable to expect the Regulation to serve as a blueprint for similar policy developments in other provinces. For instance, Ontario ratepayers are still awaiting regulations to be issued under the Protect Ontario by Securing Affordable Energy for Generations Act, 2025, which will prescribe the new requirements for connecting data centres to Ontario’s electricity grid. Based on Ontario’s related stakeholder consultation, it is clear that Ontario is seeking to balance the economic growth opportunities that data centres can bring to the province (e.g. tax revenues, digital sovereignty) against the need to ensure grid reliability and security for other new and existing industrial and commercial customers.

Will Ontario achieve this balance by introducing new curtailment thresholds, similar to the Alberta approach? Or might Ontario adopt “a distinct electricity rate class” for new and pending digital infrastructure loads, similar to the approach considered by Hydro-Québec, which is contemplating a 13-cent rate hike for data centres that have an annual consumption of more than only five megawatts (almost twice the rate for other large industrial customers)? Or might Ontario create a BYOG incentive similar to Alberta, but limit its scope consistent with British Columbia’s approach, where prospective digital infrastructure proponents must participate in a competitive selection process to access up to 400 megawatts of electricity sourced from renewable energy supply resources?

As provincial governments continue to refine their approaches, one thing is increasingly clear: policies governing data centre connections are becoming a central component of electricity planning across Canada.

We are closely monitoring regulatory developments pertaining to data centers across Canada. For more information, please contact the authors or any other member of our Power or Energy Regulatory groups.