The AI revolution is fueling a surge in data centre development, with the U.S. and China leading global capacity growth and reaping significant economic rewards, according to a recent TD report.
The report, by economist Likeleli Seitlheko, said that while Canada is eager to attract more data centre investment and bridge its computational infrastructure gap, grid constraints pose a challenge to accommodating large-scale data centre development in the near term.
However, as many regions also have limited grid capacity, Canada can position itself as a competitive location longer term if it can figure out how to connect new data centres to power in a timely manner.At the same time, it will be important to ensure that the costs of integrating new data centre loads are borne by the industry while keeping electricity prices affordable for ratepayers to maintain public support, said the report.

“Although Canada faces near-term hurdles to its plans to increase AI data centre infrastructure due to constrained generation and transmission capacity, the country is not out of the race to attract more of the expected capital expenditures on data centres. Many countries are also dealing with similar grid constraints, which means that regions that can adapt their electricity sectors quickly to enable new large loads to connect to supply in a timely manner will come out ahead,” said the report.
“This situation creates an opportunity for Canada to create conditions that can enable faster data centre connection to the grid or to off-grid alternatives. The ‘bring your own generation’ model that is being explored by Alberta is one such promising tool. Data centre companies in Texas are already opting for this option as it is faster than waiting to be connected to the grid. Also, other regions are considering it as a way to shelter ratepayers from the costs of building new generation and transmission for data centre. Ontario, on the other hand, can lean on its advantage as the first jurisdiction in North America to build a small modular reactor (SMR). One way to do this would be to include SMRs in the new corporate power purchase agreements program, which allows companies to procure their own generation. The proposed 40 GW offshore wind farm in Nova Scotia is another potential generation source that could support a data centre industry in Atlantic Canada.
“Whatever policies and tools are used, protecting ratepayers from electricity price increases will be important for gaining public support. Governments can look to jurisdictions in the U.S. and elsewhere for lessons on what can be done differently to avoid repeating actions that have contributed to rising retail electricity prices in other markets like the PJM Interconnection.”

Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Entrepreneur. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 and 2024 as one of the top business journalists in the world by PR News. He was also named by RETHINK to its global list of Top Retail Experts 2024, 2025 and 2026.
About Us
Canada’s Entrepreneur is the number one community media platform in Canada for entrepreneurs and business owners. Established in 2016, our podcast team has interviewed over 800 Canadian entrepreneurs from coast-to-coast. With hosts in each province, entrepreneurs have a local and national format to tell their stories, talk about their journey and provide inspiration for anyone starting their entrepreneurial journey and well- established founders.
The commitment to a grass roots approach has built a loyal audience on all our social channels and YouTube – 500,000+ lifetime YouTube views, 250,000 + audio downloads, 50,000 + average monthly social impressions, 15,000 + engaged social followers and 120,000 newsletter subscribers. Canada’s Entrepreneur is proud to provide a local, national and international presence for Canadian entrepreneurs to build their brand and tell their story

