Interconnection studies and queues

For most data centre projects since 2023, the question has not been what power costs but when it can be connected. Utilities that once connected a 20 MW facility within a year or two now face requests for hundreds or thousands of megawatts at single sites, totalling many times their existing peak demand. Each request must be studied to determine what transmission and generation additions are needed, who pays for them and how long they will take. This lesson explains how large loads and generators are connected to the grid, how interconnection studies work, why queues have grown so long, and what developers can do to secure power on a predictable schedule.

Load versus generator interconnection

Connecting a large load and connecting a generator are different processes with different rules:

• Generator connections are governed by each province's system operator and transmitter: in Ontario, the IESO's connection assessment and approval process and Hydro One's customer impact assessment; in Alberta, the AESO's connection process; in vertically integrated provinces, the Crown utility's procedures, often tied to competitive procurements.
• Load connections are governed by provincial transmission and distribution codes and utility tariffs, and in several provinces by new government approval requirements specific to data centres.

For a data centre, both matter: the load connection determines when the campus can draw power, and generator interconnection determines how quickly the new supply needed to serve it (and any co-located or contracted generation) can come online.

The study process

Whether for a load or a generator, interconnection studies follow a similar sequence of increasingly detailed analyses:

• Pre-application or scoping: the customer describes the project, location, size and ramp schedule; the utility gives preliminary information about nearby facilities and capacity.
• Feasibility or preliminary study: steady-state power flow analysis (ELE-380) identifies thermal overloads and voltage violations under normal and N-1 contingency conditions.
• System impact study: detailed power flow, short-circuit, stability and sometimes electromagnetic transient studies under many scenarios and contingencies, identifying the required network upgrades.
• Facilities study: engineering design and cost estimates for the connection facilities (substation, lines, protection, metering) and network upgrades.
• Agreement: an interconnection or connection agreement specifying the facilities, costs, security, schedule, operating requirements and, for loads, the contracted demand and ramp.

Each stage takes months; the whole process for a large load or generator commonly takes two to four years before construction of upgrades even begins. Upgrades themselves may take years more: a new 500 kV line can take a decade from conception to energization, while large power transformers have had lead times of two to four years.

What studies look for

A large load affects the grid in several ways that studies must evaluate:

• Thermal capacity: whether lines and transformers can carry the additional flow under normal conditions and after contingencies. A 500 MW load at a single point can overload multiple circuits.
• Voltage: large loads depress voltage, especially after contingencies; reactive power support (capacitor banks, STATCOMs) may be needed.
• Resource adequacy: whether there is enough generation to serve the load at peak, which in many regions is now the binding constraint rather than transmission.
• Stability and ride-through: data centre loads are dominated by power electronics (UPS rectifiers and server power supplies). When a fault depresses voltage, many UPS systems transfer to battery within milliseconds, removing their load from the grid. In July 2024, a 230 kV fault in Virginia caused about 1,500 MW of data centre load to transfer to backup simultaneously, creating a sudden surplus that operators had to manage. NERC has since identified large-load ride-through behaviour as a reliability risk, and system operators increasingly require data centres to remain connected through specified voltage and frequency disturbances.
• Power quality: harmonics and, for AI training clusters, rapid load swings of tens of megawatts as computation synchronizes across thousands of GPUs.

Why queues grew

In the 2020s, interconnection requests grew far faster than utilities could study or build. In Alberta, the AESO received requests for more than 15 GW of data centre load in 2024 and 2025, compared with a provincial peak of about 12.5 GW, and responded by allocating a limited interim block of capacity and then, under the 2026 Data Centre Regulation, setting rules that favour projects bringing their own generation. In Ontario, the IESO forecast demand growth of 75% by 2050, with data centres a major contributor, and the province gave the minister authority to approve or refuse data centre connections. Hydro-Québec has required government authorization for new loads of 5 MW or more since 2023, and BC Hydro allocates a fixed block of power to AI and data centre projects competitively.

Many requests are speculative: developers file at multiple sites, hoping to secure capacity at one, and utilities have no way to tell which are real. This inflates queues, slows studies for everyone and makes load forecasts unreliable, which in turn affects resource planning and rates.

Provincial responses

Each province has responded to the surge in requests differently:

• Ontario: under the Transmission System Code, a customer pays a capital contribution for connection facilities and for network upgrades not covered by the expected revenue from its load over a defined period. The IESO introduced requirements for large computational loads, and since 2025 the Minister of Energy can approve or refuse connection of data centres above a threshold, with the province prioritizing projects that serve Ontario's economic interests and data sovereignty.
• Alberta: the AESO allocated interim capacity among large-load applicants in 2025 and the 2026 Data Centre Regulation distinguishes projects that bring their own generation from "bridged" projects that use limited grid capacity until generation arrives, with required contributions to transmission and cost recovery.
• Québec: new loads of 5 MW or more need government authorization, and power is allocated to projects judged most beneficial to the province, with a separate data centre rate proposed.
• British Columbia: a competitive call allocates 400 MW over two years, with a per-project cap, after a pause on new connections for some energy-intensive uses.

Generator connections also matter: Ontario's long-term procurements (LT1, LT2) and Alberta's market-driven additions determine how quickly new supply can be built to serve growing demand.

Indigenous partnerships in new supply

New transmission and generation built to serve large loads in Canada increasingly involve Indigenous equity ownership, which shares benefits, supports consultation and can speed approvals. Data centre developers also partner with First Nations on sites and generation (DCE-410).

• Ontario: Hydro One offers First Nations partners up to 50% equity in new large transmission lines, and the Indigenous Opportunities Financing Program supports equity in energy projects.
• Alberta: the Alberta Indigenous Opportunities Corporation provides loan guarantees for Indigenous ownership in energy, transmission and related projects.
• Federal: the Canada Indigenous Loan Guarantee Program, launched in 2024 and expanded in 2025, backs Indigenous equity in major resource and energy projects.

Cost responsibility

Who pays for the facilities needed to connect a large load is one of the most contested questions in the industry:

• Direct connection facilities (the customer's substation, the tap line) are normally paid by the customer.
• Network upgrades (reinforcing shared lines and substations) may be paid by the customer, by all customers through rates, or split; rules vary widely.
• Generation needed to serve the load is paid by all customers through rates or capacity markets, unless the customer brings its own supply.

Ontario uses an economic evaluation: the transmitter estimates the incremental revenue the customer's load will pay over the evaluation period and compares it with the cost of facilities; if revenue falls short, the customer pays a capital contribution.

Strategies for securing power

Data centre developers use several approaches to obtain power faster and more reliably:

• Early engagement: file requests years ahead, share accurate load forecasts and ramp schedules, and build relationships with utility planners.
• Site selection for available capacity: target locations with existing transmission headroom, retired generation sites with existing connections, or areas with surplus generation (DCE-410).
• Phased ramps: request capacity in stages that match the utility's ability to build, with firm early phases and options for later ones.
• Flexibility: agree to curtail load during system emergencies or peak periods in exchange for faster connection. Studies suggest that if large loads could curtail for a fraction of a percent of hours, existing grids could connect tens of gigawatts more load without new capacity.
• Bring your own generation: on-site or co-located generation (Lessons 7 and 10) can serve the load initially ("bridging") or permanently, reducing the burden on the grid.
• Fund upgrades: offer to pay for network upgrades or provide security, making the request more credible and protecting other customers.
• Buy existing positions: acquire sites or projects with existing connection agreements or queue positions.

Lesson 4 examines how flexibility can unlock capacity sooner, and Lesson 9 the contract terms, such as minimum bills and collateral, that come with large-load connections.