A data centre is the digital world’s engine room. Every email sent, every photo stored, every video streamed, and every AI-powered tool depends on the constant work taking place inside these facilities. Housing thousands of computer servers and complex networking systems, data centres ensure information is stored, processed, and transmitted seamlessly around the globe. With reliable power supplies, advanced cooling systems, and high-speed connectivity, they are built to keep the modern economy running without interruption.
Canada is uniquely positioned to emerge as a global hub for data centres by leveraging its climate and abundant renewable energy. Global M&A activity reinforces this trajectory, showing demand for Canadian facilities is set to accelerate as these advantages gain even greater importance. For owners, operators, investors, and data centre tenants, understanding this evolving market, and its regulatory and financing landscape, is essential to seize the opportunities now emerging across the country.
What’s driving data centre M&A activity worldwide?
Despite global market recessions slowing the rate of technology-related investments, data centre M&A activity continues as demand for data storage rises to support to AI and cloud computing developments.
Since 2015, Synergy has tracked more than 1,381 data centre M&A deals across the world, totalling $276 billion in deal value. After a dip in 2023, data centre M&A activity surged again in 2024 with a total deal value surpassing $40 billion, positioning the year to break the adjusted 2021 record. As of August 2024, $36.7 billion in deals had closed, with another $7.1 billion agreed to close, led by major equity investments in Vantage Data Centers and EdgeConneX. While 2021 and 2022 were bolstered by four of the largest deals in industry history, namely the acquisitions of CyrusOne, Switch, CoreSite, and QTS, which were each over $10 billion in value, 2024 featured a broader spread of transactions. Private equity is playing an increasingly dominant role, rising from 54% of deal activity in 2020 to almost 90% since 2022.
Canadian institutional investors are recognizing the need for and profitability of data centres. The Canada Pension Plan Investment Board (“CPP Investments Board”) is investing $225 million through a 50% stake in a construction loan co-financed with Deutsche Bank to support a 54 MW hyperscale data centre expansion in Cambridge, Ontario. The project is a joint venture between Related Digital, TowerBrook Capital Partners, and Ascent, and aligns with the CPP Investments Board’s global data centre strategy across major hubs in the Americas and Asia Pacific. Canada presents an enticing investment opportunity because of unique geographical factors and the availability of renewable energy that will be crucial to the sustainable operation of data centres.
Why Canada is emerging as a data centre hotspot
As global demand for digital infrastructure accelerates, Canada is positioning itself as one of the premier destinations for building and operating data centres. The country is already home to more than 280 facilities, with more on the way as international operators and investors take notice. In most regions, data centres struggle against extreme heat, driving up energy consumption and operating costs.
Canada’s competitive edge lies in its geography and energy mix. The naturally cold climate reduces cooling costs, while access to hydroelectric and other non-emitting energy sources supports operators’ ESG commitments. Together, these advantages make Canada an attractive location for both hyperscale and colocation developments.
How Canada turns cold into a competitive advantage
Cooling alone can account for up to 40% of a facility’s total energy use, a major cost in warmer climates. Canada transforms this challenge into an advantage. Its naturally cold climate functions as a built-in cooling system, lowering costs while reducing environmental impact. This is a decisive differentiator, as sustainability is increasingly shaping investment decisions.
When combined with abundant renewable power and a stable political environment, Canada offers efficiency and sustainability, making it one of the most attractive locations in the world for building the digital economy infrastructure.
What ESG expectations are shaping investor decisions?
For global investors, a strong ESG profile is no longer optional, it is expected. This is especially important for energy-intensive data centres. Canada stands out as it offers one of the cleanest electricity grids in the world. Roughly 80% of its power comes from non-emitting sources such as hydro, nuclear, wind, and solar.[1] For operators, this means the heavy energy demands of a data centre can be met with clean power, helping them meet climate commitments while appealing to sustainability-focused customers and investors.
How Ottawa is investing in next-generation AI infrastructure
In addition to its natural and environmental strengths, Canada is putting real capital behind its digital future.[2] By 2030, 70 per cent of global demand for data centre infrastructure is expected to be for advanced AI workloads, with generative AI alone projected to account for 40 per cent of demand.[3] The Canadian federal government committed up to $700 million to fund private-sector AI data centres and related infrastructure through the AI Compute Challenge.[4] The investment aims to achieve the following:
- build out or expand the net-new AI compute capacity in Canada;
- provide flexible and affordable compute offerings for Canadian innovators, businesses and industry;
- contribute to anchoring or growing Canadian AI champions; and
- advance innovative and sustainable compute solutions.[5]
Eligibility for this program is targeted at commercial entities, industry consortia, and partnerships between industry and academia pursuing commercially viable AI compute infrastructure projects. With applications now open, Ottawa is sending a clear message: Canada intends to support and lead the next wave of global AI data centre growth.[6]
What regulatory requirements apply to data centres in Ontario?
Building and operating a data centre in Canada involves compliance with multiple regulatory layers, including land use, building codes, energy approvals, environmental standards, and operational security requirements. While specifics vary by province, the following considerations apply broadly across Canada:
1. Zoning and Building Permits
Municipal zoning by-laws may classify data centres as industrial or special-use facilities. Developers must confirm zoning compliance early, as restrictions on height, setbacks, noise, and traffic can affect site selection and design. Building permits under provincial building codes, such as the Building Code Act, 1992 (Ontario) and the Ontario Building Code, cover structural, electrical, mechanical, and fire safety requirements.
2. Energy Approvals
Data centres are among the most energy-intensive facilities in Canada, and securing reliable power is critical. Grid connection requirements are governed by provincial regulators and system operators. In Ontario, for example, grid connection requirements are governed by the Independent Electricity System Operator (“IESO”), which conducts assessments and administers market rules for transmission-level connections, and also by the Ontario Energy Board (“OEB”) through the Transmission System Code and Distribution System Code. Similar processes exist in other provinces, such as the Alberta Electric System Operator connection framework in Alberta.
3. Environmental Compliance
Environmental permitting often focuses on backup power systems, such as diesel generators, which may trigger air quality and fuel storage regulations. Compliance with provincial environmental laws governing emissions, water use, and waste management is essential. Canada’s clean electricity grid offers a competitive advantage for operators seeking to meet ESG commitments. However, operators must still manage emissions from backup systems and cooling infrastructure to align with federal and provincial standards.
4. Security and Privacy Compliance
Beyond construction and energy approvals, operators may seek compliance with physical security and industry compliance frameworks such as ISO/IEC 27001 and SOC 2. These non-legal industry standards are widely recognized for protecting sensitive data and ensuring operational resilience. Compliance is often required by customers and cloud service providers, and may intersect with privacy laws such as PIPEDA, which applies federally, or provincial privacy laws such as the Personal Information Protection Act in British Columbia or the Act Respecting the Protection of Personal Information in the Private Sector in Quebec.
How are data centres financed in Canada?
Data centre financing transactions in Canada have grown rapidly in both number and size in recent years. These transactions typically comprise private equity investment, secured lending, and/or construction financing, reflecting the capital intensive and highly technical nature of data centre development.
Private equity
Typically the leading funding source, with both domestic and global investors targeting stable, long-term cash flows from colocation and hyperscale facilities. Private equity firms often partner with operators or developers to acquire and/or build data centres.
Institutional capital
Institutional investors including pension funds and infrastructure funds have entered the space, viewing data centres as a core infrastructure asset class similar to utilities or telecommunications networks.
Construction financing
Critical during the development phase, as data centres require substantial upfront capital for land acquisition, building, power, and cooling infrastructure. Canadian banks, pension-backed lenders, and private credit funds increasingly participate in these financings.
Secured transactions
Lenders typically take security over the real property, equipment, and revenue streams associated with data centre facilities. Many large-scale secured transactions involve syndicated lenders or sponsors where debt raises start at several hundred million dollars and exceed well over a billion dollars. Collateral packages are often complex, especially when multiple lenders or cross-border financing structures are involved.
Miller Thomson at the forefront
Already at the forefront of this space, Miller Thomson acts as Canadian counsel to Vantage Data Centers with respect to its corporate structuring, acquisitions and financings, including its recent successful issuance of US $640 million in securitized notes. The notes are rated A- by S&P Global Ratings. Vantage is a leading global provider of hyperscale data center campuses servicing top-tier global hyperscalers, cloud providers and large enterprises across five continents and 37 campuses in North America, EMEA and Asia Pacific.
If you need support in this evolving industry, whether through a development, joint ventures, capital raising, financing and leasing, as well as general M&A activity, contact our Corporate Law team, our Technology team and our Real Estate team to spark a conversation on how we can assist you.
Because of its cool climate, renewable energy availability, and political stability, Canada offers low operating costs and strong ESG performance.
The federal program provides up to $700 million to fund private-sector AI data centres and next-generation compute capacity.
Projects must comply with zoning, building code, environmental, and energy connection regulations under Ontario’s Building Code Act, IESO, and OEB frameworks.
Private equity, institutional investment, and construction financing dominate, often involving complex secured transactions.
Lawyers assist with structuring, compliance, financing, M&A, and due diligence to reduce risk and optimize returns.
[1] Government of Canada, 2025
[2] Government of Canada, 2025
[3] 2024 Fall Economic Statement, pg. 122.
[4] Government of Canada, 2025.
[6] 2024 Fall Economic Statement, pg. 105.
