Ontario's IESO Groups Data Centers Among the Particularly Variable Drivers of Its Demand Forecast

Ontario's grid operator, the Independent Electricity System Operator (IESO), looks ahead each year at the province's power needs. Its 2026 Annual Planning Outlook, dated March 2026, adds high- and low-demand scenarios to its reference forecast. It also introduces what it calls a growth margin. That margin groups together the areas of demand growth that are "particularly variable," and keeps them apart from the steadier ones. Commercial data centers are among the variable ones.

The outlook names "strong interest from new commercial artificial intelligence service-providing data centres" among the primary drivers of forecast growth across all three scenarios. Parts of the outlook follow, not the whole.

A Lower Reference Forecast

The reference scenario is the IESO's view of the most likely path for demand. It underpins planning and procurement. In it, net annual energy demand is forecast to grow from 152 TWh in 2026 to 250 TWh in 2050. That forecast represents approximately 65% growth, the IESO says.

That forecast is lower than last year's. The 2025 outlook had forecast 75% growth by 2050. The IESO's summary gives three reasons: economic impacts, a lower forecast for electric vehicles, and the success of enhanced energy efficiency measures.

One limit: the inputs to the forecast, a footnote says, were finalized in September 2025.

Three Scenarios

The high-demand scenario forecasts demand growth of as much as 92% through 2050. Among other things, the IESO says, it reflects accelerated economic activity, rapid electrification and more large new loads materializing. Its section on the scenario names three drivers of that growth. One is strong interest from new commercial artificial intelligence service-providing data centers. Another is industrial electric vehicle production and supply chain projects, with industrial sector companies' prospective project pipelines. The third is incremental decarbonization and electrification projects across the economy.

The low-demand scenario forecasts demand growth of roughly 38% through 2050. Among other things, it assumes slower economic activity, weaker investor confidence and fewer large new loads materializing.

Despite short-term uncertainty, the outlook says, all three scenarios indicate rising demand through the 2030s and beyond.

The Growth Margin

From this outlook on, the IESO reports its forecast in three parts. The first is demand in the reference year, 2026. The second is baseline growth, built on assumptions it calls more stable and readily available, such as population, households and economic output.

The third is the growth margin. It covers changes in demand "based on volatile assumptions and projections in terms of trends and planned projects." One part of it is economic development. That part includes commercial data centers, mineral extraction and processing, auto and transportation machinery manufacturing, chemical production and other industrial manufacturing. The other part is societal electrification, which includes the decarbonization of buildings, industry and transportation.

The IESO says the split will allow better tracking and monitoring of the key drivers that could affect planning from year to year.

Data centers also come up where the outlook discusses large step loads. These are projects that connect to the grid with demand of 20 MW or more. They typically come online in substantial blocks over a short period rather than ramping up gradually. It says significant growth of these loads is currently expected in the commercial sector, "driven primarily by the expansion of data centres." It then adds a caution: "there is considerable uncertainty regarding the timing, scale, and geographic distribution of these new loads." The IESO says it will continue to monitor developments in large step loads, and collaborate with industry stakeholders to inform future demand planning.

The outlook is open about its doubt. It names AI service-providing data centers as a driver of growth, and files commercial data centers in the part of the forecast it calls volatile.