In June 2025, the Ontario government introduced Bill 40 – the Protect Ontario by Securing Affordable Energy for Generations Act – a sweeping piece of legislation designed to reshape the province’s energy strategy while promoting economic growth.
From hydrogen market development to foreign investment restrictions and data center approvals, Bill 40 signals a significant shift in how Ontario approaches infrastructure, investment, and energy governance. For general counsel, business leaders, and investors, this Bill warrants close attention—not just for what it says, but for how it could impact strategic planning and operational costs.
Key Takeaways for Businesses
- Energy security is being prioritized over foreign investment flexibility.
- Data center and high-load facilities face new connection requirements.
- Hydrogen development and economic growth are now legislative objectives.
- Ontario Energy Board CEO powers are expanding, with potential impacts on regulatory transparency.
- Public funds may be used to subsidize electricity generation and distribution.
What’s in Bill 40—and Why It Matters
Economic Growth & Hydrogen Market Enablement
Bill 40 officially makes economic growth a statutory objective, reinforcing the province’s intent to attract industry and infrastructure. This includes a strong focus on building Ontario’s hydrogen economy—which is expected to generate jobs, attract capital, and support decarbonization.
Implication for businesses: Companies operating in clean tech, renewables, or adjacent industries may find new opportunities in Ontario’s energy market—especially if tied to hydrogen.
Foreign Investment Restrictions
Amending the recently passed Bill 5, Bill 40 enables utilities to invest in implementing new restrictions on foreign participation in Ontario’s energy sector. The language underscores a “Canada First” orientation aimed at protecting local interests and infrastructure.
Implication for businesses: Foreign-owned or multinational firms in energy and infrastructure should reassess investment risk, compliance frameworks, and expansion plans in Ontario.
New Requirements for Data Centers
Recognizing the growth of energy-intensive sectors like data centers, Bill 40 requires that “specified load facilities” meet new connection criteria to access Ontario’s transmission or distribution systems.
Implication for businesses: Data center operators may experience prioritization in approvals—but also greater scrutiny. Strategic location planning and early regulatory engagement will be key.
Government Payments to Generators and Distributors
The legislation authorizes the government to make direct public payments to electricity generators or distributors. While this could temporarily reduce the cost burden on ratepayers, it raises questions about long-term provincial debt and market distortion.
Implication for businesses: Energy-intensive users should monitor how these subsidies affect pricing, competition, and the regulatory environment in the months ahead.
Expanded Authority for Ontario Energy Board CEO
Bill 40 grants the CEO of the Ontario Energy Board enhanced authority to establish internal procedural policies without the need for full public transparency.
Implication for businesses: While this may streamline regulatory processes, it could also reduce visibility into future policy changes. Legal teams and GCs should anticipate potential blind spots in regulatory oversight.
Who’s Supporting (and Opposing) Bill 40?
- Supporters emphasize the promise of job creation, economic resilience, and reduced energy costs for residents and small businesses.
- Critics cite risks related to foreign investment deterrents, environmental degradation (especially from data center sprawl), and reduced transparency in public decision-making.
As of publication, Bill 40 is not yet enacted, but its passage could have lasting effects on Ontario’s legal, energy, and investment frameworks.
How Caravel Law Can Help
At Caravel Law, our team of seasoned legal advisors supports clients across energy, technology, infrastructure, and investment sectors. We understand the nuances of Ontario’s evolving regulatory landscape—and we can help you proactively respond to the risks and opportunities Bill 40 presents.
Whether you’re a GC navigating compliance or a business leader planning market entry, our team is here to advise.
Contact us to understand what Bill 40 means for your business strategy.