Proposed National Electricity Strategy brings Canada closer to becoming an energy superpower
Electricity demand is rising and is expected to more than double in the next 25 years. Electrification, population growth, industrial expansion, and the rise of data centres are driving this. To meet this massive growth, electricity must be treated as “enabling infrastructure” — essential to economic development. Over the past decade, Electricity Canada, through its State of the Canadian Electricity reports, has called for decisive leadership when it comes to making Canada’s electricity grid stronger, more affordable and more reliable.
Canada needs a framework that brings together federal, provincial, and Indigenous leadership that gets electricity providers building, with fewer obstacles to investment and building. Today’s announcement of a National Electricity Strategy—and the launch of consultations to support it—marks a major step forward in that direction. The government’s announcement makes the important distinction that to renew, expand, modernize and grow the system, affordability concerns must be met. The proposed $15 billion in energy savings by 2050 is important to achieving this.
Financing electricity projects
This year’s State of the Electricity Industry report, Forging Canada’s Electricity Future makes it clear that we need to move beyond a traditional utility model when it comes to financing such large-scale projects.
The announced National Electricity Strategy and accompanying green paper, “Powering Canada strong: A national strategy for an electrified Canadian economy” rightly emphasizes the need for generational investment and new approaches to financing. Extending the Clean Electricity Investment Tax Credit to support certain major high-voltage intra-provincial transmissions projects, and complementing existing support for inter-provincial interties including tax credits, could prove to be a game changer in building Canada’s complex grid and connecting generation assets to communities.
The federal government must play a sustained role in sharing risk, lowering the cost of capital, and accelerating timelines through financing tools that reflect the long life and broad public benefits of electricity infrastructure.
Existing tools—including those delivered through the Canada Infrastructure Bank, the Canada Growth Fund, and tax incentives—are important building blocks. The consultations announced today provide an opportunity to expand and better align these tools with the scale and urgency of the challenge.
Adjusting the Clean Electricity Regulations
The government stating that they will adjust the Clean Electricity Regulations, and be willing to use most sources of energy, including natural gas, is important. As the government moves to adjust the Clean Electricity Regulations, it will be critical to ensure they support the rapid, large-scale buildout required to double Canada’s grid. Clear, flexible, and investment-friendly regulations will give utilities the confidence to move forward with the generation, transmission, and distribution projects Canadians need.
Regional integration and interprovincial interties
As we stated in our recent Electricity Canada / Deloitte report on Interties, Canada’s electricity system has historically focused on north-south electricity trade. The recent political situation has demonstrated the need to look to connections between Canadian provinces and territories. And we don’t have to build entirely anew here. As we emphasized in a recent op-ed, existing interties are often underutilized and can deliver immediate reliability and affordability benefits through targeted upgrades and coordinated planning.
We support the Strategy’s emphasis on connecting Canada’s grids through expanded transmission and coordinated planning. The announced consultations are a huge leap forward as they will enable all parties to deal with common barriers to interprovincial interties. All this could strengthen resilience and lower long-term system costs.
Other work that needs to happen
As consultations begin on the National Electricity Strategy, Electricity Canada will continue to advocate for these key areas:
- Using the Major Projects model for all electricity projects: Long timelines need predictable approvals. We need a two-year federal approval timeline for all electricity projects, drawing lessons from the Major Projects Office process.
- Streamlining federal regulatory processes to reduce delays and risk: regulatory complexity affects existing electricity projects as much as new ones. The government’s broader efforts to accelerate project approvals are an important step forward.
- Addressing supply-chain constraints: Electricity Companies invest $30 billion in Canada, and strengthening domestic supply chain will benefit everyone. To that end, Canada needs to develop a supply chain roadmap as a matter of urgency.
- Meeting the challenge of a coming labour shortage: the Spring Economic Update had promising news about offering funding to recruit, train and hire workers. It is critical this happens to address a projected workforce shortfall.
Electricity Canada and its membership look forward to working with governments and partners to ensure a swift response to the strategy consultations so we can quickly move to the next step: beginning one of the most ambitious building projects of the next 15 years, to make Canada’s grid stronger, more resilient, more affordable, and ensure economic stability.
QUOTE:
“Canada’s electricity sector has been clear about what it needs to build: financing that treats electricity as critical infrastructure that powers our economy. The National Electricity Strategy reflects this reality and recognizes the scale of what lies ahead. to do that we need support from all levels of government, and we need regional integration that strengthens the system we already have. We have a big task ahead: building to meet double the demand while keeping affordability and reliability a top priority. We are ready to build, and we look forward to working with governments to turn this strategy into action.”
- Francis Bradley, President and CEO, Electricity Canada
