Electricity is Essential for the Next Decade
The state of the Canadian electricity industry 2025
The next decade is critical
Everything is changing in the world we live in. Right now, Canada faces a massive trade war with its biggest ally. The weather has become more extreme: communities are devastated by hurricanes, destructive winds and wildfire. We face unprecedented political and economic insecurity as a result.
In the middle of all this change, all this instability and all these extremes… electricity is there, no matter what.
Flick a switch and the light doesn’t come on by magic. Somewhere, a turbine is spinning a giant magnet at 60hz to generate a current of electrons that is transmitted through a vast network of high voltage cables that are distributed to homes, business, schools, and anywhere else people need it. This is overseen by thousands of dedicated workers. And it all starts with keeping a magnet spinning continuously without interruption. Some regions of Canada can do that easily, using vast amounts of water. Others are left using the resources available including wind, nuclear, natural gas and others. Sometimes keeping that magnet spinning requires multiple sources of fuel.
Canada’s electricity sector makes this happen no matter what.
However, we have a lot to get done during the next decade.
To meet the growing need for electricity we must more than double the amount of electricity being supplied in the next 25 years. And we need to do this in the midst of vast scarcity: A scarcity of resources, a scarcity of capital and a scarcity of labour.
Electricity Canada’s members must thoughtfully and strategically grow the sector by an astronomical amount. This will require an unprecedented team effort. This can be done, but we have ten short years to make sure this massive build-out can happen.
We have ten short years to get this right.
Over the coming pages, we hope to show you the need for electricity in Canada and the willingness of Canada’s electricity providers to build. But, more importantly, we want to point out the obstacles we face as a sector—and the solutions that can get us building and keep investment flowing into Canada.
Everything is changing in this world. But electricity is always there, no matter what. And Canada’s electricity providers are there to make sure that nothing stops people from getting power for everything that matters.
Electricity is essential to the next decade.
Francis Bradley President and CEO
Electricity Canada
CANADA – U.S. ELECTRICITY TRADE
The gathering storm
In a 72-hour period starting February 1, the U.S. and Canada briefly engaged in a trade war. The U.S. were poised to place a 25% tariff on most Canadian goods and a 10% tariff on energy sources from Canada. Canada responded by getting ready to put similar tariffs from products from the U.S.
These sanctions were “paused”—they will be reconsidered in March—but the threat of tariffs remains. All this presents a significant challenge to one of the most important relationships between Canada and the U.S.: the trade of electricity.
Canada-U.S. electricity trade is more than a century old – indeed both countries share Niagara Falls for hydroelectric power. Canada trades electricity with around 30 states annually. Canada primarily exports more electricity than it imports, but imports have increased over the past few years due to extreme weather and drought conditions in provinces like British Columbia and Manitoba.
Over the past five years, the U.S. has imported 331 TWh of electricity from Canada, which in turn benefits the Canadian economy.
Annual electricity trade between Canada and the U.S.
WORD OF CHOICE:
Tariffs: A tax imposed by the government of a country on imports or exports of goods. Taxing electricity being imported into the United States will affect Canadian and U.S. customers, driving the price of electricity higher and creating further affordability challenges.
A potential trade war puts the electricity sector in uncharted territory and raises questions about how the system can stay reliable and affordable.
What cross-border electricity trade provides Canada and the
U.S.
Resilience and reliability
Integration helps even out fluctuations in energy needs, helping manage periods of prolonged demand due to extreme weather, cold snaps, and/or drought conditions.
Affordable bills
The free flow of electricity between the U.S. and Canada helps keep electricity competitively priced, bringing bills down for Canadian and American families.
What could happen with tariffs
Jobs and economic growth
Electricity trade powers industrial and manufacturing potential on both sides of the border, creating Canadian and American jobs and prosperity.
There is no existing mechanism for the application of tariffs to electricity trade. The electricity markets in North America were purposefully designed based on the unhindered free flow of power across the border.
Bills will go up everywhere. Tariffs on electricity would drive up costs for the US and Canada alike. Additionally, a potential decline in exports of surplus electricity could seriously reduce revenues.
Emergency power supply could be affected. One of the biggest reasons for cross-border electricity trade is to handle peak demand caused by extreme weather. Increasing the cost of electricity could hurt consumers and businesses precisely when they need it the most.
A crisis nobody wants
According to a survey by Innovative Research Group in 2024, 57 % of Canadians and 67% of Americans think that free trade with Canada and the U.S. has been a good thing for their respective countries.
A trade war will not only affect trading electricity, but potentially goods crossing the border as well. With the need to build Canada’s grid faster, and as utilities and data centres compete for semi-conductors and transformers for grid expansion, we need a “team Canada” approach to our supply chain – and our electricity supply.
With both the U.S. and Canada experiencing unprecedented demand for electricity, now is not the time to get in the way of powering our economies and creating good-paying jobs. We shouldn’t be disrupting this century-old trade relationship that provides energy security to the whole of North America.
BUILDING INFRASTRUCTURE NOW
How to build a grid
When it comes to building a major electricity project, the people who build and invest need one thing: certainty. In the next 25 years, Canada’s electricity demand could more than double, from approximately 600 TWh/yr to over 1200 TWh/yr. Doing this requires building projects on a massive scale. Growing communities will need to be connected to sources of power. Distribution networks will need to be expanded and modernized to efficiently distribute and re-distribute power.
Electricity use by sector
Source: Canada Energy Regulator (EF2023)
All of this needs investment— capital from the private sector and from the provincial and federal governments.
There is a great deal at stake. The financial cost of getting this wrong is too great. A decision made today needs to hold up 20, 30 and even even 40 years from now.
WORD OF CHOICE:
Distribution: The process of bringing electricity at safe voltages to customers’ homes and businesses, and a critical component of building new housing and supporting electric vehicles.
The wheel of questions asked by an electricity provider
Do we have LABOUR and SUPPLY CHAINS?
Do we have FINANCING?
Can it be built within a PREDICTABLE and REASONABLE timeframe?
Will it provide the greatest BENEFIT at the LOWEST COST?
All these questions need to be answered before a single metre of cable is laid down.
For the electricity sector to attract investment, the government needs to provide a clear pathway to get to a yes in a reasonable time.
That means making it more financially advantageous to invest or making it easier to work with multiple levels of government and regulators.
What is needed to be open for investment in building Canada’s bigger, better grid:
Competitive investment ($55 billion annually)
A simplified system of approvals
A regulatory environment that works
A way for provincial and federal funders to talk to each other
REGULATION AND APPROVALS
The buck stops where?
Canada has a great deal to build over the coming years to power our nation. And building critical infrastructure is good for everyone: it benefits the economy through investment and job creation.
And yet, while most of the work building such things could have been underway years ago, things hardly move in Canada. Projects are increasingly ensnared in procedural delays.
Canada ranks second worst among the 38 countries in the Organization for Economic Co-operation and Development (OECD) when it comes to the pace of permitting.
Time to Obtain a General Construction Permit, OECD Countries
Source: World Bank
Federal permitting and approvals are slow, cumbersome and duplicative as they involve processes from multiple agencies, often times conflicting with existing processes at the provincial level.
Nearly two years ago, the Supreme Court of Canada issued an opinion that sections of the Impact Assessment Act are, as it stands, unconstitutional. The Impact Assessment Act has made building large-scale infrastructure projects difficult. In particular, the Act’s Designated Project List is flawed, as it is solely based on project type and size, regardless of whether the impacts are already understood.
Complicating matters, federal efforts to stimulate building often falter because electricity is a provincial responsibility, and these are managed by disparate local and regional systems of regulation. What ends up happening is one level of government sets a policy direction, and other levels of government react... and regulators offer interpretations of what can and can’t be done. It’s difficult to move forward as a result
Slow processes are killing projects, and driving up costs for projects that do get built.
Build things faster
In 2023, Electricity Canada made three key recommendations to improve Canada’s cumbersome approvals process.
Until this happens, investment in Canada is jeopardized. Unless we can provide a clear pathway to get to a yes or no in a reasonable time, investors will go elsewhere.
BUILDING A RELIABLE AND RESILIENT ELECTRICITY GRID
Powering through the new normal
In the early weeks of January 2025, we witnessed the devastating effects of unpredictable weather. When unseasonal Santa Ana wind gusts blew in from the desert, they brought with them uncontrollable embers to Los Angeles and surrounding areas. In 48 hours, 17,000 acres were burnt down and at the time of writing this report, fires were still not contained. The death toll is rising, houses are gone and the damage to electricity infrastructure, extensive.
Extreme weather is the new normal.
The LA fires are just one example of the unpredictability of climate change. We are facing “storms of the century” now every year. And when they happen, these storms severely cripple the grid. Electricity companies across North America now grapple with the dual challenge noted by the 2024 Electricity Advisory Board of growing the grid while protecting it from major climate disasters.
Source: Electricity Canada Service Continuity Committee
WORD OF CHOICE:
Bomb cyclone: A mid-latitude storm that rapidly intensifies, resulting in a dramatic drop in central pressure. Also known as explosive cyclogenesis, weather bomb, or bombogenesis.
Weathering the weather (events)
Major events: power interruptions outside the control of the
These can be anything from lightning to equipment damage, to vehicles hitting things, to mischievous animals or even the odd kite stuck on a hydro pole
Significant events: power interruptions that are truly catastrophic and exceed 2% of the national five-year rolling average of customer hours of interruption. Due to utility jurisdictions and weather patterns, more than one major event can map to one significant event.
Top ten significant events in the past 20 years in Canada
All included peak wind speeds of 70 km/h or greater.
Top 10 Significant Events
Hurricane Fiona's peak wind speed reached 170 km/h.
THE GOOD NEWS…
There are 8,760 hours in a year and the average customer in Canada will only experience about 10 hours of power outages total spread over 2 or 3 times. This is reflected in the System Average Interruption Duration Index, otherwise known in the electricity industry as SAIDI. In 2023, this average meant an interruption averaging 10.08 hours per customer.
This means that electricity in Canada, despite severe weather, despite enormous load growth and despite the demands of electrification, is still over 99.9% reliable.
Electricity utilities work hard to keep the lights on, to inform customers when there is a power outage, and to offer clear expectations for power restoration. But we need to be smart about future building. Any expansion of the electricity grid needs to be able to withstand extreme weather, and planning for it needs to be informed by smart risk-management practices.
ELECTRIC VEHICLES
Driving growth nationwide
One in ten of the vehicles currently on the road in Canada is electric. While this astounding number has been influenced by federal electric vehicle mandates, the unprecedented growth of EVs—which started at less than 2 per cent of vehicle sales in 2014 and in ten years has climbed to 11 per cent – is primarily market-driven.
EVs are increasingly more affordable and vehicle charging, more available. Both factors have increased consumer confidence, and the number of EVs purchased is expected to increase from approximately 480,000 today to 5 million by 2030. Moreover, many provinces are open for business with industries that build or power EVs.
New EV registrations of total vehicles
Source: Statistics Canada
WORD OF CHOICE:
Range anxiety: The fear of running out of charge before reaching a destination or finding a charging station when driving an electric vehicle. As the network of charging stations has increased along major travel corridors, this has lessened significantly.
Road works ahead
Most electric vehicle adoption is happening in Ontario, Quebec and British Columbia. Part of the reason for this is federal EV mandates. Funding programs don’t align with some provincial policies and regulations, which leave electricity providers stuck in the middle.
As more EVs are adopted, the load growth will increase. Electricity providers and policymakers are now preparing for this anticipated growth, working to ensure necessary grid upgrades, demand management, and energy storage solutions to accommodate peak charging times and ensure reliability.
Battery Electric Vehicle charging load forecast
What we need … and soon
Public charging ports
We need 679,000 public charging ports to be built between 2025 and 2041
Multifamily building retrofits
Multifamily buildings need personal charging ports. 1.6 million parking spaces need to be retrofitted by 2030
Medium and heavy duty vehicle charging (MHDV)
MDHVs are expected to grow to over 400,000 by 2030. This will require an additional 41,000 charging ports
Next stop: everywhere
The more electric vehicles are adopted the more charging infrastructure is needed with a focus on rural and remote areas. A good place to start would be corridors.
Source: Natural Resources Canada
INTER-PROVINCIAL TRANSMISSION
The ties that electrify
When people talk about “Canada’s electricity system”, the problem is, there isn’t one system. There are thirteen, serving each province or territory. Generally speaking, most power flows north-south within each part of the country.
But does it have to be this way?
Inter-provincial transmission would provide neighbouring provinces with the opportunity to share electricity between each other. This would enable load sharing during peak demand periods and would enhance grid stability and reliability. It would also provide a “green corridor” that connects renewable power to regions that have been more reliant on fossil fuels.
Yukon is completely reliant on its own power
Ontario and Quebec share 2,775 MW of combined transfer capacity. Ontario often shares electricity with Quebec during winter, and Quebec shares with Ontario during summer
Prince Edward Island derives its power from undersea cables that connect PEI to 100 MW from New Brunswick
WORD OF CHOICE:
Intertie: an interconnection that allows the passage of current to be shared between two or more electric utility systems.
Building the ties
Right now, work is underway to develop large-scale inter-provincial transmission including:
T Birtle Transmission Project, a 230-kilovolt transmission line connecting Manitoba and Saskatchewan. It was completed ahead of schedule and under budget, helping support Saskatchewan’s goals of reducing greenhouse gas emissions by providing access to Manitoba’s rich hydro resources.
T NS-NB Reliability Tie (still in development) that will span 96 kilometers between Onslow, Nova Scotia and the New Brunswick border and offer enhanced reliability to both provinces. Construction on this intertie will be complete by 2027 and is one of the factors in Nova Scotia meeting its target to be off coal by 2030.
How to build an inter-provincial transmission line (a step-by-step process)
Needs assessment: provinces determine that there is a need to address factors including new renewables, load growth or grid reliability.
1. 4. 2. 5. 3. 6.
Route selection: identify a feasible route for the transmission line which includes environmental assessments, land use and social license.
Feasibility study and impact assessment: once a route has been selected, the technical, economic and environmental impact of the study need to be considered.
Material procurement: with long lead times caused by geopolitical and climate related risks, materials will need to be procured as soon as possible.
Construction: Once contracts are awarded and sites prepared, the towers and lines can be assembled involving a highly skilled workforce.
Testing and commissioning: following an appropriate testing period, the corridors can be energized and provinces connected.
The build out of the electricity grid for future needs requires more of everything: generation, transmission and distribution. But it creates a more resilient grid.
The (final?) frontier
Artificial intelligence is growing… but so are the needs of powering AI.
Generative AI, the brain behind software like ChatGPT, requires an unheard-of-amount of power to energize what are large factories of computers. These are known as data centres.
Source: International Energy Association, Electricity 2024: forecast to 2026
According to a report by the International Energy Association, data centres, cryptocurrencies and AI consumed approximately 460 TWh of electricity globally in 2022 (nearly 2% of total global electricity), and that demand could double by 2026, reaching 1,000 TWh—enough to power all of Japan. And the computing power of AI is growing.
WORD OF CHOICE:
Hyperscaler: companies that use or sell vast amounts of computing resources to train and run newer, cutting edge, AI models. They have access to unlimited capital.
What data centres need:
LAND
The average data centre is 100,000 sq. ft. The largest one in Canada is currently 900,000 sq ft.
WATER
Data centres produce tremendous amount of heat (think about how hot a laptop can get!) so water is needed as a coolant.
NEAR URBAN CENTRES
Fibre optics cable networks are essential for the transmission of data, so data centres need to be close to cities.
TEMPERATE CLIMATE
Continental climates, dry, sunny, and cold winters that can assist with renewable energy.
Data centres rely on renewable energy for generation, and will often have solar farms or wind turbines to assist. But these sources are not predictable and support from the local grid is essential.
How could data centres impact Canada?
Currently the market value of Canadian data centres are $5.03 billion USD, and this could grow to $9 billion by 2030. About 1% of electricity in Canada right now is used for data centre consumption. However, this is expected to grow dramatically as parts of Canada have declared themselves “open for business” to data centres and are actively courting hyperscalers. At the same time, other parts of Canada have declared moratoriums on future data centre builds.
This is an important opportunity… but we need to consider the impact that data centres could have in terms of infrastructure needs, which are massive. This could be both an opportunity and a risk to Canada’s economic growth.
Canada is working to double, possibly triple the capacity of the grid to build the Canadian economy and enable the massive growth in electric vehicles and electric home heating. But the modelling for Canada’s electricity growth, that becomes part of budgets and legislation and regulation, has only just included electric vehicles and the changes to weather as a result of climate change. AI is missing from the modeling, and it’s right on our doorstep.
We cannot risk the price increases and reliability challenges potentially caused by data centres being added to the grid.
Recommendations
Regulatory reform that gets extreme weather. Utilities need regulations that support their investment in grid modernization and proactive grid-hardening so that the system can stand up to extreme weather events.
Advocate strongly against tariffs applied by the United States. New tariffs on electricity or goods that support the build out of Canada’s electricity grid will be devastating to Canadian and American consumers.
Investment in distribution systems. Electricity distribution infrastructure is strategically important to connecting the housing that Canada needs to build out. The provincial regulatory structures that govern distribution infrastructure haven’t kept up with the times. The federal government should set minimum standards to support the build out required.
Alignment of permitting and approvals processes with desired outcomes. If the goal is to build, and to build faster, a holistic approach to building needs to be adopted. Permitting and approvals processes need to be streamlined and made faster, with clear and accountable timelines.
If there’s one project, then there should be only one approval process. We need a “one-stop” approach to approving large-scale builds, instead of approvals from multiple agencies across federal and provincial governments, with different requirements.
Shore up the supply chain. Protecting Canada’s electricity infrastructure means bringing manufacturing capabilities into Canada. We need a strong supply chain to safeguard the safety and long-term stability of our electricity system against attacks and weather events.
Develop a planning process for inter-provincial transmission. Inter-provincial transmission is key to ensuring affordable, reliable electricity. To do that we need a process that engages the provinces, the federal government and Indigenous peoples to work together.
Provide regulations for building data centres. Canada’s energy regulation was designed for the era of landlines and the telegraph; they need to be expanded to the changed world that we live in now. Data centres provide a major opportunity and challenge to electricity providers and we need to be ready for it.
