The federal government has revealed the broad strokes of its long-awaited National Electricity Strategy, which centres on the ambitious aim of doubling the capacity of Canada’s electrical grid by 2050.
Ottawa has also launched months-long consultations with provinces, territories, Indigenous Peoples, utilities and unions, in an effort “to identify the actions needed to double our grid most effectively and affordably.”
There is much to admire in the document unveiled by Prime Minister Mark Carney in Ottawa on Thursday.
For one thing, it shows a comprehensive understanding of the scale of the issue and the elements we need to address to build a better energy system in Canada. That so much of it is yet to be developed is largely because the federal government has limited control over electricity build-out; that power lies with the provinces and territories.
In our own recent study of Canada’s electricity system, SHARE found that the lack of a sustained, cross-country co-ordinating body between those provinces and territories and the federal government was one of the biggest constraints to building the clean energy grid at scale.
So if our governments want to do one thing to facilitate investment in this country, it’s to get themselves together to plan a national clean energy grid — not just a provincial one.
Putting off the hard choices
Thursday’s announcement at least indicates that Ottawa understands the issue; where the government’s strategy falls short is in addressing it. By pursuing an “all of the above” approach to building out our electrical grid, the government is still avoiding the hard choices between pathways. But those choices can’t be put off forever.
For example, the government is making bold predictions about cost savings, saying the strategy “could deliver up to $15 billion in total energy savings by 2050 and lower total energy costs for 7 in 10 Canadian households.”
But it does so while promoting the use of never-before-built technology like Small Modular Reactors (SMRs), as if the already enormous cost estimates for this new technology are likely to be met – which history suggests is very unlikely.
If we want to build fast and affordable, however, we have a lot more renewable power options available. And if we’re concerned about reliability, we should focus our industrial strategy on enhancing that capacity with investments in grid-scale batteries.
The government also says it wants to maintain the Net-Zero goal in the Clean Electricity Regulations.
Yet this strategy promotes the continued use of natural gas, not as a transition fuel, but a permanent part of our energy mix, relying on carbon offsets as a way to mitigate its emissions. Offsets are useful long-term to deal with hard-to-abate emissions — not as an alternative when renewable energy is an option.
We also shouldn’t ignore the elephant in the room: Industrial carbon pricing. Our industrial carbon price is one of the best financial mechanisms we have to incentivize private-sector clean-energy development, investment and trade opportunities for Canada.
The relentless attacks on this mechanism by certain CEOs and premiers are undermining our ability to build our industrial capacity in clean energy and export-ready businesses.
Make-or-break time
The federal announcement comes at a make-or-break time for the Canadian power grid, as capacity constraints and uneven regulatory environments are already affecting investment decisions across multiple sectors, from finance to mining.
Institutional investors are keenly interested in supporting the build-out promised by this new strategy — not only of the grid itself, but of the manufacturing, tech and clean-energy-generation opportunities an ambitious strategy such as this opens up.
SHARE and our many institutional investor colleagues in the Capital Markets Group are eager and well-positioned to work with the government to help turn this plan into a reality and truly “power Canada strong”.
