Powering Up: Inside Ottawa’s plan to build the clean power grids of the future

If Canada is going to meet its climate targets, virtually everything will need to be electrified. Gas guzzlers swapped for electric vehicles and public transportation; heat pumps put in place of gas furnaces; and renewable energy moving to centre stage as coal, oil and gas power plants are phased out.

Affordable, reliable electricity grids are essential to modern life and form the backbone of Canada’s economy. Without abundant power, energy-intensive sectors like auto manufacturing or steel production fall by the wayside.

To slash planet-warming greenhouse gas emissions and position the country’s economy for growth in this era of climate change, the federal government aims to introduce legislation this year requiring net-zero power grids by 2035. That target is both a promise in the Liberals’ 2021 election platform and a commitment made by all G7 member countries (the United States, United Kingdom, France, Germany, Japan, Italy and Canada).

It will be a monumental task to double or even triple electricity generation by 2050 (when the country has committed to reach net-zero emissions) to meet our projected energy needs. Canada already has approximately 150 gigawatts (GW) of capacity on the grids and must bump that amount to 400 GW by the 2050 deadline, according to the David Suzuki Foundation. It’s a dizzying amount. To put it in perspective, producing one GW of electricity requires 2.4 million solar panels or 310 wind turbines.

And to meet growing demand while slashing planet-warming greenhouse gas emissions, the majority of new generation must come from wind and solar, according to the Canadian Climate Institute. However, alongside wind and solar, the federal government is pushing a broader suite of options, including small modular nuclear reactors, equipping gas power plants with carbon capture technologies, bioenergy and energy efficiency.

In 2021, the year of the most recent federal data, the electricity sector was responsible for 7.7 per cent of the country’s total greenhouse gas emissions. Those emissions will need to be scrubbed from power grids while adding new sources.

The challenge of expanding Canada’s clean power grids promises to be one of the most complicated battles in the race to a sustainable future.

That’s in no small part thanks to Canada’s complicated and fragmented approach to providing electricity. Provinces are responsible for regulating utilities operating within their borders, creating a patchwork of regulations from coast to coast. But there are also Crown corporations and privately owned utilities, sometimes pitted against one another at a time when greater collaboration is required.

Enter Natural Resources and Energy Minister Jonathan Wilkinson. He believes even though electricity generation falls under the provinces’ purview, the federal government has an important role to play in enabling necessary investments and co-ordinating the buildout.

Wilkinson compares the scale of building clean power grids to the building of the transcontinental railroad that connected the country more than a century ago. He doesn’t mean a literal coast-to-coast project; for Canada, big regional grids make more sense. But the size, complexity, cost and importance make the railroad a tempting comparison.

There are two major priorities for Wilkinson when it comes to modernizing the country’s power grids. The first is decarbonization, which means provinces that burn fossil fuels to generate power must move to cleaner alternatives for climate change reasons. The second is building a reliable, affordable and abundant grid that positions the country for economic growth through the energy transition. Wilkinson doesn’t view cleaning the power grids as a cost — more like an opportunity.

“Volkswagen chose Canada because we have a clean grid, and increasingly you're finding that companies are going to have to account for the carbon that's embedded in the final products they produce,” Wilkinson said in an interview with Canada’s National Observer. “So having a clean grid … is going to be something that's really important, but that means [the] doubling or more of the power generation in this country versus what we have today.

“That's what I mean by the scale of the challenge.”

Most provinces and territories agree Canada must move to a clean grid, Wilkinson said, adding industry drives much of the demand. When Ontario Premier Doug Ford came to power, he didn’t have a broad and deep developed climate plan, Wilkinson noted. But increasingly, Ontario is “focused on clean electricity … because they actually want to attract industry.”

The federal government is attempting to get provincial buy-in for its clean electricity ambitions. Wilkinson pointed to a deal reached in October between Ottawa, New Brunswick and Nova Scotia, two provinces led by Conservative governments, that will see new investments to better link the provincial power grids as the Maritime provinces phase out coal.

But Canada has a challenging political landscape and not every province is itching to collaborate with Ottawa.

“The two that probably have been more challenging are Alberta and Saskatchewan,” Wilkinson said. “Hopefully, we can get to a place where we agree on how we're actually going to get this done, or at least that the disagreements are not fundamental.”

Alberta has accused the federal government of violating the Constitution by proposing legislation requiring clean electricity by 2035. The responsibility for the province’s power grid is the “exclusive jurisdiction” of the provincial government, Alberta’s Minister of Environment and Protected Areas Rebecca Schulz told federal Environment and Climate Change Minister Steven Guilbeault in the fall.

In a technical submission to the federal government over proposed clean electricity regulations, Alberta took issue with the cost of decarbonizing its power grid and called for federal support.

“There must be federal funding provided to Alberta commensurate with the [clean electricity regulations] impact.”

But the federal government is making money available. Last year, it announced it would introduce a clean electricity tax credit that could be used by private utilities and Crown corporations alike to step up the pace of building green grids. It is expected to cost the federal government $25.7 billion over 10 years and can be tapped by Crown corporations, publicly traded utilities, Indigenous community-owned corporations and pension funds.

The tax credit is tailored to boost Canada’s economic competitiveness, a briefing note written for Wilkinson stated.

“The fact that the comparable United States Inflation Reduction Act measures are largely in place is making Canada a relatively less attractive destination for investment at this time,” the briefing note reads, underscoring how Ottawa fears losing investment.

Jurisdictions with clean grids will have a competitive advantage in attracting new investments, particularly for emerging sectors like green hydrogen, green steel, electric vehicles and batteries, the federal government’s electricity sector “vision paper” states.

The buddy system

The U.S. beat Canada to the punch when it comes to rolling out tax credits to incentivize clean electricity. But while the American electrical grids are 40 per cent clean, Canada’s are already 84 per cent non-emitting, mostly due to the abundance of hydroelectric dams in use.

A bit of geographic luck has already positioned Canada relatively well overall, but the advantage begins to fall apart at the provincial level. Not every province has a clean grid. Some like British Columbia, Manitoba, Quebec and Newfoundland and Labrador have massive amounts of hydro resources, while others like Alberta, Saskatchewan, New Brunswick and Nova Scotia still rely on fossil fuels.

With this landscape in mind, a buddy system strategy starts to emerge. Each province that still depends on burning coal, oil or gas to generate electricity has a neighbour next door with hydropower that can lend a hand.

Every province must scale up its own wind, solar, geothermal and other renewable sources of electricity generation to meet growing demand. However, strengthening interprovincial transmission line links, called interties, is the most promising way to use provinces with hydropower as batteries to provide reliable, affordable and clean electricity to provinces when other forms of renewables can’t meet demand on their own.

At the same time, the buddy system approach recognizes that pairing hydro-rich provinces with fossil-fuelled provinces provides benefits to both. For instance, Nova Scotia and Alberta both have tremendous renewable energy potential, from offshore wind to solar farms, that could be used to send cheap electricity to their hydro-rich neighbours B.C. and Quebec. As the hydro-rich provinces find themselves increasingly constrained, whether it be from droughts impacting the ability of dams to generate electricity or simply not having enough hydropower at the moment to meet demand through the energy transition, the ability to import clean electricity from their neighbours will become increasingly important.

An October report from the Public Policy Forum estimated that off Nova Scotia’s Sable Island, up to 1,000 wind turbines could be installed at this site alone — enough to generate more than six times the electricity consumed by Atlantic Canada (or 6.5 million Canadian homes).

“Offshore wind could be for Atlantic Canada what oil was to Texas or hydropower to Quebec,” the report found. “We are talking here not of something incremental, but monumental.”

In other words, when the sun is not shining and the wind is not blowing, Quebec can send its hydro-generated electricity to the Maritimes to help keep the lights on. And, when the sun is shining and the wind is blowing, Maritime provinces can help meet demand in Quebec, without needing to add new, expensive hydro dams to the grid, by exporting its wind power.

Extrapolating this concept to the rest of the country means that by linking British Columbia with Alberta, Manitoba with Saskatchewan, and Quebec and Newfoundland and Labrador to Nova Scotia and New Brunswick, power grids can be rapidly decarbonized while meeting growing demand.

There is a “great complementarity” between the regions of the country, said Jason Dion, Canadian Climate Institute senior research director and member of Canada’s Electricity Advisory Council, in an interview with Canada’s National Observer.

“That doesn't mean it will happen. There's lots of things that get in the way of that potential, but I think as we recognize the opportunities that it could present to better integrate our grids, the more we'll start to get serious about that,” he said.

Historically, provinces have opted to build north-south links with American states across the border, rather than building interties between provinces, Dion said. Even though better integrating the provinces always made sense, several factors have gotten in the way, he added.

There’s been a tendency to see better co-ordination as “more trouble than it’s worth,” alongside provinces wanting to keep jobs, investment and associated revenues within their borders. Moreover, the notion of being “self-sufficient” is popular among premiers, even though the “consequences of remaining an island are coming more and more into focus,” Dion said, pointing to Texas’s recent devastating cold snap blackouts that occurred because most of the Lone Star State couldn’t import power to meet demand.

“The whole name of the game here is going to be the federal government supporting greater integration among willing regional partners,” he said. “You connect between areas that want to connect and see the benefits, and as the feds, you can provide some financial support to help tip the business case and really get people to come to the table.”

Priority projects

The federal government has three transmission intertie priorities, according to a mandate letter commitment tracker Canada’s National Observer received through a federal access-to-information request. They are called the Atlantic Loop, the Prairie Link, and the North Montney Electrification.

The Atlantic Loop is the most advanced project and refers to long-standing plans to send electricity from Quebec into New Brunswick and Nova Scotia. It was originally envisioned as a transmission circuit across the East Coast but has since been scaled down to improve transmission between New Brunswick and Nova Scotia where bottlenecks exist. Wilkinson, however, is not ruling out further phases to the loop project, including using electricity from Newfoundland and Labrador.

The North Montney Electrification project refers to a plan in British Columbia to increase transmission capacity in the North Montney region, where the province plans to extract gas to fuel its liquified natural gas (LNG) export aspirations. The need for electricity to power gas exports is anchoring the plan to build new transmission capacity in the region, but BC Hydro says other large industrial customers are looking to set up, too, and need the electricity to do it.

“By using clean and renewable electricity instead of fossil fuels to power industrial operations in the North Montney region, we estimate this could avoid over one million tonnes of greenhouse gas emissions per year — roughly equivalent to taking 200,000 cars off the road,” says BC Hydro.

The Prairie Link, Wilkinson said, is a term that isn’t used as much today, but refers to linking Manitoba and Saskatchewan to help the latter province phase out its fossil fuel consumption. He added the concept has been around “for a long, long time,” and was even discussed when he worked in Roy Romanow’s government in Saskatchewan in the early 1990s. Originally, the idea was to help Saskatchewan phase out coal, and now it would be to phase out gas, but the conversation has largely stalled.

A priority for Wilkinson during his tenure as natural resources minister has been to set up “regional tables” between provinces and territories to foster co-operation on energy and resource issues. Every province and territory except Saskatchewan has either set up something similar, is participating or is at least discussing participation in these regional tables.

“When I asked Saskatchewan to set up a regional energy and resource table to have a conversation about a number of things, including economic areas of interest for them, they wrote me a 14-page letter telling me why they didn't want to do that,” Wilkinson said.

“I say this as somebody who grew up in Saskatchewan, went to university in Saskatchewan, worked for the premier of Saskatchewan, it saddens me that there's not an ability to have a better conversation,” he said.

Taken together, the challenges of building the power grids Canada will need to meet its climate targets are clearly political. With most provinces being led by right-wing governments posturing against many of Ottawa’s priorities, pan-Canadian co-ordination will be difficult. But it’s an essential piece of the puzzle.

Over the coming months, Canada’s National Observer will shine a spotlight on specific regional issues, the behind-the-scenes political battles, how communities are responding and more in our Powering Up series.