Canada has spent decades benefiting from an electricity system that is cleaner and, in several provinces, cheaper than those of many competing economies. That advantage is now being tested.
A new report from the Canadian Climate Institute warns that most provinces are not preparing enough generation and transmission capacity for the mines, factories, data centres and other major projects seeking power. Electricity demand is accelerating just as governments are trying to attract investment, diversify trade and build new domestic industries. Unless planning systems catch up, companies may encounter long connection delays, uncertain rates or an outright shortage of available electricity. The result could be a costly contradiction: Canada may possess the resources needed for a clean industrial boom while lacking the grid infrastructure required to make it happen.
Canada’s Electricity Advantage Is Under Pressure
Canada enters the competition for industrial investment with a considerable head start. Approximately 80 per cent of the country’s electricity comes from non-emitting sources, supported by enormous hydroelectric systems in Quebec, British Columbia and Manitoba and a large nuclear fleet in Ontario. In 2025, Canadian generators produced roughly 625 million megawatt-hours of electricity. Hydroelectricity alone supplied nearly 55 per cent, even after several years of drought weakened output in important producing regions.
That foundation has historically helped attract electricity-intensive industries such as aluminum smelting, mining, pulp and paper production, and advanced manufacturing. However, an existing clean grid is not the same as an expanding one. Much of the available capacity has already been committed, while new demand is emerging from electric transportation, industrial electrification, battery manufacturing and artificial intelligence. Provinces that once marketed surplus electricity are increasingly confronting tighter supply. The report’s central warning is that Canada’s advantage could gradually disappear unless governments begin treating new power infrastructure as an economic-development priority rather than simply a utility obligation.
Provincial Plans May Be Underestimating Real Demand
The Institute compared Ontario, Quebec, Alberta and British Columbia, which together represent more than three-quarters of Canada’s industrial electricity demand, with jurisdictions including Texas, Germany, Norway, Washington state, New South Wales and the United Kingdom. Researchers examined the industrial projects waiting for grid connections and compared their electricity requirements with the demand included in official provincial plans through 2035.
Because project queues can contain speculative or duplicated proposals, the researchers assumed that only half of the proposed industrial demand would actually materialize. Even under that conservative assumption, most Canadian systems would still face a significant planning gap. Ontario and Quebec came closest to accounting for projects in their queues, while British Columbia retained a smaller shortfall after raising its forecast. Alberta had the widest gap, although its competitive electricity market could allow private generators to react more quickly if transmission and reliability services are available. The broader problem is that regulators have traditionally been punished for building too much capacity, while the lost economic value of building too little receives far less attention.
Billions in Investment Could Be at Risk
A separate assessment prepared by Dunsky Energy + Climate Advisors estimated that inadequate access to clean electricity could put between $110 billion and $220 billion in potential Canadian capital investment at risk. It also associated those projects with approximately 40,000 to 80,000 direct jobs. The estimates cover industries such as electric vehicles and batteries, clean steel, critical-mineral processing, data centres, renewable generation and electricity storage.
These figures illustrate why the issue extends well beyond environmental policy. A processing plant or technology campus can take years to design, finance and construct, but investors cannot make a final commitment without knowing when electricity will be available and what it will cost. When a utility provides an uncertain connection date, a company may choose another province or country rather than leave billions of dollars waiting. Communities can lose more than the initial construction project. They may also miss the supplier contracts, municipal tax revenue, skilled employment and population growth that follow a large industrial facility. In that sense, unused grid potential can become a hidden form of economic loss.
Clean Technologies Are Becoming the Fastest Option
The timing is especially frustrating because the cost of adding several clean technologies has fallen sharply. Since 2009, the levelized cost of solar electricity has declined by about 84 per cent, while onshore wind costs have dropped by roughly 56 per cent. Battery-storage costs fell another 27 per cent in the most recent year examined by the Institute. Wind farms, solar facilities and batteries are also modular, allowing capacity to be added in stages rather than waiting for one enormous facility to be completed.
British Columbia’s recent procurement provides a practical example. Ten renewable projects selected through its 2024 call for power are expected to supply about 4,830 gigawatt-hours annually, increasing BC Hydro’s supply by approximately eight per cent. Their average inflation-adjusted price was reported at $74 per megawatt-hour, about 45 per cent below contracts awarded in the province’s 2010 clean-power call. Wind, solar and storage cannot perform every function of an electricity system by themselves, but they can add substantial capacity faster than many conventional alternatives when paired with flexible hydro, transmission, demand management and dependable backup resources.
Transmission Has Become the Missing Link
Producing more electricity will not solve the problem if that power cannot reach customers. Wind and solar projects are often built far from cities, mines and industrial parks, making transmission lines essential. When the grid cannot carry all the electricity being produced, system operators may have to curtail generation. That means functioning wind turbines or solar facilities are deliberately prevented from supplying their full output because the network has nowhere to send it.
Major transmission projects can take close to a decade to plan, approve and construct. The long timeline encourages utilities to wait until demand is certain, but industrial investors often require electricity before a new line could realistically be completed. Canada’s national electricity strategy estimates that interprovincial transmission capacity may need to rise by as much as 27 per cent by 2035 and 70 per cent by 2050. Better connections could allow hydro-rich provinces to balance wind and solar production elsewhere, improve reliability during extreme weather and reduce dependence on north-south electricity trade. Without early construction, however, transmission may continue arriving years after the investment opportunity it was supposed to support.
Artificial Intelligence Is Changing the Scale of the Challenge
Electricity planners once dealt mainly with gradual changes in population, housing and conventional industrial activity. Artificial-intelligence data centres have disrupted that pattern. A single proposed campus can request hundreds of megawatts and radically change a region’s power forecast. Ontario’s system operator expects provincial electricity demand to rise about 65 per cent by 2050 in its reference scenario, with data centres projected to account for 8.6 per cent of total demand by that year.
Alberta demonstrates how quickly the numbers can escalate. In 2025, its system operator reported 29 proposed data-centre projects seeking more than 16 gigawatts of combined grid capacity. That was far beyond what the system could immediately accommodate, leading the operator to establish an interim process allowing up to 1,200 megawatts of large new loads through 2028. The national outlook is also highly uncertain. Depending partly on data-centre construction, the Canada Energy Regulator projects end-use electricity demand could increase by between 26 and 84 per cent from 2023 to 2050 across its main scenarios. Planning too cautiously could repel investment, while accepting every speculative request could burden existing customers.
The Four Largest Provinces Face Different Obstacles
Ontario is preparing for strong growth driven by population, transportation, manufacturing and data centres, but it must replace or refurbish aging assets while developing new generation and transmission. Quebec retains some of Canada’s lowest industrial rates and an exceptionally flexible hydro system, yet rising domestic demand has reduced the surplus power that once appeared almost limitless. Hydro-Québec has begun publishing transmission-capacity maps and holding new wind procurements to provide developers with clearer information.
British Columbia expects electricity demand to increase by about 15 per cent by 2030. Its long-term plan includes new renewable procurements, efficiency programs, hydro upgrades and the proposed North Coast Transmission Line, which could support mining, liquefied natural gas and other northern development. Alberta has an open market that can attract private generators, but its rapidly growing project queue, transmission constraints and dependence on natural gas create a different set of risks. The Institute’s comparison shows that Canada does not have one national electricity problem. Each province begins with different resources, regulations and market structures, meaning national coordination must still leave room for regional solutions.
Indigenous Ownership Is Becoming Central to Grid Expansion
Indigenous communities are no longer participating only as stakeholders consulted after electricity projects are designed. They are increasingly developers, co-owners and long-term beneficiaries. The Institute found Indigenous equity involvement in nearly 550 electricity projects representing approximately $260 billion in infrastructure. Its underlying research estimated that First Nations partners held stakes in about 31 per cent of hydro projects, 30 per cent of wind projects and 19 per cent of solar projects as of 2024.
Recent procurements show how quickly the model is changing. All ten projects selected in British Columbia’s 2024 call for power included significant First Nations ownership, and nearly all were majority Indigenous-owned. BC Hydro estimated that the agreements could create between $2.5 billion and $3 billion in First Nations asset ownership. Its subsequent call required a minimum 25 per cent First Nations equity stake for eligible projects. Meaningful ownership can improve project design, strengthen local support and produce revenue that remains in communities for decades. It can also make development more durable by recognizing Indigenous rights and regional knowledge at the beginning of the planning process.
Ottawa’s Strategy Will Be Judged by What Gets Built
The federal government has launched a national strategy built around doubling Canada’s electricity supply by 2050. Natural Resources Canada estimates that the required expansion and modernization could cost more than $1 trillion. Ottawa cannot direct provincial utilities or dictate each province’s generating mix, but it can influence whether nationally important transmission and clean-power projects receive financing, tax support and coordinated planning.
The Institute recommends a federal-provincial framework for sharing demand information and setting regional goals, followed eventually by stronger intergovernmental planning institutions. It also calls for selective federal risk-sharing through tools such as the Canada Infrastructure Bank, especially when new infrastructure creates national benefits that local ratepayers should not finance alone. Additional recommendations include predictable clean-electricity rules, support for battery storage and stronger incentives for industrial customers to reduce consumption during peak periods. The report’s message is ultimately practical rather than ideological: major investors need affordable electricity, credible timelines and confidence that policy will endure. Canada already possesses much of the clean-power foundation. Its challenge is building the next layer before the investment moves elsewhere.
