Electricity is essential - State of the Canadian electricity industry 2025

Electricity is essential The state of the Canadian electricity industry 2025

Table of Contents The next decade is critical................................................................3 CANADA – U.S. ELECTRICITY TRADE

Building shelter from the storm.................................................... 4 BUILDING INFRASTRUCTURE NOW

How to build a grid..............................................................................6 REGULATION AND APPROVALS

The buck stops where?...................................................................... 8 BUILDING A RELIABLE AND RESILIENT ELECTRICITY GRID

Powering through the new normal .............................................10 ELECTRIC VEHICLES

Driving growth nationwide............................................................ 12 INTER-PROVINCIAL TRANSMISSION

The ties that electrify....................................................................... 14 DATA CENTRES

The (final?) frontier ......................................................................... 16 Recommendations ............................................................................ 18 Electricity is Essential for the Next Decade: The State of the Canadian Electricity Industry 2025 is produced by Electricity Canada 1500-275 Slater Street, Ottawa, ON, K1P 5H9 | electricity.ca Prepared by Francis Bradley, Daniella Bidin, Graeme Burk, Daniel Gent, Will Greene, Eric Jacques, Shelley Levoy, Julia Muggeridge, Channa Perera, Michael Powell, Jay Wilson, Robin Yee Edited and written by Graeme Burk and Julia Muggeridge Illustrated and designed by Fatima Khan Translation by Louise MacKay © 2025 Electricity Canada

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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.

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.

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.

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

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CANADA – U.S. ELECTRICITY TRADE

Building shelter from the storm Canada-U.S. electricity trade is more than a century old – indeed both countries share Niagara Falls for hydroelectric power, and Canada trades electricity with around 30 states annually.

Canada’s trading relationship with the U.S. this year has been marked by volatility, shifting rapidly and unpredictably among a disruptive series of tariffs threatened, implemented, paused, and modified. Electricity has also been drawn into discussions of Canadian countermeasures. Regardless of what follows, the electricity sector, and the other Canadian sectors it supports, are adapting to a dramatically changed trade landscape.

Exemptions for goods covered by the Canada-United States-Mexico Agreement (CUSMA) have so far sheltered electricity from tariffs – and the associated uncertainty and turmoil of their implementation. However, it is unwise in the current environment to take anything for granted. When the agreement is reviewed for extension in 2026, the first priority must be preserving the free flow of electricity.

Annual electricity trade between Canada and the U.S.

Source: Canada Energy Regulator

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WORD OF CHOICE: Tariffs: Taxes imposed by the government of a country on imports or exports of goods. Taxing electricity being imported into the United States would 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

Affordable bills

Jobs and economic growth

Integration helps even out fluctuations in energy needs, helping manage periods of prolonged demand due to extreme weather, cold snaps, and/or drought conditions.

The free flow of electricity between the U.S. and Canada helps keep electricity competitively priced, bringing bills down for Canadian and American families.

Electricity trade powers industrial and manufacturing potential on both sides of the border, creating Canadian and American jobs and prosperity.

What could happen with tariffs 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 U.S. 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.

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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.

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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 FINANCING?

?

Do we have LABOUR and SUPPLY CHAINS?

Will it provide the greatest BENEFIT at the LOWEST COST?

What is needed to be open for investment in building Canada’s bigger, better grid:

Competitive investment ($55 billion annually)

?

?

Can it be built within a PREDICTABLE and REASONABLE timeframe?

A simplified system of approvals

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.

A regulatory environment that works

That means making it more financially advantageous to invest or making it easier to work with multiple levels of government and regulators.

A way for provincial and federal funders to talk to each other

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REGULATION AND APPROVALS

The buck stops where?

Canada has a great deal to build over the coming years to power our nation. 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 moved in Canada. Projects were increasingly ensnared in procedural delays. Five years ago, Canada was ranked second worst among the 38 countries in the Organization for Economic Co-operation and Development when it comes to the pace of permitting. Until recently, federal permitting and approvals have been slow, cumbersome and duplicative. They often involved processes from multiple agencies, often conflicting with existing processes at the provincial level.

Getting closer to building things faster In summer 2025, the federal government made significant commitments to fast-track regulatory approvals of projects of “national interest” and to simplify permitting and approval processes more generally. This culminated in the establishment of a Major Projects Office in August.

This would fulfil many of the “Build Things Faster” recommendations Electricity Canada made in 2023 to improve Canada’s burdensome approvals process.

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However, the changes that have been implemented are a “two-track system”, projects of “national interest” will receive priority for fast approval. Everything else will stay the same, for now. The government has pledged to reduce decision timelines for other projects and to develop a single approval process – though this will take two years to achieve.

Ultimately, it is essential that the regulatory environment for all projects is improved. Delays in getting permits and approvals adds cost for industry no matter the size of the project. And those costs all end up on customers’ bills.

Other impediments to building Changes to the Fisheries Act in 2019 have resulted in backlogs, project delays and increased costs to the electricity sector. These changes have increased uncertainty and regulatory burden for the industry without a meaningful benefit to fisheries or fish habitat.

The Clean Electricity Regulations will add significant costs and add reliability risks in several Canadian jurisdictions while not meaningfully reducing emissions.

How to eliminate barriers Implement 2-year project approvals for all critical infrastructure projects to drive Canadian competitiveness and get major projects built faster.

Address the unworkable Clean Electricity Regulations, which threaten reliability in several Canadian provinces.

Continue fast-tracking projects of national interest through a federal permitting process.

Determine how to better support existing infrastructure.

The federal government has pledged to make Canada a “clean and conventional energy superpower.” This has led to commitments to fast-track regulatory approvals of projects of “national interest” and to simplify permitting and approval processes generally. What has been started must get finished. Unless we can provide a clear pathway to get to a yes or no in a reasonable time, investors will go elsewhere.

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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

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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 electricity provider.

Top 10 Significant Events

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.

The top ten significant events in the past 20 years in Canada all included peak wind speeds of 70km/h or greater.

Hurricane Fiona's peak wind speed reached 170 km/h.

Major events

32% of major events occur between the beginning of November and the end of January.

1113

179

major events have been recorded in the Service Continuity Database from 2004-2023.

major utility events mapped 53 significant events between 2004 and 2023.

• 55% of those major events occurred since 2017.

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.

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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.

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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

Source: Natural Resources Canada

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.

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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.

NO CONNECTION

TWO-WAY CONNECTION

ONE-WAY CONNECTION

QC ON

PEI

YK

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

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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)

1.

2.

3.

Needs assessment: provinces determine that there is a need to address factors including new renewables, load growth or grid reliability.

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.

4.

5.

6.

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.

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DATA CENTRES

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.

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What data centres need:

LAND

WATER

NEAR URBAN CENTRES

The average data centre is 100,000 sq. ft. The largest one in Canada is currently 900,000 sq ft.

Data centres produce tremendous amount of heat (think about how hot a laptop can get!) so water is needed as a coolant.

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.

Electricity is essential – 2025

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.

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Electricity is essential – 2025

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.

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