Ottawa wants to double electricity supply. Provinces will determine whether it happens

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Colleen Giroux-Schmidt is senior vice-president of development, Western Canada and federal government affairs at Innergex. Merran Smith is president of New Economy Canada.

Two questions burn at the top of Canada’s economic agenda: how to accelerate growth, and how to mobilize the capital to fund it. Increasingly, the answer to both hinges on something we have long taken for granted: electricity.

More and more, Canada’s economic agenda is pinned to projects that require abundant, cheap and low-carbon electricity. Critical minerals mining and processing, battery supply chains, data centres and next-generation steel all require enormous amounts of power. So will planned investments in Canada’s military and defence capabilities, from quantum computing to a stronger presence in the North.

That growing demand is what’s driving Canada’s new national electricity strategy, which Ottawa unveiled on Thursday. The plan aims to double electricity supply by 2050 and accelerate electrification across the country.

Ottawa begins consultations on strategy to double Canada’s grid capacity by 2050

This level of ambition is exactly what we need. But success will depend heavily on the action taken by provinces and territories, where electricity is planned, managed and built in Canada.

There is some movement on that front: Ontario’s recently passed Bill 40 codifies “economic growth” as a new objective in electricity planning. But unfortunately, provincial electricity forecasts are still underestimating what is coming. An analysis by The Transition Accelerator and Dunsky Energy + Climate Advisors found that forecasts do not sufficiently account for industrial electrification, data centres and electric transportation in a net-zero economy.

In short, Canada’s economic growth, investment agenda and data sovereignty plans are banking on electricity our country doesn’t have plans to produce.

So, what’s the holdup?

Fundamentally, it stems from how electricity is viewed: as a cost, not an investment.

This isn’t unique to Canada. Electricity regulators worldwide have long operated with a similar mindset: build for the demand we know, not the supply we might need. Deeply ingrained policy principles dictate that utilities should keep rates low, stable and predictable for ratepayers, embedding caution in planning.

“Thou shalt not overbuild” became the commandment because if utilities churn out more electricity than the market consumes, ratepayers bear the cost.

But those were rules for a different time. Today, the greater risk isn’t that we overbuild electricity infrastructure, but that we fail to build it at the pace and scale required to fulfill our economic potential.

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Canada is not the only country waking up to its future electricity demand. Countries around the world have recognized that electrification is a defining economic advantage. China, Indonesia, South Korea, Norway and (yes) Texas are all considered front-runners in the race to expand capacity and attract industrial investment. Chile has more than doubled its installed power capacity in just over a decade.

Canada is not just competing on the outputs of an electrified economy – abundant, clean power that attracts global enterprise – but also on the inputs: the capital, skilled labour and supply chains needed to build.

Those resources cannot be marshalled overnight. Canada needs to send strong market signals now that we are committed to a 20- to 30-year investment in building electricity infrastructure. That would provide certainty to investors, commercial developers, Indigenous Nations and industry that Canada is serious about maintaining our reliable, low-cost and low-carbon grid in the face of growing demand.

The federal government can and should set this direction, and the federal electricity strategy will play an important role. But provinces must power it.

This will require a deliberate shift in provincial approaches to electricity infrastructure – from building in step with (or just behind) demand, to building in anticipation of it.

For decades, we’ve been living off the investments made to our electricity system in the 1960s and 1970s. Now we need to build again, without overburdening households and businesses.

Doing so won’t be easy. It will mean facing up to the real costs of modernizing our grid and having hard conversations about who pays, when and how, while finding creative ways to finance projects, share risk and protect affordability.

But the alternative is more costly: an economy constrained not by permitting or approvals, but by a shortage of power. This is what growth demands. And our future won’t wait.