Why Canada’s Energy Security Hinges on Renewables

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Why Canada’s Energy Security Hinges on Renewables

Clean electricity grids are well within reach across the country. Canada is already a global leader in the power sector, with 82% of its electricity coming from non-emitting sources, mainly hydropower. Legacy hydroelectric development has been bolstered by coal phase-outs, implemented first by Ontario and Alberta and followed by a federal regulation ensuring a nationwide phase-out by 2030. More recently, the federal government has committed to a non-emitting electricity grid by 2035 and developing clean electricity regulations to meet that end. Detailed modelling has shown how Canada can meet its 2035 target, support increased electrification, and provide reliable, affordable electricity across the country by prioritizing wind, solar, electricity storage, and additional interprovincial transmission. This scenario is modelled with no new nuclear or natural gas generation.  

Expanding renewables is also a cost-effective option. Electricity prices across the country demonstrate that provinces and territories with high shares of renewable energy have been able to keep power prices low with renewable electricity production. Households in fossil fuel-reliant provinces such as Saskatchewan pay 60% more for their power than households in Quebec and 45% more than households in Manitoba. Although the cost differential is related to legacy hydroelectric development, the falling costs of solar, wind, and battery technology mean that these sources provide the lowest cost options for supplementing existing hydroelectricity or replacing coal and gas power generation.   

Information from the Alberta Electric System Operator confirms that wind and solar are already the cheaper options for new power than gas (normally the cheapest fossil fuel-based alternative). This shift is also evident when looking at actual power sector development in Alberta in recent years. In its deregulated and competitive market, Alberta added a remarkable 1.6 GW from wind and solar between 2019 and 2021, resulting in wind and solar accounting for 17% of total capacity in 2021 (Canada Energy Regulator, 2022; Sorensen, 2022). At the same time, the province has phased out coal faster than expected.

Modelling in Alberta, New Brunswick, and Nova Scotia has also shown that clean energy portfolios, including wind, solar, battery storage, demand flexibility, and energy efficiency, can provide the same grid services as natural gas generation at a lower cost (Gorski & Jeyakumar, 2019, 2022b).  

As noted above, more flexible electricity grids will be needed to support renewables. This flexibility will include more integrated provincial and territorial grids that maximize renewable energy sources across the country. Currently, Canadian provinces are better connected to the United States than to each other. Provinces and territories need to improve connectivity so that Canada can benefit from their different strengths—from plentiful hydropower in some provinces and territories to the enormous potential for wind and solar in others. Additional investments and regulatory reforms are necessary to ensure adequate storage and “smarter” grids that support improved forecasting of supply and demand and that fully enable demand management.  

Reducing Demand for Fossil Fuels Increases Energy Security 

While renewables and storage technologies can eliminate fossil fuels from the electricity grid, electrifying end uses and reducing demand through energy efficiency will limit Canadians’ direct exposure to fluctuating fossil fuel prices. At the household level, electricity currently accounts for 23% of energy use. However, that is predicted to grow to 96% in 2050 if Canada achieves its net-zero target. 

While this transition is already underway, accelerating the phase-out of fossil fuels in household consumption will improve energy security, in part because sectors such as personal transport and heating, where demand for fossil fuels is high, have readily available, cost-competitive alternatives.  

The federal government’s target of no new combustion engine vehicles as of 2035 is a policy step that will not only help Canada build a cleaner future but also help to considerably reduce its dependency on oil and gas. Canada has more than 25 million light-duty vehicles on the road, and to reach the 2035 target, the government is aiming for 60% of new sales to be zero-emission vehicles by 2030. However, it has been noted that the market for electric vehicles is now established to the point where market dynamics are replacing government policy as the key driver for adoption.  

Other demand-side policies could include efforts in Canada’s building sector, where gas plays a key role. About a quarter of Canada’s final energy consumption comes from buildings, with 65% going to heating and cooling (IEA, 2019a). Choosing high-efficiency electric heat pumps for heating and cooling and investing in deep energy retrofits will help reduce Canadians’ exposure to volatile natural gas prices while reducing emissions and improving the comfort of homes.  

The electrification of buildings and transport will create additional demand for electricity requiring 2.2 to 3.4 times more electricity capacity in 2050. However, detailed modelling shows how this increased demand can be reliably met with wind, solar, energy storage, and interprovincial transmission.   

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