Powering Canada Strong: Canada launches National Electricity Strategy for consultation

On May 14, Canada released its National Electricity Strategy, Powering Canada Strong: A National Strategy for an Electrified Canadian Economy (the Strategy). The Strategy outlines a national plan and series of reforms intended to double Canada’s electricity supply by 2050 through new infrastructure and accelerate economy-wide electrification to support competitiveness and decarbonize. Investors and sector participants should consider the Strategy’s initial proposed reforms and actions, and assess how they could affect future project development, financing, and regulatory approaches.

What you need to know

• “A nation-building exercise not seen for generations”¹: To meet projected electricity demand and address system costs (forecasted to exceed $1 trillion by 2050), the Strategy is organized around four pillars: (1) building and financing infrastructure; (2) connecting grids east-west-north; (3) training and attracting the workforce needed to build the grid; and (4) expanding domestic manufacturing of grid components.
• Canada’s energy superpower ambition: The Strategy follows recent federal announcements aimed at positioning Canada as an energy superpower, including proposed reforms to accelerate the federal approvals regime and support trade and transport sector projects. The Strategy is also being launched ahead of an imminent announcement on the Canada-Alberta Memorandum of Understanding addressing a new pipeline initiative.
• Amending the Clean Electricity Regulations (the Regulations): While details are limited, Canada intends to amend the Regulations to give electricity sector participants greater use and flexibility of carbon offsets and to help avoid “stranded assets by enabling greater flexibility for existing units to maintain reliability and avoid costly premature replacement”.
• Supporting investment and securing affordability: Canada plans on expanding its Clean Electricity Investment Tax Credit (ITC) to support certain major high-voltage interprovincial transmission projects, and expand energy-saving retrofits for up to one million households through grants and other programs.
• Advancing regional integration and interties: The Strategy would support new and expanded interties between provinces and territories, including by exploring priority consideration for intertie projects, standard cost-allocation mechanisms, and federal-provincial-territorial collaboration on regional coordination.
• Next steps: Canada will consult provinces, territories, Indigenous Peoples, industry, utilities, and unions on the identified actions in the coming months.

The Strategy’s objectives and four pillars

The Strategy emphasizes electricity’s role in Canadians’ energy security, affordability, competitiveness, and economic sovereignty. It frames grid expansion as necessary to respond to industrial growth, building and transport electrification, new housing builds, and demand from emerging sectors such as critical minerals development and AI data centres.

The Strategy’s two goals are to double Canada’s electricity supply by 2050 and accelerate economy-wide electrification to support competitiveness and address climate change. In responding to these demand pressures, the Strategy and its related intergovernmental consultation are grounded on four pillars:

1. Building the infrastructure needed to double Canada’s electricity generation: Consultations will consider how to finance the build-out, spread costs over time, and keep electricity affordable.
2. Connecting Canada’s fragmented grids east-west-north through new and expanded transmission lines: Consultations will address barriers to interprovincial interties, including duplicative infrastructure and wasted power that affects reliability and affordability.
3. Training, attracting, and retaining talent: An estimated 130,000 skilled workers will be required to double the power of Canada’s electricity grid by 2050. Consultations will require Canada to work with industry, labour, and training partners.
4. Making more of the technology and components powering our grid here at home: Consultations can explore how Canada can grow its domestic manufacturing capacity so more component parts for the grid are Canadian-made.

Key proposed actions of the Strategy

The Strategy outlines ongoing initiatives and federal investments to address these objectives, including project referrals to the Major Projects Office (MPO), strategic financing provided by the Canadian Infrastructure Bank (CIB), the launch of the $25 billion Canada Strong Fund, and proposed reforms to streamline the federal approvals regime and support trade and transportation projects. In addition to these plans, the Strategy also outlines preliminary actions for enhancing investment and supporting Canada’s electricity grid.

Amendments to the Clean Electricity Regulations

Affirming the need to provide a predictable and durable regulatory landscape for electricity sector participants, Canada intends to amend its Regulations, which were enacted under the Canadian Environmental Protection Act, 1999. Finalized in December 2024, the Regulations are intended to limit carbon dioxide pollution from fossil fuel-fired electricity generation starting in 2035 and move Canada’s electricity system toward net-zero emissions. While Canada remains committed to this net-zero target, it notes that “an evolved approach” is required to address urgent pressures and threats. Canada intends to amend the Regulations to allow sectoral participants greater use and flexibility of carbon offsets and to “offset residual emissions elsewhere”. Changes to the Regulations will also aim to avoid “stranded assets by enabling greater flexibility for existing units to maintain reliability and avoid costly premature replacement”.

The continuing role of the Major Projects Office (MPO)

The Strategy also emphasizes the MPO’s role in accelerating nation-building infrastructure by noting the electricity projects referred to the MPO thus far, including the Darlington New Nuclear Project, the North Coast Transmission Line, the Iqaluit Nukkiksautiit Hydro Project, the Taltson Hydro Expansion Project, and the Atlantic Energy Strategy. Canada will also refer the development of a new comprehensive Transmission InterConnect Investment Strategy to the MPO.

Encouraging investment and tax credit reform

The Strategy highlights the “generational investments” required to support builds across generation, transmission, distribution, and storage. It reaffirms Canada’s commitment to identifying investment barriers and attracting foreign direct investment to support electricity system growth.

The Strategy also highlights the role of institutional investors such as pension funds and their importance in “filling a critical capital gap” and providing lower-cost capital for the infrastructure build-out. Additionally, Canada notes the significance of its investment tax credits (ITCs) in offering billions in funding support for projects and proponents. As such, the Strategy proposes expanding the Clean Electricity ITC to support certain major high-voltage interprovincial transmission projects.

Securing affordability

On affordability, Canada intends to expand energy-saving retrofits for up to one million households through a combination of grants, financing, and complementary measures. The Strategy notes this could support homes in transitioning their electricity heating/cooling from propane, oil or electric baseboard heating to heat pumps. Additionally, Canada plans to introduce Bill S-4, which would modernize the Energy Efficiency Act by strengthening its enforcement framework, accounting for modern technologies and new market actors, and allowing ministerial exemptions from the Act and its regulations to support economic growth, competitiveness, and innovation².

Supporting greater regional integration

The Strategy supports provincial and territorial intertie development, noting that more integrated grids could take advantage of geographic and time zone differences, improve load balancing, and reduce duplicative capacity infrastructure. A 2025 C.D. Howe Institute Report highlighted that doubling the capacity between Alberta and B.C. could yield $1.7 billion in net benefits by 2050³.

Canada intends to work with provinces and territories to address barriers to greater regional integration, and the Strategy outlines several ideas to encourage its development. Initial actions to address barriers include:

• considering priority treatment for proposed intertie projects (e.g., referral to the MPO and federal funding);
• establishing innovative mechanisms through the development of federal-provincial-territorial collaboration, entrenching “long-term regional planning, project development and dispute resolution” with a potential regional coordination role for the Canada Energy Regulator; and
• developing a standard cost-allocation mechanism to guide and arbitrate costs among project participants. Here, the Strategy suggests drawing on the model used by the European Union’s Project of Common Interest frame.

A forthcoming Nuclear Energy Strategy

The Strategy highlights Canada’s position as a “Tier One nuclear nation”—a country with robust fuel cycle capability, domestic reactor technology, a skilled workforce, and a strong nuclear regulator. Powering 15 percent of Canada’s electricity, nuclear energy is positioned as a competitive advantage and an opportunity for economic growth, international partnerships, trade diversification, and energy sovereignty. The Strategy reaffirms Canada’s plan to develop a new Nuclear Energy Strategy to position nuclear energy “as an essential part of a modern, clean, and better-connected grid”, as was announced in the recent Spring Economic Update.

Highlighting the strategic role of natural gas

To support the Strategy’s ambition of realizing $15 billion in energy savings by 2050, Canada will have to embrace a wide range of energy sources, including natural gas. The Strategy highlights natural gas-fired generation as a source of reliable, affordable, and secure electricity that can respond in real time to changes in demand and complement intermittent renewable generation. The Strategy aligns with Ontario’s Integrated Energy Plan, which affirms natural gas as an important part of the province’s energy mix.

Next steps

Over the next few months, Canada will consult provinces, territories, Indigenous Peoples, utilities, and unions on the proposed action areas. Interested parties are invited to provide input on the Strategy by contacting electricity-electricite@nrcan-rncan.gc.ca.