Energy

 
Global demand for diversified energy continues to grow, fueled by increasing populations, emerging technologies and a heightened need for affordability and emission reductions.

Areas to watch

M&A and investment

Across jurisdictions, energy security has become a key driver of M&A activity—a reflection of a shifting and less certain geopolitical and trade environment. Global energy investment is forecasted to hit a record US$3.3 trillion in 2025, with capital deployment of that commitment across renewables, nuclear, grids, storage, low-emissions fuels, efficiency and electrification forecasted to hit $2.2 trillion this year alone¹. In North America, M&A in the energy sector surged in Q3 2025, with deal value growing by 149% and deal volume growing by 7% quarter on quarter².

Canada’s full endowment of energy resources will need to be put to work to meet the need for affordable, reliable, secure energy. We expect to see increasing and sustained investment activity across the energy spectrum, from oil and gas and nuclear to renewable power and energy-intensive infrastructure projects such as data centres. Western Canadian oil and gas continue to be a key driver of the Canadian economy and exports. As the country looks to a more affordable roadmap for the energy transition, oil and gas will continue to be a critical part of the energy supply mix to help reduce costs for consumers, provide reliable energy and ensure energy security.

Transactions within the Canadian energy sector were strong, with notable deals across critical minerals, oil and gas production, renewable platforms and fuel distribution. The largest announced deal was the agreement by Anglo American plc and Teck Resources Limited to combine the two companies in a US$57 billion merger of equals to form the Anglo Teck group, expected to be a global critical minerals champion and top five global copper producer. Critical minerals are an essential part of the global economy and a driving force in energy transition, with copper acting as a vital conduit in renewable energy and storage systems.

Renewables

As the energy transition continues, governments across the globe are enacting policies and financing measures designed to support low emission energy sources. Investments in climate mitigation and energy transition initiatives also continue, with projected investment numbers expected to exceed US$80 trillion by 2040³.
 

 
 
Canadian renewables remain a strong asset class, with the sector hitting a “breakout year” in 2024, growing by 19% to US$35 billion in global investments⁴. Federal support for renewables also remains strong. Under the Climate Competitiveness Strategy, unveiled in Budget 2025, the Canadian government has highlighted climate action as an economic advantage and will seek to attract investment in clean energy and technology.

Projects

Budget 2025 included several measures for the growth of infrastructure, including energy projects. The budget earmarks $115 billion in generational investments in infrastructure over five years and lays out steps for permit and regulatory reform in a bid to reduce timelines and complexity. Several energy-related projects have been referred by the Canadian federal government to the newly launched Major Projects Office for consideration as national interest projects. These include two LNG projects, the Darlington small nuclear reactor project, the Iqaluit hydro project, the North Coast transmission line and the Northwest Critical Conservation Corridor (which includes clean power transmission development). The government has increased funding to facilitate the development of these projects (including through Canada Infrastructure Bank, the Canada Growth Fund, Export Development Canada and the Indigenous Loan Guarantee Corporation) but remains steadfast in its desire to attract private investment. Budget 2025 announced tax incentives to promote investment and support the advancement of major projects.

Indigenous communities play a significant role in power infrastructure projects, and meaningful Indigenous engagement is a critical part of project development. With the announcement of legislation that aims to accelerate national priority projects, meaningful Indigenous participation and engagement will be key to project success. The government has established the Indigenous Advisory Council to advise the MPO on working with Indigenous groups and Indigenous perspectives. Earlier this year, the federal government increased the funding available for the Indigenous Loan Guarantee Program from $5 billion to $10 billion. Investors await more clarity on how the federal government intends to balance its desire to advance national interest projects quickly while honoring its climate objectives and its commitment to protecting Indigenous rights.

Provinces are also placing a renewed support behind energy initiatives, with many launching actions and investment programs to bolster the reliability and affordability of their energy systems. For example, the Government of Ontario released Energy for Generations, an Integrated Energy Plan (IEP) which provides a 25-year roadmap for powering Ontario’s growth and economic development. The IEP outlines actions and investments across Ontario’s energy system, with a focus on affordability, clean energy, reliability and security across nuclear and hydro generation, grid infrastructure, natural gas, hydrogen and carbon capture, energy efficiency and Distributed Energy Resources, Indigenous partnerships, and regional and global trade opportunities.

Global data centre investment is experiencing considerable growth. In Canada, Ontario and Alberta are leading in data centre projects with over 6,500 MW of new data centre projects requesting grid connection in Ontario⁵ and a 5,800% surge in data centre connection requests in Alberta⁶. Both provinces are taking legislative steps to safeguard the grid. The Ontario government has proposed Bill 40 to direct the OEB to implement requirements for data centres to meet before they are able to connect to the grid. In a bid to offset against provincial corporate income taxes, the Alberta government is bringing in a new 2% levy on computer hardware for all data centres of 75 MW or more requesting connection to the grid⁷. In addition to evolving costs, companies along the data centre supply chain should also consider updated regulations within the space.

Critical minerals are an essential part of Canada’s energy strategy. To bolster this strategy, the federal government has announced the establishment of a $2B Critical Minerals Sovereign Fund, to be administered by Natural Resources Canada⁸. The fund will accelerate investment in mining projects and strengthen supply chains through equity investments, loan guarantees, and offtake agreements. In addition, $50 million over five years will be allocated to support the fund’s delivery and a $371.8 million First and Last Mile Fund will be launched to support upstream and midstream development of critical minerals supply chains.

Nuclear

Nuclear energy is experiencing a significant resurgence as jurisdictions respond to rapidly rising electricity demand from population growth, electrification and energy-intensive digital technologies such as AI. Recent projections from the International Atomic Energy Agency and the OECD Nuclear Energy Agency indicate that global nuclear generating capacity could double by 2050, with cumulative investment needs across the nuclear value chain exceeding US$2 trillion.

Data centres—one of the fastest-growing electricity loads worldwide—have become a notable driver of international interest in nuclear energy. As outlined in our insights into data centres, the U.S. is seeing several announcements pertaining to privately operated, off-grid nuclear facilities being built to serve data centres. These early-stage projects take advantage of flexible ownership structures, merchant-style power arrangements, and a licensing framework that allows private entities to pursue stand-alone nuclear deployments.

Canada’s regulatory and market environment differs in important ways. Under the Canadian Nuclear Safety Commission’s (CNSC) framework, privately financed or single-offtaker projects must proceed through the full suite of licensing stages traditionally applied to utility-scale nuclear stations. In addition, electricity-market structures in most provinces do not currently accommodate merchant nuclear models comparable to those contemplated in the U.S. For investors, this means that novel ownership structures, industrial SMRs, campus microreactors, or non-grid-connected applications must be evaluated under existing multi-stage processes. While this approach provides a globally respected safety regime, it may limit the pace at which certain emerging deployment models can be pursued.

Major nuclear projects are underway in Canada, demonstrating strong public-sector and private commitments to nuclear technologies. The pioneering small nuclear reactor project by Ontario Power Generation (OPG), which received an up to $3 billion innovative equity investment by Canada Growth Fund and Building Ontario Fund, establishes Canada as the first G7 jurisdiction to advance a grid-scale, multi-unit commercial SMR deployment. With OPG pursuing multiple units of a single SMR design, Canada is positioned to demonstrate cost and schedule efficiencies associated with standardized, serial construction—long viewed as critical to sustainable nuclear economics. Ontario Power Generation and Bruce Power’s ongoing multi-unit life-extension program, among the largest low emission-energy infrastructure investments in Canada, continues to anchor long-term nuclear capacity and supply-chain activity. The Ontario government recently approved OPG's plan to refurbish four CANDU nuclear reactors at the Pickering Nuclear Generating Station, extending the facilities operations for up to 38 years and creating up to 30,500 jobs.

Federal support for next-generation CANDU technologies, including up to $304 million in repayable support to AtkinsRéalis, reinforces Canada’s position as one of the few countries with domestic reactor-design capability. As electricity systems fall under provincial jurisdiction, provinces are also demonstrating support for nuclear energy. Ontario, Saskatchewan, New Brunswick and Alberta have each outlined long-term strategies involving new nuclear capacity, SMRs and advanced reactor technologies. Through the Future Electricity Fund and Natural Resources Canada, $52.4 million has been allocated to nuclear feasibility studies and enabling activities in Saskatchewan, Alberta, and Ontario⁹.

While capital commitments across the sector continue to increase, deployment timelines will depend heavily on the clarity and predictability of regulatory and permitting pathways. Additional guidance may improve project certainty in areas such as fleet-wide or generic environmental assessmentsand licensing for repeat SMR designs; frameworks for industrial, campus, or other non-grid-connected nuclear applications; enhancements to federal–provincial coordination under consolidated or single-window processes; and increased predictability in licensing and permitting timelines, especially for novel technologies.

Budget 2025 also highlighted additional support for the sector, offering a retroactive implementation of the 30% Clean Technology Investment Tax Credit for small modular and advanced nuclear projects to materially improve project economics, new funding for nuclear export development (intended to support Canada’s nuclear supply-chain participation and international project opportunities), and workforce-development investments aimed at expanding pipelines for skilled nuclear trades and specialized engineering roles. It also includes a commitment to a “one project, one review” model intended to reduce duplication, clarify federal–provincial roles and streamline impact-assessment processes¹⁰. Moving forward, federal programs and tax measures will need to align with provincial procurement priorities to support efficient execution and sustained investor confidence.

Mitigating risk

Evolving supply chain

Due to the integrated nature of energy production and distribution, it is no surprise that geopolitical instability is impacting energy market access and supply chains. Within the nuclear sector, global competition for nuclear components and specialized labour is intensifying. Constraints on large-scale forgings, enriched-fuel supply, reactor-grade materials and experienced nuclear trades may present scheduling and cost risks for Canadian projects. Early procurement strategies and supply-chain partnerships will be increasingly important as global deployment accelerates.

The ongoing uncertainty of the tariff and trade environment between Canada and the U.S. remains a key consideration for those within the energy sector. The impact of the initial U.S. tariffs and subsequent Canadian retaliatory measures have led the Canadian government to broker deals with other nations and launch domestic industry building initiatives to diversify, develop and secure the energy supply chain. These strategic partnerships help mitigate risks presented by an overreliance on the U.S., while creating opportunities for Canadian energy players, such as new investment channels, broader market access and an acceleration of major projects. However, with new opportunities come additional challenges. Companies should closely monitor evolving trade rules, shifting ESG requirements across jurisdictions, and among different investor groups, and identify and manage additional cybersecurity threats related to large-scale projects, such as interconnected grids.

For more information on our leading nuclear transactional and regulatory counsel, please visit our Nuclear Energy practice page.