New Canadian Electricity Outlook: Bullish Load Growth and a Major Renewables Buildout
This week on the podcast, we dig into a new report on renewable growth in Canada, “Canada’s Renewable Energy Market Outlook 2025”, a joint study by Dunsky Energy + Climate Advisors and the Canadian Renewable Energy Association (CanREA).
To unpack the findings and the broader state of renewables in Canada, we’re joined by Leonard Kula (Vice President of Policy – Eastern Canada and Utility Affairs, CanREA), Ahmed Hanafy (Partner, Dunsky Energy + Climate Advisors), and Vittoria Bellissimo (President and CEO, CanREA).
Peter and Jackie asked our guests: What are your expectations for growth in Canadian electricity demand through 2035 and 2050? How does demand from AI data centers contribute? As intermittent renewable generation rises, do you see technical limits, such as reliability, that put a ceiling on growth? Do project developers source the wind turbines and solar modules from China, and should Canada push for more domestic content? Do renewables face issues with “not in my backyard” (NIMBYism)? Can renewables contribute meaningfully to meeting the fast-growing demand from data centers, which need near-perfect levels of reliability? Do you expect renewable energy growth in Alberta, given the market changes that have weakened the investment case?
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Episode 304 transcript
Disclosure:
The information and opinions presented in this ARC Energy Ideas podcast are provided for informational purposes only and are subject to the disclaimer link in the show notes.
Announcer:
This is the ARC Energy Ideas podcast, with Peter Tertzakian and Jackie Forrest, exploring trends that influence the energy business.
Jackie Forrest:
Welcome to the ARC Energy Ideas Podcast. I’m Jackie Forrest.
Peter Tertzakian:
And I’m Peter Tertzakian, welcome back. It is time stamped at Monday morning, November 24th, 2025. A snowy morning in Calgary, the first major snowfall of the year so about time, I would say. You’re over there in Toronto, Jackie, how is it out there?
Jackie Forrest:
It’s beautiful here but I’m glad I’m missing that first winter storm because people seem to forget how to drive every single year it happens, weird.
Peter Tertzakian:
Yeah, that’s why I came in at 6:00 a.m. because I knew it was going to be ugly and, certainly, it was. Anyway, on this morning, we have news over the weekend that there may be a pipeline deal in the making.
Jackie Forrest:
Yeah, there was an article in the Calgary Herald, we’ll put a link to it in the show notes, that talks about a memorandum of understanding potentially between Alberta and the federal government for an oil pipeline to the Northern BC Coast. And there’s been no official announcement as of the recording time but I think something might happen this week based on that article.
Peter Tertzakian:
And there’s a word that our Prime Minister is coming to Calgary on Thursday and it is all part of what’s termed the Grand Bargain. But we’ll talk about that on another episode because I think we’ve got some very interesting guests. But there’s one more milestone I guess we can record because we talked about it in previous podcasts and that’s the end of the COP conference, COP30 in Brazil.
Jackie Forrest:
That’s right. And I’ve done some reading on the weekends and I think most of the articles that I’ve read do talk about it as a bit of a disappointment. I think the one accomplishment is the idea of tripling the money for adapting to a changing climate which I think is constructive, really starting to plan towards potentially a future that is going to be warmer and what will that look like. But I took away from it I just don’t think that these consensus processes like the UN COP are … They’re just very challenged today so it’s not surprising to me that not a lot got accomplished. But I’m predicting that clean energy is going to take off because it’s already one of the low cost sources of energy supply, we need more electricity so I think it’s going to have to do it the old-fashioned way, not through policy, but through being the best choice.
Peter Tertzakian:
No, I don’t think the policy hammer works anymore and the world is not in a collaborative mood, I think we can agree. So, it’s probably up to technology and economic viability and, in that regard, there’s plenty of good news in terms of the evolution of energy in our energy systems particularly in electrification. So, I think that’s what we want to talk about today and, to help us through that, we don’t have one, we don’t have two but we actually have three special guests. I think this is going to be a first in terms of the number of guests we’ve had around our microphone.
So, I’d like to take the opportunity to introduce to you Leonard Kula, who’s Vice President of Strategic Initiatives at the Canadian Renewable Energy Association. We also have Ahmed Hanafy, a Partner at Dunsky Energy + Climate Advisors. And for the third time back, we also have from the Canadian Renewable Energy Association, otherwise known as CanREA, the President and CEO, delighted to have back Vittoria Bellissimo. Welcome to you all.
Vittoria Bellissimo:
Thanks for having us.
Jackie Forrest:
Well, we talked about this, actually, a few weeks ago, the CanREA-Dunsky report that focuses on the growth and renewables over the coming decades and we really wanted to dive more into that report. So, we appreciate we’ve got our key authors with Len and Ahmed on as well as Vittoria who heads the CanREA Association. But before we get to that, I know you just hosted a very large conference in Toronto in October. Could you just tell us, Vittoria, what was the mood at the event?
Vittoria Bellissimo:
Yeah. CanREA just hosted Canada’s largest electricity conference and trade show in Toronto in October, it was a fantastic event. It was kicked off by Ontario Minister Stephen Lecce who really talked about the critical role of electricity, including wind, solar and energy storage, positioning Ontario and Canada as clean energy superpowers and the backbone of the future economy. So, we had nearly 3,000 people making it the biggest show we’ve ever hosted, more than 180 exhibitors and the mood throughout the conference really was one of excitement and, I would say, momentum. There’s a growing recognition of the need for more electricity in every market across Canada and we’ll talk about that today and people are excited to deliver on that mandate. It’s a big challenge, I think people know it’s a big challenge but our industry is ready. Our theme of our conference was Canada’s Clean Energy Advantage and we want to serve Canadians with affordable, reliable, clean energy.
Peter Tertzakian:
Well, your association, Canadian Renewable Energy Association speaks for itself and we’ve had you on the show twice before. But this is the first time we’ve had Dunsky Energy + Climate Advisors so maybe, Ahmed, can you briefly tell us about your firm out of Toronto?
Ahmed Hanafy:
Sure. So, yes, Dunsky is an energy advisory firm actually based out of Montreal with staff and offices in Toronto, Vancouver and everywhere across the country literally from coast to coast to, we have a new colleague up in Yukon now, so coast. I like to think of us as a bit of a hybrid of an engineering consulting firm and a management consulting firm but one that’s essentially focused on one thing and one thing only which is the engine transition. So, we just continue to support leading utilities, governments, corporations, industry associations, system operators, regulators, investors across the country as well as south of the border in the US and really help them with their efforts to accelerate and navigate the energy transition.
So, you’ll find our fingerprints on everything from utility resource plans to some of the big provincial policy moves, rate designs, regulatory initiatives across the country, customer programs and everything in between including market intelligence like this work that we’re here to talk about today.
Jackie Forrest:
Okay. Well, let’s talk about the report briefly. Just tell us why did you decide to jointly publish this report? This is the first time you’ve done that.
Ahmed Hanafy:
Yes, I’m happy to start on … We really launched this report in response to what I would call three vacuums in the industry today. The first is on the cost side. So, as an industry in Canada or as electricity stakeholders in Canada whether it’s utilities, interveners, industry developers and others, we still heavily rely on US benchmarks. We use whatever the latest and greatest US price projections are, multiply them by the exchange rate and that’s what we use as our benchmark for costs. And from years of helping clients develop Canada-specific forecasts, we’ve realized that that’s not really reflective of our cost regimes in Canada, our policies, our tax regimes, our financial institutions. So, the first gap I think this report addresses is trying to put together Canadian costs grounded in Canadian context so we’re not just relying on NREL or Lazard forecasts times exchange rates.
The second vacuum that I think this report aims to address is the relatively fragmented nature of Canadian industry data in general. So, when you try and look for what is the forecasted uptake of wind, solar and storage or other technologies in Canada, you are largely relying on either individual IRPs and plans from the provinces, you’re relying on projections that are mostly driven by policy conversations around how to achieve net zero by certain timelines but there isn’t really out there a consolidation of what is the market potential for these technologies in Canada. Last quick one is the economic story of this industry. So, this industry has been, to a large degree, painted within its emission reductions benefit that it brings to the country, that’s only part of the story. So, what we sought to do here is also try and quantify some of the impacts from economic perspective around GDP contribution, job creation and really help shape the narrative around the contribution of renewables to Canada’s prosperity and economy.
Peter Tertzakian:
So, if we turn to the big conclusions out of this report, maybe we’ll turn it over to you, Leonard and Vittoria, what are the … So, what’s the bottom line? What did the report find in terms of the major conclusions?
Vittoria Bellissimo:
I think what we were trying to do here is provide some information to the marketplace on what the growth looks like. So, if you look at the next decade of wind, solar and storage, the growth will drive, according to our report, 143 billion to 205 billion in investment, create 250,000 to 350,000 job years and slash grid emissions intensity by up to 80%.
Jackie Forrest:
Well, one of my takeaways, Vittoria, was the rate of growth. We’ve gone from very low growth almost the last several years, almost declining slightly in terms of the load in Canada and then, suddenly, we switched gears and we’re growing at about 2% kegger when we were like a half percent before so almost a quadrupling in the rate of growth. And so, of course, that’s going to require a lot of things to get done in this country and we’re going to ask you some questions on that. But I guess the main question I have is, when I look at that trajectory of growth, what is driving that? It just seems like quite a big change from what we’ve seen up until now.
Vittoria Bellissimo:
Yeah, it’s a combination of things and it was surprising originally, I think, to folks in the electricity sector that we’re starting to see real growth after being pretty flat for a long period of time. It’s a combination of things, you have to meet the need so there are retirements coming up that we have to supply for but, on the actual load growth side, we’re talking about electrification, obviously we’re talking about data centers which I’m sure we’ll get into later and just general electrification of the economy.
Peter Tertzakian:
So, this is the pull, this is a demand, it’s not necessarily what is going to be built but we’ll come to that.
Vittoria Bellissimo:
Yeah, we’ll come to what will be built.
Peter Tertzakian:
Right. So, there’s this expected pull which no doubt is also driven by population growth which has been fairly significant over the past few years combined with the associated economic activity, combined with pull from AI data centers which also, as you said, we’ll come to. So, it’s the overall we’ve been stable and flat also benefiting from efficiency gains but, all of a sudden, it’s starting to reverse and we’re going to follow the same trajectory we’re already seeing in the United States.
Vittoria Bellissimo:
Yeah, that’s right. And the thing about electricity is you have to build it in advance of need. If we’re going to be able to reassure the economy that the power sector will be there, we’ve got to be there first.
Peter Tertzakian:
Mm-hmm. Well, where do you want to start? Do you want to start with the AI? Because on everybody’s mind and Alberta has 20 gigawatts of potential projects, the Quebec Premier has just announced that his province wants into the game. So, how do you factor in the AI stuff?
Ahmed Hanafy:
I would say the starting point for understanding the implications of AI and low growth is looking at what’s out there right now and there’s, again, to your point numbers of gigawatts and gigawatts of queues in every single province in this country but the reality is not all this is going to materialize. So, what we took as a starting point in this study is looking at what the utilities and the system operators in each province think is actually going to materialize which is only a fraction of this massive, massive demand. So, let’s say our reference scenario which we essentially mimic the utilities latest and greatest projections captures some AI growth not necessarily at the full scale that’s envisioned in these queues and by some organizations but it’s still not insignificant.
Where you really start to see that acceleration in demand is when you look at our accelerated scenario which we didn’t necessarily attribute the growth only to AI data center demand but it’s certainly one of the big drivers for that increased demand but that’s when we started seeing some of these queues materialize in a more tangible way. I think the jury is still out on whether this demand is all here to stay or not but my personal view I’d say is that the upside is certainly very starking when you look at the load growth in this country. We have, again, to your point, Peter, traditional load growth from population growth, that’s not going away anytime soon. We have economic development in the form of reshoring of industries, new industries setting up shop here which obviously is at the risk factor of tariffs and geopolitical uncertainty but it’s certainly not all going to go away. And you have this data center load which we were seeing big players ask for big allocations.
Just in Alberta last week, the existing allocation was sweeped up by just two players and that’s a fraction of the needs and a fraction of the queues. So, I think the upside is significant and then you lay on top of that also the decarbonization opportunities, electrification opportunities that are, sure, have slowed down now in this policy environment that we’re experiencing but certainly is not going to go away fully.
Peter Tertzakian:
So, Ahmed, to just probe a little bit into the upside because, as you said, pull in terms of gigawatts is significant from every province but it seems like there’s a conservatism in the report and even what you’re saying in terms of how much of the load growth will come from AI. So, is the conservatism a function of the regulations that would preclude us being able to build more electrical interconnects and behind the fence generation or supply chain issues relating to generation construction or what is it? Where is the conservatism? Or is it an investment problem, there’s a reticence to deploy capital to build out AI and associated energy requirement?
Vittoria Bellissimo:
I think it’s quite a complicated question. If you think about timelines, the timelines that data centers need are much shorter than the timelines it takes to build new electricity generation. Wind, solar and storage are the fastest generation to market and they can’t match the data center timelines so that is one concern. Here in Alberta, you’ve seen that there’s some caution with large loads because we haven’t dealt with large loads like this before. So, the initial phase of data center cap was set at 1.2 gigawatts that filled pretty quickly and now we’re thinking about what to do next and it has everything to do with learning and experiencing these large loads. If they go out very quickly, what does that mean for the other customers on the grid?
And you had some thoughts about what do regulators do in this time period, how do regulators look at the electricity that’s going to be required for AI versus the electricity that’s going to be required for homeowners and businesses and the joke on the internet is who gets the power, is it AI or your toaster, where are we allocating. And I think that we’re going to see some real caution from regulators and decision makers on this front because, when there is a change in the power sector, it really is rally around reliability, make sure that existing customers can get served reliably first and we just don’t have a lot of experience with it.
Peter Tertzakian:
Right.
Ahmed Hanafy:
Just to illustrate that point a bit further, I live in Montreal and the Quebec government and Hydro-Quebec had a policy here with respect to data centers that was really geared towards trying to prioritize the limited supply of electricity and electrons towards where they’re going to be bringing most value to the economy and that was not deemed to be crypto and data centers at some point but we’re seeing some shifts in narrative that might raise that profile of that industry relative to other industries. So, I think the challenge or the competition for electrons is not going to go away and what we’re going to start seeing now is governments try and put their lists in order and tell us what they care about more so than others. My guess is that the untouchable is going to be meeting basic loads for residential and commercial customers followed by public development opportunities that are bringing jobs and GDP contributions and data centers will still be significant but I think, when the real competition between those different sectors happens, data centers are likely to take the third place in my perspective.
Peter Tertzakian:
Well, this humming and hawing about whether or not AI is going to compete with a toaster, are we going to make cat videos or toasters which is how are you going to prioritize these things, there’s another school of thought that this is a global race. It’s more than a school of thought, it’s a reality and that there’s not billions, not tens of billions but hundreds of billions, if not, trillions going to be invested in this space and why is it that a country like Canada which has all the resources is not in this game because … It’s are we going to participate or not, are we going to participate or not, meanwhile, the world goes by like a reality TV show. I’m just making that comment and it just seems that I think we have everything it takes to build out our electricity grids and the primary sources, why would we not take advantage of the next generation of computational growth?
Vittoria Bellissimo:
We just hosted several conferences that addressed this topic. At Electricity Transformation Canada, we had a great panel on it with Microsoft and AWS on it and we had a similar great panel at Energy Storage Alberta last year and the case that was made by companies that are looking to build data centers was these are the new roads, these are the new … This infrastructure is necessary and you build your economy on this infrastructure. So, I think they make a fairly compelling case for why it’s important to do some of this here and I do think that there are a lot of people working hard in the power sector trying to figure out how to do this here. But I will also say that it’s a new thing, that hasn’t been done before and we haven’t built for this level of growth before so I expect there will be growing pains. Will we get there? I think we’ll serve a lot of load. I don’t think we’ll serve everything that’s listed in the ISOs project list, for example.
Jackie Forrest:
So, to put this growth in perspective, your base case which does not assume a lot of AI growth has about a 2% annual average growth rate all the way out to 2050 which is a quadrupling and we’re saying AI could even make that higher. Of course, there’s going to be constraints to that. So, Len, I wanted to ask you a question. You’ve had long career, you worked as a COO of the Ontario Electricity System Operator, you were charge of doing these type of forecasts. Could we have it wrong? There’s certainly been many times in the past where load growth just didn’t materialize and if, actually, you look at the most recent trend in Canada, it actually seems to be going a little bit down not up.
Leonard Kula:
Yeah, you’re absolutely right. The history of it is that forecasts are forecasts. We often use to preface a lot of our presentations by saying here’s our forecast and, to be clear, it will be wrong. And so, knowing that you’ve got those challenges, how do you manage it? I think the thing that is comforting here is that everything is being projected to go up and the question is the degree to which and that changes the nature of it. Over the past decade, as we’ve already said here, demand has been flat, even decreasing driven by retrenchments in economics and very effective demand reduction programs. But now we’re starting to see a significant trend of increased demand and the question is how much. But always in the back of our mind, we know that things will happen, black swans happen, recessions happen, governments change that drive a lot of those changes.
Power system planners go ahead and address this with a number of different tools in the toolbox, scenarios as reflected in our report but it’s a common approach for system planners to go ahead and look at a reference, a high and a low case and extracting what are the things that are common to all of them and, therefore, what are the no regret actions that we need to take. The other bit is that we will often go ahead and refresh these forecasts on a regular basis. So, in Ontario, it’s an annual planning outlook with that cadence to go ahead and capture the most up-to-date information. But it is a real challenge, as Vittoria said, the time to build transmission is seven to 10 years. The time to build generation varies upon technology but wind and solar are amongst the fastest and they’re in the three to four year range and things like AI and those kinds of loads can materialize and disappear much faster than that. So, trying to find that appropriate balance is the real trick or the real key to all of this.
Jackie Forrest:
One of the takeaways I had from your report was that the vast majority of new generation is actually wind. It’s not probably going to be that … Solar just wasn’t a very big growth area. Why is that? Is that because we don’t have good solar capacity factors across the country?
Vittoria Bellissimo:
Not even a little bit. The solar regime that we have in Alberta and Saskatchewan, for example, is among some of the best solar that you’ll see in North America but there are other factors here. So, that’s true of these two prairie provinces but not necessarily true across the whole country, other provinces don’t see the solar regimes that we see. The other factors that play here are, yes, we’re further north so wind is going to bat heavier than solar is, there are political decisions and policy decisions made to this effect as well but you are starting to see it change. So, we are starting to see that there’s, in the CanREA report, a projection of 17 to 26 gigawatts of new solar over the next decade and we’re starting to see policies change. So, Quebec, for example, is looking to procure up to three gigawatts of solar which adds a diversity of supply to their electricity mix.
So, we’re starting to see a change. I think wind will be heavier and you can see that in other folks’ forecasts as well, the regulator forecasts tend to show that.
Peter Tertzakian:
Now, Leonard, you worked … I think you ran a system operator, right?
Leonard Kula:
That’s correct.
Peter Tertzakian:
Yeah. So, yeah, tell us about what happens when renewables come in as a larger fraction of the energy mix. I know, here in Alberta, we’ve got a lot of concern about that sort of thing so maybe put to rest any myths or amplify any realities that are associated with bringing in large amounts of renewable energy that’s intermittent into a grid.
Leonard Kula:
Yeah, it’s an excellent question and, frankly, it’s one of the big gaps in having people understand the implications of the energy transition. So, for a century, we’ve operated power systems where there was great confidence that the fuel was sitting there right next to it. So, whether it was water behind a dam or coal sitting in a pile next to the generating station, when we thought of our power systems, we thought in terms of the output of the generator not where was the fuel coming from. And to be honest, there have been instances where you’ve had some generation like run-of-river hydroelectric where it was dependent upon the amount of water that was flowing through the river system. So, we dealt with it in small amounts. Now though, as you move forward, you’re looking at technologies whether it’s increased amounts of hydroelectric or wind or solar where you’ve got less confidence the fuel’s going to be there. Even in certain parts of North America, gas generators worry about where their gas supply is going to come from.
So, everyone’s trying to adapt to the new paradigm which is is the fuel going to be there to manage it. It’s, frankly, a different way of looking at the power system and a different way of managing it and the way that you do address it is by recognizing what are your sources of system flexibility to go ahead and manage that. So, in certain places like Quebec and Manitoba and British Columbia, they’ve got large amounts of hydroelectric and hydroelectric storage that gives them the flexibility to adapt to variable output from wind and solar. Ontario has a lot of different sources of flexibility, it’s got imports and exports that it can adjust, it’s got hydroelectric capability, it’s got other fast-acting resources, they’re adding a lot of storage to the system. So, frankly, you need to look at it in a very different way which is where are you going to get sources of system flexibility to manage the variability.
Peter Tertzakian:
Just to close the loop on this question. So, is the Alberta government or Alberta at large warranted in being concerned about a rapid growth in renewables?
Leonard Kula:
I think that, as you add wind and solar and it’s been a great success story in Alberta, what needs to come with it is that the system operator needs to go ahead and make sure that it’s got the sources of flexibility to go ahead and manage it effectively. So, Alberta has benefited greatly from the investment of wind and solar there and the system operator needs to go ahead and make sure that it can manage that.
Vittoria Bellissimo:
Okay. So, just to give you some context from other places, Peter, then. If you look at Hydro-Québec, if you look at BC, these are jurisdictions that have over 90% hydroelectric generation. So, they’re incorporating more wind and solar, you can see it in Hydro-Québec’s plan to add 10 gigawatts of power in the next decade and, in BC’s run, the 2024 call for power and they’re about to accept submissions for the 2025 call for power. But if you look at Alberta, our renewable supply, and the system operator reports it as wind, solar and hydro, contributed approximately 19% to total electricity generation in 2024, up from 17% in 2023. So, we have a higher concentration than these other places but we can still grow that significantly, we just need to bring resources with that and we need to compensate those resources fairly. We’ve had an energy-only market where we just buy energy and we hope that we get all the things we need with that energy and that’s not necessarily the case.
Jackie Forrest:
Right. So, that could include things like battery storage or natural gas peakers or things that can respond when there’s no sun or wind. Let’s talk a little bit though about the levelized cost of wind and solar in Canada compared to other types of generation. I know the cost of natural gas has become more expensive and now, in Canada, we’re talking about you need to have carbon capture storage on it which makes it very expensive. So, how does that compare wind and solar to the alternatives? And I just also wanted to mention how do these incentives that the government is providing so, for example, this 30% investment tax credit and we just learned in the budget a few weeks ago accelerated depreciation, are those really meaningful in terms of reducing the costs of these technologies?
Ahmed Hanafy:
So, the levelized cost of energy of wind and solar by all projections you see whether in Canada or south of the border has consistently been cheaper or lower, I should say, than other resources like natural gas. The availability of policy support levers like ITCs and appreciation rules certainly make the wedge even further and further increase the competitiveness of these resources. So, I’d say, the policy, it helps to reduce the cost but that’s not necessarily the reason for the cost competitiveness. That said, I do want to say it is very easy to look at the levelized cost of energy and see when is cheaper, when is better, let’s put more wind but I think it’s also a bit of a misleading number to look at LCE in absolute. It doesn’t necessarily reflect the full system needs and the characteristics are not necessarily apples to apples and compare those costs between wind and solar and dispatchable generation.
So, I think what really tells the economic story of this resource and its competitiveness is when it shows up in forecasts like this. So, when we talk about, again, 150 gigawatts of forecasted generation growth in Canada over the next 25 years, our numbers show that 70% of that is going to be wind and solar and storage. That’s not driven by policy push, that’s not driven by forcing them to meet certain assumptions on our emission reduction targets, it’s purely driven by economics. And so, we’re seeing that resource, those resources, I should say, compete on cost and are the majority of a portfolio that’s designed to meet an affordable, reliable and clean energy supply.
Peter Tertzakian:
Mm-hmm. Let’s talk about NIMBY as a more social resistance because that afflicts every types of energy or any type of land use whether it’s a power line coming over someone’s property or a wind farm or solar farm or whatever. So, what is the Ontario-Quebec landscape? Well, I’ll just talk about any province for that matter because of these huge growth projections. To what extent is social resistance, I’ll call it, a factor in impeding the ability to serve this load growth that you’re predicting?
Leonard Kula:
So, I think that NIMBY-ism or social resistance I think is a factor that needs to be considered when we think of the buildup of these new technologies, of these new facilities. In many ways, frankly, it’s not a wind and solar only perspective, it has to do with transmission and other generation types. From a wind and solar perspective, it’s a very different landscape today than it was, say, 20 years ago. Twenty years ago, these facilities were new technologies in communities and folks really didn’t know what they were, what their impacts were whether it was from a health or visual standpoint, you now have 20 plus years of history with these facilities in these communities. A very significant difference in Ontario is that, 15, 20 years ago, communities didn’t have a choice, there was legislation that said that developers could put these facilities where they needed them. Now, the Ontario government’s been very clear of saying that there will be municipal support resolutions necessary for wind and solar and, frankly, for any generation technology that seeks to get a contract from the system operator here.
Twenty years ago, the build out of the fleet were largely policy choices. The government of the day wanted to retire coal and replace it with natural gas and wind and solar and that was a policy choice. Today, the new projects, as we’ve been talking about here today, are being driven by system need and there’s a new way of getting them, they’re being done often in technology agnostic or competitive procurements and there’s just a lot more and better information available to support community support decisions. I’m not saying that that has made it for perfectly smooth sailing, there are robust conversations going on in communities but it’s in a much healthier environment today than it was 15 to 20 years ago.
Vittoria Bellissimo:
If I can just build on that a little bit, Peter. The interesting thing about renewable energy projects and energy storage projects in Canada right now is that the partnerships that are building them are changing. So, we’re seeing a whole lot of groups bringing indigenous equity to the table and being joint owners on projects and proponents of projects. We’re seeing municipalities being much more interested and involved in projects. And I think, when you have a group of people who are saying yes and want the project to succeed and have a vested interest in the outcome from a financial perspective, you can really see a change in the dynamics around social acceptance.
Peter Tertzakian:
So, do we have any evidence that the period for permitting projects is shortening?
Vittoria Bellissimo:
That’s a really good question and we’d probably need to unpack that for an entire podcast but I do think you’re starting to see a willingness from government to make changes. Nothing drives change, quite like having a need and knowing you’re not going to be able to fill it in your time period and we’re seeing that across Canada in lots of different major project streams.
Jackie Forrest:
I would add to, Vittoria, in BC and now in Manitoba, there’s actually a requirement … Well, your bid will have a much better chance of being the winning bid if you have indigenous participation. And I think, in BC, we saw most of the projects were, I think majority, 51% indigenous and I think that’s the goal in Manitoba as well. So, very different in terms of who’s developing them than in the past that way.
Vittoria Bellissimo:
Yeah, absolutely. It’s a good move forward for economic reconciliation.
Peter Tertzakian:
What about this offshore wind project in Nova Scotia? We had Jason Chee-Aloy on a couple of weeks ago or a few weeks ago, it was in the prime minister’s directives or whatever you call it, the major project office. What’s the story with that and did you factor that into your report?
Ahmed Hanafy:
So, we didn’t factor into the report mostly because this has been in about six months in the making and this file has been evolving as we speak by the minute. So, we did not factor into this first iteration but certainly will do in the future iterations. I think it certainly is a major product shift in the availability of supply in Atlantic Canada, a heavily constrained region as we see right now. My hypothesis is that, if we were to include that supply of offshore wind, it would certainly change the dynamics in the region and beyond which brings it to the second nation building product that we haven’t talked about today which is expanding transmission between provinces.
The magnitude of the Wind West project for Wind East project rather is massive and it’s certainly beyond the needs of the Nova Scotia as well the entire maritime region. So, for it to really be … I guess for the full potential and value to be tapped into, it would have to be accompanied with a significant expansion of our east-west transmission capacity to be able to get those electrons to where they’re needed elsewhere in central Canada and beyond. I think if we were to, and we certainly will include next year, I expect it to have major impacts on every other resource because offshore wind certainly brings diversity of resource and contribution that would make it value adding to the system.
Jackie Forrest:
Right. Well, and just to clarify, that was a concept in the first tranche of projects had … Actual projects and then concepts they wanted to advance the business plan on but certainly the way it was described in that announcement was much broader than just the offshore wind but actually a lot of transmission that would connect maybe the Atlantic Loop project revisited in a different form. So, let’s talk a little bit about residential and smaller scale commercial and industrial solar. My sense is that we just really don’t have a lot of it in this country. Is that the case and did you have any expectations of how that would grow?
Ahmed Hanafy:
So, we have about 1.3 gigawatts of rooftop and residential and commercial solar in Canada right now. We’ve worked with CanREA about a year ago to build a projection for a behind the meter solar in Canada and, if I recall, our projection landed somewhere between 12 and 20 gigawatts of installed capacity by 2050. So, certainly, the market is still at the very, very early stages of maturity and there’s a lot of upside from here. For the purpose of this report, we didn’t want to muddy the waters with other factors so we essentially just bought into the forecasts and productions of their respective utilities in each province and they have also their own growth projections that something we line up with the numbers I stated here.
The attractive thing about behind the meter solutions is that they’re quicker to deploy, we’re talking about deployment in the months to years, not years to decades, and they bring us a ton of other benefits that utilities and customers can benefit from. So, they certainly have a role to play, by our estimates somewhere in the range of five to 10% of the electricity generation could come from these resources over time.
Jackie Forrest:
Okay. Well, let’s hope that we get some more incentives and that happening because I certainly think we’re real laggards in that space. But before we run out of time here, I did want to talk a little bit about how we actually build these projects. Of course, in the US, they’re putting large tariffs in place to stop these Chinese solar panels and other Chinese clean tech equipment from coming into the country. What’s the situation here in Canada? Are most of our projects relying on imported Chinese equipment and are we doing anything to try to increase our domestic?
Vittoria Bellissimo:
Right now, I will state that Canada has had a tariff of 154.4% on Chinese made solar panels, it’s been in place since 2014 and last year the federal government proposed to add a second tariff to Chinese produced panels, modules and all of the upstream components that go into making solar panels. There is also a similar tariff that applies to Chinese wind turbine towers imported into Eastern Canada. The problem with applying tariffs, and I know all we talk about these days is tariffs, to these components is that Canada lacks domestic manufacturing. So, right now, we have one wind turbine blade manufacturer, one wind tower manufacturer, a couple solar racking manufacturers, one or two announced battery energy storage manufacturing projects in Canada but it’s not a very, very large supply chain. And in order to build that, we need some mechanisms in place if that is in fact our goal.
So, we have the clean technology manufacturing ITC which offers an incentive for companies setting up manufacturing of these goods in Canada but it’s not as high as the production tax credits still available in the US. In budget 2025, the federal government announced it will likely conduct a consultation on putting domestic content requirements for clean technology and clean electricity ITCs. But what we’ve been advocating for at CanREA really is a domestic content adder for the ITCs that would reward companies buying made in Canada components and we’re hopeful that this type of an approach combined with the manufacturing ITC will bring more production to Canada.
Peter Tertzakian:
Yeah, that would be nice. We already have precedent of companies that are manufacturing solar panel moving to the United States and so it’s not a minimum we need to arrest that migration of manufacturing capability and ideally give more incentive to have domestic manufacture for all sorts of equipment if we’re going to regain our manufacturing here in this country. I look at this 2% growth and, after a long period of flat period and indeed even decline, it just glares at you. 2% growth doesn’t sound like a lot but it’s huge. And if we’re going to achieve that and we’re going to achieve it almost overnight going into next year, why does your report not really have much growth from natural gas generation? It is one of the primary energy sources that can help with this kind of growth. I appreciate it’s the Canadian Renewable Energy Association and so on but all jewels are competitive and they have to contribute to the mix if we are going to achieve this kind of growth.
Ahmed Hanafy:
Yeah, first of all, I do want us clarify that this report was not intended to just build a rosy picture and outlook for wind and solar and storage, it was really trying to look at, if we buy into the slow growth of 2% or our high scenario 2.5% roughly per year, what is going to be built to meet that demand. So, right now, we have 150 gigawatts of deployed capacity in this country, predominantly hydro, nuclear, gas and renewables and what we’re seeing is, by 2050, to meet that load growth, we need to have somewhere in order of 350 gigawatts of deployed capacity. So, essentially we need to build two to two and a half X the current fleet over the next 25 years. What we see very clearly is that the majority of that growth will come from wind, solar and storage capacity. It doesn’t mean there is no role for other technologies but the complete opposite actually. In our outlook, you see a growth in nuclear, you see a growth in hydro, although a modest one, and actually you see a little bit of growth in natural gas over the years.
It ends up at, actually, the starting point and end point for natural gas and the outlook are pretty much exactly the same, roughly 25 gigawatts, but there’s certainly increase in the midterm here. In our high growth scenario, actually, you see a lot more gas and that’s where, to your point, the integration of renewables coupled with the pace of load, that’s quite significant. It’s going to require all fuel sources and we started to see gas which, again, by cost merit order is behind renewables in some cases starts to come into the market. So, I would say we do see gas growth, we see nuclear growth, we see everything growing because the fundamental demand for electrons what’s driving this industry, not a political target for certain emission reductions or otherwise.
Jackie Forrest:
Okay. Well, other projections do have much more natural gas and there’s an assumption that wind and solar really can’t contribute to AI load growth because you can’t meet the five nines of reliability. Do you think that that’s wrong then? Do you think that it can contribute?
Ahmed Hanafy:
Well, all models are wrong, some are useful. If you look at any system operators plans or any utilities plans, there are multiple pathways to meeting reliability and affordability objectives, the question is the trade-offs. So, what we see here is there are pathways where renewables can play an outsized contribution to this transition against 70% or so of the growth that, obviously, can be met by other resources. But if we really care about that affordability, reliability and clean dilemma, then what we’re seeing is that the supply mix will heavily be loaded towards renewables.
Vittoria Bellissimo:
And if I could put a frame on it for you, Jackie, a hard agree the future is going to be a mix, I think the real story is not whether renewables will be used but how fast the supporting infrastructure can scale to make them the lion’s share of every electricity system all over the world. And I think that applies to data centers, I think that applies to all electricity consumers. And Canada’s set up for success because we have, in many jurisdictions, a hydro backbone and that’s going to make it easier for us to develop these clean resources.
Jackie Forrest:
Okay. And one last question before we wrap up, Vittoria, since we do have you here and I know you’ve been really leading the charge in terms of the opposition to Alberta’s changes for renewables. Can you just give us the situation from your perspective, very quick situation? Actually, the study showed growth of solar and wind in Alberta, how likely is that would you consider the current market situation for renewables here?
Vittoria Bellissimo:
Okay, that’s a good heavy ender question, Jackie, but, yeah. So, for Alberta, just to take a couple minutes, I would differentiate between existing projects and new projects. So, one of the things that we’ve said repeatedly here is that changing the rules of the market and policy environment on a go-forward basis is one thing but changing the rules for existing projects who can’t factor new costs into their financial structures is punitive and is counter to the government stated commitment to protecting operating investments in this province. I could tell you more about why I think that is the way it is but, fundamentally, capital can walk and, if an environment doesn’t look safe, then it will and I think that decisions we make here to sacrifice existing assets are a problem.
Now, there are a series of changes that have been made in Alberta that make it difficult to make investments in this environment going forward but I do think that, at the end of the day, we’ll probably see a slow pace of renewable development in the short term and because the investment environment is challenging. But hybrid projects, so pairing solar plus storage in good locations in Alberta may be viable and I think the key change here is the revenue model, it may require a change from a fully contracted environment to more of a merchant play. It would not surprise me to see solar plus storage projects in the right areas move forward in this province.
Peter Tertzakian:
Right, right. Well, a great conversation. We’ve run out of time, we’ve talked about all sorts of things so thank you very much. In this pursuit of how to satisfy what is not expected but what is very likely to be pretty aggressive electrical power growth, base case 2% which doesn’t sound like a lot but it is a lot here in this country. Talked about the sources of where that primary energy is going to come from, the sources of demand, including AI, supply chains, permitting, managing the grid and so forth.
Special thanks to Vittoria Bellissimo and Leonard Kula from CanREA, Canadian Renewable Energy Association and also co-author of the report, Ahmad Kanafi from Dunsky Energy and Climate or is it + Climate Advisors all the way from Montreal. Thank you very much for joining us today and, as I said, this story is not going away. I think we’re really going to see this thing rev up in ’26 and ’27 so, no doubt, we will be talking about this more and hope to have you back maybe for a fourth time, Vittoria.
Vittoria Bellissimo:
I hope that’s a record, yeah.
Peter Tertzakian:
All right, good.
Vittoria Bellissimo:
Thanks for the invite.
Jackie Forrest:
Thank you and thanks to our listeners. If you enjoyed this podcast, please rate us on the app that you listen to and tell someone else about us.
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