Skip to content
Image credit: Petri Oeschger

Four insights about the future of electricity in Canada

The Canada Energy Regulator’s latest report shows that a net zero economy depends on bigger, cleaner, smarter electricity systems.

Last month, the Canada Energy Regulator (CER) released its annual outlook exploring possible futures for the country’s energy system. The 2023 edition of the Energy Futures series marks the first time the CER has modelled economy-wide net zero scenarios for Canada, a move experts have long been calling for.

The Energy Futures report is used by investors, policy-makers, industry, and other regulators to guide decision-making. By putting two net-zero scenarios (Canada Net-zero and Global Net-zero) at the centre of its analysis, the CER has established a new, credible foundation to plan for Canada’s net zero future.

The report has garnered a lot of attention, specifically its findings about the declining demand for oil and gas in a low-carbon world, due primarily to global shifts beyond Canada’s control. However, less attention has been paid to what’s projected to replace fossil fuels in Canada’s net zero energy system: clean electricity.

In this Insight, we break down four takeaways from the Energy Futures report about the future of electricity on the path to 2050.

1. Reaching Canada’s net zero target requires a big switch from fossil fuels to clean electricity

The CER makes clear that electricity is the cornerstone of a net zero energy system. At 440 Megatonnes, we agree: electrification is core to every conceivable pathway to Canada’s emissions targets.

In its report, the CER projects that electricity use will almost double between 2021 and 2050, due to the widespread adoption of electric vehicles, heat pumps, and electrified industrial processes. This finding aligns closely with the findings from other net zero studies, which show electricity demand growing by 1.6 to 2.1 times between 2021 and 2050.

2. To meet growing demand, electricity systems must get bigger, cleaner, and smarter

To supply Canada’s energy needs in a net zero future, electricity systems in all provinces and territories will have to be bigger, cleaner, and smarter than they are today.

Making electricity systems bigger means increasing generation capacity to meet the rising demand from widespread electrification. In the CER’s net zero scenarios, electricity generation more than doubles between 2021 and 2050.

The Energy Futures report also underscores that it’s possible to grow electricity systems even as they get cleaner and produce fewer emissions. The report shows the electricity sector achieving, and actually exceeding, net zero emissions by 2035 in both the Canada and global net zero scenarios. Looking out to 2050, the report finds that making electricity systems cleaner requires phasing-out unabated fossil fuel generation—to less than one per cent of generation in 2050—while expanding non-emitting sources of generation.

Finally, the report shows how electricity systems must also become smarter, or more flexible, to support the growing share of variable electricity supply from wind and solar. The Energy Futures report identifies several solutions that make systems more flexible, including grid-scale storage, expanded grid connections between provinces, demand-side flexibility, and emerging sources of non-emitting dispatchable power like small modular reactors and natural gas equipped with carbon capture, utilization, and storage. 

3. Net zero electricity by 2035 is achievable and there are a range of pathways to get there

The CER’s energy outlook joins a series of studies—highlighted in the Institute’s Big Switch report—showing that it is possible to achieve the federal government’s target of net zero emissions in the electricity sector by 2035. Each of these studies relies on a different mix of generation technologies, demonstrating that there are multiple viable pathways to a net zero electricity system.

Figure 1 compares the generation mix by source across four studies that examine how Canada can achieve net zero in the electricity system by about 2035, including the global net zero scenario from the CER’s latest Energy Futures report.

Figure 1: Net-zero electricity generation in Canada by technology, modelled across four studies

Each one of these studies shows a net zero electricity system relying on safe bets: existing technologies that can scale easily. Specifically, the two largest sources of generation in every study are the same: hydropower (most of it pre-existing), and wind (most of it newly installed). The CER’s net zero scenarios show a staggering nine-fold increase in wind power by 2050, thanks to its affordability and its adaptability to provincial and territorial needs. Another affordable option, solar power, is expected to grow steadily both at grid-scale and on rooftops across the country.

The CER’s study also explores the potential role of technologies whose development is less certain but could bring big payoffs—what we call wild cards. The 2023 Energy Futures report finds that nuclear power could play a large role in Canada’s generation mix, if small modular reactor technology matures quickly enough and can be scaled up at a reasonable cost. Likewise, the report theorizes that under certain conditions, biomass power generation coupled with carbon capture and storage, known as BECCS, could capture enough carbon to offset emissions in other parts of the economy.

4. A cleaner energy system is a leaner energy system

The Energy Futures report illustrates one of the more striking advantages of a decarbonized energy system: it’s more efficient. Although electricity demand almost doubles in the CER’s net zero scenarios, total energy use falls (Figure 2). In the global net zero scenario, total energy demand falls by 26 per cent by 2050 from its peak in 2024 while electricity use climbs steadily. This finding holds across the economy. In every sector, electricity becomes the largest end-use energy source while total energy use declines.

Figure 2: Total energy and electricity demand on the path to net zero

A cleaner energy system is a leaner energy system for two main reasons. First, electrified technologies like electric vehicles and heat pumps are much more efficient than their fossil fuel counterparts. Second, other efficiency improvements like better insulation and new machinery will drive down energy demand even further. This lower overall energy use is a key reason why households are expected to spend less money on energy on the path to 2050.

The future is electric

The latest edition of the CER’s Energy Futures series tops off an overwhelming body of evidence that all credible pathways to net zero emissions are founded on bigger, cleaner, smarter electricity systems. The report shows how these systems could work and illustrates their central advantages of reduced emissions and greater energy efficiency, all of which means lower energy costs for Canadians.

The CER has joined a growing chorus of independent voices concluding that Canada’s future is electric. Now is the time to start building it.

Anna Kanduth is a Research Lead with the Canadian Climate Institute and manages the 440 Megatonnes initiative. Ross Linden-Fraser is a Senior Research Associate with the Canadian Climate Institute.