Canada’s largest commercial bank says the country will struggle to meet rising electricity demand in the coming years unless governments make tough decisions.
Energy consumption is expected to increase by 50 percent over the next decade, but the country’s ability to meet that demand is limited by its goal of a net-zero grid by 2035, the Royal Bank of Canada said in a report Tuesday. Ontario, the country’s economic engine, could face power shortages as early as 2026, the bank warned.
Major infrastructure upgrades are needed to deliver energy between provinces and to store power to ensure reliable supply, RBC said, and it’s far from clear where that electricity will come from.
Meanwhile, Canada faces global competition for crucial minerals and other materials as countries rush to become decarbonised in the wake of a wider energy crisis triggered by Russia’s invasion of Ukraine.
“Canada not only needs to keep pace — it must accelerate the expansion of its power system or risk falling behind in a renewed Net Zero grid race,” economist Colin Guldimann said in the report.
RBC outlines the pros and cons of different options to meet demand, including trade-offs between cheap versus reliable clean energy. “To stay in the race, Canada must accelerate its major push on electricity: between provinces, for decades and across the country,” the bank said.
The other conclusions and recommendations include:
- Existing natural gas plants will likely need to operate until at least 2035 in provinces with major energy shortages;
- More attention to nature conservation is needed;
- New renewable solar and wind assets need to be built to “fill the gaps”;
- After 2030, provinces must decide whether they are willing to “bet” on expensive carbon capture solutions to build new gas-fired power plants or retire by the mid-2030s.
- Solar and wind power are now the cheapest sources of new electricity, although solutions are needed to provide reliable power in times of darkness or calm weather;
- Some of the best solar and wind sites are in the Prairies, where phasing out coal power is the biggest challenge;
- Hydropower is Canada’s ‘trump card’ and the country should invest in hydropower and nuclear development as a way to add baseload power to the national grid;
- In the longer term, using fewer batteries and more hydro and nuclear power to displace generation could be more affordable, increasing costs by $4 billion, versus $7 billion for a fully renewable storage solution;
- Current subsidies favor wind, solar and carbon capture, but subsidies to encourage investment in hydropower and nuclear power should also be considered;
- Major projects must be coordinated across provinces to save costs.
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