Canada Must Electrify Its Economy Faster or Risk Falling Further and Further Behind

Canada could unlock trillions of dollars in economic growth by rapidly expanding electricity supply and electrifying transportation, buildings and industry, according to University of Victoria energy modeller Madeleine McPherson.

McPherson’s team modelled the economic effects of roughly doubling Canada’s electricity grid for a report prepared with New Economy Canada and the Canadian Chamber of Commerce. The analysis found that the larger grid could add a cumulative $3 trillion to the economy by 2050, create 1.6 million additional jobs and generate about $5 in economic benefits for every $1 invested in the power sector.

“This doubling of the grid really is worth it from an investment perspective and from a growth perspective for Canada,” McPherson told Energi Media.

But building more generation and transmission is only part of the challenge. Canada must also increase electricity demand through technologies such as electric vehicles, heat pumps and electric industrial processes.

Hislop noted that electricity supplies only about 18 per cent of Canada’s energy use and has remained near that level for decades. McPherson agreed Canada is “really far behind both in the numbers and also in terms of our thinking about it.”

That gap could become an economic constraint as global industries adopt more efficient electric technologies. McPherson pointed to rapid cost reductions in EVs, heat pumps, wind and solar, arguing that supply-side and demand-side technologies are increasingly reinforcing each other.

Canada also faces a planning problem. Utilities have traditionally forecast future electricity demand by looking at historical load growth, but McPherson warned that approach can miss emerging demand from EVs, heat pumps, LNG electrification, data centres, new mines and advanced manufacturing.

“If that supply is not there when we need it, it’s a big hit to our economy,” she said. “There’s a lot of economic growth, jobs that we’re leaving on the table if we don’t build the grid out fast enough.”

The modelling also found that grid expansion alone will not produce the projected economic gains. Canada must simultaneously grow its workforce and attract more investment capital. McPherson said doubling electricity supply without increasing available labour and capital produced no increase in total economic output compared with business as usual.

She also argued for stronger federal and provincial direction, including public investment to build infrastructure ahead of demand. Ratepayers should not carry the entire cost, she said, because electricity infrastructure supports broader economic development.

Interprovincial transmission is another priority. Better links between provincial grids would allow hydro-rich provinces to exchange power with jurisdictions that have strong wind and solar resources, improving reliability while lowering system costs.

The larger message, McPherson said, is that electrification should be treated as an economic strategy rather than merely a climate policy. Faster electrification could lower operating costs for households and businesses while positioning Canada to compete in a global economy that is already shifting toward electric technologies. That would turn electricity planning from a utility exercise into a central pillar of national economic strategy.

“Investment in electrification has a huge return on investment,” she said.

End Note: More Energi Media Coverage on Electrification

YouTube interviews

• An Electrified Canadian Economy Is a More Competitive Economy
• Industry, Not Consumers, Driving Electrification of Canada
• Canada’s Power Islands Are Holding Back Electrification
• China Leads, Canada Lags on Electrification

Energi Media website

• Canada’s Low Electrification Rate Threatens Its Future Prosperity
• Electrifying Canada’s Economy Requires Provincial Coordination And Utility Reform
• Canada Needs Affordable Power and Practical Policies to Become an Electrostate
• Canada’s Grid Ambitions Are Accelerating, but Electrification Demand Still Lags: UVic Modeller

Thoughtful Journalism on Substack

• Canada’s Utilities Have A New Job To Learn
• From Molecules to Electrons: Latest IEA Data Is Eye-Popping
• Carney’s Oil Projects Are Moving. His Electrification Plan Has to Catch Up
• Canada’s Clean Energy Transition Has a Worker Problem: Not Enough of Them