Canada Needs Affordable Power and Practical Policies to Become an Electrostate

The prosperous economies of the future will be fuelled by electricity. EVs will replace gasoline cars. Heat pumps will heat buildings, not gas furnaces. Countries like Canada will double or triple power generation, manufacture the new electric technologies, and deploy them at scale.

That’s the recipe to become an electrostate. The process, however, doesn’t happen all by itself.

Canada needs affordable electricity and policies that help households and industry replace fossil fuels if it wants electrification to strengthen its economy, energy policy expert Jan Rosenow told Energi Media.

Building more generation is only part of that task. Governments also need to identify the technologies they want adopted and the policies that will make adoption happen.

“It needs real government support. Otherwise it’s rather unlikely,” Rosenow said in an interview with Markham Hislop.

His argument challenges the assumption that announcing an electricity target will deliver an electrified economy. The economic benefits also depend on the price consumers pay for power.

Affordable Electricity Comes First

Rosenow defines an electrostate through four dimensions: electricity’s share of energy consumption, domestic clean power production, deliberate electrification policy, and manufacturing the technologies required.

A country can advance in one area while lagging in another. He treats the term as a direction of travel, rather than a status countries either achieve or miss.

For Canada, national averages obscure important provincial differences in electricity costs and generation.

“I think it’s quite important to differentiate,” he said.

Low electricity prices can help industry compete and leave households spending less on energy. High prices can undermine those benefits.

“If we don’t do that, then there could even be an economic cost to electrification.”

Canada’s Low Electrification Rate

Canada has a long way to go.

Electricity supplied just 18 per cent of the country’s end-use energy consumption in 2020, according to the Canada Energy Regulator. Natural gas and refined petroleum products supplied a combined 75 per cent.

The provincial differences were stark: electricity accounted for seven per cent of Alberta’s energy use, compared with 41 per cent in Quebec.¹ These figures measure the energy consumed across the economy, rather than the cleanliness of the power grid.

That distinction matters.

Building more generation can supply new mines, factories and data centres without replacing the oil and gas already used in buildings, transport and industry. Canada needs to do both: expand electricity supply and help existing energy users switch.

Rosenow’s argument is that affordable power and specific policies make that switch possible. A larger grid creates the capacity to electrify. Replacing combustion technologies puts that capacity to work.

Targets Need Policies

Rosenow said electrification is increasingly being treated as a response to energy price volatility and as an industrial strategy.

But governments must follow targets with measures that help consumers and businesses adopt electric vehicles, heat pumps and industrial equipment.

He pointed to Europe’s industrial electrification initiatives as an example of governments moving beyond broad ambitions to support specific investments.

The test is whether those policies deliver their intended outcomes. Governments need to identify how each technology and policy contributes to achieving the target.

Established companies often resist technological change because they want to keep earning money from existing assets, he said. That resistance is familiar across industries and countries.

Where Canada Could Compete

Manufacturing presents a different challenge. Rosenow doubts that countries can readily undercut China’s production costs for solar panels, battery cells or electric vehicles.

“It’s probably more wise to identify parts of the future energy system where technologies are dearly needed,” he said.

He pointed to industrial heat pumps and thermal storage equipment as areas where companies outside China still have opportunities. Software also deserves attention.

Developing those industries requires stable policy that gives investors confidence. Repeated changes in direction make it harder to attract investment and support innovation.

Rosenow also highlighted the spread of solar, batteries and electric vehicles in emerging economies. Improving economics and available supply chains allow countries to adopt technologies quickly.

For Canada and Europe, prolonged indecision carries its own competitive risk. Other countries continue building their capabilities while governments debate their direction.

“Others will not stand still.”

Canada’s challenge is to turn electricity resources into affordable energy services and viable industries. A larger grid can support that transition. Policies determine whether households and businesses make the switch.

This is interview is based on Jan Rosenow’s essay, What is an electrostate? on his Bright Spot Substack.

Endnotes

1. Canada Energy Regulator, Provincial and Territorial Energy Profiles, end-use energy demand by fuel in 2020: Canada, Alberta and Quebec.
2. Further reading: Markham Hislop, Canada’s Low Electrification Rate Threatens Its Future Prosperity, Energi Media. International comparisons, charts and links to the underlying IEA, OECD and CER sources.
3. Further reading: Canada’s grid ambitions are accelerating, but electrification demand still lags: UVic modeller, Energi Media. Madeleine McPherson explains the gap between expanding electricity supply and electrifying transportation, buildings and industry.
4. Further reading: Electrifying Canada’s Economy Requires Provincial Coordination And Utility Reform, Energi Media. Moz Salim and Madeleine McPherson discuss provincial coordination, utility reform and the cost of switching to electric technologies.