Canada has a vision to create a fully electrified, net-zero economy by 2050. This three-part blog series "Electric Ambition" explores how we can double electrification, supply and energy efficiency/productivity.
The federal government’s Powering Canada Strong strategy sets an objective of doubling electricity supply by 2050 to support economic growth, affordability, energy security and a more electrified economy.
However, this only works as a system. Building twice as much electricity does not automatically mean Canadians will make use of the extra electricity. Canada must also double electrification.
This means significantly increasing the amount of Canada’s energy use that can be powered by electricity instead of fossil fuels. That shift is what turns a larger electricity system into a more electrified economy.
Electrifying our economy and our lives, means electric vehicles can replace gasoline-powered cars and trucks. Heat pumps can replace oil and gas-powered furnaces and air conditioners. Commercial fleets can plug in instead of filling up. Industrial processes can run on electricity instead of fossil fuel reliance.
The local grid is a key piece
Making those changes at scale requires more than building new generation hundreds of kilometres away. The electricity system closest to customers also needs to be ready for them.
For most of the last century, electricity systems were built around a relatively simple, one-way model: generate electricity at large power plants, transmit it over long distances and distribute it to customers.
Electrification changes that equation.
Utilities increasingly need to accommodate new loads such as EV charging, heat pumps and electrified industrial processes, while also integrating power sources located at customers’ homes and businesses, including batteries, rooftop solar and flexible equipment (that is, equipment that can operate a different times or draw on different sources for their energy).
The local distribution grid is therefore becoming one of the most important pieces of Canada’s electrification opportunity.
Some communities will need new substations, feeders and transformers. Others may be able to accommodate significant new demand by using existing infrastructure differently.
A fleet of electric vehicles, for example, does not necessarily need to charge when electricity demand is already at its highest. Smart charging can shift that demand to hours when capacity is available. Buildings can temporarily adjust heating or cooling. Batteries can charge when demand is low and provide power when the system is constrained.
Used well, these resources can turn electrification from simply more load into more flexible load.
Get the most from what we have; build where we need to
Canada will undoubtedly need significant new generation, transmission and distribution infrastructure. Building enough infrastructure to serve every new electricity load at its highest possible peak, however, is the most inefficient and expensive way to electrify.
Customers need affordable options. To provide that, utilities need better visibility into when and where demand is growing, tools that give them greater coordination and control over the distribution grid, and flexibility programs that allow customers to shift or reduce demand when doing so helps the system.
Regulation needs to keep pace
To get more out of our existing electricity infrastructure, Canada needs a rulebook that puts demand-side resources on equal footing with new supply.
Put simply, today’s utility regulatory frameworks allow them to invest in poles, wires and substations, but solutions that can defer or avoid some of those investments at scale are also needed. Customers and businesses that provide useful services to the grid need clear ways to participate and be compensated for the value they provide.
Unlocking demand-side resources (that is, resources on the utility customers’ sites) would deliver affordability, resilience and speed. Utilities and regulators need to see and value what customers can contribute to the electricity system through energy efficiency, demand response, rooftop solar and batteries.
The rulebook should enable utilities to invest in demand-side programs and procure customer-side resources, with appropriate cost recovery and incentives, while ensuring customers are fairly compensated for the grid services they provide. Where they can meet the same system need, these resources can avoid, defer, or reduce investments in generation, transmission and distribution, lowering costs for utilities and customers while making electrification more reliable and easier to scale.
Electrifying buildings and vehicles
Buildings are where electrification happens: heat pumps, electric vehicle charging, thermal storage, rooftop solar and batteries are in, or on, buildings. That makes buildings essential to creating a reliable, affordable, low-carbon energy system.
Buildings also currently comprise of 30% of energy use. Retrofitting existing buildings with more energy efficient systems (ex. Heat pumps, lighting controls) would reduce waste by 15 to 30%.
When the benefits to the electricity system are valued, building retrofits become an investment opportunity, not a subsidy-driven activity. Beyond consuming electricity, homes and buildings can actively help manage when electricity is needed, reduce pressure on the grid and support a more resilient energy system.
Vehicles, meanwhile, are the second highest source of emissions, and electrifying them would be the fastest route to net-zero. To make that a reality, we need affordable models in dealerships and access to reliable charging.
Measuring success: a bigger grid used more intelligently
The Canada Energy Regulator projects that end-use electricity demand could grow by 84% between 2023 and 2050 in its Canada Net-zero Scenario. Success will be measured by whether Canada can accommodate that growth while keeping the electricity system affordable, reliable and ready for what comes next. We can celebrate progress when we have a bigger grid, used more intelligently:
- Utility regulation must reward thinking about electrification and grid planning together. Each provincial utility system is starting from different places. Two leading actions, for example, include how the Government of Alberta enables demand-side management in the utility system by providing the regulatory framework for implementation and how the Government of Ontario moves beyond considering distributed energy resources as non-wires solutions, to requiring their implementation where they are cost-effective.
- As Canada develops new generation and transmission, local utilities need the infrastructure, tools and regulatory frameworks to connect millions of new electric vehicles, buildings and businesses without treating every new kilowatt of demand in the same way.
- Canada has a clear pathway to have 75% of passenger vehicles be electric vehicles by 2035 and policies to accelerate the electrification of trucks and buses.
- The national building codes for residential and commercial buildings are fully adopted while energy efficient equipment standards advance.
Where to from here?
Doubling electrification in transportation, buildings and industry is a massive undertaking, with many questions remaining, including:
- How can we consistently value, and monetize, the benefits of electrification and energy efficiency in the utility system?
- How can federal, provincial and local governments work together towards common goals?
- How can the auto sector—from manufacturing and supply chains, to vehicle sales and charging infrastructure—effectively coordinate the shift to electrified transportation?
- Buildings are the hub for electrification, hosting local energy generation and charging infrastructure, energy management and efficiency. How can utility regulation and programs support buildings as an energy system component?
Policies that could support the doubling of electrification:
- Modernize utility planning and regulation to require consideration of customer-side solutions alongside traditional grid investments.
- Enable demand flexibility and distributed energy resources to participate in utility programs, planning and operations.
- Pay customers and aggregators for grid value when flexible demand, storage and other resources help avoid or defer system costs.
- Improve distribution-grid data and visibility so utilities can identify where new demand is emerging and where flexibility can provide value.
- Accelerate investment in local grid capacity where substations, feeders, transformers and other upgrades are needed to support electrification.
- Supply side policies that can replace the decreased ambition of the light duty GHG vehicle emissions standard.
- Purchase incentives and infrastructure programs to offset the costs of electrification for fleets.
