The Great Rewiring: Canada’s Electricity Strategy

On May 14, 2026, Prime Minister Mark Carney announced the long-awaited National Electricity Strategy (the Strategy) containing a bold goal to double Canada’s electricity grid capacity by 2050.¹² The Strategy is framed as an all-inclusive response to a rapidly changing global environment, marked by geopolitical instability, shifting trade dynamics, accelerating artificial intelligence (AI) demand, and intensifying climate pressures. In that context, the federal government positions electricity as a central lever for energy security, economic competitiveness, and affordability for Canadians. The Strategy announces proposed material regulatory changes to the Clean Electricity Regulations (CER) while maintaining a net-zero by 2050 goal, introduces a streamlined federal approvals process, and arrives alongside a parallel federal-Alberta Implementation Agreement³. The Implementation Agreement establishes alignment on industrial carbon pricing, commitments to advance the Pathways Project and a new export pipeline under the Canada-Alberta Memorandum of Understanding dated November 27, 2025 (the MOU), and a collaborative approach to the development and expansion of economic activities related to the electricity sector, recognizing the importance of both natural gas generation and lower-carbon forms of power generation.⁴

The Strategy is organized around four pillars—Build, Connect, Train and Make—and launches a formal consultation with provinces, territories, Indigenous Peoples, utilities, unions and other stakeholders . Such consultations are intended to take place over the next four months, with an aim of identifying specific action items required to finalize the Strategy. The Strategy has been widely viewed as a necessary and long‑anticipated step toward coordinating Canada’s fragmented electricity systems and enabling the scale of investment required for electrification. Taken together with the Implementation Agreement, these announcements suggest a shift in federal policy: electricity expansion, carbon pricing, and resource development are increasingly being advanced in tandem rather than in tension. In effect, the federal government is attempting to align affordability, decarbonization and resource development within a consistent investment framework.

For context, the federal government’s jurisdiction over electricity is limited. Under section 92A of the Constitution Act,1867, provinces have exclusive jurisdiction over “development, conservation and management of sites and facilities in the province for the generation and production of electrical energy.”⁵ As such, the Strategy can only go so far in dictating electricity policy. On the other hand, the federal government has considerable carrots (in the form of funding) and sticks (in the form of regulations that pertain to areas such as the environment) to influence and direct electricity policy. Interties, which are central to the Strategy, are within federal jurisdiction and an obvious area for the federal government to promote. The Implementation Agreement states the federal government’s intention to extend the Clean Electricity Investment Tax Credit to support provincial transmission interties.⁶

1. Electricity supply: Shifts in the generation mix

a. Renewables: Driving new capacity growth

The Strategy acknowledges global momentum for renewables. Citing a report from the International Renewable Energy Agency, the Strategy notes that renewable power installed capacity rose to 49% globally and represented 86% of new electricity generation.⁷ This uptake has been enabled by the “dramatic cost reductions for renewable technologies” and increased battery storage build out. As the cheapest and fastest-to-build type of generation, renewables as part of a robust grid will be central to the affordability theme built into the Strategy. 

Renewables are expected to form the bulk of the new supply, supported by the (i) Clean Electricity Income Tax Credit, (ii) the CA $4.5 billion Smart Renewables and Electrification Pathways Program and (iii) forthcoming offshore wind legislation for Nova Scotia and Newfoundland and Labrador.⁸ Hydroelectric generation remains foundational in provinces such as Quebec, British Columbia and Manitoba, while wind and solar are expected to account for a large share of incremental capacity, consistent with broader federal policy and long-term outlooks that see renewables driving the most growth in electricity supply.⁹

The Strategy focuses on building capacity and enabling investment rather than setting renewable-specific targets, which will be up to each province to dictate. The Strategy notes a strategic role for natural gas in complementing intermittent wind and solar. Interties and regional transmission will also be central to enabling more renewable generation to assist in balancing intermittency of these resources. For example, a Wind West use case includes Hydro-Québec using offshore wind to power its pumped hydroelectric storage.¹⁰ The build out of 40 –60 GW of offshore wind will depend on one or more interties between Nova Scotia and various provinces. The Strategy cites a 2020 report that identifies that a CA $1.7 billion investment in interprovincial transmission could attract an additional CA $6.6 billion in private funding for transmission alone, and an additional CA $92.5 billion over ten years for renewable power.¹¹ Adjusted for inflation, these numbers represent significant capital investment in Canadian infrastructure and jobs.

Energy storage, while mentioned, does not get a central role in the Strategy, which is unfortunate given the string of recent successful procurements across Canada, with more to come. Procurements have also seen continued declining prices for battery storage in particular. The Strategy notes several key investments the federal government has made in the area of storage, including CA $518 million for Ontario's Oneida battery storage project and CA $138 million for Atlantic Canada's largest planned storage project.¹²

b. Natural gas and LNG: Continued role and regulatory changes

Natural gas is explicitly recognized as a long-term contributor providing baseload, peaking and flexibility. The federal government noted that affordability and reliability will require “a wide range of energy—including natural gas,” with LNG export facilities being listed as a priority sector.¹³ The Strategy recognizes that gas-fired generation remains particularly important in provinces such as Alberta and Saskatchewan, where it provides dispatchable capacity to meet peak demand and balance intermittent renewables. Its continued inclusion also has implications for upstream production of the natural resources industry and LNG development.¹⁴

While the federal government has limited ability to dictate resource targets of the provinces, Canada and Alberta agreed in the Implementation Agreement to establish a joint Electricity Working Group with a mandate to advance their joint commitment to work toward net-zero greenhouse gas emissions from the electricity sector by 2050. Under the Implementation Agreement, Canada and Alberta further agreed to expand economic activities related to the electricity sector, including an expansion of natural gas power generation and lower-carbon power generation, with a commitment by Alberta to implement any required changes to the Restructured Energy Market to ensure that natural gas generation and investment in renewables and other forms of power generation continue. The CER requirements are viewed by developers and investors as effectively freezing natural gas power development through stringent limits on emissions from fossil generation, effectively requiring carbon capture or restricting plant operations. This Strategy and the Implementation Agreement specifically identify that the federal government intends to adjust the CER to enable the power sector to grow more rapidly across all provinces and territories by providing greater flexibility to offset residual emissions elsewhere.¹⁵ This is particularly significant for Alberta, where the oil and gas industry continues to make significant emissions intensity reductions and the power sector has seen overall emissions decline, whether through the implementation of specific protocols under TIER or otherwise.

c. Nuclear: Long-term support for the grid

The Strategy recognizes that Canada is a tier one nuclear nation¹⁶, although the role nuclear will play is framed less as rapid expansion and more as a stable, long-term complement to renewable generation. Leading the way in the nuclear department through a referral to the Major Projects Office (the MPO) is the Darlington New Nuclear Project.¹⁷ The Strategy also supports small modular reactors, particularly industrial applications and remote regions, and will be welcomed across the country as different industries, specific companies and local governments consider including nuclear on a smaller scale.

d. Energy efficiency and distributed energy

The Strategy identifies energy efficiency and grid modernization as a priority. Specifically, the Strategy notes, “advancing demand-side solutions and grid modernization, working with large energy users to improve energy efficiency and energy management, accelerating energy retrofits and deploying research and development, and planning tools to lower costs and enhance reliability” as a component of the Strategy’s underlying purpose, being economic sovereignty and energy security nation-building exercise.¹⁸ The fact that a federal national strategy includes energy efficiency, distributed energy sources and grid modernization underscores the importance of affordability for consumers. The Strategy refers to Hydro-Québec’s recent finding that its CA $10 billion investment in efficient technologies will save enough energy to avoid a 3x (CA $30 billion) in new supply. Grid modernization will also give consumers control over their electricity usage, with a corresponding ability to reduce costs (and in some cases, make money). Buried in the Strategy is mention of the federal government’s planned new Automotive Strategy, including a National Charging Infrastructure Strategy, which will address grid integration and facilitate demand side management and the use of EV batteries as distributed energy storage. 

2. Electricity integration: Interties to connect Canada’s fragmented grid

The Strategy places considerable weight on expanding interprovincial and regional transmission, with interties framed as a key mechanism for improving reliability, reducing system costs and enabling greater use of non-emitting electricity.

In contrast with other large, developed nations, Canada's grids are fragmented across provinces and territories. The federal position is that billions of dollars are wasted in outages, duplicative infrastructure, and wasted power.¹⁹ In response, the Strategy targets interprovincial transfer capacity increases of 27% by 2035 and 70% by 2050, unifying grids across the nation.²⁰ Notably, the Strategy avoids broad, unnecessary transmission expansion across the country, instead prioritizing the development of targeted interties. In addition to a map outlining proposed interties, specifically identified projects include:

• Nova Scotia – New Brunswick (Wasoqonatl Reliability Intertie): This is one of the most advanced projects. The Canada Infrastructure Bank has committed CA $285 million in equity (including CA $54 million through the Indigenous Equity Initiative) plus CA $24.7 million in Natural Resources Canada (NRCan) pre-development funding.
• Yukon–BC 765-km High-Voltage Line: While not as advanced as other project NRCan has committed CA $40 million for pre-feasibility on a line framed as both a sovereignty asset and an enabler of northern resource development.
• BC–Alberta Interconnection: Doubling capacity is projected to yield CA $1.7 billion in net benefits to 2050. While noting the market differences between Alberta and its neighbours, the Strategy is noticeably absent on details as to how the Alberta Electric System Operator (AESO), market participants and other stakeholders will be impacted by such increased intertie capacity. In Alberta, where the AESO is already currently implementing a restructured energy market and an optimal transmission planning framework, this intertie focus will be implemented in light of the Province's current announced changes²¹.
• Manitoba–Saskatchewan Interconnection: Tripling capacity is projected to yield CA$2.3 billion in net benefits.
• North Coast Transmission Line (NCTL), BC: Referred to the MPO. Enables Ksi Lisims LNG and Golden Triangle critical minerals development; projects up to 3 Mt/yr in emissions reductions.²²

The Strategy further references the interties contemplated in the Atlantic Energy Strategy.²³ That Atlantic Energy Strategy identifies interties between New Brunswick and Nova Scotia, transmission cables between Prince Edward Island and New Brunswick, as well as Wind West, and further development of Churchill Falls and Gull Island by Québec and Newfoundland and Labrador as being possible or currently being studied. Interties supported by increased regional transmission would allow surplus clean power to flow across borders, reduce the curtailment of renewable generation and provide access to firm capacity without requiring duplicative infrastructure in each jurisdiction.

At the same time, intertie development has historically faced persistent challenges, including complex cost-sharing arrangements, regulatory fragmentation and differing provincial priorities. While the federal government signals a more active role (including streamlined approvals and financing support), the pace of progress will ultimately depend on provincial alignment and the resolution of longstanding jurisdictional issues. In this context, interties are best understood as a structural enabler of the broader strategy, with the potential to reduce overall system costs and emissions, but with delivery timelines and outcomes that remain uncertain.

3. Securing the north

Northern electricity is framed as a sovereignty and defense asset, signaling that some projects may qualify for national security characterization. The Strategy includes a targeted focus on improving energy security in Northern and remote regions, where many communities remain reliant on diesel generation. This reliance presents both cost and reliability challenges, as well as a significant source of emissions. There is an emphasis on both renewable and on strengthening local and regional grids to reduce isolation and improve resilience.

4. Affordability: Role of federal agencies

Affordability was prominent to the message presented by Prime Minister Carney. Institutions such as the Canada Infrastructure Bank and the Export Development Canada are expected to support major projects by providing capital, reducing financing costs, and attracting private investment. These tools are intended to help advance large-scale generation and transmission projects that may otherwise face barriers due to their size, complexity or long payback periods. More broadly, the federal role appears focused on enabling investment rather than directly shaping electricity pricing, which remains largely within provincial jurisdiction. This creates an inherent tension: while federal support can lower system-wide costs over time, near-term rate impacts will depend on how provinces structure cost recovery and allocate the expenses associated with new infrastructure.²⁴

5. Permitting reform: Faster project approvals

While still in relatively early stages and with legislation undefined, the newly announced federal permitting framework appears to build on the recent trend toward streamlined coordination seen in agreements with British Columbia, Alberta, Ontario and New Brunswick, and the parallel provincial efforts ²⁵ to align enabling legislation, in a manner that, if implemented both comprehensively and expeditiously, could turbocharge both electricity generation and transmission project development across multiple jurisdictions. Those announced include:

• One-year cap: Federal reviews/decisions must conclude within one year of complete information submission.
• Single federal decision: One integrated permit/approval decision per major project, eliminating multi-department fragmentation.
• Single-regulator model: Reviews for international and interprovincial pipelines, transmission lines and offshore renewable energy projects will be assigned to the Canada Energy Regulator; and nuclear and uranium projects will be reviewed by the Canadian Nuclear Safety Commission. This consolidation reduces the Impact Assessment Act overlay for many energy projects.
• Crown Consultation Hub: The Consultation Hub will establish a single, coordinated federal consultation process for each Indigenous group affected by a major project, replacing multiple overlapping processes and aligning more closely with provincial efforts.
• Major Projects Office (MPO): If referred or designated, the MPO will provide a single point of contact for coordination. It is further anticipated that specific electricity projects may be designated under the Build Canada Act as matters of national interest for further fast-tracking.²⁶ If so designated, it would be game-changing as to the potential impact on the provincial or local transmission grid. As of the date of this publication, no project has been designated as such—the projects currently announced as using the MPO structure are referred projects—utilizing the concierge service of the MPO only. 

6. What the strategy does not address

While the Strategy outlines a broad framework for expanding and decarbonizing the electricity system, several notable issues are either absent or only indirectly addressed.

For example, there is limited discussion of the growing impact of data centers, which are emerging as a significant source of electricity demand. Rapid expansion in this sector, primarily driven by AI large learning models, has the potential to materially affect load forecasts, infrastructure planning, and regional power markets. AI data centers are projected to require 3-5 GW by 2030 and up to 10 GW by 2050.²⁷ The absence of a clear approach to managing this demand leaves an important gap in the broader electrification narrative. In contrast, the recently released Implementation Agreement indicates that data centers are front of mind and Canada and Alberta committed to collaborate to finalize Alberta’s policy framework for AI data centers by July 1, 2026.

Further, the Strategy does not directly address the future of carbon pricing at a national level, despite its relevance to both electricity generation and broader investment decisions. While the Implementation Agreement establishes alignment on carbon pricing in Alberta it is unclear whether any or all of the industrial pricing system characteristics will apply nationally. As the CER serves as the primary regulatory mechanism for the power sector, the interaction between these rules and economy-wide carbon pricing frameworks remains unclear, although with the significant developments this week, we hope more direction will be forthcoming from the federal government.

Taken together, these dynamics do not detract from the core objectives of the Strategy, but they do highlight areas where further policy clarity will be required. As electrification accelerates and large-scale capital decisions are made, the interaction between electricity policy and carbon pricing frameworks will play a defining role in shaping both system outcomes and investment decisions.

Footnotes

1. Prime Minister of Canada, “Prime Minister Carney Announces Forthcoming National Electricity Strategy” (14 May 2026), online: National Electricity Strategy. ↩

2. Canada and Alberta agreed to facilitate a doubling of the grid by 2050 under the Implementation Agreement announced on May 15, 2026: Prime Minster of Canada, "Implementation Agreement for the Canada-Alberta Memorandum of Understanding of November 27, 2025" (15 May 2026), online: Implementation Agreement↩

3. Ibid. ↩

4. Prime Minister of Canada, “Canada-Alberta Memorandum of Understanding” (27 November 2025), online. ↩

5. The Implementation Agreement confirms that the CER will be held in abeyance until the CER Reference is before the Alberta Court of Appeal and any subsequent appeal to the Supreme Court of Canada.↩

6. See Implementation Agreement, supra note 2. ↩

7. Natural Resources Canada, “Powering Canada Strong: A National Strategy for an Electrified Canadian Economy”, online: Powering Canada Strong. ↩

8. Ibid. ↩

9. Ibid. ↩

10. Kristyn Annis et al, “Offshore Wind in the Atlantic - Canada’s Trump Card” (13 April 2026), online. ↩

11. Powering Canada Strong, supra note 7. ↩

12. Powering Canada Strong, supra note 7.↩

13. See National Electricity Strategy, supra note 1. ↩

14. Natural Resources Canada, “Enhanced Investment Co-operation Advances Efforts Around LNG Canada’s Proposed Phase 2 Expansion” (14 May 2026), online.↩

15. See National Electricity Strategy, supra note 1 ↩

16. Natural Resources Canada, “Canada’s National Statement on Nuclear Energy – The Honourable Jonathan Wilkinson, Minister of Natural Resources, the International Atomic Energy Agency” (October 2022), online. ↩

17. Canadian Nuclear Safety Commission, “Darlington New Nuclear Project”, online.↩

18. Ibid. ↩

19. Ibid. ↩

20. Ibid. ↩

21. See Implementation Agreement, supra s.2.2↩

22. Ibid. ↩

23. The Atlantic Energy Strategy is a, collaborative, region-wide initiative focused on rapid decarbonization, large-scale electrification, and building a, sustainable, and, secure energy system by 2030-2050. Key pillars include advancing offshore wind, expanding nuclear (SMRs), enhancing regional grid interties, and developing hydroelectricity. NRCan and Nova Scotia released a final report on January 11, 2025 identifying their findings and the strategy, online(pdf).↩

24. Powering Canada Strong, supra note 7.↩

25. Legislative Assembly of Alberta, Bill 30, Expedited 120-Day Approvals Act, 2nd Sess, 31st Leg, Alberta, 2026 at s 5, online (pdf).↩

26. Powering Canada Strong, supra note 7. ↩

27. Ibid.↩