Why Canada’s Power Systems Remain Divided and How to Unite Them (C.D. Howe)

Canada’s heavy reliance on energy trade with the United States and its limited interprovincial connections come at a growing cost to Canadians. A new report from the C.D. Howe Institute argues that now is the time to integrate the country’s electrical grids.

In “Powering the Federation: A Blueprint for National Electricity Integration in Canada,” Madeleine McPherson outlines how Canada can establish governance structures and processes to create a more integrated electricity grid. With climate and trade uncertainties on the horizon, the report calls for timely proactive leadership to strengthen Canada’s internal electricity links.

“Wind is one of Canada’s cheapest energy sources,” says McPherson, associate professor at the University of Victoria. “Not only would integration allow provinces to avoid costly overbuilding by prioritizing efficient wind locations, hydro power could also perfectly complement it by providing steady output when the wind isn’t blowing.”

A more integrated system would help provinces reduce system costs for Canadians and open opportunities to sell surplus power into wider markets. It could also attract private investment, spur job creation, and boost economic growth. Some models suggest that expanding the BC-Alberta interconnection by twice its current capacity would yield $1.7 billion in net benefits over the investment period to 2050. Another model found that a $1.7 billion federal investment in interprovincial transmission could unlock an additional $6.6 billion in private investment for transmission and $92.5 billion over 10 years for renewable power plants. However, given the provinces' past resistance to federal intervention and various governance gaps, the path to integration is challenging and unclear.

“Integrating Canada’s provincial grid is no easy feat. This is why our current power system prioritizes trade with the US than with each other,” warns McPherson. “This will require bold, ambitious provincial actions, but Canada has a history of tackling ambitious national projects when it matters most.”

The blueprint emphasizes that national planning must be bottom-up, not top-down – rooted in provincial priorities and mutually beneficial arrangements. It also lays out a pragmatic, four-phased roadmap to the future of integration: building trust and shared goals between provinces; piloting coordinated planning; transitioning to sustained governance structures; and, finally, achieving long-term systems focused on innovation and inclusion.

“Throughout history, Canadians have shown what’s possible through cooperation and coordination,” concludes McPherson. “We have the ability, and these unprecedented times demand a grid that is more resilient and affordable than ever.”

Read the Full Report