RBC fears an energy shortage in Canada — and as early as 2026 in Ontario
Canada’s largest commercial bank says the country will struggle to meet growing electricity demand in the coming years unless governments make tough decisions.
Energy consumption is expected to increase by 50% over the next decade, but the country’s ability to meet this demand is limited by its commitment to a net zero grid by 2035, the Royal Bank of Canada said in a report on Tuesday. Ontario, the country’s economic engine, could face power shortages as early as 2026, the bank warned.
Major infrastructure upgrades are needed to deliver power between provinces and to store power to ensure reliable supply, RBC said, and it’s far from clear where that power will come from. .
Meanwhile, Canada faces global competition for critical minerals and other materials as countries race to decarbonize in the wake of a broader energy crisis triggered by the US invasion of Ukraine. Russia.
“Canada shouldn’t just keep pace – it must accelerate its electricity system expansion or risk falling behind in another Net Zero grid race,” economist Colin Guldimann said in the report.
RBC outlines the pros and cons of various options for meeting demand, including the trade-offs between cheap clean power and reliable clean power. “To stay in the game, Canada must accelerate its big push on electricity: between provinces, across decades and across the country,” the bank said.
Its other findings and recommendations include the following:
In the shorter term:
- Existing natural gas plants will likely need to continue operating in provinces facing significant energy shortages until at least 2035;
- More emphasis on conservation is needed;
- New renewable solar and wind assets should be built to “fill in the gaps”;
- After 2030, provinces will have to decide whether they are willing to “bet” on expensive carbon capture solutions to build new gasworks or decommission gasworks by the mid-2030s.
- Solar and wind power are now the cheapest sources of new electricity, although solutions are needed to provide reliable power in times of darkness or calm weather;
- Some of the best solar and wind sites are in the Prairies, where phasing out coal power is the most difficult;
- Hydroelectricity is Canada’s “trump card” and the country should invest in hydroelectric and nuclear development as a means of adding baseload electricity to the national grid;
- In the longer term, using fewer batteries and more hydro and nuclear power to displace generation may be more affordable, adding $4 billion to costs versus $7 billion for a fully renewable storage solution;
- Current subsidies favor wind, solar and carbon capture, but subsidies to encourage investments in hydro and nuclear should also be considered;
- Major projects should be coordinated between provinces to reduce costs.
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