Canada’s largest commercial bank says the country will struggle to meet rising electricity demand in the coming years unless governments make tough decisions.
Energy consumption is expected to rise 50 percent in the next decade, but the country’s ability to meet that demand is constrained by its commitment to a net-zero grid by 2035, the Royal Bank of Canada said in a report on Tuesday. The bank has warned that Ontario, the country’s economic engine, could face an energy shortage by 2026.
RBC said major upgrades to inter-provincial power delivery infrastructure and energy storage are needed to ensure reliable supplies, and it’s not clear where that electricity will come from.
Meanwhile, Canada faces global competition for critical minerals and other materials as nations rush to decarbonize in the wake of a broader energy crisis triggered by Russia’s invasion of Ukraine.
“Canada should not only continue to do so – it needs to accelerate expansion of its electricity system or risk falling behind in the renewable net-zero race,” economist Colin Goldman said in the report.
RBC outlines the advantages and disadvantages of various options to meet demand, including trade-offs between cheap clean energy versus clean, reliable energy. “To stay in the race, Canada needs to accelerate its big electrification push: between provinces, across decades, and across the country,” the bank said.
Its other conclusions and recommendations include:
- Existing natural gas plants will likely need to continue operating in provinces facing significant power shortages until at least 2035;
- More emphasis is needed on conservation;
- New solar and wind energy assets must be built to “fill the gaps”;
- After 2030, counties must decide whether they are willing to “gamble” on expensive carbon capture solutions to build new gas stations or retired gas stations 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 energy sites are in the wilds, where phasing out coal power is more difficult;
- Hydropower is Canada’s “trump card” and the country should invest in hydro and nuclear development as a way to add base load power to the national grid;
- In the long run, it may be more expensive to use fewer batteries and more hydro and nuclear to replace generation, adding $4 billion to costs versus $7 billion for a fully renewable energy storage solution;
- Existing subsidies favor wind power, solar power, and carbon sequestration, but subsidies should also be considered to encourage investment in hydro and nuclear power;
- Major projects must be coordinated across provinces to reduce costs.
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