Canada's Clean Energy Investment Slows, But Future Surge Expected Amidst New Power Deals

Canada's clean energy investment saw a slowdown in 2024, primarily due to a decrease in renewable energy plant construction. However, experts suggest that upcoming provincial power deals and a global push for energy security could reignite momentum, potentially leading to a significant surge in green energy development across the nation.

Clean Energy Investment Trends

International Energy Agency (IEA) figures indicate that capital spending on power generation in Canada averaged US$7.3 billion annually between 2021-2025. Of this, US$5.3 billion was directed towards renewables, with the remainder split between fossil fuels and nuclear projects. This represents an increase compared to the 2016-2021 period, when renewables attracted US$3.3 billion in capital expenditure.

Potential for a Renewables 'Gold Rush'

Despite a disappointing dip in solar and wind farm construction last year, the overall share of renewables in Canada's energy mix has grown significantly, rising from 27.6 percent in 2016-2020 to 36.6 percent in 2021-2025. With most provinces planning new power procurement rounds this year, conditions are ripe for a substantial increase in renewable energy projects.

Key Takeaways:

• Renewables are the most cost-effective new energy source, with prices continuing to fall.

• Canada possesses abundant wind and solar resources, complemented by a strong hydropower network.

• Underinvestment in transmission infrastructure is a key challenge hindering the integration of new power sources.

• Energy security is emerging as a primary driver for national energy policy.

Challenges and Opportunities

Canada faces unique challenges, including its vast geography and 13 distinct energy grids. A significant hurdle identified is the underinvestment in transmission infrastructure, which is crucial for connecting new power generation to consumers. Furthermore, a nationwide slowdown in solar and wind installations was partly attributed to Alberta's 2022 moratorium on renewables projects.

Nationally, solar power generation saw a decrease in new capacity switched on in 2024, and wind power installations also experienced a decline compared to the previous year. The average yearly investment in Canada's electricity network saw a slight dip, mirroring a global trend where grid spending lags behind investments in generation and electrification.

Future Outlook and Global Context

Experts emphasize the need for investment in interprovincial power grids and interties to enhance Canada's ability to build and distribute clean energy effectively. Globally, China leads energy investment, with a significant portion allocated to renewables. The IEA report highlights that global investment flows are not yet sufficient to meet renewable energy and efficiency goals set at COP28, underscoring the need for doubled annual investment in renewable power to achieve ambitious capacity targets by 2030.

Sources

• Canada’s clean energy investment slows but momentum could surge with new power deals, Canada's National Observer.