Building Out The Electricity Grid: Canada’s New National Electricity Strategy

On May 14, 2026, the Canadian government announced the launch of a new National Electricity Strategy.^[1] The strategy aims to double the capacity of Canada’s electricity grid by 2050 and supply clean, reliable, affordable power across the country for decades to come. Development of the strategy will involve consultations over the next few months with the provinces, territories, Indigenous Peoples, utility companies, and unions.

The federal government has identified two key priorities behind the National Electricity Strategy: building a more sustainable Canada and building a more affordable Canada. It expects the strategy to deliver up to $15 billion in total energy savings by 2050 and lower total energy costs for 7 in 10 Canadian households. The government noted that realizing these savings will likely require amendments to the Clean Electricity Regulations which were enacted under the Canadian Environmental Protection Act, as the government intends to provide greater flexibility with respect to the use of carbon offsets and to offset residual emissions elsewhere.

According to the federal government, implementation of this strategy will require significant investment in clean energy generation, the interconnection of fragmented electricity grids, the training and retention of skilled workers, and the strengthening of domestic manufacturing capacity to ensure that a greater share of grid enabling technologies is produced in Canada.

The strategy has identified four key pillars:

1. build the infrastructure needed to double Canada’s electricity generation;
2. connect Canada’s fragmented grids East-West-North through new and expanded transmission lines;
3. train, attract, and retain the talent needed to build the grid of the future; and
4. grow Canada’s domestic manufacturing capacity for the components and technologies to build the grid.

Support for energy-saving retrofits is also projected for up to one million households through financing, grants, and complementary measures. Part of this includes supporting Canadians in transitioning from propane, oil, and electric baseboard heating to electric heat pumps. At the same time, the plan reflects a broader willingness to embrace natural gas as part of the energy mix, recognizing its role in supporting electricity systems as demand grows and grid complexity increases. Natural gas can play a critical role in providing baseload power and the operational flexibility needed to complement intermittent renewable sources such as wind and solar.^[2]

The Major Projects Office has already identified several nationally significant projects aimed at increasing Canada’s grid capacity, including hydroelectric projects such as the Taltson Hydro Expansion in the Northwest Territories and the Iqaluit Nukkiksautiit Hydro Project in Nunavut, nuclear generation projects such as Darlington New Nuclear in Ontario, clean electricity transmission lines like the North Coast Transmission Line in British Columbia, and major wind developments like Wind West in Nova Scotia.^[3]

A further priority of the government is enhancing the attractiveness of clean energy investment opportunities in Canada, including through the further development of existing clean economy investment tax credits.^[4] The credits are intended to incentivize capital investment across a variety of sectors, including clean electricity, clean technology, hydrogen production, carbon capture, and clean technology manufacturing.^[5]

The Legal Impacts

Changes to clean electricity rules means a changing regulatory environment for energy developers, sponsors and lenders. Stakeholders in the energy sector will want to closely monitor these changes. Of particular interest to stakeholders will be how the federal government’s negotiations with the provinces unfold, given that regulation of electricity is largely an area of provincial constitutional responsibility. While the federal government can unilaterally implement some aspects of the strategy - such as offering investment tax credits - others will require some level of provincial cooperation.

We take note of the federal government’s focus on East-West-North transmission line projects, as we expect the federal government will have a greater role in supporting and catalyzing such interprovincial transmission projects than it would for purely intraprovincial projects. In recent months we have seen some private and public sector efforts to get such interprovincial transmission projects off the ground and suspect that power developers will be particularly interested in whether the new National Electricity Strategy will help bring these projects forward.

More broadly, achieving the expanded capacity goals of the new National Electricity Strategy will require substantial buildout of generation, transmission, distribution and storage assets. This could also lead to changes in procurement structures, project delivery models, cost-allocation mechanisms and financing arrangements. The details of how the buildout will be funded and the scope of the public sector’s involvement in the process remain to be determined. McCarthy Tétrault will continue to monitor this unfolding situation and how it may impact clients in power generation and transmission.

Key Takeaways

1. The Canadian government is prioritizing sustainability, affordability, and efficiency through the National Electricity Strategy.
2. The goals of the new National Electricity Strategy include expanding Canada’s fragmented electricity grids to help reduce inefficiencies, expand job opportunities, and give Canadians more control over their energy.
3. The federal government continues to prioritize reducing carbon emissions while utilizing multiple forms of energy, including a renewed interest in natural gas.

If you require assistance on projects or have any questions on the above, please contact Seán O’Neill, Brad Nicpon, Kerri Lui, Dave Nikolejsin, or Rita Iafrate.

^[1] Prime Minister of Canada, Prime Minister Carney announces forthcoming National Electricity Strategy

^[2] Government of Canada, Powering Canada Strong: A National Strategy for an Electrified Canadian Economy

^[3] Government of Canada, projects referred to the MPO

^[4] Budget 2025, Chapter 1 Building a stronger Canadian economy

^[5] Government of Canada, Clean Economy Investment Tax Credits (ITCs)