What Canada’s new electricity strategy means for energy efficiency

Today, the federal government released its highly anticipated National Electricity Strategy, outlining Prime Minister Mark Carney’s stated intention to “double” Canada’s electricity grid. 

In the months leading up to the strategy, Efficiency Canada cautioned that expanding the electricity system with high fixed-cost infrastructure was a recipe for higher costs and more pollution, arguing that the government should prioritize energy efficiency and better use of the grid we already paid for. 

The strategy includes important recognition that Canada cannot build an affordable electricity system through supply alone. It mentions demand-side solutions, hints at upcoming energy efficiency policies to “further assist” with affordability and states an intention to “take additional action on energy-saving retrofits.”

Here are some highlights from the electricity strategy and analysis of how it could integrate energy efficiency measures.

Demand-side solutions

The strategy finds a place for demand-side solutions. It states that “because the cheapest electricity is the power never used, energy efficiency and grid modernisation are some of the most effective ways to address affordability. They also give consumers more choice and reduce the need for costly new infrastructure.”

A section titled “Managing demand and modernizing the system” includes a commitment “to explore”:

• Incentivizing accelerated retrofits of large buildings
• Encouraging large industrial end-users to adopt active energy management practices
• Strengthening building code science and the capacity of industry, provinces, territories, and municipalities to adopt and enforce codes consistently

These mirror some of Efficiency Canada’s budget recommendations to renew and enhance the Deep Retrofit Accelerator Initiative and Greener Neighbourhoods Pilot Program, the Green Industrial Facilities and Manufacturing Program, as well as potential renewal of the Codes Acceleration Fund or building code adoption and compliance support.

The strategy further notes “supports for Integrated Resource Planning to address silos for infrastructure planning across gas, electric, and thermal energy networks” and the use of electric vehicle batteries as distributed energy storage as a component of the National Charging Infrastructure Strategy. Relevant to these topics are Efficiency Canada reports on breaking fuel silos in demand side management, aligning Integrated Resource Planning with net-zero emissions, and ongoing work on demand flexibility.

Improving affordability and productivity

Energy efficiency and demand side management are included, yet not fully integrated into the strategy. This threatens to miss an opportunity to build more affordable and customer-empowering energy systems.

Doubling Canada’s electricity supply by 2050 and accelerating electrification are the “two challenges” that frame the strategy. A third challenge could be doubling the rate of energy productivity. Canada has already committed to this goal internationally, and Efficiency Canada is calling for this as a guiding goal for energy efficiency as a nation-building project.

The discussion on affordability includes a mention of energy poverty.  Eliminating energy poverty would be a stronger goal. The “energy wallet” analysis the strategy quotes notes that the average customer would benefit from electrification by 2050. However, this same analysis showed these benefits are less likely to flow to low-income households that do not own an electric vehicle. This is why the advisory council that commissioned this work called for a much larger budget for the Canada Greener Homes Affordability Program. 

Retrofit supports

The strategy hints at upcoming energy efficiency policies to “further assist” with affordability, stating an intention to “take additional action on energy-saving retrofits for up to one million households across Canada through a combination of financing, grants, and complementary measures.”

It provides an example of enabling households to electrify home heating and cooling by transitioning from propane, oil, and electric baseboard to heat pumps. These fuel and technology switches can have a significant impact on improving affordability and reducing energy poverty. However, a sole focus on heating system switches could fail to deliver the upgrades households need for those systems to function well and to mitigate peak demand costs on the grid. This is why a complementary focus on other demand-side strategies, like building envelope improvements and demand flexibility, is needed, especially for low-income households.

The language of energy-saving retrofits for “up to one million households” is concerning because it indicates a cap. This represents only six per cent of total households (depending on how apartment units are counted). One million homes should therefore act as a launching pad and not a cap. The start-stop pattern of past programs like the Canada Greener Homes Loan and Grant added volatility to the retrofit industry and meant customers chased incentives instead of planning upgrades to achieve the most energy savings at the lowest cost, at the right time.

A new approach to retrofits should create durable policy structures so energy efficiency services are consistently available when customers need them and delivered by trusted and innovative home performance contractor businesses that provide good jobs. This could be accomplished by a policy that combines the government capital provision for diverse innovative financing methods with business development assistance for contractors.

Advancing energy efficiency

Energy efficiency is one of Canada’s most powerful economic tools. It lowers energy bills, strengthens Canadian industries and skilled trades, and improves energy productivity — generating more value from every unit of energy we use.

The federal government is starting to recognize the role energy efficiency can play in building an affordable, reliable electricity system. Now we need to make sure it becomes a federal priority.

If you believe energy efficiency should be treated as a nation-building project, join others in the sector working to keep it on the federal government’s radar.