Canada’s power sector is expected to expand as federal tax credits, the phase-out of coal-fired generation and industrial electrification support investment in wind, solar and nuclear power. However, limited transmission capacity between provinces and the need to modernise regional grids could constrain the integration of new generation, according to GlobalData.
The company’s report, *Canada Power Market Trends and Analysis by Capacity, Generation, Transmission, Distribution, Regulations, Key Players and Forecast to 2035*, projects that Canada’s total installed power capacity will grow at a compound annual growth rate (CAGR) of 2.1% between 2025 and 2035. Over the same period, the share of non-hydro renewable capacity, mainly wind and solar photovoltaic power, is forecast to increase from 20.6% to 31.4% of total capacity. Electricity demand is projected to grow at a CAGR of 1.7%, driven by the electrification of heating, electric vehicle adoption and the expansion of data centres.
One challenge is the division of electricity planning and grid development between Canada’s 10 provinces. Transmission links between some provinces remain limited, while several provincial networks have stronger connections to electricity markets in the USA than to neighbouring provinces.
Federal policy is also shaping investment in the sector. Clean Economy Investment Tax Credits include a 15% credit for eligible clean electricity and interprovincial transmission investments, and credits of up to 30% for eligible clean technologies, including wind, solar, energy storage and small modular reactors.
These incentives operate alongside federal measures covering electricity emissions, the phase-out of coal-fired generation and industrial carbon pricing. Together, they are intended to support investment in low-carbon electricity generation and transmission infrastructure.
