Canada’s Affordable Electricity Advantage at Risk as Demand Rises, Report Warns

Canada’s long-standing edge in providing inexpensive and reliable electricity could be under threat unless governments act quickly, according to a new analysis from the Macdonald-Laurier Institute.

Energy expert Heather Exner-Pirot, who leads the institute’s work on natural resources and environment, says the country has historically benefited from an abundance of low-cost power but that advantage is no longer guaranteed.

“Affordable electricity has been one of Canada’s quiet strengths for decades,” she said. “But we’re starting to see cracks that could change that picture.”

The report highlights that national electricity generation reached its high point around 2017. Despite continued population growth, overall demand remained largely stable for years. This was due in part to improvements in energy efficiency and the migration of heavy, energy-consuming industries to countries like China.

That period of stability, however, appears to be ending.

In recent years, demand has begun climbing again, with data centres emerging as a major driver. These facilities, which support cloud computing and artificial intelligence, require vast and continuous power supply putting new pressure on existing infrastructure.

Alberta illustrates both progress and growing pains in the transition. The province has significantly expanded its renewable energy capacity, adding more than 6,000 megawatts largely replacing coal-fired generation with cleaner sources such as wind, solar, and natural gas.

But the system is struggling to keep up with the changes.

“There are times when renewable energy can’t even be fully used because the grid can’t handle it,” Exner-Pirot noted. “Transmission constraints are becoming a real bottleneck.”

For now, natural gas remains the most practical and readily available energy source in Alberta. Hydroelectric options are limited, and nuclear power while being considered is still years away from becoming a viable contributor.

Complicating matters further is uncertainty around policy. The Alberta government introduced reforms in 2025 aimed at modernizing the electricity market and improving system performance. However, with full implementation not expected until 2027, investors and operators are left in a wait-and-see mode.

“When there’s no clear framework, it becomes difficult to commit capital or plan long-term projects,” Exner-Pirot explained.

Despite these concerns, Alberta’s Minister of Affordability and Utilities, Nathan Neudorf, believes the changes will ultimately strengthen the system. He says the goal is to better align where and how electricity is produced, while ensuring investments remain financially sustainable.

“We’re working toward a more balanced and efficient generation system,” Neudorf said. “That includes making sure projects are built in the right locations and deliver value.”

The province is also preparing for future demand surges linked to emerging technologies. Under new rules, large-scale developments such as AI-driven data centres will be required to generate their own power instead of relying entirely on the provincial grid.

“We’ve put safeguards in place so the system isn’t overwhelmed,” Neudorf added. “These operations must be responsible for their own energy needs.”

At the same time, Alberta is exploring nuclear energy as part of its long-term strategy. A dedicated advisory panel has been engaging communities through public meetings to raise awareness and collect feedback.

The panel is expected to present its findings to the provincial government by the end of March 2026.

As Canada’s energy landscape evolves, the report delivers a clear warning: without timely planning, infrastructure upgrades, and policy clarity, the country risks losing one of its most important economic advantages affordable electricity.