Seizing the moment

Canada’s energy infrastructure is having a renaissance:

• Power demand is continuing to grow amid a data centre boom and increased electrification.  
• The supporting infrastructure for electrification (the “Grid”) is evolving, and needs significant upgrades and additions. 
• Canada’s power generation mix is diversifying with the addition of renewables and Small Modular Reactors (SMRs). 
• Cybersecurity continues to grow in importance as power companies expand systems and deploy new technologies.  
  

This requires tremendous capital investment, risk management, governance, and controls. Power, Utility, and Renewable (PU&R) companies and government entities are tasked with making tough choices to ensure they deploy capital effectively and efficiently.

Our energy sector leader, Line Duranleau, shares a high-level summary of today’s energy industry trends. 

In this article, we’ll dive into three key opportunity areas where PU&R companies can lead the way for Canada’s energy renaissance.

Making strategic investments for the future

Canada’s energy demand¹ could double by 2050, in the midst of shifting market structures, consumer expectations, and geopolitical events. To meet that demand in today’s climate, PU&R companies are tasked with deciding how to allocate their capital in the most strategic way. That might look like $10+ billion to repair aging infrastructure², $1 billion to create a new transmission line³, or millions of dollars into tech modernization.

The challenge becomes prioritizing the right investment choices with a future that’s increasingly less predictable, due to geopolitical and economic uncertainty.

On top of that, no initiative has a one-time price tag or absolute completion date. Infrastructure takes years to build, which allows for shifts in technology costs, electricity pricing, market structures, and regulations, where government plays an important role. For example, Alberta’s provincial government recently announced significant changes to facilitate greater investment and establish a restructured energy market⁴ that received mixed reactions from the private sector.

PU&R companies need to plan for a variety of energy mix, regulatory, and demand scenarios to make the most strategic investment choices. Utilities can make risk-informed decisions with flexible scenario models that analyze the right data, including:

• energy supply & demand mix;
• economic drivers;
• technology adoption forecasts; and
• consumer behaviours.

While an investment strategy inevitably includes choices about technology or infrastructure projects, it can also extend to investing in partnerships. For example, Indigenous communities in Canada have long been interested in establishing meaningful new connections and relationships with companies that participate in their environment.

Canada’s federal government recently invested $11 million into bringing clean energy to 15 remote Indigenous communities. At the provincial level, Manitoba Hydro recently received support by both the Manitoba and Nunavut governments for a 1,200-kilometre transmission line that would deliver 50 MW of power to the Kivalliq region of Nunavut.

Unlocking the Value of Technology Modernization

In the quest to seize the moment, technology modernization stands out as a critical area for PU&R companies. While many utilities are investing in smart grids, new ERP systems, and robotics, the maximum value of these investments often remains untapped due to data quality issues. Structured and reliable data is essential to maximize the effectiveness of technology investments, particularly in AI and cloud transformation.

One way utilities can drive value from their data is to better integrate Operational Technology (OT) and Information Technology (IT). This convergence allows for real-time analytics and greater visibility and control over infrastructure, leading to optimized performance and reduced downtime. For example, smart meters and sensors used in Advanced Metering Infrastructure (AMI) have the potential to significantly improve Grid performance but require integration with IT systems to process and analyze the data and connect it to other systems, such as customer billing. IT/OT convergence also requires more robust cybersecurity⁵ measures across the network, including partners and vendors, to protect critical infrastructure from potential threats.

By normalizing data formats, integrating IT and OT, and addressing skills gaps, PU&R companies can position themselves to better manage the complexities of modern energy systems and, ultimately, drive more sustainable and resilient energy solutions.

Balancing net-zero targets with reliability and affordability

During times of geopolitical and economic uncertainty, Canadian energy consumers continue to prioritize energy affordability and reliability over sustainability. One research study⁶ from Natural Resources Canada found that while Canadians see clean energy transition in a positive light, they also have concerns about affordability and higher up-front costs.

We see similar shifting sentiments in EV adoption. Despite EV registrations steadily increasing into 2024⁷, recent halts to government EV rebates⁸ have made them less accessible to buyers. A 2024 study by J.D. Power⁹ found that the share of new-vehicle shoppers in Canada “very likely” to consider purchasing an EV declined by three percentage points to 11%, less than half of the share of U.S. shoppers.

PU&R companies must balance their net-zero targets with the need for affordable and reliable energy supply.

The good news? Canada is already well positioned with roughly 80% of electricity generated from clean energies,¹⁰ largely due to significant hydro capacity in certain provinces. In areas like Alberta, where hydro is unavailable, advancements to lower emissions include carbon capture and sequestration projects, and conversion of coal-fired gas plants to natural gas. Plus, Canada’s renewable energy capacity has jumped by 46% in the last five years including the expansion of nuclear energy production¹¹, and significant expansion in wind power capacity.¹²

Energy storage technology helps alleviate supply pressures from climate change

Although supply capacity is increasing, recent climate events have become more extreme and impact both supply and demand. For example, in the summer of 2023, wildfires in Alberta caused several natural gas production facilities to shut down, dropping production by 9.3%.¹³ Simultaneously, British Columbia saw a significant increase in demand from consumers using air conditioning during an extreme heat wave. This confluence of events put both Provinces’ energy systems under duress.

One way utilities are bolstering supply is through increased investment in energy storage technology. While Canada’s utility companies generally have had traditionally low electric storage capabilities (3.4%), cost drops are driving increased investment in lithium battery storage and tech advancements to improve storage capabilities. Northland Power¹⁴ is nearing completion of their Oneida Energy Storage Project, a 250 MW/1,000 MWh advanced stage, stand-alone lithium-ion battery storage project, representing one of the largest clean energy storage projects in the world. It will double the amount of energy storage resources on Ontario’s clean electricity grid from approximately 225 MW today to approximately 475 MW. The project is being developed in partnership with NRStor Inc. (NRStor), the Six Nations of the Grand River Development Corporation (SNGRDC), and Aecon.

Balancing emissions targets with reliability and affordability remains an ongoing challenge, as utilities navigate economic and governmental changes. However, these changes can also bring new opportunities for utilities to capitalize on and seize the moment with the right support and strategy.

Let’s continue the conversation

At Deloitte, we are invested in helping Canadian PU&R companies navigate these difficult challenges. Over the coming weeks and months, we will be sharing more in-depth insights on all of the topics we have touched on here.

Deloitte works closely with several of our Canadian utilities and energy providers, helping them model various economic, policy and supply/demand scenarios. Our Energy System Pathways tool¹⁵ models macroeconomic and bulk system scenarios, which help companies make strategic choices through a better understanding of their generation and transmission system requirements. For modelling load, geospatial technology adoption, and distribution system requirements, our clients use ElectrifiedGrid,¹⁶ a full-suite platform that can help inform tough investment decisions with scenario planning and analytics.

Our Deloitte nation-building advisory services¹⁷ support both utility companies and Indigenous rights holders to build and nurture equitable partnerships to drive shared economic growth.  If you have a specific topic you would like to hear more about, please get in touch. 

End notes