Decarbonizing Canada's electricity grid is a priority in the fight against climate change and will require significant investments. Despite positive trends in renewable energy costs over the past decade, decarbonization is likely to lead to higher electricity costs for consumers.
Energy storage and a robust grid infrastructure are part of a net-zero grid, needing further investments. Greening the grid by 2035 could increase the cost of generation by ~20% in Ontario and ~60% in Alberta by 2035, on top of a ~15-20% rise that would occur without the target.
Measures introduced by the federal government such as tax credits for clean tech and financing support for grid infrastructure could help moderate cost growth. Non-financial measures such as streamlining the permitting process for infrastructure projects could also be beneficial.
Curtailment and associated costs could rise if the growth of variable resources outpaces the development of grid infrastructure and storage assets. Curtailed renewable energy also represents a missed opportunity to reduce emissions through displacing fossil fuel generation.
Costs of renewable energy technologies have made great competitive strides, specifically for solar PV and wind generation. This means these technologies can compete with fossil fuel generators without the need for costly incentives.
Electricity demand could increase by 85% by 2050 driven by electrification of end-use sectors like transportation. In addition to decarbonizing existing generation, low-carbon electricity supply must increase to support this expected growth in demand.
Governments can also offset costs for low-income households by strengthening programs that provide electric bill subsidies and promote the adoption of electric and energy efficient equipment. With time, electric costs will be offset by a reduction in spending on fossil fuels.
Other actions that can help keep costs under control include better planning and modernizing grid infrastructure, as well as procuring new generation and storage technologies through competitive auctions. These measures could keep overall system costs lower in the long-term.
The costs of decarbonization should not be a deterrence for ambitious action to reduce greenhouse gas emissions. The alternative is worse as the lack of meaningful global mitigation efforts is projected to result in runaway climate change with devastating socioeconomic effects.