Robert Hornung | July 27, 2020

Economic stimulus investments in the wake of COVID-19 must support growth in wind energy, solar energy and energy storage

Canada is making steady progress in mitigating the devastating impacts of COVID-19 on the health of Canadians and the Canadian economy. While this work is far from over, public attention is shifting to the question of how governments can best stimulate economic recovery. The scale of investment required makes this a once in a lifetime opportunity to “build back better” – ensuring that new economic activity helps us simultaneously address other significant challenges as we move forward from COVID-19.

Canada faces no bigger challenge than the threat posed by climate change.

Consistent with climate science, Canada has committed to moving to net zero greenhouse gas emissions by 2050. While there are many potential pathways to net zero, modelling and analysis consistently show that three elements will be critical:

• Canada must move to an electricity system that emits virtually no greenhouse gas emissions,
• Canada must significantly increase (e.g., double) its electricity production and use that electricity to replace other energy sources in transportation, buildings and industry, and
• Canada must dramatically increase its production of wind and solar energy, in combination with energy storage, to contribute to these outcomes.

Unfortunately, our current pathway won’t get us to the net-zero destination. The Canadian Energy Regulator’s most recent supply and demand projections to 2040 suggest that Canada’s electricity production will move from 81% non-emitting today to just 83% in 2040. Electricity production is envisioned to increase by only 14%. And while the production of wind and solar energy is expected to double over this time period, greenhouse gas-emitting natural gas is projected to be the largest source of new electricity generation.

Government stimulus strategies in response to COVID-19 can serve to create high-quality and widely dispersed jobs, while also putting us on a viable pathway to net-zero greenhouse gas emissions by 2050. This could and should involve:

• Support for labour-intensive work like the deployment of solar energy and energy storage systems for homes and commercial and institutional buildings across Canada,
• Support for major new electricity infrastructure like new transmission lines and energy storage projects, which will enable better integration and use of wind and solar energy,
• Support for the electrification of transportation and the production of green hydrogen from wind and solar energy, which could create new industrial opportunities while reducing greenhouse gas emissions from transportation.

It’s also important to remember that economic stimulus is not only a matter of new spending. Governments can also remove market and regulatory barriers to investment, and in ways that will support progress towards net zero. This could include:

• Creating transparent, fair and competitive electricity markets and procurement processes focused on deployment of the lowest-cost non-emitting generation and energy storage, and
• Enabling and supporting increased customer choice in electricity supply, including increased customer opportunities for self-supply.

If Canada is to get on a net-zero emissions pathway, we must act now. While 2050 may seem a long way off, 30 years is not a lot of time in the electricity sector. Most of the electricity generating facilities we build today will still be operating beyond 2040. Major new infrastructure projects like transmission lines can take many years to permit and build once approved.

Changing the design of electricity markets and the regulatory frameworks that govern them is also a complex and time-consuming process. Success in 2050 depends on decisions taken today – and the wrong decisions could lock us into pathways that will make it impossible to achieve net-zero emissions in 2050 without stranding assets and investment.

On July 1, 2020, the Canadian Renewable Energy Association was formed. We support Canada’s net-zero commitment and are working to enable increased deployment of wind energy, solar energy, and energy storage across Canada – from large utility-scale facilities to commercial and residential applications.

Canada already ranks in the top 10 globally for installed wind energy capacity and in the top 20 for installed solar energy capacity. Over the last decade, wind energy has been the largest source of new generating capacity in Canada and has become the lowest cost source of new generation. Solar energy costs have been falling at an even faster rate. With our massive untapped resources, however, we can do much more.

Our response to the economic impacts of COVID-19 provides that opportunity for acceleration. The pandemic has forced us to reassess many aspects of our lives and our economy. Life after COVID-19 will not be the same, and it can in many ways be better. If we are serious about climate change and our net-zero target, we need to reassess the future of our electricity system and “build back better”.

We still have time to shape the future we want, but only if we act today.

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