Canada's clean energy investment slows but momentum could surge with new power deals

National Observer

3 days ago

Canada's steady, growing investment in clean power over the past decade slowed in 2024 with a drop-off in renewable energy plant construction, according to the latest International Energy Agency (IEA) figures. But in the face of heightened geopolitical uncertainty — and with most of the country's provinces planning to award deals this year to build more power plants and infrastructure — the Canadian green transition could quickly pick up pace again, a leading think-tank says.
Capital spending on power generation in Canada between 2021-25 averaged US$7.3 billion a year — $5.3 billion of which went into renewables projects, the IEA stated in its 10th World Energy Investment report. The remaining $2 billion was split between new fossil fuel and nuclear developments.
Clean energy spending numbers in the country are up compared to 2016-2021, when renewables saw $3.3 billion in capital expenditure, while fossil and nuclear saw $1 billion and $1.2 billion invested, respectively. The Canadian data also reflects the accelerating global shift away from oil, gas and coal, which is expected to see $1.1 trillion invested in 2025, while renewables, nuclear, grids, storage, e-fuels, and electrification are on course to reach a record $2.2 trillion spend.
'Today's investment trends clearly show a new Age of Electricity is drawing nearer,' said Fatih Birol, executive director of the IEA, as the report was released online lastThursday. "A decade ago, global investments in fossil fuels were 30 per cent higher than those in electricity generation, grids and storage. This year, electricity investments are set to be some 50 per cent higher than the total amount being spent bringing oil, natural gas and coal to market.'
Birol noted spending on low-carbon power generation has almost doubled over the past five years, with solar power investment alone forecast to hit $450 billion in 2025, making it the 'single largest item in the global energy investment inventory.' Battery storage investments are also climbing rapidly, he said, with the IEA expecting spending to surge past $65 billion this year.
A Canadian green 'gold rush' ahead?
Evan Pivnick, Clean Energy Canada's clean energy program manager, said the drop in construction of solar and wind farms in Canada over the past year is disappointing. However, the 'bigger theme' in the IEA data is the growth of renewables share in the country's energy mix, which rose from 27.6 per cent in 2016-2020 to 36.6 per cent in 2021-2025, he added. Given that almost every province and territory is planning to hold a new power procurement round this year — where governments allocate future production capacity on the grid — conditions could exist for a renewables 'gold rush,' Pivnick said.
'The focus should be on interprovincial powe grids and interties - between Ontario and Quebec and Quebec and Atlantic Canada and between Alberta and BC,' says Clean Energy Canada's Evan Pivnick.
'Renewables are the cheapest form of new energy and prices continue to fall. We have historically been an oil-producing nation, but we have unbelievable renewable energy resources in wind and solar, all backed up by a world-class hydropower network,' he said.
Canada has some singular challenges, including a vast geography with 13 different energy grids, Pivnick noted. 'But I think we are entering a new chapter in our energy transition.'
Pivnik said the IEA data also reveals striking similarities between the energy transition in Canada and much of the rest of the world. One is underinvestment in transmission, which will hinder bringing new power online and getting it to industrial, commercial and residential consumers.
Another is that energy security is becoming a major motivation in all national energy policy thinking. The IEA's Birol referred to it as the 'new main driver' of investment in power generation.
'Building renewable energy projects is the best way to make Canada's energy more secure and protect the country's electricity prices from fluctuations in global markets and political dynamics," said Pivnik.
Canada's national renewables build-out has become sluggish in the last few years, primarily because Alberta — the country's erstwhile clean-energy powerhouse with over 10,000 MW of installed wind and solar — in 2022 imposed a moratorium on renewables projects.
Nationwide solar and wind build down
Nationwide, a mere 314 MW of solar power was switched on last year, down from 765 MW the year before, taking total plant capacity to 4,000 MW, according to figures from the C anadian Renewable Energy Association, an industry body.
Wind power fared little better, with the installation of 1,434 MW of turbines in 2024, down from 1,774 MW the year before, expanding the fleet to a total 18,434 MW.
The average yearly investment in Canada's electricity network fell slightly in 2021-2025 compared to the previous five years, the IEA found, to $4.1 billion from $4.2 billion. The same was seen globally as capital spending on grids, currently at around $400 billion a year, is not keeping pace with spending on generation and electrification, the agency said.
Pivnick believes new transmission infrastructure should be top of the list for the new Liberal government's so-called 'nation-building' projects plan.
'The focus should be on interprovincial grids and interties - between Ontario and Quebec and Quebec and Atlantic Canada and between Alberta and BC,' Pivnick said.
Power connections like these are the most cost-effective way to enhance Canada's ability to build more clean energy capacity in the provinces and distribute the country's energy resources to the regions that need them most, he added.
Globally, China, far and away, led the energy investment tables with a forecast $874 billion to be spent this year, of which $627 billion will go into renewables projects — as much as the EU and US combined. The Asian superpower's share of worldwide renewables spending has risen from a quarter to almost a third over the past 10 years, based on a portfolio of technologies including solar, wind, hydropower, nuclear, batteries and EVs.
Declining spending on new oil
Capital spending on oil production is foreseen falling six per cent globally, while the nuclear sector's investment renaissance is expected to result in expenditure growing 50 per cent in 2025 to $75 billion.
The rampant rise in worldwide electricity demand has also continued to fuel investment in coal, led by China, with the construction of nearly 100,000 MW of new lignite-fired power plants given the green-light.
The IEA report noted that energy sector spending patterns were 'very uneven globally' with many developing economies struggling to get capital for energy infrastructure. Africa, though it is home to 20 per cent of the world's population accounts for just two per cent of global clean energy investment.
Birol said: 'Investment flows are not yet on track to deliver on the renewable and efficiency goals agreed at COP28' in Dubai, UAE, which finished with a declaration stating the conference marked the 'beginning of the end' of the fossil fuel era.
'The annual investment required in renewable power still needs to double to achieve a tripling of installed renewable capacity by 2030, accompanied by rising spending on grids, storage and other forms of flexibility to ensure secure and cost-effective utilization of this capacity.'