I’m writing from Ottawa this week, where Canada’s government made its plan to supercharge the electric grid one of the centrepieces of Tuesday’s federal budget. It’s a move the government hopes will address skyrocketing electricity demand that will accompany its mandate to sell only zero-emissions new vehicles by 2035. 

“The backbone of the plan is clean electricity,” a senior government official told reporters in Tuesday’s lockup, where we had access to the budget documents in the hours before Finance Minister Chrystia Freeland made it public. (We agreed not to identify the official quoted above as a condition of going into the lockup.)

The budget included several other initiatives the EV industry has welcomed, like tax credits for manufacturing and expanded options for mining investments. But a better grid will be of particular interest to EV drivers and prospective buyers. 

A failing electricity grid has been among the top concerns among those worried about the EV transition. Even with ZEVs representing less than nine per cent of the country’s vehicle sales as of the third quarter last year, some utility companies like BC Hydro are already considering how to incentivize drivers not to charge at peak times.

The budget offers 15 per cent tax credits for entities installing electricity -storage batteries, grid refurbishments and clean-electricity projects, including solar, hydro, wave, tidal, nuclear and abated natural-gas power. The incentives, which will be open to Crown corporations, publicly owned utilities, pension funds and corporations owned by Indigenous communities, also target intra-provincial and -territory transmission. 

“We think the investments are significant, and we think they will make a meaningful change in terms of the size of Canada’s electricity grid,” Mark Zacharias, executive director of Clean Energy Canada, told me after the budget’s release.  

The Canada Infrastructure Bank will help lead the charge, with at least $20 billion of its existing funding newly earmarked for major clean-electricity and “clean growth infrastructure” projects. Another $3 billion will flow through Natural Resources Canada—albeit over 13 years—for grid-related projects like wind farms off the coasts of Nova Scotia and Newfoundland and Labrador. 

The government hopes the spending will not only let it increase electricity capacity by up to 3.4 times compared to current levels, but also convert the grid to net zero by 2035—or risk the country’s ability to power the economy.

There’s plenty of work to do. Toronto-based energy-management firm Enersavings surveyed over 1,000 Canadian buildings and found that 99 per cent didn’t have the electrical capacity to support a full network of EV charging stations without additional planning. 

“The grid is like a little old lady waiting to die,” the mining magnate and Ivanhoe Electric executive chair Robert Friedland told an audience earlier this month. “Storing energy in the grid is like balancing a pencil vertically on your hand—the grid is extremely unstable.”

Meanwhile, the average share of electricity-powered household energy use is set to rise to 96 per cent by 2050 from about 20 per cent in 2020, according to a May 2022 Canadian Climate Institute report , as consumers not only drive EVs but also plug in induction stoves and electric furnaces. The report estimates that nationwide electricity generation must grow three to six times faster through 2050 than it did during the decade from 2010 to 2020.

Cars aren’t the only things making new demands on the grid—so are EV factories, with LG and Volkswagen both considering power availability in their Canadian investment plans, and the critical-mineral industry that feeds battery-makers.

“Being able to attach yourself to the grid,” said Photinie Koutsavlis, vice-president of economic affairs and climate change at the Mining Association of Canada, “is that gamechanger to be able to make the economics of your project look a lot more attractive.” 

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