Introduction
The physical limit of provincial borders
47.3% renewable energy in the Canadian electricity mix is not a goal, but a technical threshold that has been surpassed. The government has identified five key provincial borders for interconnection: British Columbia–Yukon, Alberta–British Columbia, Alberta–Saskatchewan, Saskatchewan–Manitoba, and Prince Edward Island. This mapping is not simply an infrastructure upgrade; it represents the strategic choice to overcome physical barriers that limit the thermodynamic flow between regions with uneven production capacities. The current fragmentation of the energy system prevents the optimal use of local renewable resources, particularly in areas with high hydroelectric or solar availability but low local demand.
The distance between generation and consumption is a critical factor: northern areas have high energy potential, but the lack of direct connections to urban centers reduces their economic utility. The integration of interconnections is not only about transporting energy, but also about redefining the model of energy governance. Each border identified is a strategic node where physical infrastructure determines the ability to control logistical flows on a national scale.
The Input-Output Balance of the Canadian Electricity System
According to updated data, the Canadian energy mix is already 80% clean. However, this percentage hides a significant geographical inhomogeneity: Alberta produces energy from fossil fuels for over 55%, while British Columbia and Quebec exceed 96%. The integration of interconnections would allow a more efficient national input-output balance, reducing transmission losses related to indirect routes. The Smart Renewables and Electrification Pathways Program (SREPs) project, with a value of $4.5 billion and an end date in 2036, is the main financial tool for this transformation.
The national energy demand is expected to double by 2050. This growth will not be uniform: industrial and urban regions will see a consumption increase of over 120%, while rural areas will remain around 30%. The interconnection system must therefore be designed to manage seasonal variations, peak demand, and fluctuations in renewable production. The overall conversion efficiency of the system is currently estimated at 78%, with the potential for improvement of 12% thanks to an integrated network.
Energy storage capacity remains limited: the country has approximately 3.4 GWh of installed storage systems. To support a system with doubled demand and high renewable penetration, energy storage capacity is expected to increase to over 12 GWh by 2035. The integration of interconnections would reduce the need for local storage, as excess resources in one region could be transferred immediately to those with shortages.
The Operational Leverage: The Role of SREPs
The implementation of interconnections is driven by the SREPs program, which serves as a financial and regulatory catalyst. The fund does not only cover construction costs, but also includes mechanisms for assessing infrastructure risk and activating corrective measures in case of delays. Participating regions must submit detailed plans for the use of transferred energy, with decarbonization targets linked to cross-border energy flows.
The main benefit is the reduction of dependence on fossil fuels in regions with high demand. For example, Alberta could replace 42% of its CO₂ emissions with hydroelectric power from Quebec through the new connections. The industrial sector directly benefits: more stable and cheaper electricity allows for greater competitiveness in energy-intensive sectors such as aluminum production and heat treatment.
Operational losses in the current system are estimated at 14% of the total flow. Integrating the interconnections, with advanced high-voltage direct current (HVDC) transmission technologies, could reduce this figure to less than 8%. This improvement is not only economic: it implies greater resilience of the system during extreme events. The benefits also affect the energy market, where liquidity increases thanks to the possibility of trading between provinces.
Closure: Monitoring the National Operating Margin
The key indicator to monitor is the increase in the average operating spread across the national grid, measured in €/MWh. It currently stands at 18.3 €/MWh with a seasonal variability between 12 and 26 €/MWh. With the implementation of the planned interconnections, an average operating spread reduction to 14.7 €/MWh is estimated by 2035. This reduction would represent an estimated annual saving of over $6 billion for the national economy.
The operating margin is influenced not only by transmission costs but also by the ability to balance supply and demand in real time. The integration of interconnections would reduce the need for emergency reserves by 28%, resulting in a reduction in costs associated with managing the balance. The added value is measurable: each percentage point improvement in the operating margin corresponds to approximately $1.4 billion in cumulative savings over the decade.
The project is not only infrastructural; it is a fundamental step towards centralized energy governance. Logistical control over the distribution of thermodynamic flow will determine access to markets, industrial competitiveness, and the level of national decarbonization.
Photo by Arteum.ro on Unsplash
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