Canada’s energy market is undergoing a significant transformation as the country works toward a net-zero future. With increasing demand, evolving policies, and growing investment in clean energy, understanding the landscape is more important than ever.
Matt Kennedy, who leads acquisitions and business operations at Skyline Energy, has been at the forefront of this shift. Since joining the firm in 2017, he has played a key role in asset acquisition, financial analysis, and clean energy valuation. He also serves on a cleantech committee advocating for sustainable energy adoption in Ontario. In Outlook 2025, his insights shed light on the challenges and opportunities within Canada’s energy sector, the impact of government incentives, and the path forward for clean energy investment.
Below are the key takeaways from the discussion:
- Current Energy Mix: 80% of Canada's electricity comes from non-emitting sources, largely hydroelectric (60%), with contributions from nuclear, solar, and wind.
- Net-Zero Target: Canada aims for a net-zero economy by 2050, requiring electricity to grow from 20% to 40%+ of the overall energy mix.
- Electrification Trends: Increased electricity demand is driven by electric vehicles (EVs), industrial shifts, automation, and household electrification (e.g., electric lawnmowers).
- Future Energy Sources: 99% of new energy supply is expected to come from wind, solar, nuclear, and renewable natural gas.
- Solar Growth: Solar generation in Canada needs to expand 20x by 2050 due to its declining costs and ability to generate power where it's needed most.
Government Policies & Investment Incentives
- Carbon Pricing: Intended to encourage greener energy solutions by incorporating the cost of carbon into the economy.
- Clean Economy Investment Tax Credit: Provides a 30% tax credit for capital invested in renewable projects, spurring recent growth in Ontario.
- Ontario’s Renewable Energy Boom & Slowdown: Between 2010-2018, Ontario saw heavy investment in renewables due to subsidies, but the slowdown post-2018 led to concerns about future power shortages by 2029-2030.
- Private Investment: Banks and private lenders are showing strong interest in renewable projects due to their long-term stability and low volatility.
- Industry Maturity: Unlike a decade ago, renewable energy is now cost-competitive without heavy government subsidies.
Energy Exports & Consumer Impact
- U.S. Power Exports: Excess power, mainly from nuclear and hydro at night, is sold to the U.S. to reduce costs for Canadian consumers.
- Potential Impact of Export Cuts: If exports stopped, short-term electricity prices could rise, but there would be no long-term oversupply due to Canada's peak demand patterns.
- Consumer Incentives: Programs like ultra-low overnight electricity rates encourage shifting usage away from peak hours to balance demand.
Emerging Sector: Biogas & Circular Economy
- Biogas Growth: Canada is adopting biogas, a well-established industry in Europe, which turns organic waste into energy.
- Dual Benefits: Supports renewable energy targets while addressing waste diversion mandates.
- Economic & Environmental Impact: Biogas facilities generate electricity, produce renewable natural gas, and create nutrient-rich fertilizer for agriculture, contributing to a circular economy.
Investing in Clean Energy
- Long-Term Opportunity: Growing demand and government incentives make clean energy an attractive investment sector.
- Investment Considerations: Investors should assess portfolio composition and understand underlying energy assets.
- Industry Stability: Clean energy investments are increasingly seen as low-risk due to long-term contracts and strong institutional backing.
Conclusion
Canada’s energy transition presents both challenges and opportunities as the country moves toward a net-zero future. With strong government policies, increasing private investment, and advancements in clean technology, the energy sector is evolving rapidly. As demand for electricity grows, renewable sources like wind, solar, and biogas will play a crucial role in shaping a sustainable energy landscape. Understanding these developments is key for investors, businesses, and policymakers navigating the shift.