Thank you, Chair, and thank you, committee members.
I'm here today on behalf of WaterPower Canada, the national association that represents Canada's hydro power industry. Our members include public and private utilities, developers, manufacturers and engineering firms, and they represent more than 95% of Canada's installed hydro power capacity and operate over 600 facilities across the country.
As the committee considers Canada's electricity future, I'd like to leave you with a simple message: We cannot achieve our electricity, climate and economic goals without hydro power.
Hydro power already provides more than half Canada's electricity. It's clean, reliable, flexible and proven. It does much more than generating electricity; it provides the storage, balancing and grid stability services that allow other renewable resources such as wind and solar to operate efficiently. This synergy is fundamental to Canada's objective of doubling electricity infrastructure by 2050.
The challenge before us is significant. Estimates suggest that Canada will require between $1 trillion and $2 trillion of electricity investment in generation, transmission and storage infrastructure. Meeting this need will require a coordinated approach that mobilizes both public and private capital while maintaining affordability for Canadian households and businesses. Canada currently has 160,000 megawatts as its total capacity of electricity, including 83,000 megawatts of hydro. The recently signed MOU between Newfoundland and Labrador Hydro and Hydro-Québec would add another 14,000 megawatts to the system.
If we were only relying on hydro power to meet the federal government's target of doubling the size of the grid, we would have to build more than 11 similarly sized projects. The scale of this build-out is enormous, and no single source of power will be sufficient to meet the objective, but including more hydro is essential. It's already included in $100 billion of planned projects, but our sector is challenged by multiple impediments to rolling out projects quickly. Our industry faces three key barriers to contributing to Canada's energy goals.
First, investors and utilities need greater confidence that future electricity demand will materialize. Utilities make investment decisions based on demonstrable long-term expectations of growth. If consumers and industries do not switch to electricity at the pace anticipated, large infrastructure investments may not proceed. If Canada expects significant electrification of transportation, buildings and industry, then federal public policy should provide consistent signals that the market supports the transition. Reducing uncertainty around future demand will help unlock the private and public capital needed to build major infrastructure projects.
Second, we need financing tools that recognize the unique nature of hydro power infrastructure. Large hydroelectric projects require substantial upfront investment and can take between 10 and 15 years to develop and build, but once in service, they operate for generations, often for a century or more. Traditional financing structures do not always reflect their intergenerational value. While smaller renewable projects often have adequate financing opportunities, large investment requirements, long development timelines, provincial borrowing constraints, ratepayer affordability concerns and competition for capital across the broader economy can all limit investment in hydro.
The federal government can play a critical role by providing low-interest, long-amortization loans; expanded loan guarantees; and financing mechanisms that reduce borrowing costs for projects that will benefit Canadians for generations. Otherwise, some of Canada's most important clean electricity projects could be disadvantaged despite their strategic importance.
Programs such as the clean electricity investment tax credit have the potential to become highly valuable tools, but eligibility timelines and program design should better align with large infrastructure projects that require longer development periods. This is why we've recommended extending it to 2040 or beyond.
We also recommend revisiting federal EIFEL rules, which can increase financing costs for large infrastructure projects and ultimately raise costs for ratepayers.
We also support expanding indigenous participation through enhanced indigenous loan guarantee programs and facilitating indigenous equity participation in major electricity projects.
Third, regulatory certainty is essential. There is increasing uncertainty around electricity export approvals, which are often essential to the business case for large hydro developments.
Also, we see progress is being made in legislating regulatory efficiency in some federal agencies, but compliance with the Fisheries Act still entails long approval timelines and complex permitting processes for our industry, leading to increased and unpredictable project costs and unnecessary risk. These costs and additional risk are an impediment to the Government of Canada's objective of doubling the available electricity on the national grid, because capital that would otherwise flow to new production must be deployed to meet regulatory requirements of the act on facilities that have already been operating for decades, if not over a century.
Mr. Chair, Canada has a tremendous advantage. We have abundant water resources, a world-class hydro power sector and deep expertise in building and operating clean electricity systems. With the right financing and policy framework, we can leverage those strengths to build the electricity system that Canada can rely on for generations to come.
Thank you. I look forward to your questions.
