BARRIERS TO INNOVATION IN THE CANADIAN ELECTRICITY SECTOR AND AVAILABLE POLICY RESPONSES

The document identifies systemic barriers to decarbonizing Canada's electricity grid, including misaligned utility mandates, vested interests, siloed planning, and market access restrictions. It recommends implementing system-wide decarbonization mandates, technology-neutral Clean Electricity Standards, and performance-based regulation to incentivize innovation. The paper also emphasizes the need for improved interprovincial transmission and larger grid-balancing regions to integrate variable renewable energy.

• The Canadian electricity sector is hindered by strong path dependency and a risk-averse culture where utilities and system operators prioritize reliability and low cost over decarbonization and climate resilience.
• Existing asset holders and the regulated rate of return structure create financial and political incentives to block new resources like storage and solar that could reduce revenues for traditional assets.
• Information gaps and outdated data lead to inflated cost estimates for renewables in planning documents; for example, the Alberta Electric System Operator's 2021 outlook used 2018 cost estimates for wind and solar that were significantly higher than actual contract prices from 2017-2019.
• Market access is restricted for independent power producers (IPPs), particularly in provinces where Crown corporations control the generation market, creating a monopsony that limits the deployment of zero-carbon generation.
• Current market designs fail to adequately value the specific benefits of new technologies, such as the fast ramping capabilities of inverter-based generation (wind and solar), and use metrics like internal rate of return that ignore the 'option value' of flexible transition assets.
• The provincially aligned structure of Canada's electricity system limits the creation of large grid-balancing regions, which are necessary to efficiently integrate non-dispatchable renewable resources across diverse geographies.
• To drive innovation, the paper suggests adopting technology-neutral Clean Electricity Standards (CES) and Performance-Based Regulation (PBR), which incentivizes utilities to lower service costs and meet specific outcome goals rather than simply deploying capital.

APA

Hastings-Simon, S., & Kanduth, A. (n.d.). BARRIERS TO INNOVATION IN THE CANADIAN ELECTRICITY SECTOR AND AVAILABLE POLICY RESPONSES. Canadian Climate Institute. https://climateinstitute.ca/wp-content/uploads/2021/09/CICC-Barriers-to-innovation-in-the-Canadian-electricity-sector-and-available-policy-responses-by-Sara-Hastings-Simon-FINAL-1.pdf

Chicago

Hastings-Simon, Sara, and Anna Kanduth. BARRIERS TO INNOVATION IN THE CANADIAN ELECTRICITY SECTOR AND AVAILABLE POLICY RESPONSES. Canadian Climate Institute, n.d. https://climateinstitute.ca/wp-content/uploads/2021/09/CICC-Barriers-to-innovation-in-the-Canadian-electricity-sector-and-available-policy-responses-by-Sara-Hastings-Simon-FINAL-1.pdf.

Wikipedia

{{cite report |last1=Hastings-Simon |first1=Sara |last2=Kanduth |first2=Anna |title=BARRIERS TO INNOVATION IN THE CANADIAN ELECTRICITY SECTOR AND AVAILABLE POLICY RESPONSES |publisher=Canadian Climate Institute |url=https://climateinstitute.ca/wp-content/uploads/2021/09/CICC-Barriers-to-innovation-in-the-Canadian-electricity-sector-and-available-policy-responses-by-Sara-Hastings-Simon-FINAL-1.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{hastingssimonndbarriers, author = {Hastings-Simon, Sara and Kanduth, Anna}, title = {{BARRIERS TO INNOVATION IN THE CANADIAN ELECTRICITY SECTOR AND AVAILABLE POLICY RESPONSES}}, institution = {Canadian Climate Institute}, url = {https://climateinstitute.ca/wp-content/uploads/2021/09/CICC-Barriers-to-innovation-in-the-Canadian-electricity-sector-and-available-policy-responses-by-Sara-Hastings-Simon-FINAL-1.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }