A Second Golden Spike for an Electrified Canada: Using Carney’s Budget to Link the Provinces

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Mark Carney’s first budget as Finance Minister quietly provided Canada with the ingredients for something the country has lacked for a century: a truly national electricity backbone. The Clean Electricity Investment Tax Credit, a 15% refundable credit on new generation, storage, and the transmission of electricity between provinces and territories, looks like a simple fiscal tool. It is not. It is the seed of a connected, modern grid that could knit together the regional islands of Canadian electricity into a single low-carbon engine for the electrified economy ahead. And it’s far from the only lever that can be pulled to drive Canada’s second Golden Spike, this one delivering clean electrons sea-to-sea, not freight and passengers on gleaming rails.

Canada’s electricity system was built for another era. The provinces each developed their own grids to serve their local industries and populations, often connecting south to American markets but rarely to one another. Québec built high-voltage DC lines to New England. Manitoba strung its Bipoles to the U.S. Midwest. Alberta and British Columbia tied into the Western Interconnection, while the Maritimes remained isolated on small synchronous systems. The result is a federation of grids with minimal east-west connection. Canada’s three asynchronous regions—Western, Eastern, and Québec—still cannot freely share significant terawatt-hours of energy.

That separation matters more every year. Electrification is expanding into everything from transport and heat to new industrial processes. Data centers, electrified steel mills and electrified ports demand new capacity. Decarbonization targets and climate resilience call for moving vast amounts of clean power across the country. Yet the most wind and hydro potential sits far from the greatest demand.

Hydropower gives Canada a built-in advantage that few nations possess. Reservoir systems across Québec, Manitoba, and British Columbia act as vast passive batteries, capable of ramping output up or down in seconds to balance intermittent generation. Linking those provinces through HVDC corridors would allow the country to use that flexibility at a continental scale. Solar output peaks later in the West, where Alberta and Saskatchewan can overgenerate in the afternoon and push surplus electrons eastward as Ontario and Québec approach evening demand. Wind follows its own rhythm: prairie winds often rise when Atlantic and Pacific systems calm, and offshore gusts in Newfoundland and Labrador frequently complement interior lulls. With interprovincial transmission spanning multiple time zones, Canada could level production and demand across thousands of kilometers, turning variability into stability and making clean electricity as dispatchable as the fossil power it replaces.

The 2025 budget reframed the federal role in fixing that problem. It made transmission projects eligible for the clean electricity credit and removed restrictions that previously kept provincial Crown corporations—the real builders of Canadian power lines—from using it. It also aligned the Canada Infrastructure Bank and the Canada Growth Fund as partners, making it easier to combine low-cost federal financing with utility capital and Indigenous equity. The message was clear: the federal government will help carry the risk of nation-scale grid investments.

On paper, Canada already has the beginnings of a cross-country network. The new Wasoqonatl Reliability Intertie between Nova Scotia and New Brunswick will add a 345 kV AC double-circuit line spanning roughly 160 kilometres, supported by $217 million in Infrastructure Bank equity and slated for construction later this decade. British Columbia and Alberta have a legislated plan to restore nearly one gigawatt of transfer capacity on their 500 kV AC intertie by 2026, reversing years of constraint caused by aging equipment and operational limits. Alberta and Saskatchewan are replacing and uprating shared 230 kV AC transmission assets to improve cross-border flows and strengthen reliability across the Prairie seam. Ontario and Québec are examining expansion of their 315 kV and 500 kV AC interties, with options for ±320 kV HVDC back-to-back converters to manage asynchronous operation and trade. Manitoba, meanwhile, is assessing replacement of end-of-life 500 kV transformers and control systems at its eastern boundary, where integration with Ontario could eventually involve new ±500 kV HVDC converters. None of these are megaprojects yet, but together they are the structural anchors of a future national HVDC backbone.

The real opportunity is to connect these regional projects into an east-west HVDC overlay that carries controllable, low-loss power flows between regions. Modern voltage-source HVDC technology can operate as multi-terminal systems rather than simple point-to-point lines. That means each provincial node can be built as a discrete project and later interconnected into a national mesh. The technical foundations already exist. Labrador’s Muskrat Falls line and the Maritime Link are both HVDC systems. Manitoba’s Bipole III, at 500 kV, is one of the longest HVDC lines in the world. Québec’s export grid to the U.S. is built on similar technology. Extending this expertise to interprovincial corridors is not a leap of imagination but an engineering progression.

In a phased plan, the Atlantic HVDC assets would connect through New Brunswick into Québec. The central corridor would link Manitoba and Ontario through upgraded interties and new converter stations. The western seam between Alberta and Saskatchewan would become the HVDC bridge between the Western and Eastern Interconnections. Each region would continue to operate its own AC system, while the HVDC overlay would transfer surplus generation and stabilize supply during peaks or outages. By 2035, the regional patches could be joined into a multi-terminal DC grid capable of balancing renewable generation across the country in real time.

The proposed North Atlantic Transmission One–Link, or NATO-L, is an ambitious trans-Atlantic HVDC project that would connect Eastern Canada with Ireland or the United Kingdom through roughly 6 GW of subsea transmission capacity. My involvement has been peripheral, focused on early-stage assessment of hydroelectric balancing potential between the continents and on reviewing initial collateral from the project’s technical and financial teams. NATO-L represents a strong enhancement of the value proposition for both sides of the Atlantic. With a cross-Canada HVDC spine in place, the country’s hydro, wind, and solar assets could feed into a unified grid capable of supporting Europe during periods of low renewable output, while importing power when domestic conditions tighten. Canada and Europe, long-standing allies in security and trade, could extend that partnership into the energy domain, sharing clean electrons across the ocean as readily as they now share commitments to stability and decarbonization.

The economics are compelling. Transmission accounts for a modest fraction of total system costs but delivers reliability and curtailment savings that compound over decades. Studies of interprovincial grid expansion show potential net benefits in the tens of billions by 2050 from avoided fossil generation and improved utilization of hydro and wind. The tax credit reduces the weighted average cost of capital by cutting effective project costs up to 15%, improving the internal rate of return for provincial utilities and Indigenous partners. With the Infrastructure Bank and Growth Fund offering low-interest capital and equity participation, the public risk is contained while long-term national benefits are captured.

What remains is coordination. Canada has no national transmission authority. Planning, permitting, and cost allocation sit within provincial jurisdiction, and environmental reviews can stretch for years. Building an HVDC overlay requires a formal framework similar to Australia’s integrated system plan or the U.S. Department of Energy’s designated transmission corridors. A National Transmission Accord, endorsed by provinces, utilities, and Indigenous governments, could establish shared standards for HVDC design, set interconnection rules, and coordinate permitting. It would not federalize electricity but harmonize it.

In May of 2024, 28 energy ministers in Europe agreed that it was essential to build a European transmission system, not a country-by-country system, and this year started the process of creating a European transmission planning organization. I had a small part in that, having edited the second edition of Supergrid Super Solution, Eddie O’Connor and Kevin O’Sullivan’s handbook for a European HVDC mesh supergrid, a book that’s on every European energy ministers’ desk, sharing a stage in Brussels in October at its launch with one of the energy ministers and a member of European parliament, among others, to discuss it, and helping strategize and launch Supergrid Europe, a new Brussels-based NGO devoted to advocating for the supergrid. Europe, while it’s moving too slowly, is moving. Canada needs to recognize that this is the direction of the world and move rapidly to keep up.

My Sankey energy flows vision of an electrified Canadian economy shows the payoff. Fossil fuels feeding into transportation, heating, and industry shrink to zero, while electricity, ambient heat and biomass flows expand to replace them. Hydro, wind and solar dominate the primary energy input, converging into a continental-scale grid that distributes power efficiently from coast to coast. On the right side of the diagram, energy services—mobility, heating, and industrial production—consume electricity directly. Rejected energy, the losses inherent in combustion, nearly disappears, dropping from two-thirds of all primary energy in today’s economy to a fifth in a decarbonized future.

This vision of an electrified and efficient electrostate isn’t a fantasy. China is building it incredibly rapidly today, shooting past the west in the electrification of industry and transportation and the deployment of renewables, with massive transmission corridors linking hydro, wind and solar megascale complexes in the west and northwest to demand centers in the south east. Sub-Saharan Africa is leapfrogging the west, with solar deployments shooting up in the last year, and studies for 10,000 km HVDC interconnectors linking a dozen countries the breadth and length of the continent. Pakistan deployed 17 GW of solar, cheap Chinese panels on rooftops without subsidies, often with cheap Chinese batteries buffering them, in 2024 alone, has reconductored 80% of its existing transmission lines, and has built massive north-south HVDC interconnections with China’s help. India is hammering in wind and solar and built out its HVDC transmission in advance of solar deployments to avoid curtailment.

The Clean Electricity Investment Tax Credit isn’t the only budget element that can support this. Carney’s budget contains several other levers that can help Canada finance and coordinate a national HVDC backbone without inventing new institutions or programs. The most direct is the expansion of the Canada Infrastructure Bank’s statutory capital from $35 billion to $45 billion, paired with a broader mandate to invest in nation-building projects of any asset class. That opens the door for the Bank to take on equity or blended-financing roles in transmission corridors that cross provincial lines. The Bank already has a track record with the Wasoqonatl Reliability Intertie and other clean power projects. Giving it both capital and flexibility allows it to anchor the kind of multi-jurisdictional partnerships that HVDC lines require, combining federal patient capital with provincial and Indigenous investment.

The Clean Technology Manufacturing Investment Tax Credit adds another piece to the puzzle. It provides a 30% refundable credit on the cost of manufacturing equipment used to produce key clean-energy components, from batteries and solar panels to electrical transformers, converters, and high-voltage cables. For a national HVDC program, this credit can underwrite the industrial base that builds the physical backbone. Every converter station and transmission corridor depends on specialized, capital-intensive manufacturing of switchgear, rectifiers, and advanced power electronics. Locating that production inside Canada not only captures economic value but also shields the grid build from supply-chain volatility and import delays. If provinces or private manufacturers align their investments with this credit, Canada could anchor its own HVDC equipment production and feed a decades-long cycle of domestic infrastructure demand.

Canada already builds much of the equipment a national HVDC system would need. Hitachi Energy’s Varennes plant in Québec manufactures large HVDC transformers and converter components, supported by a new federal investment to expand production and simulation facilities. Domestic firms such as Northern Transformer in Ontario and PTI Transformers in Saskatchewan already produce high-voltage transformers for utilities across North America. This existing industrial and technical base gives Canada a running start toward scaling up the specialized manufacturing an HVDC backbone requires. The Clean Technology Manufacturing Investment Tax Credit wouldn’t be starting from a clean slate, but expanding on expertise and manufacturing we already have. It’s worth pointing out that Canada’s transformers and the steel and aluminum that are used to manufacture them are hit by Trump’s tariffs, so expanding our domestic market as well as seeking other markets is rational economic policy.

A new Major Projects Office is also being funded with over $200 million across five years to coordinate approvals, financing, and Indigenous participation for nationally significant infrastructure. Transmission lines suffer more from procedural drag than from lack of money. Each province has its own regulatory and consultation regime, and interprovincial lines often need federal environmental assessments as well. An office that can unify reviews, coordinate Indigenous engagement, and streamline permitting is more valuable to an HVDC build than another tranche of cash. Without institutional coordination, no amount of funding will move electrons across provincial borders.

The Build Communities Strong Fund, worth about $51 billion over ten years, offers another entry point. Most of its streams target local and community infrastructure, but its “direct delivery” arm explicitly supports regionally significant projects. HVDC lines do not exist in isolation—they need access roads, right-of-way preparation, and community resilience infrastructure along their routes. Using portions of this fund to develop corridor access or regional substations would reduce front-end costs and help rural and northern communities benefit from construction.

The budget’s new Critical Minerals Sovereign Fund also fits indirectly into the picture. With $2 billion over five years earmarked for domestic supply chains, it can strengthen the industrial base needed for HVDC hardware. Voltage-source converters, high-voltage cables, and advanced transformers all depend on specialized metals and manufacturing. Canada has the minerals but little downstream processing. Strengthening that supply chain reduces import dependence and cost volatility for large-scale transmission builds.

Then there is the broader infrastructure envelope—$280 billion over five years. It is framed around protecting communities, building competitiveness, and modernizing assets. That language captures transmission as easily as it does bridges or transit. As provinces look to tap those funds, HVDC projects should be positioned as resilience investments: infrastructure that keeps industries operating, cities powered, and renewable energy moving during extreme weather.

Finally, the budget builds out Indigenous participation funding, from consultation support to equity financing structures. Every cross-country transmission project will intersect Indigenous territories, and inclusion is non-negotiable. These programs can underwrite equity stakes and build capacity so that Indigenous nations are partners, not stakeholders. The combination of Indigenous equity mechanisms and Infrastructure Bank participation could define the financial model of a twenty-first-century national grid—shared investment, shared governance, and shared benefit.

One of the most important details in the 2025 budget is the removal of restrictions that previously prevented provincial and territorial Crown corporations from accessing federal clean electricity tax credits. Those utilities own and operate most of Canada’s generation and transmission assets, yet they were originally excluded from the incentive structure designed to decarbonize them. By lifting that barrier, the federal government made the 15% Clean Electricity Investment Tax Credit and related programs truly usable by the entities capable of delivering large projects. This change turns what was once a symbolic measure into a practical financing tool, allowing provincially owned utilities like Hydro-Québec, Manitoba Hydro, BC Hydro, SaskPower, and NB Power to apply the credits directly to capital costs for HVDC interties and other major grid upgrades.

Together, these mechanisms create the financial and institutional scaffolding for a cross-Canada HVDC system. They are not labeled as such, but they are ready to be connected. The Infrastructure Bank supplies capital, the Major Projects Office manages coordination, the community and critical-mineral funds handle the enablers, and Indigenous participation funding provides social license. The Clean Electricity Investment Tax Credit lowers the cost of capital for every eligible segment. The architecture of a national grid is already in the budget—it just needs to be built.

This transformation will not happen by decree, although strong federal leadership is necessary. It will take a decade or two of steady investment, technical cooperation, and Indigenous partnership. But the pieces are now visible. The tax credit lowers capital barriers. The Infrastructure Bank and Growth Fund provide patient capital. The provinces have active transmission projects that can double as HVDC corridors. The technologies are proven and Canadian utilities already run them.

The prize is a connected Canada where clean power moves freely across provinces, where hydropower balances wind, and where industries can electrify without fear of constraint. In a future where competitiveness is measured in clean terawatt-hours, the cross-Canada HVDC system is not a luxury project. It is the backbone of a modern electrified economy, waiting to be built.