Opinion: Canada’s hydro power problem is all the barriers blocking it |
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Opinion: Canada’s hydro power problem is all the barriers blocking it
We have many potential sites but costly overlapping approvals take too long and financing doesn't recognize how long-lived the assets are
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One of the most persistent misconceptions in Canada’s energy debate is that the best sites for large-scale hydroelectricity have already been developed, while what remains is marginal, impractical or environmentally untenable. It’s a convenient narrative, but it’s not true.
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Canada still has an estimated 150,000 megawatts or more of untapped hydro power potential. That’s nearly double the country’s current capacity and is equivalent to the output of almost 500 small nuclear reactors. Moreover, roughly 10,000 megawatts consists of identified projects already on the books — viable, scoped and in many cases years into planning. These projects are stalled by decisions within our control: policy, regulatory timelines and financing conditions.
Hydro power already provides more than half of Canada’s electricity and more than 86 per cent of its renewable generation. It is the backbone of our system. Without it, we have no credible path to electrification at scale.
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Electricity demand is projected to increase by as much as 80 per cent by 2050, yet we are failing to expand one of the few forms of generation that can meet that demand reliably. Much current discussion focuses on expanding wind and solar. It’s true that battery storage can help manage short-term fluctuations. But sustained, on-demand generation remains essential. Hydro power makes the electricity system work: it provides firm, dispatchable electricity that stabilizes the grid and ensures reliability during peak demand and supply shortfalls.
So why aren’t we building?
The first answer is regulation. Hydro power projects must navigate federal and provincial permitting, overlapping jurisdictional requirements and Indigenous partnership and consultation — processes that are often unpredictable in scope and duration. Timelines can stretch well beyond a decade. Costs escalate. Investors hesitate or walk away.
Much near-term opportunity lies in upgrading and expanding existing facilities, not building entirely new ones. Such projects are often more cost-effective and have a lower environmental impact — yet they face the same regulatory burden as new developments. That limits one of the most practical pathways to expanding capacity.
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Everyone agrees that environmental protection and Indigenous participation are non-negotiable. But duplicated reviews and undefined timelines add cost and risk without proportional benefit. Canada has created processes that make it much easier to announce climate targets than to build the infrastructure required to meet them. Streamlining these processes — without weakening their substance — is a legitimate and necessary reform.
The second barrier is financing. Hydro power projects are capital-intensive. Large facilities can cost tens of billions of dollars upfront. The estimate for Gull Island in Labrador is roughly $25 billion. On the other hand, projects are also built to last and often operate for 80 to 100 years or more.
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The relevant question is not simply what a project costs upfront, but what it costs relative to the alternatives over its full lifespan. Hydro power’s longevity makes it valuable: it delivers stable electricity over generations while reducing the need for repeated reinvestment in shorter-lived infrastructure. Over time, that makes it one of the most cost-effective sources of electricity available.
In Canada, hydro power projects are typically developed through a combination of public investment, regulated utilities and structured partnerships that depend on predictable timelines and stable financing frameworks. Hydro power can attract private capital, but only where regulatory timelines are predictable and there is clear certainty around cost recovery. Incentive programs are often designed for shorter-term projects, while investment tax credits exclude many large-scale projects because of their development timelines.
In earlier decades, Canada did not shy away from projects of the scale now required to meet the country’s future electricity needs. Major hydro developments were treated as nation-building efforts and were backed by public investment and long-term planning. Today, however, ambition comes wrapped in red tape.
Federal financing tools are not designed for long-duration infrastructure. Fixing that is ultimately a policy choice. Projects like Gull Island, the Churchill Falls expansion and proposed pumped storage facilities are not speculative ideas. They are real opportunities to expand capacity and strengthen the grid. What’s lacking is not feasibility but urgency.
Hydro power gives Canada a structural energy advantage most countries envy: abundant, reliable, domestic supply that is largely insulated from global price shocks. Squandering that advantage is a choice that has real consequences.
If governments are serious about electrification, affordability and energy security, hydro power needs to be treated as strategic infrastructure. That means streamlining approvals, setting clear timelines, designing financing tools that reflect how long-lived these assets are and making hard decisions about who pays.
Canada is not running out of hydropower. It is running out of excuses not to build it.
Lorena Patterson is president and CEO of WaterPower Canada.
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