The great recalibration: Canada’s energy transition and the European opportunity

The following article draws upon the remarks given by Thomas J. Timmins to the Legal Working Group of the World Wind Energy Association on September 24, 2026.
 

Canada is currently executing a historic recalibration of its energy policy, trade relationships, and legal frameworks. For international wind energy developers, suppliers, and legal advisors—particularly those based in Europe—this transition presents an unprecedented, multi-billion-dollar market opening.

Understanding Canada’s evolving energy sector opportunities requires mapping the macro shift in U.S.-Canada trade, sweeping federal tax and permitting reforms, the push for national transmission corridors, and distinct provincial procurement opportunities from coast to coast.

U.S. integration and Canada’s pivot towards Europe

To understand Canada’s current trade pivot, one must first appreciate the sheer scale of its economic integration with the United States. Approximately $3.6 billion in trade crosses the Canada-U.S. border each day.^[1] The reliance is deeply entrenched: in 2025, 67% of all Canadian goods and services exports were destined for the U.S., while 58% of Canada's imports originated from its southern neighbour.^[2] Canada’s footprint at the state level is massive, serving as the top export destination for 34 U.S. states and the top import source for 21 states, surpassing both China and Mexico.^[3] This relationship is defined by highly integrated, cross-border supply chains, with nearly 50% of all bilateral goods trade occurring between related companies.^[4]

However, recent U.S. protectionism—ranging from domestic content requirements to sweeping tariffs—has exposed the strategic vulnerability associated with concentrating so much Canadian trade in a single market. In response, Canada is actively diversifying its trade relationships, including by deepening ties with Europe. In September 2026, Canadian and EU leaders discussed moving beyond the Canada-EU Comprehensive Economic and Trade Agreement (CETA), expressly identifying energy security as an area for deeper cooperation.^[5]

This shift builds on existing opportunities for European firms. For developers, engineering, procurement, and construction (EPC) contractors, equipment manufacturers, and their counsel, CETA^[6] already provides an established framework for immediate, actionable access to Canadian public procurement. Where a procurement falls within CETA’s coverage, EU goods, services, and suppliers are entitled to treatment no less favourable than their Canadian counterparts. For European EPCs and equipment manufacturers, this includes guaranteed rights to bid on Canadian public and Crown corporation procurements once specific financial thresholds are met, allowing them to bypass domestic preferential policies on major infrastructure projects.

Federal catalysts: Capital, permitting, and grid expansion

At the federal level, three developments are particularly important for project development: tax incentives that improve project economics, regulatory changes intended to streamline approvals, and transmission policy aimed at expanding the grid infrastructure needed to connect new generation projects and serve growing demand.

Federal tax incentives are materially improving the economics of clean energy investment. The federal government has fundamentally de-risked clean energy capital through its suite of refundable Clean Economy Investment Tax Credits (ITCs), which are expected to provide more than $93 billion in federal incentives. Bill C-15 (Budget 2025 Implementation Act, No. 1)^[7] introduced the 15% Clean Electricity ITC and enhanced several previously enacted ITCs. The suite also includes a 30% Clean Technology ITC for eligible investments such as wind turbines and battery storage. Because these are refundable credits, eligible claimants can receive cash payouts even if no tax is owed, provided they meet applicable prevailing wage and apprenticeship requirements to obtain the full credit rate.

Simultaneously, regulatory gridlock is being dismantled. Recent amendments to the Physical Activities Regulations under the Impact Assessment Act (IAA) have removed interprovincial transmission lines and offshore wind projects from the federal Project List, reducing overlap with review by the Canada Energy Regulator (CER).^[8]

Canada is also moving toward a more integrated national electricity grid—the “United Canada” grid—through complementary provincial, territorial, and federal initiatives. This grid will support explosive load growth, including growth driven by artificial intelligence and hyperscale data centres. In March 2026, Ontario launched the National Energy Corridor Partnership,^[9] an interprovincial-territorial initiative to advance new transmission projects and strategic interties across Canada, followed in May 2026 by the federal government’s National Electricity Strategy.^[10] The goal is to aggressively expand interprovincial transfer capacity, with major projects like British Columbia’s North Coast Transmission Line already in motion.

Provincial procurement: Opportunities from east to west

The mechanics of project development vary significantly across the provinces, creating unique regional opportunities, all supported to varying degrees by federal initiatives:

• Nova Scotia (East):

  The province is pioneering offshore renewables with the "Wind West" project, aiming to tap into a world-class offshore wind resource capable of powering up to a quarter of Canada's electricity needs.^[11] Supporting this momentum, the federal and provincial governments have designated Canada’s first four offshore wind energy areas, while the Canada-Nova Scotia Offshore Energy Regulator (CNSOER) has launched the first call-for-bids process. At least eight proponents have pre-qualified, with the formal call for bids expected later in 2026 for up to 5 GW of offshore wind capacity.

• Quebec and Newfoundland and Labrador (East):

  In August 2026, Quebec and Newfoundland and Labrador reached a historic, multi-billion-dollar agreement to upgrade the Churchill Falls generating station and develop the Gull Island project.^[12] This builds on the immense Lower Churchill Project, which already encompasses the 824 MW Muskrat Falls hydroelectric facility and the Maritime Link connecting the provincial grids. Crucially, this new agreement grants Newfoundland and Labrador up to 985 MW of transmission capacity to independently export its power through Quebec to the U.S. Hydro-Québec also launched a major wind procurement in April 2026 targeting 1,500 to 3,000 MW of installed capacity, with requirements relating to Quebec content and social acceptability.^[13]

• Ontario (Central):

  The Independent Electricity System Operator (IESO) awarded 20-year contracts for 1,315 MW of wind and solar capacity in its April 2026 LT2 Window 1 energy procurement.^[14] In June 2026, the IESO added three battery storage projects representing 640 MW of capacity, bringing the LT2 secured total to 1,750 MW of new supply across the capacity and energy streams.^[15] Developers should immediately prepare for LT2 Window 2—which is expected to introduce new repowering and domestic content rules—as well as the Long Lead-Time (LLT) procurement, targeting resources with a development horizon of more than five years.^[16] To support this massive influx of generation, Ontario is embarking on an unprecedented transmission build-out, highlighted by the bulk transmission plan and the new "Toronto Third Line" project, which will be procured competitively through the province's new Transmitter Selection Framework (TSF).^[17]

• Alberta (West):

  Alberta’s renewable development model has historically relied heavily on corporate Power Purchase Agreements (PPAs), supported in part by industrial carbon pricing. More recently, “bring your own generation” policies are becoming increasingly important as the province seeks to accommodate massive data centre loads without imposing the associated generation and infrastructure costs on the broader grid.

Structure early for Indigenous equity and foreign investment review

While the opportunities are vast, the Canadian market is uncompromising in its new legal realities.

Indigenous equity ownership should now be seen as a strict commercial prerequisite. In the recent Ontario LT2 procurement, every single winning bid included at least 50% Indigenous equity ownership. To finance these stakes, First Nations are leveraging significant government-backed financing programs, including the federal $10 billion Indigenous Loan Guarantee Program (ILGP) and various provincial equivalents.

International developers must also carefully navigate the rapidly evolving Investment Canada Act (ICA). The national security review mandate has expanded to scrutinize "economic security" and the protection of critical supply chains. New rules coming into effect mandate a suspensory, pre-closing notification for investments in prescribed sensitive sectors—even for non-controlling minority stakes.

For international developers, the path forward is clear: structure Indigenous partnerships early, engage specialized legal counsel for ICA clearance well before closing, and fully leverage CETA thresholds to build a lasting footprint in the Canadian market.