Federal Budget Funds Studies and Tax Credits to Expand Canada's Power Grids
Canada's latest federal budget allocates tens of millions of dollars for interprovincial transmission studies and expands investment tax credits to high-voltage intraprovincial projects, aiming to address grid fragmentation despite ongoing challenges in cross-provincial cooperation.
The cover of Canada's latest federal budget features imagery of transmission towers near the Churchill Falls and Gull Island power project in Labrador. 
Inside, the document sets aside tens of millions of dollars for studies intended to help governments plan interprovincial links, known as interties.
The budget allocated $26.4 million over 10 years to the federal natural resources department for data and modelling capacity. An additional $37 million was earmarked for the next fiscal year to conduct robust cost-benefit analysis of proposed interties and support cross-border cost-allocation discussions. Several transmission-related proposals have already been referred to the Major Projects Office as projects of national importance.
Efforts to connect provincial grids have faced setbacks in the past. The Atlantic Loop, introduced around 2020, contemplated 1,000 kilometres of two-way transmission lines connecting the Atlantic provinces to Quebec. A few years later, the project was abandoned due to rising costs and partner withdrawal.
Tim Weis of the Pembina Institute stated that intertie projects are complicated by high costs and the need for cooperation between provinces with different regulatory systems. Madeleine McPherson of the University of Victoria noted that models show interties make power more affordable and improve reliability during extreme weather. A more interconnected grid allows better access to lowest-cost resources like wind and hydro.
Beyond planning funds, the budget expanded investment tax credits to include high-voltage intraprovincial transmission projects, covering cables, towers, and transformers. The government forecasts the cost of these tax credit changes will be $2.4 billion from 2027 to 2031 and $36.1 billion over the following decade. Vittoria Bellissimo of the Canadian Renewable Energy Association described the tax credit changes as smart and practical for lowering transmission project costs for developers. 
François Bouffard of McGill University observed a shift toward energy sovereignty in Canada after Donald Trump's return to the White House in 2025, noting that energy sovereignty has gained importance in Canadian policy following shifts in U.S. political leadership.
Despite the new measures, criticism remains. Keith Brooks of Environmental Defence criticized the budget for overshadowing electricity infrastructure investments with larger funding for oil and gas projects.