Small modular reactors investment

It's a new year, so we're unpacking what 2026 could bring for Canada's energy sector. Host Trevor looks back at 2025, from shifting federal policy to rapid AI adoption. Then he scans the horizon: faster major project approvals, an east–west grid push, and new hydro and small modular reactor investments in Ontario. He also touches on AI-powered DER programs, battery storage, and wider support for industrial decarbonization. Plus a quick note on the podcast's new pace.

Related links

● Independent Electricity Systems Operator (IESO): https://www.ieso.ca/

● Save on Energy program: https://www.saveonenergy.ca/

● Trevor Freeman on LinkedIn: https://www.linkedin.com/in/trevor-freeman-p-eng-8b612114

● Hydro Ottawa: https://hydroottawa.com/en

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Transcript:

Trevor Freeman 00:00

Welcome to a thinkenergy short hosted by me, Trevor Freeman. This is a bite sized episode designed to be a quick summary of a specific topic or idea related to the world of energy. This is meant to round out our collective understanding of the energy sector, and will complement our normal guest interview episodes. Thanks for joining and happy listening. Hi everyone, and welcome back and Happy New Year. Welcome to 2026 this is the first think energy podcast episode of this new year. Happy to be here with you. I'm your host, Trevor Freeman. So last year, we started off 2025 with a little bit of a look forward at some of the energy stories we might see throughout the year. And I think this goes without saying, 2025 was a pretty eventful year when it comes to energy and politics and all things associated with that certainly had lots of twists and turns, more than any of us expected. But I kind of think that's just the new normal in all things this during this time of history, but certainly when it comes to energy as well, I think we should just expect every year to be unexpected, lots of twists and turns. So I think the best way to start this one is to look back at some of the things we said we were keeping our eye on at the beginning of last year and see how they turned out, and see whether or not our predictions or guesses were correct and kind of what happened throughout the year. So just for a little bit of context, when we recorded this episode last year, Justin Trudeau, Canada's Prime Minister at the time, had just resigned the leadership of the party and as prime minister. So we knew that a new leader was coming for the Liberal Party, and likely a federal election was on the horizon. And at the time, the Conservative Party in Canada was much more popular with voters according to polls, and it looked very much like there would be a new government, a new federal government, but that is not what happened. And I'm sure Canadians will know that is not what happened. So after Justin Trudeau resigned, the liberals climbed in the polls. They chose Mark Carney to lead them, and not long after they won the election. Now in the episode last year, I had said that should the Liberals stay in power, which seemed like a long shot at the time, but should the Liberals stay in power? We knew what their energy policy was. They would keep the carbon the price on carbon. They would invest, continue to invest, in clean energy infrastructure and continue working towards their net zero goals. They had been working on that that was kind of a main pillar of the liberal party's approach to governing, and that felt like a safe bet. But even that did not come to pass. On his first day in office, Mark Carney canceled the price on carbon, and soon after that, he paused the previous government's EV target, or target to achieve certain sales on electric vehicles, and just recently, he has signed an MOU to work with Alberta on a new bitumen pipeline. So that is a little bit different than what we expected, should a Liberal government continue? So why is all this happening? Well, this, this isn't a politics podcast, so we're not going to get into all the specifics, but plainly stated, the government is saying they want to position Canada as a leader, both in clean energy, but also economically. And there are some economic pressures that the government is under, and this is what they are saying that is the best way to move forward in that so we'll get to some of the outlook on the new government, or not so new anymore government, but the current government shortly. But let's have a look at some of the other things that we said might happen for 2025 last year, we noted that utility companies would likely continue to use AI to streamline their processes and monitor infrastructure and just really take more advantage of AI. Personally, I can say that AI has moved forward in ways that we couldn't even predict last year, at least that, you know I couldn't predict last year. I'm sure there's folks out there who totally saw where this saw where this was going, but AI really is taking off in our personal lives, certainly in the workspace and definitely in the utility space as well. So we saw some of that come true, but we also see that AI is capable of way more than that in the energy sector, like all sectors of the economy and all areas of society are really looking at new ways to use AI and figure out what's the best way to integrate this into our business. How do we take this from pilot projects to, you know, actual core parts of our business? So that's continuing for sure. We also said that electricity companies or utility companies would continue to invest in. Grid modernization, and that certainly is happening. In August of 2025 the federal government announced a plan to spend over $13 million to update Ontario's power grid, with five major projects on the horizon, which is a huge investment, and investment of this size is really intended to make the system more reliable and help manage projected electricity demand. And you know the other thing, and I'm sure I've talked about this before on other episodes, so you'll be aware that hydro Ottawa is still in the in the process of getting approval for our next five-year plan, which has big investment in reliability and modernization and supporting continued electrification. And of course, we talked a little bit about the trade conflicts with the US, and you know how Canada is responding to that. And certainly, that was a major piece of 2025 it really formed a lot of the policy, or influenced a lot of the policy of both our federal government as well as provincial government when it comes to energy projects, it's increasing that look kind of east to west, rather than north to south. So making sure that we have good interprovincial energy cooperation and collaboration. And certainly, we've saw some progress on that throughout 2025 so on the sort of provincial side of politics, again, I'm in Ontario here, so we had suggested that we would likely see a provincial election in 2025 and certainly that's exactly what happened. The Ontario Conservative Party won another mandate, and part of their approach since they've come back into power, or one that new mandate is to look to expand clean energy, look to expand our nuclear fleet in particular. And we'll talk a little bit more about this in a little bit. So that's kind of a summary of the 2025 outlook that we did a year ago. Now let's get into what might we see moving forward in 2026 and again, you know, just the caveat here, this isn't a politics podcast. This is strictly about energy. So going to try not to weigh in on one side or the other of some of these issues, just highlighting what we might see moving forward. So, first off, major projects. So in 2025, this sort of newly elected Prime Minister of Canada, Mark Carney, founded the major projects office. This department looks to streamline the approval process for what they consider nation building projects. You know, trying to help take the approval process for those projects to be like a two-year decision rather than a five year decision under that kind of previous process that it went through. On the website for this the Liberal Party states that they open the major projects office in part to build clean energy infrastructure quickly, and of the 11 nation building projects that they've announced so far, they are categorizing eight of those 11 as clean economy projects. On top of these, Mark Kearney reiterated his commitment to building an East West electricity grid, which would link those our provinces together and help, like I said earlier, help that flow of electricity east to west, you know, between provinces improve, rather than, you know, right now, we have a lot of great north south connections between us and the United States. So the intent is that these projects will really position Canada as a leader in clean energy, help us achieve our own carbon reduction and net zero goals and ensure that we can manage growing demand for electricity. So we're in very early days of those projects yet, and what I'm highlighting here is that we expect to see a lot more information about those projects, about how they're going to proceed, timelines, etc, during the course of this year, and likely even see some new ones get added to that to that current list. So speaking of major projects, our next item that we're keeping an eye on is the Alberta to BC pipeline. This definitely has been a big news item in the latter part of 2025 and as we move into 2026 we expect to see a lot more about it and hear a lot more about it. So near the end of 2025 the federal government smart Carney signed an agreement with Alberta's Premier. Alberta's government, led by Danielle Smith, and this agreement acknowledges the plan to collaborate on and expedite the approval process for a new pipeline, which will transport oil from Alberta to the coast of BC. And the federal government is calling this a nation building project, and it would streamline the review process for this pipeline. So really make it a lot easier to get through the various hurdles in order to actually be built. And sort of initial timelines are saying Construction is expected to start in 2029 So still a few years out. But this pipeline was controversial before the agreement was signed. So this pipe. China has been on the books, or, you know, in the plans for a while, and it was controversial to start with, and this agreement has, you know, only made it more so it was really skyrocketed this project into the public's eye, and there's a lot of controversy around it. Once the announcement went public, Liberal MP, Stephen Gilbeau resigned from the Prime Minister's cabinet citing the government's decision to walk back their climate commitments. So this is definitely controversial, mainly because a new pipeline will increase fossil fuel production by, you know, at least a million barrels per day is sort of the current estimate, which is counter to Canada's stated target of reducing greenhouse gas emissions and achieving net zero emissions by 2050. In addition, BC's Premier, David Eby, also opposes the project, arguing that the federal government moved ahead without meaningfully considering BCS concerns British Columbia's concerns, particularly around environmental risk and the spill response on BC's sensitive coastline and on their marine ecosystem, which would be put at risk by adding another pipeline in the area that they're talking about. In addition to that, many indigenous people in BC and elsewhere stand against the pipeline, and the government is still looking for indigenous stakeholders as part of this project. Now, Mark Carney and Danielle Smith both say they want Canada to reach its net zero target by 2050 but even after the deal was signed, Alberta announced some changes to its industrial carbon pricing mechanism that, you know, in a sense, weakened that tool, which a lot of people are kind of pointing at to say, clearly, climate targets are not a key driver in consideration in this. And so this there's a weakening of the climate tools that we do have in place is not a great sign, and we'll leave it at that. So there's a few caveats to this deal. First, the pipeline is only supposed to move forward if there's real progress on carbon capture. In other words, the pipeline and large-scale climate capture are kind of being treated as a package. So in theory, you shouldn't get one without the other. But carbon capture is yet to be implemented at scale. It's not clear that it's actually a viable solution, something that can actually have a meaningful impact at that scale. So it remains to be seen whether or not that that can actually happen second. And this is a big one, the pipeline needs a private sector partner to actually build it, and nobody stepped up for that yet. So it's important to know that this agreement between the federal government and the Provincial Government of Alberta is just to help streamline the process. Should a private sector partner come along to actually build this, the federal government's not saying they're going to fund it and build it, which is sort of contrasts with how the previous Liberal government traded a pipeline many years back. But we won't get into that here. So all that to say, don't expect any actual movement or shovels in the ground on this one anytime soon. And certainly, as this progresses, there will be lots of legal challenges, and sort of you know, there are, there are people on both sides of this, but we will hear a lot more about this in 2026 it's going to be a big news story. Things are going to happen, and we'll hear both from proponents of the pipeline as well as opposition to the pipeline throughout this year, it will definitely be a big energy story here in Canada and even beyond that, Okay, next up investments in Ontario, so let's look a little bit closer to at least home. For me, on a greener note, Ontario will expand its clean energy sector in 2026 the government has announced several new partnerships with indigenous groups, including two large scale hydroelectric dams in northern Ontario. We talked a little bit about that in a previous episode, and they've also committed $4.7 billion to refurbish and update existing hydroelectric facilities to make sure that they can continue to provide clean electricity well into the future. So some of these new stations, there's the Nine Mile rapids project and the Grand Rapids project. They are coming online, you know, at a time when we really do need additional capacity on our grid. So ISO, as I've talked about many times, ISO is predicting that by 2050 we'll see a 75% increase overall in the province. But specifically in northern Ontario, demand for electricity will increase by over 80% and to meet that demand, there's, you know, this is an all tools in the toolbox. Kind of approach here, in addition to all the other great things that are happening, distributed energy resources, energy efficiency, etc, we also do need more infrastructure, more generation. The government also wants to expand Ontario's nuclear fleet. This is a government that's very keen on using nuclear. Energy and expansion of our existing nuclear assets as an important tool to provide emissions free electricity. One big step that they've taken towards this goal is investing $3 billion into four small modular reactors, which will produce, you know, 1200 approximately 1200 megawatts of energy, which is a lot that's enough to power over a million homes. Construction on these started in 2025 but the reactors aren't expected to come online until 2030 but the important point is that the government is very keen, as I said, on nuclear energy, looking to expand our emissions free electricity in order to meet our growing electricity demand, but to do so in a way that still tries to approach our climate targets and make sure that we're providing emissions free energy. Okay, next step is AI we talked about this last year, and it's well, it'll be a topic of conversation for many, many years to come. So AI and electrification, lots more in store. This year, it'll be a key investment area for energy companies. Moving forward, for sure, we'll see utilities continue to use it to build smart grids, for example, to analyze the flow of electricity on their grids in real time. And hydro Ottawa is no different. We're a part of that as well. So just in the last few weeks here, at the very end of 2025 in December, the federal government announced a $6 million investment into hydro Ottawa's der accelerator program. And part of that program looks to utilize AI to help us analyze electricity demand manage it. So this program really looks to partner with customers in specific areas, areas of constraint, to leverage their own devices. So customer owned devices like smart thermostats, battery storage systems in order to help us manage electricity demand. And we'll use AI as a function of that, or as a tool to help us do that to really forecast when we need to take action and what action we can take. But AI goes well beyond that. So electrification is going to grow. Overall, electricity demand is going to grow. We're going to see more utilities looking for solutions like large scale battery storage systems in order to tackle that demand. These systems, the storage will help relieve the grid from additional stress and better utilize the infrastructure that we do have in place. So lots more to come on, the sort of next gen of technology when it comes to AI and grid mod and how we're going to use those to help manage this growing electricity demand that we're seeing Next up, and our last kind of main topic is decarbonization. So that's not anything new. Obviously, if you're listening to this podcast, you'll know that we talk about this all the time, and it's one of the main drivers of what's happening in the energy industry right now. But decarbonization continues. It's not a constant flow of progress in the same direction. There's sort of ebbs and flows, if you will. We saw lots of change on the decarbonization front in the last year, but it continues to be something that organizations need to figure out. We know that we need to decarbonize as a society. Our different sectors of the economy all need to figure out how they're going to decarbonize, and the stakeholders of that really need to figure out what their role is. So the ieso, as one of those stakeholders, has also been focusing on their own decarbonization support, but mainly Their support has been focused on transportation and building heating. But we expect there to be, you know, a bit of a broadening of that look from the ISO in 2026 looking at other sectors like mining, paper, steel, you know, cement production, refining, chemicals, etc, the list goes on. So really look to see potentially more support for others, other areas of the economy, and how they will achieve decarbonization with, you know, could be industry specific programs or initiatives. We should probably see more of that in the coming year. But that's not to diminish from the existing programs that are already in place, and we'll see more leverage of, for example, of the ISOs existing save on energy incentive programming which helps existing commercial businesses, industrial businesses, residential customers, really target energy efficiency, energy reduction in the in the decarbonization in their own lives or workplaces. So there will be continued leverage of that. Utilities will continue to promote that. So expect to see that be a big piece of 2026 so that's the areas that we've that we've identified in 2026 it'll be interesting to look back a year from now to see you know what happened? Was it in line with what we said here? What came out of the blue that we totally didn't expect? Or what was a bigger deal than. Maybe we thought it would be but really look forward to this year. We've got lots of great conversations planned with some fantastic guests, and really looking forward to exploring some of these topics. Certainly, looking for you guys to connect with us and interact with us. Send us a note, find us on social media. Think energy at hydro ottawa.com is our email address always looking for guest recommendations, topic recommendations, questions, feedback. I'd certainly love to hear from you. You might know it's a little bit of a change in how we do things in 2026 we're certainly committed to continuing to bring you great content and great guests, but we might be shifting to maybe more of a monthly format, so really focusing on bringing those experts on, giving us the time and the space to plan those episodes, to coordinate with the guests and bring you great content. So we'll be looking at one episode a month moving forward, but always happy to hear from you. So if you have thoughts on that format or again topics, guests certainly reach out. Okay, so that wraps up our first episode of the year. Like I said, really looking forward to getting into all the great content this year with you guys. Thanks for tuning in. Happy New Year, and we'll chat with you again soon. Thanks for tuning in to another episode of The think energy podcast. Don't forget to subscribe wherever you listen to podcasts, and it would be great if you could leave us a review. It really helps to spread the word. To spread the word. As always, we would love to hear from you, whether it's feedback comments or an idea for a show or a guest. You can always reach us at thinkenergy@hydroottawa.com.