2026 Federal Budget: What It Means for Canada’s Power Sector

On November 5, 2026, the federal government tabled Budget 2026: Masters of Our Destiny. Like the name suggests, Budget 2026 is focused on strengthening Canadian sovereignty, attracting investment to the country and diversifying trade and technologies.

Power is a central theme of Budget 2026, which treats electricity as a strategic national asset. Building on the Powering Canada Strong strategy (see our bulletin here), Budget 2026 commits more than C$50-billion to the sector and advances the National Electricity Strategy through tax credit changes, targeted funding, regulatory amendments and support for major projects.

Key Takeaways

Power-related highlights of Budget 2026 include the following:

Clean Electricity and Clean Technology Investment Tax Credits

The Clean Electricity Investment Tax Credit (CE ITC) and Clean Technology Investment Tax Credit (CT ITC) currently expire for property that becomes available for use after 2034. Budget 2026 would:

• Extend both to property that becomes available for use before 2041, with the CT ITC phase-down to 15% moving from 2034 to 2040
• Expand the CE ITC to intra-provincial transmission lines built to operate at or above the highest voltage used in each province (and 69 kV in the territories), for property acquired and available for use on or after Budget Day (eligible property broadly includes cables, towers, lattices and transformers, but not buildings, distribution equipment or certain international transmission property, with further details to be released at a later date)
• Introduce a domestic content bonus of up to 10 percentage points under the CT ITC and up to 5 percentage points under the CE ITC, with scope and parameters to be set through 60 days of targeted consultations

Together, the extension and transmission expansion are expected to cost C$2.4-billion (from 2027–2028 to 2030–2031) and C$36.1-billion (from 2031–2032 to 2041–2042).

Building Out and Connecting the Grid

Consistent with Powering Canada Strong, Budget 2026 recognizes the need for large-scale electricity infrastructure build to meet Canada’s projected doubling of electricity demand by 2050. Related funding proposals include:

• Nearly C$4-billion over 10 years, starting in 2027–2028, for electricity infrastructure, renewable energy and priority projects, including new funding for the Smart Renewables and Electrification Pathways Program
• C$37-million in 2027–2028 for cost-benefit analysis of proposed provincial and territorial interties and cross-border cost allocation
• C$26.4-million over 10 years to Natural Resources Canada for system planning data and modelling
• C$6-billion over 6 years, starting in 2028–2029, to deploy emerging generation technologies such as solid oxide fuel cells
• A commitment to work with interested provinces and territories on new financing approaches for the largest electricity projects, although Budget 2026 does not describe these approaches or set aside funding to build interprovincial transmission

Regulatory Framework

Budget 2026 proposes C$22.9-million over 5 years for Environment and Climate Change Canada to update the Clean Electricity Regulations (CER) (see our bulletin here) and develop equivalency agreements with provinces and territories, where appropriate.

The net-zero by 2050 goal would be maintained, and the changes would be subject to consultation. The government also intends to update the federal industrial carbon pricing benchmark and to explore linking carbon markets across Canada with the provinces and territories.

Nuclear Energy

Budget 2026 proposes C$518.5-million over 5 years, starting in 2027–2028, and C$18.1-million thereafter to implement the June 2026 Nuclear Energy Strategy (see our bulletin here), including: C$261-million to Natural Resources Canada for supply chains, research and development, and research reactor readiness, C$127-million to Atomic Energy of Canada Limited, C$131.1-million to the Canadian Nuclear Safety Commission to prepare for new projects and become the sole federal regulator for nuclear energy projects, and C$17.5-million to Global Affairs Canada for export promotion.

Budget 2026 also confirms support for the Darlington New Nuclear Project: up to C$2-billion from the Canada Growth Fund, C$970-million in Canada Infrastructure Bank financing, access to the CE ITC and an approximately C$715-million federal-provincial loan guarantee enabling seven Williams Treaties First Nations to acquire a significant minority interest.

Major Projects

In support of the Major Projects Office and Bill C-39 (the Building Canada Strong Act) (see our bulletin here), Budget 2026 proposes to establish a new major projects management entity with specialized technical and project development expertise to help manage risks and keep approved projects on track.

Budget 2026 proposes C$187.4-million over 5 years, beginning in 2026–2027, and C$24.2-million in future years to launch and operate the major projects management entity, which will have an initial focus on the Mackenzie Valley Highway and the Taltson Hydro Expansion.

Northern and Remote Communities

Budget 2026 proposes C$1.6-billion over 10 years, starting in 2027–2028, for northern energy reliability. This includes C$713.8-million to help Indigenous, rural and remote communities transition from diesel and fossil fuels to renewables, and C$929.1-million to replace and upgrade aging northern infrastructure, including the Mayo Hydro Facility and Atlin Hydro Expansion.

Demand-Side Measures

Budget 2026 highlights the previously announced C$2-billion National Heat Pump Rebate (for up to 820,000 households), and proposes C$587-million over 5 years for more than 55,000 additional electric vehicle chargers and C$400-million over 7 years for the Strategic High-Efficiency Industrial Facilities Transition program.

Budget 2026 also commits to giving Canadian artificial intelligence (AI) companies access to 500 megawatts of sovereign AI compute through new financial tools (e.g., backstops and offtake agreements). Our bulletin regarding Canada’s AI for All Strategy can be found here.

Looking Ahead

The Budget signals that the federal government sees electricity build-out as central to Canada’s energy security and sovereignty. However, many measures still require legislation, regulatory amendments or consultation. Next steps include the 60-day domestic content bonus consultation, details on eligible transmission property, consultation on CER amendments, the industrial carbon pricing benchmark update and the progress of Bill C-39 through Parliament. Our team is closely monitoring these developments.

For more information, please contact the authors or any other member of our Power and Energy Regulatory groups.