Canada’s EV transition could cost more than $300B by 2040

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Canada’s electric-vehicle transition could cost more than $300 billion by 2040 as the installation of charging infrastructure expands, upgrades to the electrical grid are made and other changes take place, according to a report released by Natural Resources Canada.

The report, an update to a 2021 study that Natural Resources Canada also commissioned, forecasts that Canada needs to significantly accelerate the pace of installing charging infrastructure to add 40,000 public charging ports per year on average between now and 2040. That is a big increase given that there are currently around 32,000 public ports across the country, and roughly 11,000 public charging ports were installed in 2023.

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Montreal-based consultant Dunsky Energy + Climate, the author of both reports, said its latest forecast significantly increased its estimate of the public charging ports needed by 2025 to 100,520 from about 52,000 in its previous estimate in 2021.

“The general message for 2025 is there’s no risk of overbuilding,” said Jeff Turner, the consultant’s director of clean mobility, who worked on both the 2021 and 2024 forecasts.

He said the big increase was because he took a more granular approach, studying each region’s needs and benchmarking his estimates against similar forecasts in the United States this time.

The largest cost cited in the report is upgrading the electrical grid between 2025 and 2040 to support the growing number of electrical vehicles on the road.

Noting that there is ample uncertainty about how the grid will be updated during the next 15 years, the authors put forward three possible scenarios on what it will cost to build new electric-generation plants and install the associated transmission and distribution.

The low-end price tag was $26 billion, while the high end was $294 billion. A middle estimate pegged the cost at $94 billion.

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Anna van der Kamp, executive director of Natural Resources Canada, said that the grid upgrades are “doable.” Canadian utilities have invested $23 billion into the grid per year on average in recent years, according to her data.

“There is a lot of uncertainty about how this is all going to play out,” she said about the EV and energy transition, “but I think it’s important to note the scale of investments that is already happening on an annual basis.”

As for meeting the report’s target of 100,520 charging ports by 2025, van der Kamp said “it would be challenging,” adding that it is not an official federal target.

She said the federal government has already invested $1.2 billion in EV charging infrastructure, and that the number of charging ports in Canada grew about 72 per cent last year to 26,395 ports from 15,368 at the end of 2022.

Today, van der Kamp said there are roughly 32,500 charging ports across Canada. She said charging ports are installed on a seasonal basis, so it is too early to extrapolate how many will be added by the end of 2024.

Although the Dunsky report forecasts it could cost $17.7 billion to install the necessary charging infrastructure by 2040, she said the government alone won’t bear all those costs. Some private companies are building chargers for their employees; some retailers are building ports to attract consumers; and some companies are investing in charging networks in order to make a profit.

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The report assumes Canada will meet its zero-emission vehicle targets, Turner said.

Currently, the federal government has mandated that all new vehicles sold in Canada be zero-emission vehicles by 2035, with interim targets of reaching 20 per cent by 2026 and 60 per cent by 2030. Those mandates have received pushback from some automakers.

Brian Kingston, president of the Ottawa-based Canadian Vehicle Manufacturers’ Association, a lobbying organization for several automakers, has said the mandates are not realistic because a lack of charging infrastructure is deterring some would-be EV buyers.

Some reports have suggested that may be true. For example, a lack of charging station availability was cited as a top concern by 72 per cent of consumers who would not consider purchasing an EV, according to an Autotrader Canada survey conducted in March.

Kingston said EVs currently represent less than three per cent of the light-duty fleet on the road. That’s not enough to encourage companies to invest in charging stations to make a profit because the charging ports won’t be used enough, he said.

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He is also dubious about the ability to install an average of 40,000 charging ports per year between 2025 and 2040, saying he sees 10,000 per year as more realistic.

“Ambition doesn’t match reality,” he said.

Still, Turner said the federal government’s EV mandates have helped utilities create supply and demand targets so they can prepare for the EV transition.

The report said the greatest need for public charging ports exists in communities where EV drivers may live in condominiums or apartment towers and lack access to home-charging ports.

“Probably the biggest shift is recognizing there’s a really important need for level 2 charging infrastructure,” Turner said, referring to the type of charging typically found in a home or workplace that replenishes a battery over a matter of hours.

Of the roughly 100,000 charging ports needed by 2025, he said roughly 90 per cent could be level 2 chargers, not fast chargers that can replenish a battery in minutes.

“A lot of public conversation around installing new chargers focuses on people taking long trips and wanting to get back on the road quickly,” Turner said.

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But he said there’s a far greater need for public level 2 chargers that EV drivers can use to replenish their batteries while working or shopping in their own communities.

Turner’s forecasts beyond 2025 look more similar to his forecasts from 2021. For example, although he sees a need for 93 per cent more charging points in 2025 than he had predicted several years ago, his forecast for 2030 predicts only 20 per cent more charging points than he had forecast in 2021 and the number needed by 2035 essentially remained unchanged.

Van der Kamp said most EV owners have access to charging ports at home, but an estimated one-third of Canadians live in multi-unit residential buildings and may not have access to charging ports at home.

She said the federal government is looking closely at the country’s needs as it funds new charging infrastructure.

“We’re ranking projects based on their ability to fill gaps,” she said.

• Email: gfriedman@postmedia.com

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