Canada's Energy Landscape: 3 Key Insights For 2025

On October 21, 2025, McCarthy Tétrault's National Energy Group hosted a cross-country panel event to discuss Canada's evolving energy landscape, regulatory reforms, and market trends. The session was opened by Seán C. O'Neill, Partner and Co-Lead of the National Energy Group, Business Law Group, Toronto, who emphasized the importance of Indigenous partnerships and reconciliation in the energy sector.

Panel Speakers

• Christopher Langdon (Partner, Co-Lead of Projects Group, Toronto)
• Lynn Parsons (Partner, Co-Head of Indigenous Projects & Transactions Group, Financial Services Group, Toronto)
• Gaëtan Thomas (Strategic Advisor, Toronto)

Western Canada Panelists

• Kimberly Howard (Partner, Energy & Infrastructure Groups, Co-Lead National Environ-mental Group, Calgary)
• Selina Lee-Andersen (Partner, Environmental, Aboriginal, Regulatory Law, Vancouver)
• Sven O. Milelli (Partner, Managing Partner BC Region, Business Law Group, Vancouver)

Eastern Canada Panelists

• Ljuba Djurdjevic (Counsel, Energy Regulation in Business Law Group, Toronto)
• Jacob Stone (Partner, Business Law Group, Québec City and Montréal)
• Mathieu LeBlanc (Partner, Business Law Group, Québec City)

The event delivered a comprehensive overview of regulatory reforms, Indigenous engagement, market trends, and cross-country energy developments, with opportunities for audience questions and discussion. Below is a summary of the key insights:

1. Major Federal Regulatory Reform: Bill C5 and the Major Projects Office

Bill C5 (Building Canada Act) is a landmark federal initiative streamlining regulatory processes for major infrastructure and resource projects deemed nationally significant.

Major Projects Office

The creation of the Major Projects Office ("MPO") aims to accelerate approvals, reduce duplication, and coordinate financing, with a goal of two-year approvals for national interest projects. The MPO is also tasked with attracting domestic and global capital, and integrating Indigenous consultation at every stage, signaling a major shift in how large projects are managed and financed in Canada.

Capital Initiatives

Government initiatives for financing major projects include the Canadian Infrastructure Bank, Canada Growth Fund, and Indigenous Loan Guarantee.

Approved major projects include the LNG Canada Phase 2, Darlington New Nuclear Project, Contrecoeur Terminal Container Project, McIlvenna Bay Foran Copper Mine, and Red Chris Mine Expansion. Further project announcements are expected mid-November 2025, April 2026, and July 2026.

2. Indigenous Participation and Consultation Embedded in Policy

Indigenous engagement plays a central role in project selection and approval, with policies emphasizing meaningful consultation and economic participation under Bill C5 and related provincial initiatives. These efforts aim to foster genuine collaboration and shared benefits.

Federal Policy

The federal government's adoption of UNDRIP principles (free, prior, and informed consent) and the formation of Indigenous advisory councils are reshaping project development, requiring prioritization of Indigenous partnerships and capacity-building in their strategies.

Reconciliation, consultation, and advancing the interests of Canada's Indigenous people is central to the entire major projects process. Bill C5 embeds existing legislation, including UNDRIP principles and the duty to consult under Section 35 of the Constitution.

Federal and provincial initiatives require economic participation from and consultation with Indigenous peoples.

British Columbia Examples

BC Hydro's competitive calls for power now require a minimum of 25% First Nations equity participation, with incentives for ownership up to 51%. In the most recent round, eight out of ten awarded projects achieved majority First Nations ownership.

There has been a surge in wind and renewable energy projects developed in partnership with Indigenous communities, reflecting a broader shift toward co-development and shared benefits.

The North Coast Transmission Line is being developed with co-ownership by affected First Nations, ensuring long-term economic and governance roles for Indigenous partners.

Electricity Purchase Agreements ("EPAs") in BC Hydro's procurement processes now include specific incentives for Indigenous benefits, such as credits for non-equity participation and Canadian content, further encouraging meaningful involvement.

Quebec Examples

Hydro Quebec is actively partnering with local and Indigenous communities in the development of large wind projects. These partnerships go beyond consultation, involving Indigenous groups as shareholders and project coordinators.

The first solar request for proposals ("RFP") in Quebec offer bonus points for Indigenous participation. While not mandatory, projects that include Indigenous equity or partnership receive higher scores in the selection process, encouraging developers to seek out these collaborations.

3. Cross-Country Updates: Provincial Regulatory, Market, and Transaction Shifts

There is a surge in M&A activity, joint ventures, and competitive procurement in renewables (wind, solar, storage), with incentives and requirements for Indigenous equity and Canadian content. This is paired with rapid updates to the regulatory frameworks to support growth and manage increased demands for electricity.

Alberta Electricity

Alberta is undergoing a major electricity market restructuring, with significant implications for project developers. Alberta has shifted from a zero-congestion transmission model to optimal transmission planning. This means electricity and transmission costs will now vary based on location and congestion levels, introducing new financial considerations for generators and developers.

The new rules introduce location marginal pricing, where the cost of electricity depends on where it is generated and consumed. Incumbent generators, those already energized, will be granted financial transmission rights for the first eight years of the new market, providing some relief from these location-based costs. The specifics of how these rights will be calculated and allocated are still under consultation.

Projects that are not yet energized but are in the later stages of the Alberta Electric System Operator ("AESO") connection queue or have paid their Generator Unit Owner Contribution ("GUOC") must act before December 1:

• A Final Investment Decision declaration may be submitted between October 15 and December 1. This declaration signals their commitment to proceed and secures incumbent status, making them eligible for financial transmission rights.
• Alternatively, developers can declare their decision to exit the AESO connection process by the same deadline, allowing them to receive a refund of their GUOC. If no action is taken, the project will not be treated as an incumbent and will not receive financial transmission rights; the GUOC will be refunded annually under the usual process after energization.

Alberta has also passed legislation allowing the independent system operator rules to be implemented directly by regulation, bypassing the traditional Alberta Utilities Commission approval process. This enables faster, more iterative changes to market rules and regulatory frameworks.

British Columbia

British Columbia has enacted Bill 14 and Bill 15 to streamline permitting for renewables and infrastructure, and is rapidly increasing procurement from independent power producers, with a strong focus on First Nations equity participation (up to 51% ownership in recent wind projects).

• Bill 14: By 2026, prices are expected to rise as export markets absorb more Canadian supply. However, project delays, regulatory hurdles, and shifting global energy demand remain risks, making execution and timing critical.
  • Bill 15: Focuses on infrastructure projects of provincial significance.
  • BC Energy Regulator: Expanded mandate for renewables, now provides a single-window for regulatory oversight. New regulations are expected in spring 2026.
• Bill 31 was also introduced to fast-track the North Coast Transmission Line, supporting industrial growth and export. The bill enables co-ownership of the transmission line with affected Indigenous communities and permits preferential access to industrial electrical supply, prioritizing natural resource development over emerging industries such as AI and data centers.

In response to BC's Clean Energy Strategy, BC Hydro has committed to regular procurement from independent power producers and demand side energy management, time bearing rate structures, and renewals for existing EPAs. BC Hydro's 10-Year Capital Plan is also increased by 50% to $36 billion, focusing on upgrades to transmission infrastructure to achieve additional capacity.

BC Hydro also implemented several new EPA provisions in its 2025 Power Call including additional credit for non-equity First Nation benefits, tariff adjustment mechanisms, and a BC Hydro right of first refusal.

BC LNG Canada successfully loaded its first cargo for export to Incheon, South Korea on June 30, 2025, officially putting Canada on the map as an LNG exporting nation. By 2026, prices are expected to rise as export markets absorb more Canadian supply. However, project delays, regulatory hurdles, and shifting global energy demand remain risks, making execution and timing critical.

Ontario

In April 2025, Ontario enacted Bill 5, and later in 2025, Bill 40 (Protect Ontario by Securing Affordable Energy for Generations Act), both aimed at limiting foreign participation in Ontario's energy market. These underscore a strategic shift toward bolstering domestic control and investment in energy infrastructure. Some other recent market and regulatory updates include:

• New procurement programs implemented throughout 2025 include long-term and medium-term RFPs, capacity auctions, and corporate power purchase agreements for participants in the industrial conservation initiative.
• Market Renewal Program, launched in May 2025, overhauls wholesale electricity market to enhance efficiency, transparency, and competitiveness.
• In July 2025, the ISO initiated registration for a new transmitter selection framework, establishing a competitive process for selecting transmitters for specific new transmission projects.
• The Local Generation Program, set to launch in 2026, is designed to support local energy generation by introducing a competitive process where proponents can propose their required operating price, moving away from standardized offer pricing.

Quebec

Hydro Quebec is actively scaling up its renewable energy portfolio. In May, Hydro Quebec unveiled a new plan to reach 3,000 MW of solar energy by 2035. For wind, Hydro Quebec's action plan aims to add up to 10,000 MW of wind energy by 2035. The approach involves partnerships with local and Indigenous communities, with Hydro Quebec acting as coordinator, shareholder, and off taker, especially in the early stages.

A major development is the new agreement between Newfoundland & Labrador and Quebec to replace the historic Churchill Falls power purchase agreement. The agreement also calls for infrastructure upgrades, including a 10% capacity increase at Churchill Falls, a second powerhouse (800 MW), and the Gull Island facility (2,250 MW), with Hydro Quebec leading development and Newfoundland & Labrador Hydro taking over operations.

While Hydro Quebec is taking a more active role in coordinating and investing in large-scale renewables, the private sector remains important for mid-sized projects (up to 350 MW), ensuring technical expertise and development experience are leveraged.

Nova Scotia/Atlantic

Nova Scotia is advancing the Wind West project, a large-scale offshore wind initiative with phased licensing and buildout. The project is expected to expand in tranches, potentially reaching 62 GW—about 27% of Canada's projected electricity demand.

The Canada-Nova Scotia Offshore Energy Regulator, originally focused on oil and gas, has had its mandate expanded to include offshore wind. It is overseeing the pre-qualification process and will manage future calls for tenders, ensuring regulatory oversight and facilitating project development.

The Atlantic provinces have launched the Eastern Energy Partnership, a joint initiative to transform regional energy production and transmission. Inspired by the Atlantic Loop concept, it includes major transmission infrastructure buildouts, such as an island-to-mainland link for Prince Edward Island and pipeline connections between Quebec and New Brunswick.

The region is also supporting the development of green hydrogen, leveraging new electricity supply from wind and hydro projects. Interprovincial links, including transmission and pipeline infrastructure, are being planned to facilitate energy exports and support the growing hydrogen industry.

Conclusion

Our team of experienced professionals will continue to provide insights and support to help you address opportunities and challenges in this dynamic sector.

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