Electrification is an opportunity for Canada to expand its economy, with the potential to add C$3.1 trillion and unlock more than 1.6 million jobs by 2050 compared to a business-as-usual scenario, suggests a new report.

The key is to grow the economy alongside the grid, meeting the large-scale development needed to double electricity supply with job growth and expanded capital access, says New Economy Canada.

“The modelling shows how the electricity system can be a catalyst for economy-wide growth, supporting more jobs and higher incomes across the country,” New Economy Canada Executive Chair Merran Smith told The Energy Mix.

“When people have more money to spend, it supports local businesses and growth in their community.”

The report assesses overall growth, jobs, and sectoral changes in two different scenarios. A business-as-usual scenario assumes 50% growth in electricity demand by 2050 and a 5% increase in electrification, along with stable or growing fossil fuel prices and falling costs for clean technologies. An electrified-economy scenario assumes double the growth in electricity demand, alongside more than a 16% rise in electrification, flatlined fossil fuel prices, and plummeting costs for clean technologies.

In this scenario, two enabling conditions were required to realize the full potential economic gains, write the researchers: Expanding the labour force, and accelerating firms’ ability to secure capital for new projects.

The model shows how the two scenarios produce differing results for economic growth and job creation. Electrifying the economy would bring in about $5 in economic benefits for every dollar invested in the power sector, New Economy Canada says.

The difference comes from the substantial development needed to build up the grid and meet higher electricity demand.

“Doubling electricity supply and electrification is going to take a lot of people and a lot of investment,” Smith said. When New Economy Canada modelled that scale of buildout, the grid grew at the expense of other sectors by drawing away workers and capital.

But “removing the limit of work force and investment—as governments are actively working to address—allows for the electricity system to grow while also enabling growth across the economy.” In the business-as-usual scenario, the electricity system grows more slowly and offers less economic opportunity, meaning that work force and investment don’t need to expand as much to avoid limiting overall growth.

The economic gains from electrification would be felt across various sectors, with the largest relative gains showing up in construction sectors. The services sector would receive the largest overall benefit at $1.2 trillion as people spend their higher incomes. Other sectors—ranging from agriculture, to mining, to industry and manufacturing—would also benefit. The only losses would fall on the fossil fuel energy sector.

The modelling results “demonstrate that electrification is not simply a strategy for growing the power sector,” the report states. “It is a strategy for growing the entire economy.”