Forget America. Build an East-West Power Grid.

It was my first real summer job. I had applied to be a data analyst at BC Hydro and the HR manager was calling with the good news. “Congratulations! You will be working in our power trading division, Powerex. Do you have any questions?”

“Yes,” I replied. “What exactly is power trading?”

I didn’t know it then, but I’d accidentally stumbled into what became a 15-year career in one of the most fascinating—yet perhaps least understood—aspects of Canada’s energy infrastructure.

My relationship with electricity to that point, like most normal people’s, was limited to using it and paying for it. I knew that power came from different sources of generation—hydro, nuclear, gas, etc.—but I had no idea that it could be traded.

I’d soon come to understand the intricate dance of buying and selling electricity across provincial and international borders. My career took me from BC Hydro to Wall Street and ultimately to Alberta. Along the way I learned how power was moved from one region to another, with a combination of transmission rights and power schedules. What I discovered was a system that, while highly sophisticated, remains strikingly unbalanced—favouring north-south connections with the United States while our east-west interprovincial connections remain underdeveloped.

At its core, power trading is like any other commodity trading, but with one key difference: electricity cannot easily be stored in large quantities. It must be generated and consumed almost simultaneously, creating a delicate balancing act between supply and demand that changes minute by minute. This means that unlike, say, oil or bananas, where trade tends to flow consistently from point A to point B, power flows often change direction hourly, responding dynamically to evolving system conditions across interconnected regions.

This is where trading becomes essential. By connecting different electricity systems, we can leverage complementary resources and demands across regions. Consider B.C.’s vast hydroelectric resources, which can generate abundant power on command. Meanwhile, Alberta might have excess wind power on particularly gusty days. Through interconnected grids, these complementary resources can be shared efficiently rather than wasted or duplicated. The larger the connected region, the greater the potential benefits.

It’s like how firefighters from Canada and Australia assist each other during their respective fire seasons. When it’s winter in Canada and our firefighters are available, they fly to Australia to help combat summer wildfires down under. When Australia’s fire season ends, their firefighters return the favour during our summer months. Power trading works on similar principles of resource sharing and mutual benefit. Yet despite the potential, our electricity system remains what energy researcher Pierre-Olivier Pineau has described as “balkanized”—provincially siloed systems with strong connections southward, but weak links between neighbouring provinces. Canada currently trades twice as much electricity across the U.S. border as we do across provincial borders. B.C., Manitoba, Ontario and Quebec each have larger interties with their southern counterparts than their provincial neighbours.

There’s a better way. We could build an east-west power grid, prioritizing strengthened connections between our provinces. To be clear, the east-west grid wouldn’t look like the TransCanada highway—a linear piece of infrastructure, running from coast to coast, isn’t practical. Long distances result in losses on power lines, and the physics of different parts of the electrical system make certain linkages more challenging and costly. Instead, an east-west grid would consist of enhanced regional pairings. For example, B.C. and Alberta are a natural fit, as are Saskatchewan and Manitoba, for their complementary resources. Ontario and Quebec, already reasonably large traders, could expand that partnership. And further connections between the Atlantic provinces—and potentially Quebec—offer significant regional opportunities. 

This idea isn’t new. It dates back to 1961, when Prime Minister John Diefenbaker’s government first proposed a national power grid that would span from the Pacific to the Atlantic. The ambitious plan was designed to make surplus electricity from remote northern hydroelectric projects available to industrialized areas of Canada. Diefenbaker’s cabinet established a federal-provincial working committee, hosted a first ministers’ meeting in 1962, and commissioned engineering studies to assess the benefits.

When Lester B. Pearson’s Liberal government took power in 1963, it effectively abandoned that vision, prioritizing electricity exports to the United States over domestic connections. His government authorized export agreements for up to 25 years while relegating the national grid concept to secondary status—a policy shift that would shape Canadian energy development for decades to come.

In the ’70s, there was another round of interest in interprovincial connections, and various regional initiatives emerged. In the east, the four Atlantic provinces and Quebec explored opportunities to share surplus power, which would reduce the region’s dependence on oil-fired generation. In the west, B.C., Alberta, Saskatchewan and Manitoba undertook extensive technical and economic studies on the potential for a Western Electric Power Grid. But these regional initiatives ultimately collapsed due to shifting economic conditions, disagreements about cost-sharing and benefit distribution, and, ultimately, a preference for exports to the larger U.S. market.

Why has the vision of a robust east-west grid remained largely unfulfilled since then? Several stubborn barriers continue to impede progress.

First, major transmission lines are extraordinarily difficult to develop. They’re expensive, face regulatory hurdles across multiple jurisdictions, and often encounter public opposition. For example, Manitoba’s 1,300-kilometre Bipole III transmission line, built to deliver power from northern to southern Manitoba, jumped in cost from $2.2 billion in 2007 to over $5 billion once completed roughly 10 years later. An east-west grid connecting the four western provinces would span at least 2,000 kilometres, with proportionally higher costs and complexities.

Second, the total benefits of interconnected grids can be hard to quantify (and finance) upfront. Valuing the economic benefits of specific sales agreements is one thing; valuing the benefits from having access to distant generating resources during emergencies and extreme weather—or other random events affecting system reliability—is far more challenging. These “known unknowns” can tip the scales in favour of regional integration when properly assessed.

Third, big projects like power lines always create winners and losers. The problem is that the people who might lose something (like land or control) fight harder against these projects than the many people who would gain small individual benefits fight for them. Provincial power companies want to keep their independence, communities don’t want giant towers in their backyards, and many other groups have their own reasons to say “no.” To make real progress on connecting provinces with power lines, we need to recognize who pays the costs and who gets the benefits, and find ways to make the deal fair for everyone.

Finally, there are “seams issues” where different market structures meet. Alberta has a deregulated electricity market with private companies that take investment risks, while BC Hydro operates as a Crown corporation with guaranteed cost recovery. Reconciling these different systems requires complex regulatory frameworks and market design changes that few have the political will to tackle.

While these barriers haven’t changed, the potential benefits of an east-west grid have grown substantially in recent years, driven by two major trends: the renewable energy revolution and rapid growth in electricity demand.

The rise of renewable energy, particularly wind and solar, represents a game-changer for interprovincial connections. These resources are inherently variable—dependent on weather conditions that can change rapidly. Wider geographic integration helps smooth out this variability. When the wind isn’t blowing in southern Alberta, it might be howling in northern B.C.. When cloud cover reduces solar output in Saskatchewan, clear skies might prevail in Manitoba.

Canada’s immense hydroelectric resources are perfectly suited to complement these intermittent renewables. Our reservoir systems act like giant batteries, storing water to generate power when wind and solar aren’t producing. BC Hydro’s system, for instance, can ramp production up or down almost instantly, providing reliable backup when the sun isn’t shining or the wind isn’t blowing. This relationship becomes increasingly valuable as more renewables enter the grid.

Meanwhile, electricity demand is projected to rise dramatically in the coming decades. Electrification of transportation, heating and industrial processes will require substantially more power. In 2024, the B.C. government announced that it would invest $36 billion into BC Hydro to meet this growing demand.

Affordability becomes increasingly important in this high-demand scenario. Interprovincial connections can optimize the use of existing resources and reduce the need for each province to build excess generating capacity for peak periods or emergencies. This shared capacity represents billions in potential savings across the national economy—a huge competitive advantage in an increasingly electrifying world.

As we look ahead, the case for strengthening Canada’s east-west grid connections has a new driving factor: the urgent need to reduce our dependence on the United States. While trade has historically been beneficial—in 2024, Canada exported nearly $3 billion worth of electricity to the U.S. while importing back roughly two-thirds of the volume at less than half the cost—this relationship is becoming increasingly uncertain.

This came into sharp focus when President Trump unleashed new trade tariffs earlier this year, accompanied by threats of annexation. For the first time in recent memory, provincial governments began expressing a shared interest in dismantling interprovincial trade barriers, including those that apply to energy. This emerging sense of Canadian economic patriotism has breathed new life into the decades-old vision of interprovincial power lines traversing our country.

Now, more than 60 years after Pearson abandoned Diefenbaker’s national grid vision, another Liberal government—this time under newly elected Prime Minister Mark Carney—is poised to refocus Canada’s electricity policy toward greater internal connections. Carney’s government has pledged to aggressively pursue national-interest projects in order to protect Canada, including an east-west electricity grid. This represents a dramatic shift back to Diefenbaker’s vision for the Canadian power system.

My first day at BC Hydro’s trading floor seems like a lifetime ago. What began as a basic question—“What is power trading?”—led me down a path of exploring one of Canada’s most significant infrastructure challenges and ultimately recognizing its immense opportunity.

The story of Canada’s east-west power grid is about more than just electricity. It’s about national identity, economic security and environmental leadership. It’s about whether we have the vision and political will to overcome provincial silos and build infrastructure that connects us as a nation.

The barriers remain substantial, but the benefits have never been clearer or more urgent. As we face the twin challenges of climate change and economic uncertainty, strengthening our interprovincial connections offers a pathway to a more resilient, sustainable and independent Canadian energy future.

The question is no longer whether we need an east-west power grid, but how quickly we can overcome the barriers to build it.

Blake Shaffer worked at Powerex—the trading arm of BC Hydro—and TransAlta Corp, an electricity company in Alberta, from 1999 to 2014. He is now an associate professor of economics at the University of Calgary.