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Nordic Cooperation on Electricity Holds Big Lessons For Canada, Case Study Finds

As it seeks to decarbonize the grid, Canada’s “balkanized” power sector has much to learn from longstanding Nordic co-operation, policy advisor Shawn McCarthy writes in a recent case study for the Canadian Climate Institute.

Denmark has become “one of the world’s leading producers of variable renewable energy, with wind power alone accounting for 47% of its domestic supply in 2021,” McCarthy writes. That standing owes significantly to its “robust connections with other Nordic jurisdictions that supply power when the wind isn’t blowing.”

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Having worked together for more than a generation “to build a market of two-way trade that facilitates cost efficiency, flexibility, and carbon emission reduction,” Denmark, Norway, Sweden, and Finland have since expanded their system of interjurisdictional cooperation to the Baltic states as well as the European Union.

Canada’s “highly balkanized” electricity system stands to learn much from such cooperation, which extends far beyond matters of transmission capacity to “include formal links that facilitate planning and grid security coordination.”

“Harmonization of data and of supply/demand modelling is required to ensure maximum grid efficiency,” McCarthy notes.

“And harmonization of markets has been another key feature of the Nordic success,” he writes, adding that in its absence, “co-operation among provinces will be more challenging.” 

In stark contrast to the Nordic example, Canada is a patchwork of power sector fiefdoms, “with most provinces guarding access to markets, maintaining highly concentrated decision-making, and championing in-province supply options over regional interties.”

That’s despite multiple experts urging that “consumers would be well-served by greater interprovincial co-operation on grids, especially as we work to decarbonize,” McCarthy says, citing several recent reports and studies.

Canada “would see the greatest benefits from increased trade between hydro-rich provinces like Quebec, Manitoba, and British Columbia, and fossil-dependent neighbours that are building out renewable power capacity in their efforts to decarbonize.”

The long history of Nordic cooperation “goes back more than 100 years, to 1915 when the first undersea cable was laid between Denmark and Sweden,” McCarthy explains. The Nordic Council of Ministers, formed in 1972, has also played a critical role, consistently keeping energy co-operation on the radar of its four member states.

Other highlights in the region’s timeline include the 1995 establishment of Nord Pool, the first international power exchange, which initially operated between Norway and Sweden, with Finland and then Denmark joining over the next few years. “Estonia, Latvia, and Lithuania joined the market between 2010 and 2012, connected by three underseas transmission lines to their Scandinavian neighbours.”

But the increased efficiency and lower costs that have resulted do not owe solely to more capacity and restructured markets. Regional governance structures play a key role, with the Nordic Regional Security Coordinator established in 2021 to maintain a reliable power supply over both the short and long term.

But those seeking to advance the cause of interprovincial electricity trade in Canada will most certainly “need to recognize the inevitable political resistance,” McCarthy adds, like populist elements in Norway that have been agitating for reduced power exports.

So proponents “must find ways to communicate the benefits of cooperation. And find ways to strengthen economic and social bonds so that increased electricity trade is part of a broader shared agenda.”

One flaw with the otherwise laudable Nordic cooperation on electricity is that there is little evidence of Indigenous involvement in project planning and implementation. The situation is very different in Canada, where Indigenous communities are increasingly “demanding their seat at the table,” McCarthy says.

“The construction of interprovincial transmission lines will require their participation,” he stresses.

The “clear lesson for Canada,” the case study concludes, is the need “to get started with joint projects and some pilot programs,” because “Canada’s patchwork of provincial electricity systems cannot go from virtually nothing to effective integration in one fell swoop.”