The Need for Strategic Clean Energy Tax Credits

Targeted to Transform Canada’s Electrical Grid

My role as President and CEO of JFE Shoji Power Canada affords me a responsibility and commitment to our country’s sustainable and clean energy future. While Canada’s new Clean Electricity Tax Credit System (ITC) is an encouraging step forward, we need to see policies that go beyond simply incentivizing electrical generation and storage. Our grid requires replacement, renewal, and expansion, and tax credits should encourage investments and initiatives that help us in that endeavour.

Seeing the Bigger Picture

The Interconnected Electrical Grid

The Clean Electricity ITC currently provides valuable incentives for investments in clean electricity generation systems, stationary electricity storage systems, and interprovincial electricity transmission equipment. These components are vital but narrow in scope. We need comprehensive solutions that address the efficiency, renewal, and expansion of the entire electrical grid. 

Our electrical grid is more than just a collection of generation and storage facilities. It is an intricate network that must be modernized and expanded to handle the increasing demand for clean energy, improve reliability, and reduce energy losses. We need strategic tax credits that support innovations and investments in grid efficiency, smart grid technologies, and the necessary infrastructure upgrades and expansion.

How Strategic Tax Credits Can Provide Impact

ITCs Need to Cover the Whole System

• Inspire and Incentivize Investment: Policies on electrification, and the speed at which our country expands our electrical grid for expected future demand, is provided through legislative leadership. Sales goals for zero emission vehicles and clean energy generation incentives only represent the extremities of a broader system. Equipment supply chains and utilities, critical middle elements, must be similarly incentivized.  Equipment such as electrical power and distribution transformers need to be eligible for Clean Energy ITCs.
• Foster Innovation: By broadening the scope of tax credits to include grid efficiency, equipment upgrading and replacement, and modernization, we can encourage the development of new technologies and solutions that make the entire system more robust and efficient. This includes key electrical equipment like transformers, smart grid technologies, advanced metering infrastructure, and automated control systems.
• Support Grid Renewal and Expansion: Many parts of Canada’s electrical grid are aging and in need of significant upgrades.  Strategic tax credits can help drive investments in renewing and expanding the grid, ensuring it can support the increased load from renewable energy sources and electric vehicles. Equipment OEMs alone will not invest without some assurance of demand.
• Enhance Reliability and Resilience: A modern, efficient grid is more resistant to disruptions caused by natural disasters, cyberattacks, and other threats. Investments in grid infrastructure ensures a consistent, reliable supply of electricity to all Canadians.
• Reduce Energy Losses: An efficient grid minimizes energy losses during transmission and distribution. This not only saves money but also reduces the environmental impact of energy production. Strategic tax credits can support technologies and practices that enhance grid efficiency.

A Call to Action

Leadership and Legislation for a Holistic Approach

To achieve a truly sustainable and resilient electrical system, we need leadership and legislation that recognizes the interconnected nature of the grid. This means:

• Expanding Tax Credit Eligibility: Include investments in grid infrastructure and equipment, efficiency improvements, and smart grid technologies under the Clean Electricity ITC.
• Encouraging Comprehensive Solutions: Incentivize holistic approaches that integrate generation, storage, and grid management.
• Promoting Public-Private Partnerships: Facilitate collaborations between government, private sector, and research institutions to develop and deploy innovative grid solutions.

Strategic Tax Credits Can Inspire a Sustainable Future

By expanding the Clean Electricity ITC to cover the entire electrical grid, it can inspire a wave of innovation and investment that transforms our energy system. This holistic approach will support the generation and storage of clean energy, ensuring that it is delivered efficiently, reliably, and sustainably to every corner of the country.

I urge our policymakers to advocate for strategic tax credits that drive comprehensive investments for the clean energy companies building our clean electrical energy grid, and to provide the leadership needed to do this quickly to meet our stated goals. Together, we can build a clean energy future that is resilient, efficient, and truly sustainable.

Ron Harper 
President/CEO 
JFE Shoji Power Canada