WaterPower Canada has welcomed proposals in Canada’s 2026 federal budget that would give hydropower developers more time to qualify for clean energy investment tax credits. The measures form part of the federal government’s National Electricity Strategy, which the budget puts at more than C$50 billion.
The budget proposes extending the Clean Technology and Clean Electricity Investment Tax Credits to the end of 2040. It would also expand the Clean Electricity Investment Tax Credit to qualifying transmission equipment operating at or above each province’s highest voltage threshold and at 69 kV or above in the territories. The government estimates that the extensions and expanded transmission eligibility would cost a combined C$38.5 billion.
Lorena Patterson, president and chief executive of WaterPower Canada, said the extensions would give developers greater certainty given the time required to plan, permit and build hydropower projects. The association also welcomed the government’s decision to consult on a domestic content bonus for the two credits. The budget separately proposes C$37 million in 2027–28 to assess the costs and benefits of proposed grid interconnections and inform discussions on how to share costs across jurisdictions.
In Labrador, the budget highlights the Churchill Falls expansion and Gull Island development. The federal project breakdown identifies 1,275 MW of additional capacity from upgrades to the existing Churchill Falls units, up to 2,500 MW from a separate expansion and 2,700 MW from the new Gull Island station. In August, Ottawa announced up to C$10 billion in federal financial support for a wider package that includes the hydropower works, associated transmission and a Labrador wind project.
In Yukon, upgrades to the Mayo Hydro Facility would safeguard 15MW of existing capacity. The Atlin Hydro Expansion in northern British Columbia could add 8MW to Yukon’s grid and generate 31GWh each winter. The budget also proposes early support for the Taltson Hydro Expansion in the Northwest Territories and funding to help Indigenous, rural and remote communities reduce their reliance on diesel.
WaterPower Canada also welcomed the federal government’s intention to work with interested provinces and territories on financing large electricity projects. The association said the Canada Strong Fund, which would receive an initial C$25bn over three years, could provide another financing route. The budget cites a hydroelectric generation and transmission project as an example of the type of investment the fund could support.
