Thermal generation—which includes natural gas, coal, oil-fired power plants, and nuclear reactors—generates $18.4B in annual revenue and accounts for nearly 40% of national electricity demand.
Amid a decarbonization context, the industry is continuing its transition: coal capacity is rapidly phasing out, while natural gas, abundant in Western Canada, is emerging as the replacement fuel.
The nuclear fleet, concentrated in Ontario, is gaining longevity through CANDU reactor life-extension programs. Despite regulatory pressure and fuel price volatility, the segment remains a strategic pillar for the country’s energy security, with 15 companies employing 15,877 highly skilled workers.
Three indicators highlight the current strength and challenges of Canada’s thermal power sector.
Total value generated by thermal power plants in 2024, up 4.4% year over year.
Profitability supported by long-term contracts and the transition from coal to gas, despite rising fuel costs.
Natural gas now accounts for half of the segment’s revenue, compared to just 6% for coal, reflecting the ongoing energy transition.
By 2029, electricity demand is expected to grow in line with economic recovery and the electrification of industrial uses. Thermal operators project 0.9% annual revenue growth, driven by:
For asset buyers and sellers, market consolidation—led by four public and semi-public groups—creates opportunities for the sale or acquisition of strategic units (gas, combined cycles, SMRs). While the residual value of coal infrastructure is declining rapidly, converting these assets offers an attractive growth pathway.
Investors with ESG expertise and secure fuel supply agreements will be well positioned to capture above-average margins while contributing to Canada’s national climate goals.
Three indicators highlight the current strength and challenges of Canada’s thermal power sector.
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