Electrification Requires more than Demand: Canada Needs the Manufacturing Capacity to Deliver it

August 20, 2026

By Electro Federation Canada

Canada’s electricity system is entering a period of significant change. Governments, utilities and industry are investing in the expansion and modernization of electricity infrastructure, while electrification, economic growth and new large loads are increasing demands on the system. 

Much of the conversation understandably focuses on how Canada will generate, transmit and distribute the electricity it needs. But there is another question that deserves greater attention: where will the equipment be required to build and modernize that system be manufactured? 

Electrification will create demand for electrical equipment. It does not guarantee that the manufacturing investment needed to meet that demand will happen in Canada. 

That distinction represents both an important economic opportunity and a competitiveness challenge. 

Electrical manufacturers produce the technologies that connect electricity to homes, businesses and industry and enable everything from grid expansion and electric-vehicle charging to new industrial facilities and data centres. As Canada invests in these areas, there is an opportunity to strengthen the domestic manufacturing capacity and supply chains needed to support that growth. 

New research from Electro-Federation Canada (EFC) shows that Canada can compete for this investment. But with manufacturers continuing to make decisions about where to deploy capital, future investment should not be taken for granted. 

Investment is happening, but the next decision matters

EFC’s 2026 Competitiveness Survey found that 40% of respondents had recently expanded or were currently expanding at a location already selected. Another 30% were considering future expansion. 

Among the expansion locations already selected, 65% were in Canada. 

That demonstrates Canada’s ability to attract electrical manufacturing investment. It does not guarantee that the next round of investment will land here. 

Every new expansion brings another location decision, and manufacturers weigh a combination of factors when deciding where to deploy capital. Investment that has not yet been committed remains an opportunity for Canada, but one that must be won. 

The most frequently cited factor in EFC’s survey was the availability of skilled labour, selected by 71.4% of respondents. Cost of land and buildings followed at 52.4%, while market access and proximity to customers was selected by 47.6%. 

The results challenge the idea that manufacturing competitiveness comes down to one factor or simply to finding the lowest-cost jurisdiction. 

Canada’s opportunity is to compete as a high-value North American manufacturing platform. Skilled workers, access to customers, transportation infrastructure, and integrated supply chains all contribute to that proposition. 

But those advantages must be supported by competitive investment economics. As manufacturers consider their next expansion, Canada must make a compelling case for why that investment should happen here rather than elsewhere. 

Focus on what Canada can influence

EFC members see Canada and the United States as broadly comparable on several important fundamentals, including market access, transportation infrastructure and proximity to integrated supply chains. 

Where Canada faces greater challenges is in areas such as land and building costs, capital investment incentives and corporate tax rates. These factors can materially affect the economics of a new plant, an expansion, or an investment in manufacturing equipment. 

Importantly, these are also areas where domestic policy can make a difference. Ultimately, they can influence which side of the border receives that investment. 

Trade relationships provide another part of the picture. 71% of EFC survey respondents manufacturing in Canada export to the United States. Predictable U.S. market access is therefore not simply an export issue for the electrical industry. It can influence the business case for investing in Canadian manufacturing capacity. 

Canada cannot control every outcome in international trade negotiations. It can, however, focus on ensuring that the domestic side of the investment equation is as competitive as possible. 

That becomes especially important during periods of uncertainty. Rather than waiting for external conditions to become clearer, Canada can strengthen the factors within its control. 

Investment incentives can shift the equation

One of the strongest findings in EFC’s survey concerns the potential impact of manufacturing investment incentives. 

Among organizations considering a manufacturing investment, 76% said a manufacturing investment tax credit would moderately to significantly increase their investment in Canada. 

That finding is particularly important because a significant share of manufacturers are still considering future expansion. Those investments have not necessarily been committed to Canada, and policy decisions can help influence where they ultimately occur. 

Canada has made significant investments in supporting electrification and clean electricity. But creating demand for electrical technologies is not the same as securing the manufacturing investment required to produce them domestically. 

Without competitive conditions for manufacturing investment, Canada risks creating growing demand for electrical equipment while more of the capacity needed to serve that demand is built elsewhere. 

If Canada wants to capture more of the economic value associated with electrification, the economics of investing in domestic manufacturing capacity must therefore be part of the policy conversation. 

EFC has advocated for manufacturing investment tax credits for critical grid and electrification products. The underlying principle is straightforward: if a technology is essential to delivering Canada’s clean electricity and electrification objectives, there is a case for considering the manufacturing equipment used to produce it within the investment framework supporting the clean economy. 

Investment tax credits are not the only tool available. Strategic funding, financing, procurement policies, industrial readiness, and the broader tax environment can all influence investment decisions. 

The objective should not be to rely on a single program or policy measure. It should be to create conditions in which Canada presents a compelling business case when manufacturers compare potential expansion locations. 

Manufacturing capacity belongs in the electrification conversation

This brings the issue back to Canada’s electricity ambitions. 

For years, much of the electrification discussion has understandably focused on creating and accommodating demand: modernizing the grid, connecting new generation, expanding charging infrastructure, electrifying buildings and transportation, and supporting new industrial and commercial loads. 

But every new connection ultimately depends on physical equipment. 

Transformers, switchgear, wire and cable, controls, distribution equipment and other electrical technologies must be manufactured and supplied before infrastructure can be installed. 

EFC has publicly emphasized that electrical and automation technologies are central to Canada’s electrification, energy security and supply-chain resilience. Its members operate across the technologies and supply chains that support electrical grids, buildings, transportation, and industrial systems.  

The manufacturing question therefore should not sit on the sidelines of electrification policy.  

It is part of the same conversation. 

Canada has demonstrated that it can attract electrical manufacturing investment. The opportunity now is to ensure that future investment continues to choose Canada. 

That outcome is not automatic.  

As demand for electrical infrastructure grows across North America, manufacturers will continue making decisions about where to expand plants, add production lines and invest in new equipment. Canada will be competing for those investments. 

The policy opportunity is to strengthen Canada’s investment proposition while those decisions are still being made. 

Canada has invested significantly in creating demand for electrification. The next step is to ensure that more of the manufacturing capacity needed to meet that demand is built here. 

The question is no longer simply how much electricity infrastructure Canada needs to build. It is also how much of the equipment required to build it can be manufactured domestically. 

Creating competitive conditions for manufacturing investment, including targeted investment incentives and support for expansion, can help Canada secure that opportunity, strengthen supply-chain resilience and capture more of the economic value associated with the expansion and modernization of its electricity system. 

Survey data cited in this article are from the EFC Competitiveness Survey 2026. Percentages reflect the respondent base for each question and may not sum to 100% where multiple responses were permitted.