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Reduced hydropower generation in Canada and low natural gas prices in the U.S. have resulted in a jump in U.S. exports of electricity to Canada since 2023, according to estimates by the U.S. Energy Information Administration (EIA).
The U.S. and Canada have been each other’s main electricity trade partners for decades, and for most of the past two decades, Canada exported much more electricity to the U.S. than it imported.
However, cheap natural gas in the U.S. and consequently, cheaper power prices, made U.S. electricity more competitive in Canada last year.
In addition, hydropower generation in Canada, the country’s primary source of electricity generation, was slashed amid drought conditions in western Canada which reduced inflow to water reservoirs, the EIA said.
Last year, the U.S. was still a net importer of electricity from Canada, but U.S. exports jumped by 70% from 2022, while the U.S. monthly average imports from Canada slumped by 36%.
The decline in imports from Canada was large enough that by September 2023 the United States switched to become a net electricity exporter to Canada on a monthly basis. This trend continued for five of the following nine months, according to EIA’s Quarterly Electricity Imports and Exports Report.
Although electricity exchanges across the United States and Canada remain relatively small, representing less than 1% of their respective total generation, the trade is important to grid balancing, especially during drought conditions in Western Canada, the EIA notes.
U.S. domestic electricity demand has been soaring over the past year, due to the AI and data center boom, and the U.S. is using growing volumes of natural gas to meet the increased consumption. Power-generating companies are announcing plans for the highest volume of new natural gas-fired capacity in years.
Natural gas-fired electricity generation in the United States has jumped year-to-date compared to the same period last year, as total power demand rose with warmer temperatures and demand from data centers.
