Study calls for modernizing how energy costs are evaluated  

OTTAWA, ON, Feb. 19, 2026 /CNW/ - Canada's clean energy transition is being guided by planning tools that fail to fully reflect reliability, capacity, and long-term system value, according to a new report released today by WaterPower Canada. The report, The True Value of Hydropower, finds that when electricity systems are evaluated on a system-wide and long-term basis, hydropower emerges as one of the most cost-effective and reliable clean energy resources available.

The study examines how simplified cost metrics, particularly the Levelized Cost of Energy (LCOE), are often used in public policy discussions, think tank modelling, and some provincial planning processes to compare electricity technologies. While useful as a high-level screening tool, LCOE does not account for whether electricity is available during periods of peak demand. LCOE analyses also frequently ignore the value of long-term assets, such as hydropower.

By contrast, system operators and utilities routinely use detailed planning models that account for reliability, capacity, and long-term infrastructure needs when designing electricity systems.

"Canada is planning a once-in-a-generation energy expansion, but the way we talk about cost hasn't kept pace with the complexity of the system," said Lorena Patterson, President and CEO of WaterPower Canada. "Short-term thinking in energy planning risks driving higher long-term costs for the next generations of Canadians. We need frameworks that reflect how electricity systems actually operate over decades, and ensure that as many Canadians as possible will have access to the most reliable and cost-effective electricity."

The report highlights that many wind and solar projects will require multiple rounds of reconstruction or repowering over the lifespan of a single hydropower facility, yet those future capital costs are rarely included in public cost comparisons. Hydropower, by contrast, typically incurs its core capital cost once and continues delivering energy, capacity, and flexibility for 80 to 100 years or more. Yet, analyses typically use a 20-30 year horizon.

Hydropower provides critical system value that supports the reliable integration of other clean energy resources over time. The report finds that simplified cost metrics have significantly shaped how energy costs are discussed in policy and public discourse.

"LCOE is a simplified screening tool, not a system planning framework," said Brady Yauch, Director, Markets and Regulatory at Power Advisory LLC, the independent consulting firm that authored the analysis. "When you account for the need to maintain reliability, replace short-lived assets, and invest in capacity over time, the economics change significantly. Long-lived resources like hydropower provide a level of system value that is largely invisible in conventional cost comparisons."

Using alternative methodologies that account for capacity value, asset lifespan, residual value, and replacement costs, the analysis finds that hydropower consistently becomes more competitive than it appears under simplified metrics. In several scenarios, the analysis shows that planning frameworks which rely on short-term cost metrics can underestimate long-term system costs for ratepayers.

A media primer summarizing the report's key findings is available here.

The full technical report, The True Value of Hydropower, is available here.

About WaterPower Canada

WaterPower Canada is the national voice of Canada's waterpower industry. As a not-for-profit trade association, WPC represents producers, manufacturers and developers who collectively account for more than 95 per cent of Canada's waterpower capacity. The association advocates for the responsible development and use of waterpower to meet Canada's current and future energy needs.

SOURCE WaterPower Canada