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Abstract Typically, electrical space-heating implies a very poor load factor on generating plants. This is unfortunate because space-heating could be a major potential market for electricity; the low load factor, however, means that without a new approach, electricity is unlikely to be cost-competitive. The hybrid system is proposed as a solution to this problem, by using electricity as the "baseload" heating source with a back-up oil or gas furnace for "peaks". This concept indicates the electric system could achieve very high load and capacity factors and offer substantially lower costs for space-heating than at present: conceivably as low as $1 per million BTU oil equivalent. It could also displace substantial fossil-fuels in the space-heating market. THE ELECTRIC HYBRID OPTION The fierce climate and long distances in Canada make Canadians more dependent on energy resources than virtually anyone. However, there seems to be an electricity option for Canada that could allow widescale low-cost substitution for dwindling fossil fuels. It involves not so much new hardware technology as it does a new operational technique that might be conceived as a maximum baseload electric system. We call this approach the electric hybrid theory. If the theory can be proved in practice, home-heating bills can be cut almost in half, oil imports substantially reduced or eliminated, and electrical manufacturers will have a huge new market for their products. Electricity is an obvious substitute for fossil fuels. As an energy source, it is already familiar to consumers. Furthermore, Canada is blessed with many good hydro sites, something like 25% of the world's proven reserves of uranium, and about 250 billion tons of coal. The technology to exploit these resources for the generation of electricity is well developed, most notably the CANDU natural-uranium reactor system, and long-range transmission and distribution systems to tap large or distant hydro sites. Compared to oil, the electricity system is technically as well advanced and with virtually unlimited potential. How can this potential be put to optimum use within the context of all available resources and prevailing energy cost levels? ELECTRIC SPACE-HEATING Although there are technological limits on how well electricity can substitute for fossil fuels, most notably in the transport sector, a major market that electricity has recently begun to penetrate is space-heating. Close to 10% of all space-heating in Canada is currently done by electricity, sometimes by individual room resistor grids, and sometimes by an electric furnace connected to forced-air ducting. Electric space-heating has some advantages over fossil fuels: it allows much more precise temperature control and is typically considered cleaner. Generally, however, it has not turned out cleaner, despite remarkably low-cost generating potential in Canada, and this has been a major constraint on further market penetration up to now, although recently there has been renewed interest in central Canada as fossil fuel prices rise. However, what may not be appreciated generally is that without a new approach the significant climate characteristics in Canada are likely to limit electric space-heating from a cost standpoint even is the alternatives go up in cost. The problem is the weather.