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Canada Power Report Q1 2012
Business Monitor International, Jan 2012, Pages: 61
Business Monitor International's Canada Power Report provides industry professionals and strategists, corporate analysts, power associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Canada's power industry.
BMI View:
Both industry-specific and macroeconomic factors continue to underpin BMI's view that Canada's mature electricity market will see a moderate rise in generation and consumption in the coming years. Macroeconomic headwinds, coupled with uncertainties over the renewal of renewables subsidies in some of the Provinces, have prompted us to a slight downward revision of BMI's forecasts for Canada's power sector. That said, and despite Canada 's decision to withdraw from the Kyoto Protocol, BMI still expects that renewable projects will dominate the pipeline in the coming years.
BMi has long held the view that Canada, which enjoys the advantage of a diverse and balanced electricity mix thanks to its abundant indigenous resources, will increase its electricity generation and consumption moderately in the coming years. Risks of a potential economic downturn in the country going into 2012 have now prompted us to pencil in a slight downward revision for consumption, which is now expected to reach 561.67TWh in 201 2 (compared to a previous forecast of 564.5TWh).
Furthermore, BMI has also intervened on its capacity forecasts for renewable sources (namely solar and wind) on the back of protracted uncertainties, as the generous Feed-in-Tariff (FiT) schemes adopted by some of Canada's provinces have been under scrutiny for months, with negative effects on investor confidence and installation rates. In spite of these short-term concerns, BMI maintains its view that in the medium-to-long renewable projects are to dominate the pipeline.
Canada currently enjoys the advantage of a diverse and balanced electricity mix, thanks to its abundant indigenous resources. However, the Canadian Electricity Association and the IEA have estimated that by 2030 utility companies will need CAD134bn in investment for generation and CAD103.6bn for transmission and distribution to ensure long-term stability in supply. Provincial energy strategies strongly reflect a growing desire to increase both the use of green resources and the capacity of transmission networks. Furthermore, the country will need to substitute its ageing thermal capacity, especially if it is to meet its ambitious carbon emission reduction targets.
In light of these elements, key themes for Canada’s power sector this quarter include:
- The victory of the incumbent Liberal government in Ontario has prevented the Conservative party from cancelling the province's entire feed-in-tariff (FiT) scheme, if elected. The Conservatives had pledged to intervene on the scheme retroactively, scrapping the incentives offered to Samsung’s wind project among others.
- Nonetheless, the rate of installation in the Province has slowed down substantially, owing to the Liberals’ post-election decision to slash the number of power proposals eligible for the current generous 20-year fixed rates. The retroactive cap is part of an expected review of Ontario’s FiT programme.
- Canada's Northland Power launched commercial operations at the Spy Hill gas-fired peaking plant in Saskatchewan, Canada, on October 19 2011. Under a 25-year power purchase agreement (PPA) with Saskatchewan Power, the plant is to supply power to the Saskatchewan power grid. The 86MW plant, featuring two 6000 natural gas-fired simple-cycle turbines from General Electric, has been constructed under a joint venture (JV) between Aecon Group and Black & Veatch.
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