Canada's power grid needs $293B infusion: report
Canada’s power grid will need an annual investment of $15 billion for the next 20 years in order to maintain aging facilities and meet rising demand, according to a report released Thursday.
Canada’s Electricity Infrastructure: Building a Case for Investment, a study funded by the Canadian Electrical Association and conducted by the Conference Board of Canada, suggests that a total investment of $293.8 billion is necessary between now and 2030 to service old infrastructure and boost power generation from renewable sources like wind, solar and biomass energy.
"We want to be open and frank with Canadians, because this will all be reflected in the price of electricity," says Pierre Guimond, president and CEO of the Canadian Electricity Association.
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Investment in Canada’s electrical grid was high in the 1970s and '80s, as power producers attempted to meet a significant growth in demand. The result was overbuilding, and supply overwhelmed demand. That helped to keep the cost of electricity low for several decades, but now major new investment is needed to replace worn out plants.
"Most of what is out there was built before 1980. We have been focused on keeping prices low and keeping reliability high for all these decades. We’ve maintained the system, but we’ve not added much large capacity to it, except for some Hydro Quebec projects," says Guimond.
"New neighbourhoods have popped up all over the country as the population increased and we became more urbanized, and this led to a lot of increase in the distribution sector investment."
According to the report, the largest chunk of the recommended investment — $195.7 billion — is required for power generation, with another $62.3 billion required to improve the distribution system and $35.8 billion for transmission.
The necessary investments in generation identified in the report include building new plants with renewable energy sources as well as refurbishing, repowering or retiring existing stations.
Quebec is the biggest generator of power in Canada, with a 2010 capacity of 47,013 megawatts (MW), while Ontario is second with 33,845 MW and British Columbia third with 15,093 MW. According to the report, Ontario is proposing the largest increase in capacity (11,572 MW), followed by Alberta (7,543 MW) and B.C. (4,258 MW).
Canada is a net exporter of electricity and diverts seven to nine percent of its capacity to the American market. Canada’s electricity sector employs 116,000 and contributed $24.6 billion to the economy in 2010.
Len Coad, director of environment, energy and technology policy for the Conference Board of Canada, says building a new diesel, fuel oil or natural gas facility costs about $2 million for every megawatt of generating capacity, while nuclear and coal technology costs about $4.5 million per megawatt.
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Refurbishing an existing facility can cost up to 90 per cent of building a new plant, he says.
"Essentially what it comes down to, especially for thermal plants – coal, natural gas, fuel oil, diesel – is at the end of the [plant’s] useful life, when you repower, you’re essentially taking everything out, leaving the site and the connection to the grid, and starting over," says Coad.
To generate the report, the Conference Board of Canada first identified all facilities that are operational, under construction, planned or proposed across the country. To determine future energy demand, Coad and his fellow researchers used the National Energy Board’s outlook up to 2020, and then did their own analysis to project demand to 2030.
The report forecasts a continued reliance on both public and private investment in Canada's electrical grid, without recommending specific arrangements.
"In B.C., Manitoba and Quebec, you have a private entity that’s actually building the generation facility, but the revenue stream is guaranteed or has strong assurances because there’s a long-term contract with a Crown utility. Here in Alberta, where I live, everything’s private, so you don’t have the same situation," Coad says. "But what should be public or private, we didn’t address."
"Consumers are the ones who pay for electricity, and because of these investments, they will be paying more for electricity," Guimond says. "But, I can add quickly to that, electricity in this country is a bargain – always has been, and if we have anything to say about it, always will be."