Major changes in works for Canada's electrical grid
By Zach Dubinsky, CBC News
Posted: Mar 30, 2011 6:04 PM ET
Last Updated: Apr 1, 2011 4:27 PM ET
The power structure in Canada is changing — not the government, but the country's electricity infrastructure.
By 2020, where electricity comes from and how it gets to your door will have undergone an unprecedented overhaul. Windmills will dot the landscapes of the Great Lakes and remote B.C. Smoke from coal plants will be buried in Saskatchewan and Alberta. A massive underwater cable will feed voltage from Labrador to as far away as New England.
It's all part of a complex series of initiatives that will reformulate everything from who produces the energy that powers your stove or dishwasher, to how they produce it, to your own power consumption habits and how much you'll pay each month.
"Electricity is one of the basic fuels of the economy. Not much happens without it," says Pierre Guimond, CEO of the Canadian Electricity Association, an industry group. "So getting the basics done correctly — yeah, we've got a lot on our plates."
CBC News has analyzed hundreds of studies, contracts, reports, strategy documents, maps and statistics about the country's electrical future. Many of the details have never before been gathered and shared with the public. We've produced the first map, for example, of every major generating station that's operating in Canada today or forecast to start up by 2020. And we've calculated what it will likely cost for your electricity, based on each province's current power generation strategy — and the surprising array of companies you'll be buying it from.
Will there be enough?
To the tens of millions of North Americans who spent many hours in the dark during the blackout of 2003, the question lingers: Do we generate enough electricity to meet the growing needs of homes and businesses, and do we have a robust enough grid to stave off future outages?The CN Tower is silhouetted against the setting sun as a blackout grips Toronto on August 14, 2003. As many as 10 million people in eastern North America were affected by the massive power failure. (Andrew Wallace/Reuters)
In 2003, Ontario, Canada's second-largest powerhouse after Quebec, was on the brink. Its independent grid operator made doomful pronouncements about shortages, and Ontario had to import a sizeable chunk of its energy from the United States.
More recently, British Columbia has become a net importer of current from south of the border. Alberta, Nova Scotia and Saskatchewan also rely on foreign sources.
The outlook has improved, but there's still cause for caution.
Ontario now sends $400 million in electricity to the U.S. each year, while B.C. is aiming to be self-sufficient by 2016. Alberta has seen a torrid pace of generator construction, although a March report by Canaccord Genuity predicts the province's power consumption is expected to rise by an estimated 4 per cent a year, putting pressure on the amount of power available and driving prices up. On the East Coast, the hydroelectric development of the Lower Churchill River will eventually bring online enough capacity to power any one of the Atlantic provinces in its entirety.
Overall, the country's system still needs massive cash infusions.
The International Energy Agency estimates Canada will require $10 billion a year in investments in its electrical infrastructure from now until 2030. A little over half of that will go towards generation and the rest to improve the bulk transmission grid and the more modest power lines that distribute electricity to homes.
The most recent assessment from the North American Electric Reliability Corp. – which is authorized by both the Canadian and U.S. governments to ensure the adequacy of the grids in both countries and ensures there's an adequate power supply — isn't overly rosy, either. NERC says that as of 2012, Quebec "needs additional resources" on its generation side, while B.C. and Alberta still need to "accelerate … resource development" to meet their needs for 2020. Ontario, despite its scheme to bring hundreds of small-scale generation online through guaranteed rate offers, is predicted to be a "tight area."
How much will it cost?
As a result, in almost every region of Canada, electricity prices are going up . Way up. (Try the interactive calculator to get an idea of what you'll be paying for base electricity in the coming years.)
Customers in several provinces are already seeing it. BC Hydro raised its rates 7.3 per cent this year and has announced it will seek an additional 30 per cent hike over the next three. The Ontario government declared in late 2010 that the province's rates will rise an estimated 46 per cent by 2015. Alberta still has the fourth lowest electricity cost in the country, but the Canaccord Genuity report noted that the cost of wholesale electricty has surged recently, more than doubling in January and February compared to last year, and it is expected to continue to rise over the next few years.
With the possible exception of Manitoba, nobody will be spared cost increases. A CBC News analysis of provincial utilities' power-purchase agreements and financial statements suggests the average price per kilowatt-hour countrywide will rise more than 50 per cent by 2020.The Jean-Lesage hydroelectric dam in Baie-Comeau, Que. A large amount of Canada's electricity currently comes from sites like these but the cost to generate power will increase as new, more expensive projects are constructed. (Jacques Boissinot/Canadian Press)
Until now, prices have stayed relatively low — among the cheapest of the nations belonging to the Organization for Economic Co-operation and Development (OECD) — because the majority of Canada's power comes from hydroelectricity, most of which was developed decades ago and has been paid off for years. The operating costs of hydro dams are minimal, which is why Quebec can generate its power for a couple pennies per kilowatt-hour.
But those power plants are no longer enough to meet the country's needs. And the new plants being built, plus the copper and aluminum heavy-transmission lines to reach them, will cost a lot more. The end result is that ratepayers will end up footing the growing bill.
"Newer hydro that has been built is a lot more expensive than what was built generations ago," the Canadian Electricity Association's Pierre Guimond says. "Everything is more expensive nowadays, because the sites are further away, they're more difficult to develop, and that is reflected in the cost of electricity."
Take Quebec's current biggest hydro project, a series of dams on the Romaine River north of the Gulf of St. Lawrence. It's anticipated to generate power at a cost of close to 6.4 ¢/kWh — or more than three times the price of electrons from that province's currently installed capacity.
What's happening with hydro is happening with every kind of generation. In Ontario, new wind farms get paid 13.5 ¢/kWh, and rooftop solar systems 80 ¢/kWh. A recent power industry study found new nuclear plants cost twice as much to build as they did only seven years ago. Coal-fired plants, once a cheap source of energy based on an abundant fuel, cost far more because of emissions restrictions.
It spells certain pain for consumers' wallets.
"We've underinvested in our electricity system across the country for decades," says Tim Weis, the director of renewable energy and efficiency policy for the Pembina Institute, a national think-tank on sustainable energy. "Whatever you're going to build today is going to be more expensive."
Who will generate it?
Crown-owned utilities once dominated the production and transmission of electricity. A recently as 10 years ago, more than 80 per cent of the generating capacity in Canada was run by provincial governments. But since then, the private sector has held sway.In the past, most of the generating capacity has been owned by public companies, such as the Pickering nuclear plant. By 2020 nearly all of the new generating sites will be privately owned. (OPG)
All new net generating capacity constructed since 2000 has been by private companies, and virtually all planned future net capacity will be built by the private sector. From now until 2020, private power sources will grow by almost 50 per cent countrywide, whereas government-provided electricity will nudge up a mere three per cent.
In British Columbia, where the government's procurement policy for new power sources relies almost exclusively on for-profit corporations, companies like General Electric are building hundreds of megawatts of new generating capacity.
In Alberta, oil patch heavyweights Suncor, Imperial Oil and TransCanada are putting up big plants fuelled by natural gas.
In Ontario, TransAlta runs four gas-fired stations, but also three wind farms. And in the Maritimes, TransAlta is erecting dozens more wind turbines alongside a host of small specialist companies.
For some critics, it's a disquieting trend: Natural resources such as waterways are falling into private hands, while consumers pay higher prices to effectively subsidize the private development of new industries in solar and wind power. There are also few if any provisions for all the new generating assets to transfer to public ownership once the companies' power-purchase contracts are up, and no guarantees those companies won't seek to hike their prices when that day comes.
Where will it come from?A worker pulls on a rope to help guide the blades while installing a wind turbine for Toronto Hydro at Exhibition Place on Dec. 18, 2002. The future of generation lies in wind and gas, experts say. (Kevin Frayer/Canadian Press)
From fewer than 100 megawatts in wind turbines at the dawn of the millennium, Canada has been rapidly expanding its capacity to 3,500 MW today, and plans to have 12,765 MW by 2020. That still represents less than 10 per cent of national capacity, but the country is adding more wind power than any other type (with the possible exception of hydro if the full development of Labrador's Churchill River proceeds). And the extra capacity will help enable the shutdown of one of the country's worst sources of greenhouse gas, the Nanticoke generating station in Ontario.
The move away from coal will also be aided by the slew of gas-fired plants that have started up in the past decade. While politicians prefer to tout their provinces' investments in enviro-chic renewable power, the reality is that natural gas is driving the grid's expansion. Sixty per cent of the new generation built in the 2000s is gas, and the sector is slated for another 25 per cent growth by 2020.
It's not perfect — the best gas-powered plants still emit about 40 per cent of the green house gases (GHGs) of a coal-based generator — but staring at the bogeyman of global warming, it's a significant step.
How dirty will it be?High voltage power lines spread out from Ontario Power Generation's Nanticoke Generating Station. Ontario will shut down 11 of its coal-fired plants by 2014. (Frank Gunn/Canadian Press)
The electricity sector is far off track from meeting its share of Canada's Kyoto emissions commitments (try the emissions calculator to see just how far, and experiment with ways to minimize them). The sector emitted 117 million tonnes of GHGs last year, down from a peak of more than 130 Mt in 2003. But that level is still well above the 89 Mt the industry would have to trim to by 2012 to be in line with the Kyoto protocol.
"It was pretty clear that there wasn't going to be an effort made to meet that target," the Pembina Institute's Tim Weis says. "It wasn't an unrealistic goal; we were just too slow to go get going."
Looking ahead, though, the emissions picture gets somewhat better.
The federal government has set its own goal of cutting GHGs 17 per cent from 2005 levels by 2020. Under that scheme, power plants would have to cut back to 102 Mt in emissions in the next nine years, and they may be able to achieve it.
Ontario will shut down all 11 of its remaining coal-fired units by 2014, while Alberta and Saskatchewan are exploring new (though still unproven) ways of stashing their coal plants' carbon dioxide underground. Add to that Ottawa's plan to put strict emissions caps on coal-fired power plants, and the sector could hit the federal government's milder GHG target.
If it doesn't, Canada will have a hard time achieving any emissions-reduction objectives. Electricity generation accounts for a sixth of the country's GHGs, the second-largest source after transportation.
"The government needs to lead, whether at a federal or provincial level," Weis says. "Anywhere you've seen major reductions, whether in Europe or Ontario, it's all happened because the government has taken the initiative to make it happen."
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