OTTAWA, April 7 /CNW/ - Canada's electricity sector will require more
than $15 billion in investment annually over the next 20 years to
replace or refurbish aging infrastructure and meet growing electricity
needs through 2030, according to a Conference Board of Canada analysis
"Electricity is an important component of the Canadian economy.
Canadians enjoy some of the lowest electricity prices among developed
countries, and much of our power comes from renewable sources," said
Len Coad, Director, Energy, Environment and Technology Policy.
"With half of the generation assets built before 1980, the industry
faces a pressing need to accelerate investment in infrastructure at all
levels. Much of electricity infrastructure is in need of replacement or
refurbishment. An annual investment of $15 billion is a substantial
increase over levels in recent decades."
The study, Canada's Electricity Infrastructure: Building a Case for Investment (http://www.conferenceboard.ca/e-library/abstract.aspx?did=4132), estimates that about $293.8 billion (all figures in 2010 dollars)
would be needed between 2010 and 2030 to replace aging facilities and
meet demand requirements. This level of investment would be a mix of
public and private sector investment, depending on whether the systems
in each province are owned by governments or by private industry.
At least half of the expenditure is expected to be made by private
companies, although a large portion of the private investment will be
producing power that is under long term contract to a government
agency. The remainder of the investment will be made by provincial
government corporations or municipal utilities.
The study was funded by the Canadian Electricity Association to review
the current state of Canadian electricity infrastructure and analyze
future investment requirements.
"The electricity grid that serves us so well was built for a population
of about 20 million, but is today servicing around 35 million," said
Pierre Guimond, President and CEO of the Canadian Electricity
Association. "It is time to make some of the decisions that previous
generations also had to make to have reliable and affordable
Several steps were applied to obtain the estimates. The Conference
Identified all units that are operational, under construction, planned
Used the National Energy Board's long-term outlook to determine market
requirements through 2020, and used its own analysis to project demand
Determined generating capacity requirements by balancing the market
requirements against potential retirements or repowering of existing
units, and a listing of future projects;
Applied capital costs to all generation projects,to calculate total
Used long-term plans published by the transmission companies, system
operators, and provincial regulators to estimate transmission
Based distribution investments on the levels of expenditure required to
sustain existing infrastructure and meet growth in demand.
The largest share of the full amount, $195.7 billion, would be for
generation. Most of these investments would be in renewable and low
carbon emission sources of electricity generation.
The Conference Board estimates that the distribution system will require
about $62 billion in investment over 20 years, both to sustain existing
infrastructure and to implement new systems.
The Conference Board calculates that transmission systems across the
country will require about $36 billion in investment. However, this
level of investment is likely underestimated. Transmission investment
costs are affected by the amount of power being transmitted and the
distance from the source of electricity to the market. As a result, the
Conference Board could only assess future transmission needs based on
publicly available expansion plans and their cost estimates.
The historical investment in the electricity sector has varied over the
years, with periods of high investment in the 1970s and 1980s. There
was a significant hiatus in investment in the mid-1990s, but recently,
the sector has once again seen growth in the investment levels.
The electricity sector contributed about $24.6 billion to the Canadian
economy in 2010 (two per cent of gross domestic product) and it
employed 116,000 workers. Canada exports about seven to nine per cent
of its electrical generation and is a net electricity exporter. In
2010, exports totaled $2.3 billion.
The report also includes summaries of the electricity systems in each
province. It does not address funding sources or pricing options. The
report is publicly available at www.e-library.ca. For a backgrounder on the report, visit, http://www.conferenceboard.ca/press/newsrelease/11-04-07/Canada_s_Electricity_Infrastructure_Building_A_Case_For_Investment.aspx.
SOURCE CONFERENCE BOARD OF CANADA
For further information:
Brent Dowdall, Media Relations, Tel.: 613- 526-3090 ext. 448