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Investment of more than $15B annually to meet future electricity needs: Conference Board of Canada 2011 analysis


April 8, 2011
By Alyssa Dalton

April 8, 2011

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 released this week.

“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,” he said.

The study, Canada’s Electricity Infrastructure: Building a Case for Investment, estimated 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, concluded the study.

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 electricity.”

To obtain the estimates, the Conference Board:
• identified all units that are operational, under construction, planned or proposed;
• used the National Energy Board‚Äôs long-term outlook to determine market requirements through 2020, and used its own analysis to project demand to 2030;
• 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 generation investments;
• used long-term plans published by the transmission companies, system operators, and provincial regulators to estimate transmission investments; and
• 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, stated the study. Most of these investments would be in renewable and low carbon emission sources of electricity generation.

The Conference Board estimated that the distribution system would require about $62 billion in investment over 20 years, both to sustain existing infrastructure and to implement new systems, and likely at least $36 billion in investment for the transmission systems across the country.

The report also includes summaries of the electricity systems in each province. It does not address funding sources or pricing options.

CLICK HERE to view the report.