Canada, with its diversified geography of long coastlines and vast land mass, is blessed with a wealth of natural resources – a trove which has served to make the nation a leader in the generation of renewable energy, ranking fourth in the world.
Across 10 provinces and three territories, these resources – which include moving water, wind, biomass, solar, geothermal and ocean energy – are being utilised to generate a significant percentage of Canada’s energy requirements; all in all, a strong and growing renewable energy industry.
Illustrating the full extent of this growth is the analysis, ‘Canada’s Renewable Power Landscape Energy Market Analysis 2016’, which highlights hydro as the dominant source of electricity in Canada, accounting for nearly 60 percent of installed capacity and generation. In fact, in 2015, five provinces and territories generated the majority of electricity from hydro – British Columbia (86 percent), Manitoba (97 percent), Quebec and Newfoundland and Labrador (both 95 percent) and Yukon (94 percent). In contrast, nearly all of the power generated on Prince Edward Island is from wind, though the island does rely on power imported from other provinces to meet demand.
Invest Canada, in its ‘Renewable energy – wind and solar: Canada’s competitive advantages’ report, states that Canada’s renewable energy expertise has made it a world leader in collaborative research and development in this area, with numerous opportunities available for creating partnerships between industry, government, universities, research institutes and testing facilities.
The Canadian response to macroeconomic factors, such as energy prices, have driven the growth of the country’s renewable energy industry. “In Canada, the renewable energy space is largely driven by provincial government procurement programmes and climate policy,” says Travis J. Allan, a partner at DeMarco Allan LLP. “As the premium offered for renewable electricity has dropped, market participants have been forced to become more efficient. Following early renewable investments in some provinces, and particularly in Ontario, proponents with expertise in one province are now looking to other jurisdictions to expand their development portfolios and opportunities.”
Shaping the agenda
Another factor shaping the renewable energy industry in Canada is the traditional fossil fuels versus clean energy debate. “At fourth in the world for renewable generation and second in the world for hydroelectric generation, Canada’s electricity mix is comparatively low in greenhouse gas emissions, and getting more so,” explains Mr Allan. “From 2000 to 2014, electricity sector greenhouse gas emissions declined 40 percent, primarily because of a decision to phase-out coal generation in Ontario, which represented the single-largest climate action in North America at the time and clean energy policies in the provinces of Nova Scotia and New Brunswick. Building on this, the federal government has recently announced plans to phase out most Canadian coal-fired electricity by 2030 and to set performance standards for natural gas-fired electricity generation. When paired with increased investment in renewable by numerous provinces, electricity sector greenhouse gas emissions are poised to fall even further.”
Among the most significant regulatory developments to have impacted the renewable energy space in 2016 has been the introduction of the Pan Canadian Framework on Climate Change, which will require all provinces and territories to either enact a price on carbon of $10 per tonne of greenhouse gases in 2018, rising $10 per year to $50 per tonne by 2022 via a tax, or to have in place an equivalent cap-and-trade system. The introduction of carbon pricing is likely to have a positive effect on renewable energy uptake in provinces with greenhouse gas-intensive electricity systems. The Framework also contains policies likely to support the electrification of transportation and building temperature regulation, which could increase demand for electricity overall, including from renewable sources
The introduction of new innovations is generally considered the lifeblood of any entity, and in this regard the Canadian renewable energy industry is certainly no exception. Advances in traditional renewables such as wind and solar PV appear to be driving installed costs down and productivity up. In addition, one of the most significant technological developments in renewable energy is the increasing uptake of cost-effective energy storage systems.
“Canadian provinces, led by Ontario, are increasingly recognising that energy storage dramatically increases the grid’s ability to efficiently integrate intermittent renewables, provide flexibility and deliver other economic and electrical quality benefits,” says Mr Allan. “As utilities and provinces become more familiar with energy storage, we anticipate that it will enable greater development of renewables and a reduction in the difference between energy capacity and energy generation for intermittent technologies such as solar and wind.”
With a strong renewable energy industry offering opportunities across the entire value chain, from technology development and supply to energy generation, distribution and storage, Canada is a magnet for investors – a direct result of the nation’s fiscal prudence, promotion of ‘clean energy’ and geographic advantages.
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