Though Canada is rich in fossil fuels, nuclear power may fuel a significant portion of the nation’s future electrical generation needs, especially in provinces that have traditionally relied on hydropower and fossil fuels.
Canada is in the enviable position of having an adequate electricity supply and multiple energy resources for future generation needs. Its challenge is balancing rising carbon emissions against rising electricity demand when renewables, principally hydroelectric power, already supply almost 60% of its electricity.
Given its ample natural gas reserves, a rapid short-term increase in construction of natural gas – fired combined-cycle plants is already under way to bring down carbon emissions and replace coal-fired baseload generation. In the longer term, new nuclear plants will likely supply the balance of power.
Focused Energy Policy
Canada’s energy policy is guided by a series of principles, agreements, and accords. As does the U.S., Canada relies on an active electricity market as the most efficient means of determining supply, demand, prices, and trade while ensuring an efficient energy system.
Canada is a federal state, comprising 10 provinces and three territories. The federal government is responsible for international and inter-provincial issues. But unlike U.S. states, provincial governments are given significant authority by the Canadian Constitution to manage electricity and natural resources within their borders. Hence, the Canadian electricity industry is strongly organized along provincial lines, and individual provinces have significantly different views of energy policy (Figure 1).
1. Provincial differences. In 2008, Canada generated a total of 598.8 TWh. Alberta, Ontario, and Saskatchewan are typically Canada’s three largest users of fossil fuels for the production of electricity. Overall, Alberta used 51% of all coal and 42% of all the natural gas consumed in Canada for the production of electricity; Ontario consumed 24% and 32%, respectively; Saskatchewan consumed 18% and 10%, respectively. Québec generated 30% of Canada’s total electric power and approximately 50% of all hydroelectric power while using about 1% of total fuels consumed for other forms of electricity production. Source: Statistics Canada
Electricity generation in Canada has been "unbundled" in most provinces over the past decade or so. Similar to the U.S. process, the typical vertical electric utility has been segmented into separate generation and transmission and distribution companies. Some provinces have introduced a competitive power market with independent power producers, although more than 90% of electricity consumed in Canada is still generated by electric utilities. Another key difference: Provincial governments own many of the major electric utilities.
North American Energy Interconnectivity
Goods and services are not the only commodities traded between the U.S. and Canada (see sidebar: "Major Trading Partners"). The electricity networks are heavily integrated, a dependency made clear by the 2003 Northeast blackout and the joint report on causes of the blackout released the following April that proposed bilateral solutions. A stable grid benefits both nations: In 2008, Canada exported 49.8 billion kWh to the U.S. while importing only 17.1 billion kWh from the U.S., according to Canada’s National Energy Board (NEB).
At the provincial and state level, it’s more of the same. For example, transmission lines connect Manitoba to Saskatchewan, Ontario, North Dakota, and Minnesota. On average, approximately 30% of the electricity generated in Manitoba is sold to other Canadian provinces or to U.S. markets. However, the intertie connections to Saskatchewan and Ontario have limited capacity. The Saskatchewan and Ontario interties can carry approximately 375 MW and 200 MW, respectively, and a significant portion of Manitoba’s output each year is exported into Minneapolis, Minnesota, the closest major population base to Manitoba generators.
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