Canada is one of the world ’s most energy-rich nations, a major producer of fossil fuels, biomass and uranium as well as nuclear reactors and other energy technologies. So why then would we seek European clean energy know-how and services?
ENERGY FUTURES
By Randall Anthony Mang
A host of Europe ’s largest power companies including Enel from Italy,
wind energy giant Vestas from Denmark, Siemens of Germany, and AMEC and Centrica from the UK are considering further investment opportunities in Canada’s power sector.
According to Canadian experts participating in The 2005 Energy Roundtable, which begins tomorrow at the Toronto Stock Exchange, European interest is widely welcome.
“Energy is a sensible premise on which to build and expand Canada’s trading relationships with Europe,” said Jason Langrish,, executive director of the Canada Europe Roundtable for Business (CERT), which organized the roundtable.
“Europe’s increasingly integrated energy market has produced large companies that have the experience, financial strength and technologies that Canada needs.”
While Canada possesses vast energy resources and expertise, like other Kyoto signatories, Canada’s need to deploy more renewable and other clean energy technologies, as well as demand-side systems such as smart metering, is fast rising. Simultaneously, electricity demand is already straining Canada’s transmission and distribution systems, making their upgrade vital.
In all these areas, Europeans are considered leaders. In a recent issue of The Economist, GE CEO Jeffrey Immelt said, “America is the leading consumer of energy. However, we are not the technological leader. Europe today is the major force for environmental innovation.”
The CERT-led roundtable hopes to stimulate business by bringing together Europe’s top energy players with Canadian provincial and federal authorities as well as companies including ATCO, Atomic Energy of Canada Limited (AECL),Ontario Power Generation, TransAlta and others from Canada’s power and transaction services sectors.
Mr.Langrish sees opportunities for Canadians to leverage European investment – through partnerships and acquisitions as well as via transfer of policy and technology – to increase Canada’s clean energy production and stability and expand Canadian energy trade interprovincially and internationally.
“These joint partnerships could stimulate further trade for Canadian companies like Hydro Quebec, AECL and emerging technologies like fuel cells,” said Mr..Langrish.
“With more investment, provinces like Manitoba can generate excess power and sell to their neighbours the same way Alberta does with B.C.”
Pat Concessi, a partner in Deloitte’s Global Energy Markets practice, says Canada has been improving its investment climate and has “raised a lot of interest, especially on the renewable energy side.”
British Columbia, for example, is stimulating private-power production and natural gas networks.
Alberta’s competitive electricity market and expanding transmission network is open to investment.
Quebec is intent on expanding wind-farms and renewable power generation.
Maritime provinces including Newfoundland and Labrador desire to expand hydro and other power capacity.
In Ontario alone, measures including a policy commitment to eliminate coal-fired energy as well as plans to rebuild, conserve or replace a staggering 25,000 megawatts (MW) of generating capacity over the next 20 years are expected to generate upwards of $40 billion in investment.
In addition to investing in renewable energy, Ontario is considering adding to its nuclear capacity, a powerful, zero GHG-emitting option.
Robert Van Adel, president of Atomic Energy of Canada Limited (AECL), maker of CANDU nuclear reactors, confirmed, “In Ontario, as coal is phased out, old plants are retired and demand increases, there is clearly a requirement to build new CANDU base-load capacity over the long term.”
Sasha Jacob, who leads Dundee Securities ’Power Investment Banking Group, said renewable portfolio standards and other regulations combined with the need for new power generation are helping drive investments in renewable energy.
He notes that Ontario recently issued a Request for Proposals (RFP)for another 1,000 MW of renewable electricity.
Mr.Jacob said federal and provincial programs including tax incentives and the new federal Renewable Power Production Incentive (RPPI)add further lustre.
The RPPI, for example, rewards renewable energy suppliers with a 1-cent per kilowatt (kW)payment for 10 years. “It is significant because it’s a direct payment to the bottom line. It provides a benefit to investors and increases the renewable developer's ability to access low-cost capital,” he said.
Mr.Jacob said another big advantage provided by governments in most Canadian jurisdictions is long-term power purchase agreements. “A government-backed off-take agreement provides ideal stability and certainty for investors.”
While such incentives are well received, some urge that Canadian energy policies and bureaucratic processes also require attention.
Marlo Raynolds, executive director of environmental policy research organization the Pembina Institute asked, “What can we learn from inventive and effective European policy? We’re kidding ourselves if we think we can take full advantage of their technology without their policy framework.
“We need a newer mindset around energy. It ’s critical that we develop a plan, through a multi-stakeholder engagement process, that will provide the energy services we want and help our economy grow in the most efficient manner possible.”
AECL boss Robert Van Adel noted that in Ontario, the government is facing critical decisions about how to meet future energy needs and has asked the Ontario Power Authority to make a recommendation about the best new supply options.
“To meet an earliest in-service date of 2015 for new nuclear installations, Ontario needs to start the approval processes now – especially the environmental assessment for site-specific projects.”
Pat Concessi said, “Governments should always think of investors –domestic and foreign – with an awareness of competition and opportunities worldwide. What are their issues? What is going to make them want to invest in Canada?”
For more information,visit www.europe-canada.org.
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