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New Market Report: Canada Power Report Q2 2014

Recently published research from Business Monitor International, "Canada Power Report Q2 2014", is now available at Fast Market Research

 

Boston, MA -- (ReleaseWire) -- 05/01/2014 -- External headwinds and a slowdown in domestic consumption, with private consumption in Canada is set to remain below historical levels for the next few years, continue to weigh on Canada's economic performance. According our country risk analysts, Canadian real GDP is expected growth to move just above the 2.2% to 2.3% long-term trend on average in 2014 and 2015, with expansion of 2.3% and 2.5% in those years, respectively. With power demand highly correlated to economic activities, we therefore expect that power consumption in 2014 will continue to experience positive growth, albeit at a mere 0.96%. In addition, we expect overall generation to decline as Canada's power exports to its southern neighbour will decrease slightly in future.

Our fundamental assumptions of the market continue to be relevant and therefore our short- and long-term forecasts remain mostly unchanged. Canada enjoys the advantage of a diverse and balanced electricity mix, owing to its abundant indigenous resources. Yet, and despite Canada's decision to withdraw from the Kyoto Protocol, environmental concerns are likely to weigh heavily on the country's energy agenda. Hence, in a picture similar to the one of its Southern neighbour, we expect planned shifts in the share of various fuels will be among the key drivers of new investment in the power sector.

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That said, there have been a number of positive developments across every segment of the power sector:

- We have long held the view that, although Canada's heavy reliance on coal for electricity generation and its withdrawal from of the Kyoto agreement would imply the expansion of greener technologies is not at the forefront of government policy, stringent government carbon emission regulations suggest that electricity generation from coal will decrease over our 10-year forecast period to 2023.
- Ontario's commitment to renew the Darlington and Bruce Power nuclear reactors. Ontario's nuclear reactors have provided more than half of Ontario's electricity over the last five years, powering one out of every two homes, businesses, schools and hospitals.
- Despite BMI's Oil & Gas analysts forecasting that the growth rate of gas production in the country will fall, primarily due to low gas prices in North America, we note the current level of gas consumption in the country is still low, leaving plenty of room for a surge in the use of gas for power generation over our 10-year forecast period. In this regard, developments seem to confirm this point. For example on 21 March 2014 the Alberta Utilities Commission approved one application by Shell Canada for the construction of a gas-fired cogeneration plant. The plant will consist of three 230MW natural gas turbine generators, each equipped with a heat recovery steam generator, with a total generating capability of 690MW.

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