Transcript Opportunities for Investment in Canadian Power Market

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Opportunities for Investment in the
current Canadian power climate
Presented to
The Canada Europe Energy Round Table for Business
The 2004 Energy Round Table
September 20, 2004
Bob Livet, P.Eng.
Vice President Energy Operations
AMEC Americas Limited
Regulatory Framework
 Electricity is a Provincial Jurisdiction
 Among Major Utilities:
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10 have Provincial / Territorial Ownership
6 are Investor Owned
2 have Municipal Ownership
 Utility Industry is Vertically Integrated
 Canada signed Kyoto Protocol in 2003
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Federal and Provincial Government Negotiate CO2 Targets
Federal Government Establishes Renewable Energy Credits
Some Provinces Provide Further Tax Incentives
Has Stimulated a Demand for Renewable Energy
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Canadian Electricity Generation by Type:
as % of Total, 2003
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Canadian Electricity Generation by Region and
Type TWH, 2003
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Canada – U.S. Electricity Trade: TWh, 1991 to 2003
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Canadian Net Exports by Province: GWh, 2003
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CEA (2001) Electricity Demand Projection
TWh, 2000 - 2020
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New demand, plant
replacements and export
requires significant new
capacity over the next 20
years
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By 2020, demand will be 670
TWh, coming from new plants
– 35% of year 2000 production
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New investments of over
20,000 MW per decade to 2020
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$ 150 Billion Cdn in
investment needed.
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Emerging Renewables and Alternatives:
Generation Capacity, 2002
 Emerging renewables and
alternatives include:
• wind, solar, tidal,
biomass, bio-gas, solid
waste
 More than 7000 GWh were
generated in 2002 by
Emerging Renewable and
Alternative Energy sources
Source: CIEECAC Annual Renewable Energy
Review, March 2003
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Renewable Energy
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Positive Public Acceptance
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Tax and Cash Incentives
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Wind Power Production Incentive (WPPI)
Class 43.1 Accelerated Write Off
Canadian Renewable & Conservation Expenses (CRCE)
Municipal Funding Sources
Retail Tax Credits (some Provinces)
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Wind Power Coupled with Hydro Electric Power
makes Economic Sense
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Transmission Grid Stability / Upgrades
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Recent Structural Changes
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Nova Scotia has Privatized its Electric Utility
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British Columbia, Quebec and New Brunswick
have implemented limited restructuring
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Alberta and Ontario have opened their
electricity markets to competition
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Experience with Restructuring
 Alberta opened its market to competition in 2001
• Resultant consumer price spikes caused government to intervene
with price subsidies
 Ontario followed in May 2002
• Unusually hot weather and supply shortages caused price spikes
and government reacted by freezing retail electricity rates
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REVIEW OF MAJOR CANADIAN
POWER GENERATION MARKETS
Alberta
Ontario
Quebec
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Alberta – Current Status
 Open Market for Wholesale and Retail Electricity Suppliers
 Market administered through the AESO and EUB
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AESO is responsible for Transmission Planning
 Generators can sell:
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Bid to the Pool
Pool Pricing based on merit order dispatch
Firm Capacity under Contract
Can export power to Other Jurisdiction
 Application for new Generation Facilities made to EUB
 Alberta is net importer of power
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(312 GWHR 2002) (257 GWNR 2003)
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Alberta – Growth Activity
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First supercritical coal fired plant in Canada under
construction (450 MW)
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Addition of cogeneration facilities from oil sand
developments
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Opportunities for Renewable Energy Projects
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Mandated Green Energy Mix (3.5% Target)
CO2 Emission Credits
Consumers willing to pay more
Government recognizes need for improving grid capacity
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Ontario – Current Status
 New Government (2003) lifted price freeze
 Stated goal to shut down all coal fired plants by Dec 07
(7500 MW)
 Proposes a Mixed Market Arrangement (Bill 100)
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Regulate Power Sales from Heritage Assets (OPG)
Free Market Pricing for other Generators based on
Merit Order Dispatch
Regulated Retail Price to Small Consumers
(<250,000 kWhr/ year)
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Ontario – Electricity Supply
Forecast
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Ontario
Objectives - Renewables
 Established Renewable Energy Targets
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1,350 MW by 2007
3,000 MW by 2011
 Qualifying facilities are:
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Wind Energy Centers
Water Power Facilities
Energy Projects using Biomass, Bio Fuel, Bio Gas or Landfill Gas
Minimum Capacity of 0.5 MW
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Ontario
Objective - Renewables
 First Solicitation for 300 MW closed Aug.27,04
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Successful Bidders Announced Jan.05
Further Call for Proposals expected next year
 Requirements for participation:
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Own or Lease the Site
Proponent Team to have Prior Experience
Commit to all technical & financial requirements of the RFP
Responsible for Environmental Approval & Permitting
Bears All Cost for System Connection and Upgrades
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Ontario – Other RFP
 Seeks proposals for 2500 MW of:
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New Clean Intermediate Generation (Gas as Primary Fuel)
Demand Reduction Projects
DSM Projects
Minimum 5 MW Capacity
 Time Line:
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Pre-qualification of Proponents – Sep. 04
Issue Request for Proposals – Sep. 04
Submission of Bids – Nov. 04
Announcement of Successful Bidders – Jan. 05
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Quebec – Current Status
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Quebec Energy Board
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Responsible for Regulatory Supervision of Transmission and
Distribution
 Hydro Quebec remains a Crown Corporation
divided into 4 Divisions:
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HQ Distribution (Responsible for Generation Planning)
HQ Production
HQ Equipment
HQ Trans Energy (Responsible for Transmission)
 Substantial North American Market Access via its
Transmission System)
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Quebec – Current Status cont’d
 HQ Distribution is mandated to call tenders for New
Generation Requirements.
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Proponent enters into a Power Purchase Agreement (20-25 Yr)
 HQ Production can sign Power Purchase Agreements
 Quebec is a major Exporter of Energy to US Markets
 Peak Demand has reached Capacity
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Quebec Power Generation Mix
Sources
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147 Hydroelectric Plants (tot. 34,172 MW)
29 Thermal Stations (oil & gas; tot. 1,621 MW)
1 nuclear plant (675 MW)
9 Biomass Facilities (tot. 208 MW)
136 Wind Turbines (tot. 102 MW)
Power Generation by Energy Source
Oil 0.5%
Nuclear 2.3%
2001 Total 201 TWh
Other 0.2%
Natural Gas 0.2%
Hydro Electric 96.8%
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Quebec - Objectives
 Development of Renewable Energy
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Substantial Hydro Storage Capacity encourages Development of
Wind Energy Projects
 Recent tender calls:
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600 MW of gas fired generation
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1000 MW of Wind Power Projects (Award in Sep 04)
 Expected future tender calls:
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600 MW Gas Fired Cogeneration (late 2004)
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Small Hydro Developments (<50 MW)
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1000 MW of new Wind Power Projects
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Investment Opportunities in Other
Provinces
 Nova Scotia
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Ageing Coal fired plants require investment in pollution control
equipment
 New Brunswick
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Market opens to Wholesalers & Large Industrial Users Oct. 1, 04
Refurbishment of Pt. Lepreau or 600 MW of Replacement Capacity by
2009
Seeking private investor
 British Columbia
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Wind / Hydraulic Benefit
Base Load growing in GVRD
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Summary – Canadian Power Market
 Provinces take different approaches to Open
Electricity Market
 Large Investment required till 2020 (Cdn $ 150 B)
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Private Funding Sources Required
 Renewable Energy has Broad Political and Public
Support
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Good Opportunities in several Provinces
Federal and Provincial Incentives Available
Market for Emission Credits being developed
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AMEC
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International Project Management and Services Company
Office network across the Americas, Continental Europe and Asia
AMEC Manages Projects Worldwide
Annual Revenues of CAD 10.4 Billion in 2003
Employs 45,000 People in over 40 Countries
In Canada AMEC has 4000 Employees and 78 Offices
Sectors: Transport, Oil & Gas, Power, Infrastructure and Industry and
Commerce
Designs and Implements Power Generation and Transmission
Facilities since 1907
www.amec.com