BMI View: Our outlook for the Canadian renewables industry remains largely the same this quarter; however, we have slightly revised down our wind power forecasts to align more closely with released data from the Canadian Wind Energy Association. That said, wind power remains the dominant component of the country's renewables mix and despite the recent downgrade, we believe that this trend will persist as the technology continues to be favoured over other renewable energy sources.
Although hydrocarbons and hydropower remain the dominant sources of power for Canada, the Canadian government aims to incorporate greater levels of renewables into the energy mix in order to reduce carbon emissions (reducing greenhouse gas emissions by 17% by 2020, from 2005 levels). We expect the non-hydro renewables industry to grow moderately over the course of the decade, with average annual non-hydro renewables electricity generation growth rates of 6.1% forecast between 2014 and 2022. By 2022, we anticipate that non-hydro renewables will contribute just over 13% to the total electricity generation in the country with around 24GW of capacity installed.
|Adopting Renewables Into The Mix|
|Canada Electricity Generation By Type (TWh), 2013-2022|
Downward Revision To Wind Forecasts, But Still Leading The Pack
Wind power is undoubtedly the front runner in the Canadian renewables industry in terms of sector size, contributing roughly 73% to the total renewables capacity in 2013 (according to BMI forecasts). Canadian geography offers immense scope for wind energy development and it is clearly the technology of choice for the country, with the majority of the projects in the pipeline consisting of wind power plants. We anticipate that wind will continue dominate the non-hydro renewables capacity and generation mix over the next 10 years. We expect capacity to reach nearly 16.8GW by the end of our forecast period in 2022.
|Wind Dominating The Renewables Mix|
|Canada Non-Hydro Renewables Capacity, By Type (MW), 2013f and Canada Renewables Project Pipeline, % Of Total Capacity|
That said, although our outlook for the Canadian renewables market remains mostly the same this quarter, we have altered the wind power component of our forecasts to align more closely with the most recent data released from the Canadian Wind Energy Association (CanWEA), which estimates that current installed capacity stands at just under 7.7GW. CanWEA believes that Canada's wind capacity can reach 12,000MW by 2016, and we believe that this target will be close to being reached - with just over 11,600MW installed by 2016. However, the broader CanWEA target of wind power supplying 20% of the country's total electricity needs by 2025 is overly ambitious as we reiterate that there are still a number of obstacles restricting the industry reaching its full potential. Most pertinently, the lack of a national policy framework or subsidy scheme implemented for the renewables industry.