Two obstacles must be overcome to achieve true competitive markets: reversal of the long-term underinvestment in transmission, and greater clarity in the legal and regulatory environments. How can...
America's Canadian Problem
in the province, Dalton says. "Conditions in the power markets make the development of new capacity particularly difficult. These conditions include the retail price freeze imposed by the Ontario government in November 2002 which adversely affects investor confidence, the financial woes of merchant generators which make equity investments difficult, and lenders' requirement that the output of new generators be largely contracted," he says.
Alternative Fuel Sources: Does Canada Have More To Give?
Nonetheless, Canada is rich in energy resources and the hydroelectric potential that could generate much more electricity. Canada's hydropower association suggests that the country still has twice as much hydroelectric potential as the 50,000 MW that already have been developed, representing almost a third of all generation capacity in the country. But the long lead-time in constructing a hydro facility typically requires long-term purchase contracts, which are no longer a staple of the market. Thus, electricity generated from nucle-ar, natural gas, oil sands, coal, wood, and wind sources could gain a larger share of the total Canadian generation volume.
One major new alternative fuel project in the early stages of development is based in oil sands-rich Alberta. Northern Lights Transmission hopes to construct a direct current electricity transmission line from Alberta to the U.S. Pacific Northwest for electricity export by 2008. The electricity the line would carry would be generated largely from cogeneration units, which also would produce the steam used to recover oil from the sands. The planned capacity of the 1,000-mile long transmission line is 2,000 MW, plus or minus 500 kilovolts. Feasibility studies under negotiation are assessing routing alternatives for customers in Canada and in the United States, as well as potential investors, says Glenn Herchak, a spokesman for TransCanada, in Calgary, the lead developer of the project.
The oil sands project could be important for Canada's total energy trade balance, because Northern Lights is projected to be capable of producing more than 300 billion barrels of oil, a volume which is 40 billion more barrels than is recoverable in the Middle East and 14 times more than the recoverable oil that exists in the United States, the developer claims. Northern Lights Transmission currently is a partnership between Trans-Canada and AltaLink; AltaLink is a consortium comprising SNC Lavalin Energy, Trans-Elect Inc., Ontario Teachers' Pension Plan, and Macquarie North America Ltd., a subsidiary of Macquarie Group of Sydney.
Including the oil sands project, Alberta generators have proposed construction of more than 5,000 MW of new electricity generation by 2005, which would far exceed expected demand and would permit the export of some 3,000 MW, according to provincial projections.
Nuclear generation already is key to some importing provinces, like Ontario. In a January 2003 projection of supply and demand for the following 18 months, the Ontario Independent Electricity Market Operator notes, "More significant than the demand changes are the delays announced in October (2002) to the restart of the shut down Pickering A nuclear units. These delays have reduced available generation substantially over the entire outlook period. … If the Pickering and Bruce nuclear units do not return to