7.3 Electricity generation and installed capacity


As noted in Chapter 6, electricity plays a central role in the decarbonization pathways. While all scenarios project a similar level of electricity production by 2030, with more renewable and less fossil fuels in the NZ scenarios, pathways diverge significantly by 2040 to reconverge, in 2060, in three groups: REF, CP30 and NZ scenarios (Figure 7.6).

In fact, REF project a 20% increase in electricity production in 2040, supported by fossil thermal production in the first case and renewables (wind and biomass) in the second. Over the next two decades, growth continues at the same rate, primarily supported by thermal production. CP30 sees a faster increase in electricity use with respect to 2016, on part with NZ60 until 2040:  10% in 2030 and 28% in 2040. By 2060, the demand for electricity is projected to be 70% higher than in 2016, an increase that is half that of NZ scenarios. The cost on carbon, however, contributes to decarbonize this sector. By 2030, fossil fuels generate only 10% of electricity and 4% in 2050; in absolute number, this represents only a 70 % drop in fossil fuel usage for electricity with respect to 2016. Growth in production is largely due to nuclear and wind and that are responsible for 21% and 15% of the total electricity production, in 2050.

While total electricity demand is relatively constant between 2016 and 2030, NZ scenarios all impose a stronger reduction on fossil fuel thermal generation, which represents between 6% and 9% of the total production in 2030, to fall to less than 3% in 2040. In absolute terms, due to the completion of a number of projects underway, most of the gap created by the quasi-elimination of fossil fuels in 2030 is filled by hydroelectric projects. In relative terms, wind grows by 50% to 174%, biomass by 100% to 300%, and solar by 100% to 500% for NZ scenarios in 2030.

As electrification accelerates, electricity production grows proportionally with GHG reduction ambitions, a direct result of decarbonization efforts that favour electric technology substitutes in applications where fossil fuel would otherwise be used. In 2040, NZ60 sees a 30% increase with respect to 2016, while NZ50 and NZ45 require a 50% and even a 70% increase over 2016, reaching 85% to 116% in 2050 and 130% for all three NZ scenarios in 2060.

Figure 7.6 – Electricity production #

After 2030, most of this additional electricity comes from variable solar and wind energy, as well as from biomass. For example, in NZ50, wind is expected to produce 90% as much electricity as hydro in 2050, increasing by a factor 15 with respect to 2016. In the same scenario, biomass use will be multiplied by 7 and solar by almost 50. Starting well behind wind, they are projected to satisfy 4% and 11% of total electricity demand in NZ50 by 2050 (Figure 7.6). 

7.3.1 Hydroelectricity, nuclear and biomass

A few more points merit discussion. First, no new hydroelectric project is integrated in the modelling. Even though considerable potential resources remain in Canada, information is lacking as to the specific characteristics and prices of these various projects.  

Second, nuclear energy production is transformed in all scenarios. Conventional nuclear electricity production is limited to current facilities in Ontario and New Brunswick and disappears after 2050 when they reach the end of their lifetime. This is true across all five scenarios. However, in NZ scenarios, SMRs appear in the results (after 2040), leading to a net expansion of nuclear electricity generation (+63% in NZ50 by 2060). This remains a small part of the total (slightly over 10% in 2060 for NZ scenarios) but provides part of the resilience needed to accommodate large shares of variable sources. Hydroelectricity, which does not change much across scenarios, also plays this role but to a much greater extent, due to the presence of large reservoirs in many regions of Canada. This development is based on price and characteristics according to pre-development estimates, which could change considerably in the next few years. 

Third, net-zero scenarios also some generation from thermal plants powered by bioenergy with carbon capture (BECCS), resulting in negative emissions. Accordingly, bioenergy accounts for a small share of the total in the electricity sector in net-zero scenarios (4% of total generation for NZ50 in 2050), but its role as a negative emission process is important. These carbon capture applications are crucial in compensating for remaining emissions when approaching the net-zero point, as discussed in Chapter 8.

Figure 7.7 – Electricity generation installed capacity #

7.3.2 Generation capacity

As variable electricity production plays a growing role in the electricity system, it becomes important to also consider generation capacity, as the lower capacity factor of these technologies (averaging between 22% and 47%, depending on technology and site of deployment) implies that more installed capacity is required to deliver the same power. 

For REF, as the share of thermal remains important, growth in capacity is largely proportional to electricity demand. This is also the case for CP30, where increased nuclear generation offers a high capacity factor and reduces the need for additional production capacity. There is a significant departure from this trend for NZ scenarios, which is notable as of 2040. For example, for NZ60, NZ50 and NZ45, the overall projected capacity in 2040 is 60%, 90% and 125% greater than for REF the same year, and 200% greater in 2060 for all three NZ scenarios. This overcapacity includes both production capacity (chiefly as wind and solar) and storage. The latter is projected to represent 10% to 13% of total capacity in NZ60 and NZ45 in 2040, rising to 15% for the three NZ scenarios in 2060. Although storage remains negligible in REF, as the cost of storage is expected to fall, it represents 7.5% of all capacity for CP30 in 2040 and rises to 10% in 2060. 

As presented here, storage includes long-term (weeks), medium-term (days) and short-term (hours) energy storage. It could include battery, hydrogen and other types of storage. The exact proportion between these variable energy sources and these types of storage could vary as the generation capacity is determined by (i) the adequacy of variable energy production, which is not the same for wind and solar; and (ii) the cost of storage, which enables a more efficient match between production and demand. A precise modelling of these two considerations requires detailed data on energy consumption patterns in a changing energy system and electricity production, information that is not available at the present time. 

General observations:

  • Canada’s large hydroelectricity installations are significant in helping it accommodate the more than tripling of electricity generation capacity from variable solar and wind in NZ scenarios, reducing the need for new storage and the overall cost of these technologies.
  • In the absence of detailed assessments for new hydroelectric projects and in view of the low social acceptability for any large-scale hydroelectric developments, no new project is projected here. However, it is important to remember that Canada still has considerable potential for this energy source. 
  • Given the limitations to the building of new hydroelectric capacity and current technical constraints affecting other storage technologies, hydrogen and nuclear energy may play an important role. However, their respective role is difficult to ascertain precisely at this time, given the considerable unknowns as to costs, specifications, required infrastructures, safety concerns and social acceptability. It is likely that their contributions will depend on policy choices more than on simple costs.