Overview
The Electrical Power System (EPS) sector plays an important part in the Canadian economy as the key source of energy for all economic activities. Electricity production from primary sources relies on over 105 GW installed capacity. About 66 percent of electricity needs are met with hydro power generation and 16 percent with nuclear power generation. Less than 18 percent generated from fossil fuel is currently shifting towards gas and renewable energy driven by programs to reduce and eliminate coal based production.
The market for EPS equipment was valued at an estimated US$14.7 billion in 2008. Ontario accounts for approximately two-thirds of the total. The Canadian EPS industry is highly integrated globally, with over 90 percent of Canadian manufacturing shipments attributable to export, while 85 percent of the Canadian market is supplied by imports. U.S. equipment has a dominant share with a total value of US$7.7 billion in 2008, representing 52 percent of the total imports.
After several years of solid growth, the Canadian EPS market recorded a decrease in 2007 and a further slight decrease in 2008. 2009 is estimated to remain at the same level; however, for the long term an average 1.5 percent annual growth rate is expected.
Electricity consumption continues to drive a strong demand for electrical power systems equipment. The general economic slowdown is compensated by the steady population growth and by the need for replacement equipment that generates demand.
Canada's population is projected to grow by 20 percent (from 32 million inhabitants) in the next 12 years, increasing the demand for electricity. Energy saving and conservation are heavily promoted in the consumer and industrial sectors. Provincial programs are targeting to offset up to 75 percent of the increase in peak demand, but even so, there will be further increases in electricity demand.
Another fundamental factor is the need to replace existing capacities. More than three quarters of the power-generation infrastructure was built 25 to 35 years ago; and this has to be replaced in the near future. Early in 2008, the federal government set out an aggressive plan to reduce Canada's greenhouse gas and air emissions with very challenging targets. This plan has significantly affected power generation, especially coal-based generation.
The Canadian Electricity Association (CEA) noted that high levels of investment are required for new and replacement infrastructure in order to meet the future electricity needs of Canadians. According to CEA, between 1990 and 2005, electricity demand in Canada increased by 24 percent. This trend is expected to continue in the future, with an average annual growth rate of between 1 and 1.5 percent. Over the next 20 years Canada will require an investment of about US$185 billion, of which US$95 billion will be in generation, US$27 billion will be in transmission and US$63 billion will be in distribution.
In Ontario, 52 percent of the electricity is generated by nuclear power stations; but approximately 20 percent of current capacity is coal-based. According to the Ontario Power Authority (OPA) 80 percent of the power-generation infrastructure has to be replaced within a period of 10 to 15 years from now. OPA estimates that over US$60 billion will be invested. OPA expects that generation capacity will have to increase by about 15 percent by 2025. The Ontario government plans to pursue total elimination of coal-based electricity generation within the next 15 years. This will further drive demand for replacement EPS equipment. This substantial restructuring of Ontario's energy sector presents a wealth of opportunities for U.S. companies involved in the manufacturing and distribution of electrical power systems and related components.
Alberta is another province expecting rapid growth in this sector. The Alberta Electric Systems Operator (AESO) expects Alberta's demand for power to grow by 3.5 to 4.3 percent throughout the foreseeable future. Additionally, up to 3,800 GW new generation and transmission capacity is needed by 2016.
In British Columbia, BC Hydro expects 45 percent growth in electricity consumption over the next 20 years. Similarly, SaskPower expects Saskatchewan to face a power gap of over 1500 MW by 2025.
"Green technologies" are an emerging industry sector throughout Canada as renewable energy initiatives are being implemented in all provinces. The Ontario government alone has set the goal of doubling renewable energy supplies to 15,700 MW by 2025.
Best Prospects/Services
The EPS market distribution by segments has been relatively stable in recent years. The primary power generating segment like boilers, heat exchangers, and nuclear reactors is 7 percent. The power conversion segment is 11 percent and includes equipment that transforms primary power into mechanical power, like turbines and engines. The electricity generation segment is 18 percent and includes primarily equipment converting mechanical power into electricity (generators), but also changing electricity parameters (transformers) and converting it back into mechanical power. Switchgear is about 14 percent and the rest include a large variety of components for electricity handling (transport, control, interrupting, storage, etc).
Best prospects from the top 50 product groups (HS codes) by import volume in 2008 are:
- ELECTRIC STATIC CONVERTERS, RECTIFIERS AND INVERTERS (HS 850440) – 2008 total imports are valued at US$820 million, a 15 percent increase over previous year. U.S. imports are US$287 million, representing a 1 percent increase.
- LIQUID DIELECTRIC TRANSFORMERS, 651-10,000 KVA (HS 850422) – 2008 total imports are valued at US$47 million, a 32 percent increase over the previous year. U.S. imports are US$39 million, representing a 29 percent increase.
Renewable technologies – There are wind and solar energy projects throughout Canada and the federal and local governments are encouraging more investment in these technologies.
Opportunities
Alberta: Alberta's 10 and 20-year plans have several opportunities for transmission systems as well as wind power technologies. (See: Alberta Electric System Operator. An application for a new nuclear power plant is also under analysis with the provincial regulatory body.
British Columbia: BC Energy Plan is setting the guidelines of achieving the energy self sufficiency and is targeting zero net greenhouse emissions by 2016. A variety of renewable energy technologies are pursued but the province regulatory body excluded the nuclear power from the province energy generation program.
