Canada’s Adoption of Renewable Power Sources – Energy Market Analysis

Executive Summary

Canada generates a large share of its electricity from renewable sources, including hydro generation, compared to other countries. In 2015, renewables accounted for 66% of generation, up from 60% in 2005. Only five countriesFootnote 1 produce a similar or larger share of electricity from renewable sources: Norway, New Zealand, Brazil, Austria, and Denmark.

In 2015, Canada was a global leader in total hydroelectricity production, second only to China. Canada is also a major producer of wind power; Canadian generation from solar and biomass sources is more modest. China, the United States, and Germany lead the world in total wind, solar, and biomass production.

About 60% of Canadian electricity came from hydro power in 2015, typically from large facilities with reservoirs. This type of hydro power is a valuable part of Canada’s generation mix, since it economically stores energy and moderates fluctuations from more intermittent renewable sources. Run-of-river projects do not require reservoirs and are less disruptive to water flows, but operate on a much smaller scale.

Wind power capacity in Canada increased twenty-fold from 2005 to 2015. However, the intermittency of wind generation is still a challenge for widespread adoption. One way of overcoming this difficulty is by trading electricity with neighbouring jurisdictions to help moderate generation fluctuations. This strategy allows Denmark to generate 50% of its electricity from wind sources.

Biomass provided about 2% of Canada’s electricity generation in 2015. It can be integrated into the grid easily but requires suitable supply to be economic. For this reason, projects are often integrated with operations that produce appropriate waste for fuel, such as the forestry, pulp and paper industries, and landfills.

Solar is a relatively small component of Canada’s electricity. About 98% of all Canadian solar capacity is installed in Ontario, where it represented 5% of total capacity in 2015. The primary hurdles for more solar adoption are intermittency and its relatively high cost. Solar capacity grows faster in jurisdictions which offer incentives, such as the feed-in tariff programs in Ontario and Germany.

Other renewable technologies, such as offshore wind, tidal power, and geothermal energy, have not experienced significant uptake in Canada, but still have potential. Offshore wind projects are being proposed on Canada’s west and east coasts, and a 20 MW tidal power facility already exists in Nova Scotia. Large scale geothermal energy may be possible on Canada’s west coast by harnessing the “Ring of Fire” around the Pacific Ocean. Geothermal projects are also being considered in isolated northern communities, which would benefit from combined heat and power.

Many factors influence the adoption of different power sources, including installation and generation costs, reliability, and environmental considerations. Collectively, renewables such as wind and solar are becoming more cost competitive. The low carbon emissions associated with renewables have also aligned them with current policy priorities. As a result, the increased adoption of renewables is expected to continue in Canada and abroad.

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