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There’s a Buzz in the Air and Yes, It Is Electric…

August 10, 2017
Photo of Carlos Murillo
Economist
Industrial Economic Trends

It’s been a scorching summer in Alberta, with temperatures consistently above the 30-degree mark during the last few weeks. While not everyone across Canada is lucky enough to enjoy this weather, the high temperatures bring with them a useful reminder (aside from the need to wear sunscreen and stay hydrated, of course) of the importance of electricity in our daily lives, a service provided by a key industry that is in a constant state of change.

On July 27, as temperatures soared across the province, the Alberta Electric System Operator (AESO) reported that electricity demand levels had exceeded previous summer records.1 This prompted the operator to suggest energy conservation initiatives, including minimizing the need for air conditioning by closing blinds and curtains, turning off unnecessary lights, and using cold water to wash clothes, among others. This was a sobering reminder of the many ways we rely on electricity in our modern lives.

The buzz about electricity extends well beyond Alberta, with related issues arising daily across Canada. These include:

  • discussions about the Site C hydroelectric dam in British Columbia;
  • high electricity prices in Ontario;
  • the feud between Quebec and Newfoundland and Labrador over the Churchill hydroelectric project;
  • the need for better infrastructure in Canada’s North;
  • how the industry may play a role in meeting Canada’s long-term greenhouse gas (GHG) emissions targets.

In all cases, electricity is proving to be a hot topic in Canada’s economic and policy debates these days.

Behind the delivery of electricity to our residences and workplaces lies a vast supply chain of infrastructure and a complex, robust, and economically important sector: Canada’s electric utilities industry.

In 2016, the electric utilities industry (including generation, transmission, and distribution) contributed nearly $30 billion to Canada’s gross domestic product (GDP). That’s more than the average size of a provincial economy in Atlantic Canada. In the same year, the industry employed around 100,000 workers across the country, as many as are employed in Canada’s oil and gas industries. These are well-paid jobs, with some of the country’s highest wages—almost twice the industrial composite average.

Investments in the industry were near all-time highs in 2016, exceeding $19 billion and accounting for over 10 per cent of Canada’s total non-residential business investment. In the same year, net electricity exports contributed over $4 billion to Canada’s positive trade balance.

The contribution made by the electric utilities industry to our economy is just one of the issues of the day. As discussed in our inaugural edition of the Canadian Industrial Outlook: Electric Utilities, Canada stands out globally as a leader in the production of electricity in general and non-GHG-emitting electricity in particular. As well, there are key differences across electricity markets in Canada. These issues will be discussed in more detail in our upcoming industry webinar Flipping the Switch.

With the production and consumption of energy accounting for about 80 per cent of Canada’s GHG emissions,2 the drive to de-carbonize Canada’s economy will continue to have major impacts on the electricity industry. From reducing reliance on fossil fuels to the push to increase energy efficiency, the increasing potential of microgeneration, and the rising demand for electricity due to fuel-switching by consumers (as with a major shift to electric vehicles), the industry will continue its transformation in the years to come.

Don’t get left out of the buzz on electricity issues in Canada: Stay informed with our industry analysis, including our outlook for Canada’s electric utilities. In the meantime, stay cool and enjoy the rest of your summer!

1    GlobalNews.ca, Alberta sets summer electricity usage record, July 27, 2017 (accessed August 9, 2017).

2    Environment and Climate Change Canada, National Inventory Report 1990-2015: Greenhouse Gas Sources and Sinks. Ottawa: ECCC, 2017 (accessed August 9, 2017).

 


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