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Electricity in Canada - Where are Prices Going?

Ontario

Ontario's Spot Price - Driven by weather, economic activity and generation available.

Electricity is priced each hour in Ontario based on supply and demand. The hourly demand is based on business and home use, driven by economic activity and weather. Supply is based on available generation, imports and mechanical breakdowns in the system.

Factors affecting prices

  • The recession and the closure of manufacturing plants has reduced electricity demand.
  • New generation required in Ontario will come from expensive sources. For example, the government is paying 13.5 cents/kWh for new wind power and 54 cents/kWh for solar.
  • Ontario starting closing coal generation units in 2010.
  • Electricity use is expected to increase long term at 2-3% per year.
  • Central air conditioners continue to be installed in high numbers in Ontario.
  • Several refurbished nuclear generation units are coming back online.
The result is that base load generation, which is on 24/7, is increasing while peaking capability is decreasing. It is likely that this will cause off peak prices to be lower, but peak prices to be more volatile.

For more detail, check out the Ontario IESO 18 month outlook.

Alberta

Alberta's electricity sector will be under considerable pressure over the next 5-10 years due to
- continued strong economic growth, particularly in the electricity intensive oil sands
- new environmental regulations that could cause older generators to retire;
- the addition of wind generation
- the continued long-term outlook of low natural gas and power prices.

To meet these demands there will have to be 740 MW of new capacity per year, nearly double the current rate. The current and projected low natural gas prices will cause a shift from coal to natural gas generation. This is likely to cause only a moderate price increases.

Factors affecting prices

  • Increasing demand
  • New generation, which is normally nore expensive than generation at the end if its useful life
  • Additional environmental standards and regulation
  • The need for fossil backup to wind power
For more detail, check out the Alberta Electricity System Operator 24 month Outlook

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