Canada’s Energy Future 2017: Energy Supply and Demand Projections to 2040

Mike Johnson

Technical Leader, Energy Supply Team

Solar Canada

December 4, 2017

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• The NEB’s Energy Futures (EF) reports provide long-term energy supply and demand projections for Canada

• Typically include a baseline “Reference Case” and some scenarios/sensitivities covering key uncertainties

• Recent EF reports have included scenarios on high/low oil and gas prices, pipeline export capacity, and LNG export volumes

• EF 2017 focuses on longer term climate policy developments and technological trends

National Energy Board and Energy Futures

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• Themes of energy, environment and technology run throughout

• Talk of EVs, fuel cells, and the future of oil sands

• Underestimates coal production, overestimates nuclear

generation

Some highlights from the 1967 report “Energy

Supply and Demand Forecast: 1965-1985”

Canadian Power Generation – 1965 and 1985

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EF 2017 Scenarios

Reference Case

• Currently Announced Policies

• Consensus view prices, econ growth

• Carbon price flat (nominal) post 2022

Higher Carbon

Price Case

• Increasing carbon price post 2022

• Assumes this is driven by greater global climate action

• Lower crude oil price

Technology Case

• Explores technology uncertainty

• Higher Carbon Price + greater adoption of select technologies

• Lowest crude oil price

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• Carbon Prices o Chart shows minimum federal floor

in nominal and CN2016$, some

provinces are currently higher.

Carbon Price and Technology Case Assumptions

• Technology Case Includes:o Higher long term carbon pricing

consistent with the Higher Carbon Price Case

o Low solar/wind power costs

o Improved renewable integration

o Faster uptake of EVs in passenger transport

o Greater adoption of steam-solvents in oil sands

o Greater electrification of space/water heating in buildings

o Increased use of CCS in coal-fired generation

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• Greater decline in the

Technology Case

than in the High-

Carbon and

Reference Cases for

solar

Capital costs for utility-scale solar were assumed to

continue declining over the long term

Source: NREL, EIA

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• Better technology

means more

penetration of EVs

into markets

o Thus, more

electricity demand

• More heat pumps for

residential and

commercial heating

and cooling

Also assumptions about demand-focused

technology in the Technology Case

EV Share of new passenger-vehicle purchases

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Key Finding 1:

The Energy Futures

2017 Reference Case

is the first baseline

projection in recent

Energy Futures

reports where

Canadian fossil fuel

consumption peaks

within the projection

period.

Canadian Fossil Fuel Use Projections, Recent Energy Futures Reports, Reference Case

Projected Peak is 2019

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Key Finding 2:

Canadian fossil fuel

consumption in the

Higher Carbon Price

Case is 8% lower

than in the

Reference Case,

and 13% lower in

the Technology

Case by 2040.

Fossil Fuel Use, All Cases

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Key Finding 3:

Renewable capacity

grows quickly, with

wind doubling and

solar more than

tripling by 2040 in the

Reference Case.

Technology Case

assumes lower wind

and solar costs,

improved variable

renewable integration.

Solar and Wind Capacity, Reference and Technology Cases

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Key Finding 4:

Despite different

energy outcomes,

economic growth is

similar in all three

scenarios in Energy

Futures 2017.

Per cent change in Various Indicators compared to the Reference Case by 2040, Higher Carbon Price and Technology Cases

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Key Finding 5:

Future policies and

technology trends,

both domestically and

globally, will shape

Canada’s sustainable

energy future.

The cases do not represent

a ceiling on Canada’s

potential for GHG emission

reductions, but illustrate the

impact climate policy and

technology can have on

Canada’s energy system.

Total Energy Use, All Cases

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• Electric demand increase

o EVs

o Switching to heat

pumps in provinces

not dominated by

electric heating

systems

• Electric demand decrease

o Switching to heat

pumps in provinces

dominated by electric

heating systems

• Overall: demand increases

Aggregate Impact on Electric Demand of

Technology Case Assumptions

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Electricity developments play big role in bending fossil fuel demand

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• Based on

existing policy,

we’ll see little

contribution from

it beyond 2030

Coal-fired power generation doesn’t have much

of a future in Canada

Coal-fired generating capacity by province,

Reference Case

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Generating Capacity by Fuel, 2015 and 2040, All Cases

• By 2040, total capacity in

the Technology Case is

8.5% higher than the HCP

Case, and 41% higher than

2015 levels

• In the Technology Case,

wind and solar make up

27% of Canada’s capacity

mix in 2040, compared to

19% in the Reference and

HCP cases, and 9% in

2015.

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• Much lower capital

costs for solar in the

Technology Case lead

to much higher

generation

o Over 40 TW.h in

2040

o Largely comes at

expense of coal

and natural gas

Generation is different than capacity, however

Generation by select fuels, 2015 and 2040

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Keep in mind that the NEB has underestimated solar

capacity in its past projections

• Projections for these

require a lot of policy

assumptions, and we

didn’t have much

guidance in the past

• More guidance now,

but how policy will

unfold to incorporate

more renewables into

the mix is still unknown

and there are many

pathways

Projected, cumulative solar capacity – Prior EF versions

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• Third edition of Energy Futures released as visualizations

• Includes a brand new visualization to explore changes in energy mix

• All data available in appendices

Energy Futures more than just a report, but a

significant data source as well

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• Renewables report (version 3)

FYI, the NEB has other projects in the works too

• Canadian solar-power supply costs

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• Higher carbon prices will move the

needle on Canadian fossil-fuel

demand, but improving solar and

wind technology will help move it

even more

• We’ll see more penetration of solar

into Canadian energy markets,

especially if costs keep falling like

they have been

Conclusions

Contacts: Mike.Johnson@neb-one.gc.caMatthew.Hansen@neb-one.gc.ca

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