As in the U.S., Canada's demand for electricity is expected to
rise steadily in coming years as an increasingly urban population
continues to adopt new power-using devices. New demand will be
especially strong in the energy patch, as oil sands are opened up
for export to either the U.S. or China.
As I've pointed out on numerous occasions, oil sands development
is at its core not a drilling operation but a mining and chemical
refining process. That requires an enormous amount of electricity
to carry through.
On the other hand, the Canadian government has also been very
aggressive setting targets for use of renewable energy and reducing
carbon dioxide emissions from power generation.
A year ago the country set tough new standards for fostering
biofuels development. That matches renewable energy standards set
in nine Canadian provinces that require power companies to generate
a set percentage of their electricity from wind, solar and
As the major utilities are primarily provincial power
authorities, that amounts to guaranteed contracts for renewable
energy developers and generators. And not only are contracts backed
by the full support of taxpayers, but they typically guarantee
premium rates and recovery of any change in costs. Some -
particularly in solar and wind - actually guarantee payment even if
conditions inhibit a full generation.
After it completes its acquisition of Capital Power LP,
Atlantic Power Corp. will hold several valuable projects.
Management plans to follow up with more, particularly in hydro-rich
Meanwhile, Innergex Renewable Energy, which I first
article, already has substantial holdings, and is in the
process of building more capacity. Innergex has aggressive plans
with new wind and water projects in development that will nearly
double current capacity in the next few years. And it has
prospective projects that would potentially add another 2,800
megawatts, or nearly seven times current output of 401
Getting all that up and running is just a matter of executing,
and Innergex has been very effective getting such deals done in the
past. Even a partial success will result in a big ramping up of
dividends in coming years, even as the current payout remains
secure despite what happens in the economy.