Category Archives: Economy

Le nouveau système énergétique mondial sera électrifié, local et varié

Le système énergétique mondial est basé sur l’énergie fossile (charbon, pétrole et gaz naturel) depuis deux siècles. Les combustibles fossiles sont les marchandises ultimes («?commodities?» en anglais) : faciles à transporter, faciles à stocker et standardisées. Le système énergétique fossile est ainsi une immense monoculture. Une pompe à essence pompe essentiellement le même produit, qu’elle soit à Québec, Dallas, Paris ou Nairobi. Les grandes pétrolières contribuent d’ailleurs à uniformiser les produits et à propager les meilleures façons de faire mondialement.

Les marchandises fossiles sont fortement exposées aux aléas géopolitiques. Si Poutine décide de fermer le robinet, l’Europe risque de geler. Si des révolutionnaires décident de fermer le golfe d’Aden, les pétroliers doivent emprunter des trajets plus longs et coûteux.

Le système énergétique mondial électrifié est différent. L’électricité ne peut être stockée efficacement pour être transportée : les lignes électriques ont au plus quelques milliers de kilomètres. S’il est possible de stocker l’électricité dans des batteries ou avec de l’hydroélectricité pompée, la période économique de stockage se mesure en heures ou en jours. La production est donc plus locale et rapidement consommée.

Cependant, les sources d’électricité et les besoins d’électrification varient beaucoup d’un endroit à l’autre. Si on peut se climatiser avec du solaire en Australie du Sud, on se chauffe à l’hydroélectricité au Québec. Puis, c’est l’éolien aux Pays-Bas et le nucléaire en France.

La géopolitique sera beaucoup moins importante. Si la Chine ne peut pas nous envoyer de nouveaux panneaux solaires, d’autres le feront et on peut toujours adopter les politiques industrielles pour en faire ici. De plus, les panneaux déjà livrés continueront de produire de l’électricité, alors qu’on serait immobilisé et gèlerait (ou suerait) sans un approvisionnement continu en énergie fossile.

Voici donc une autre caractéristique du système énergétique mondial électrifié : il sera local. Les choix d’électrification des sociétés dépendront des ressources disponibles localement et les solutions varieront en conséquence. Ce qui marche en Californie ne marche pas nécessairement ici.

Cependant, les outils seront les mêmes partout : production renouvelable (centralisée ou distribuée), stockage, transport, distribution, et utilisation efficace. La diffusion des connaissances techniques et des meilleures pratiques d’affaires devra être plus explicite que ce n’était nécessaire avec les grandes pétrolières. Chaque région devra développer une bonne vigie industrielle et technologique pour apprendre des autres, partager ses bons coups, et comparer régulièrement sa performance.

Donc, préparez-vous à votre avenir électrifié : produire et consommer localement tout en vous inspirant d’idées mondiales.

LinkedIn: https://www.linkedin.com/posts/bmarcoux_the-new-global-energy-system-will-be-electrified-activity-7168314950778646529-rxBt/

The New Global Energy System Will Be Electrified, Local and Varied

The world’s energy system has been based on fossil fuels (coal, oil, and natural gas) for two centuries. Fossil fuels are the ultimate commodities: easy to transport, easy to store and standardized. The fossil fuel energy system is thus a huge monoculture. A gas pump pumps the essentially same product, whether it’s in Québec City, Dallas, Paris or Nairobi. The big oil companies are also helping to standardize products and propagate best practices globally.

Fossil fuels are highly exposed to geopolitical uncertainties. If Putin decides to turn off the tap, Europe risks freezing. If revolutionaries decide to close the Gulf of Aden, oil tankers must take longer and more expensive routes.

The electrified global energy system is different. Electricity cannot be efficiently stored for transport: power lines have at most a few thousand kilometres. While it is possible to store electricity in batteries or with pumped hydroelectricity, the economic storage period is measured in hours or days. The production is therefore more local and quickly consumed.

However, the sources of electricity and the needs to electrify vary greatly from one place to another. If you can get solar power to stay cool in South Australia, you heat your home with hydroelectricity in Québec. Then there is wind power in the Netherlands and nuclear power in France.

Geopolitics will be much less important. If China can’t send us new solar panels, others will, and we can always adopt the industrial policies to make them here. In addition, the panels already delivered will continue to generate power, while we would be stuck and freezing (or sweating) without a continuous supply of fossil fuels.

So here’s another feature of the electrified global energy system: it will be local. Regional electrification choices will depend on locally available resources and solutions will vary accordingly. What works in California doesn’t necessarily work here.

However, the tools will be the same everywhere: renewable generation (centralized or distributed), storage, transmission, distribution, and efficient use. The dissemination of technical knowledge and business best practices will have to be more explicit than was necessary with the big oil companies. Each region will have to develop a good industrial and technological watch to learn from others, share its successes, and regularly compare its performance.

So, get ready for your electrified future: producing and consuming locally while being inspired by global ideas.

LinkedIn: https://www.linkedin.com/feed/update/urn:li:activity:7168314454936342528/

The Impact of Industrial Policies on Québec’s Electricity Industry

With the energy transition, Québec is currently at a turning point reminiscent of the period following the Quiet Revolution, in the 1960s and 1970s, when successive Unionist, Liberal and PQ governments initiated the development of the Manic-Outardes project, which doubled Québec’s electricity generation capacity, and then Churchill Falls (Labrador) and James Bay, which doubled it again. Today, there is again talk of doubling by 2050. But increasing Hydro Québec’s generation capacity was not the only highlight of the 1960s and 1970s.

In the 1960s and 1970s, governments also used the construction of major hydro plants to enable French-speaking Quebecers to take control of the province’s economic development. This economic development occurred both in the secondary sector (electrical equipment manufacturing and aluminum smelters) and in the tertiary sector (large consulting engineering firms and, a little later, in information technology).

We can still hear the echoes of this decision because there are about 65,000 jobs related to the electricity industry, only a third of which are at Hydro-Québec.

Québec is now Canada’s electrical manufacturing hub: we have 36.3% of Canadian electrical manufacturing jobs, but only 22.7% of total Canadian manufacturing jobs. In other words, we have proportionally twice as many jobs in electrical equipment manufacturing as Canada outside Québec. This includes the manufacture of electrical power generation and systems, as well as appliances used by residential and commercial customers, such as heaters and advanced control systems.

Obviously, the impact of these industrial policies on the aluminum smelting industry is well known: it has experienced considerable growth, with 30,000 jobs.

And that’s not all: this period also saw the emergence of world-class Québec consulting engineering firms, some of which reached the top-10 in the world, such as SNC-Lavalin (AtkinsRéalis). Our consulting engineering firms are present throughout the value chain, from large dams to residential energy efficiency assessments.

In the 1970s, the industry’s need for control and management systems propelled the information technology sector — CGI, LGS, an IBM Company and DMR come to mind. In a way, it’s safe to say that even the artificial intelligence sector that Québec is now known for was driven by the electrification decisions made by our grandparents.

L’impact des politiques industrielles dans l’industrie de l’électricité au Québec.

Avec la transition énergétique, le Québec se trouve actuellement à un tournant qui rappelle la période qui a suivi la Révolution tranquille, dans les années 60 et 70, alors que les gouvernements successifs, unionistes, libéraux ou péquistes, ont alors enclenché le développement des grands ouvrages de Manic-Outardes, qui ont doublé la capacité de production du Québec, de Churchill Falls (au Labrador) et de la Baie-James, qui l’ont encore doublé. Aujourd’hui, on parle à nouveau de doubler à l’horizon 2050. Mais augmenter la capacité de production d’Hydro Québec ne fut pas le seul point marquant des années 60 et 70.

Dans les années 60 et 70, les gouvernements ont aussi utilisé la construction des grands ouvrages pour permettre aux Québécois francophones de prendre en main le développement économique de la province. Ce développement économique fut à la fois dans le secteur secondaire (fabrication d’équipement électrique et alumineries) et dans le secteur tertiaire (grandes firmes de génie-conseil et, un peu plus tard, en technologies de l’information).

On entend encore les échos de cette décision d’avenir, car il y a environ 65?000 emplois liés à l’industrie de l’électricité, dont un tiers seulement à Hydro-Québec.

Le Québec est aujourd’hui le pôle canadien de fabrication de matériel électrique : nous avons 36,3 % des emplois canadiens de fabrication de matériel électrique, mais seulement 22,7 % des emplois manufacturiers totaux canadiens. Dits autrement, nous avons proportionnellement 2 fois plus d’emplois en fabrication de matériel électrique que le Canada hors Québec. On parle ici de fabrication d’appareils de production et de réseaux électriques, mais aussi d’appareils utilisés chez les clients résidentiels et commerciaux, comme les appareils de chauffage et les systèmes de contrôle de la pointe.
Évidemment, l’impact de ces politiques industrielles sur l’industrie de la transformation de l’aluminium est bien connu : elle a connu un essor considérable, avec 30?000 emplois.

Ce n’est pas tout : cette période a aussi vu l’émergence de firmes québécoises de génie-conseil de calibre international dont certaines sont parvenues au top-10 mondial, comme SNC-Lavalin (AtkinsRéalis). Nos firmes de génie-conseil sont présentes tout au long de la chaîne de valeur, des grands barrages jusqu’aux évaluations d’efficacité énergétique des résidences.

Dans les années 70, les besoins de systèmes de contrôle et de gestion du secteur ont propulsé le secteur des technologies de l’information — on pense à CGI, LGS, an IBM Company et DMR. D’une certaine façon, on peut dire que mêmele secteur de l’intelligence artificielle qui fait maintenant la renommée du Québec a été poussé par les décisions d’électrification prises par nos grands-parents.

A Perspective on Canada’s Electricity Industry in 2030

I wrote this piece with my friend Denis Chartrand as a companion document for my CEA presentation back in February 2018 (See http://benoit.marcoux.ca/blog/cea-tigers-den-workshop/) but I now realize that I never published it. So, here it is!

Canada Electricity Industry 2030 20180221

Wind and Solar PV Are Becoming a Chinese Story

In 2015, China became world’s largest producer of photovoltaic power, and this is clearly a policy enshrined in the 13th five-year plan (2016-2020).[i] This plan calls to increase installed wind power capacity to 210 GW and solar PV capacity to 105 GW by 2020 – about a third more than in 2016, although developers’ enthusiasm means that the solar PV 2020 objective will be achieved in 2018, given 34 GW added in 2016 and 54 GW in 2017 – more than the rest of the world combined. To put this 54 GW in context, it is a third more that the nameplate capacity of the electricity producers in the province of Québec.[ii] However, contrary to what happened in Europe, China’s policy followed the initial price reduction in wind and solar power. If Europe lit the renewable fire some time ago, China now fuels it.


Figure 1 The growth of wind and solar PV capacity saw Europe leading in early years, but China is now the main source of growth.[iii]

China now dominates new installed capacity for wind and solar PV, and this keen interest is enshrined in its 5-year plans – China will continue to have the largest share for years to come.

You may have noticed how small wind and solar PV capacities are in Canada in comparison to the rest of the world – just 12 GW for wind and 3 GW for solar PV, and barely visible in Figure 3. Canada is a small player for wind and solar PV. The rest of the world adds as much wind and solar PV capacity per year as the entire electricity generation capacity currently installed in Canada, all sources combined.

While new generation capacity from wind and solar is being installed at an increasing rate, investments have been essentially flat since 2011, compressed by dropping unit costs:[iv]

Figure 2 While new generation capacity from wind and solar is being installed at an increasing rate, investments have been essentially flat since 2011.

With lower unit costs per MW, developers can install more capacity for a given investment. This phenomenon can be expected if wind and solar technologies follow a pattern like Moore’s Law – we are not paying more for a computer than we did years ago, we are just getting more for the same price (or even lower price).

This flat 2011-2017 trend also masks major difference across the world: China’s new wind and solar investments went from $42B in 2011 to $123B in 2017 – almost half of global investments. Conversely, European investments went down in the same period, while North America was relatively flat. Canada’s investments in 2017 were a modest $3B.

The domination of Chinese investments is even greater when one considers China foreign investments in clean energy. China being already the largest market for renewable energy, it is developing the renewable sector internationally, aiming to be a leader along the entire value chain. China’s Belt and Road Initiative (BRI) is driving Chinese energy investments overseas. The initiative already has driven solar equipment exports of U.S.$8 billion.[v] China is not content to be a manufacturer and it is also looking for opportunities to develop Engineering, Procurement and Construction (EPC) standards that it can apply internationally, plus operating credentials. China is building corporate giants to fulfill those ambitions, such as Shenhua Group, now the largest wind developer in the world, with 33 GW of capacity.[vi] In 2016, Xinjiang Goldwind ranked 3rd for onshore and also 3rd for offshore wind turbine manufacturing[vii]. China has become the number one exporter of environmental goods and services, overtaking the U.S. and Germany.

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[i]        See https://www.iea.org/policiesandmeasures/pams/china/name-161254-en.php and https://translate.google.com/translate?hl=en&sl=auto&tl=en&u=http%3A%2F%2Fwww.nea.gov.cn%2F2016-12%2F19%2Fc_135916140.htm, accessed on 20180116.

[ii]       Statistics Canada. Table 127-0009 – Installed generating capacity, by class of electricity producer, annual (kilowatts), http://www5.statcan.gc.ca/cansim/a47, accessed 20180131. In 2015, public electricity producers in Québec had an installed generating capacity of 37 GW, while privates ones has 3 GW.

[iii]      IRENA (2017), Renewable Energy Statistics 2017, The International Renewable Energy Agency, Abu Dhabi, with estimates based on Bloomberg New Energy Finance for 2017.

[iv]       Clean Energy Investment Trends, Abraham Louw, Bloomberg New energy Finance, January 16, 2018.

[v]        China 2017 Review, Institute for Energy Economics and Financial Analysis (IFEEA), p. 2.

[vi]       https://www.reuters.com/article/us-china-power-shenhua-guodian-factbox/factbox-shenhua-and-guodian-chinas-latest-state-marriage-idUSKCN1B918I, accessed 20180118.

[vii]      https://about.bnef.com/blog/vestas-reclaims-top-spot-annual-ranking-wind-turbine-makers/, accessed 20180118.

A pillar of the Canadian economy is undergoing a profound transformation

Now is a time of innovation in the electric industry, like no other since Thomas Edison.

Now is the time when wealth can be created as we use our resources and our brains to ensure a resilient and sustainable energy future for all.

Potential wealth creation stems from the fundamental changes occurring in the electricity sector:

  • Globally, electricity and heat production are the largest contributors to greenhouse gas (GHG) emissions. Canada is blessed with abundant carbon-free hydroelectric generation, but our energy sector as a whole is a major emitter of climate-changing GHG.
  • In response, major investments have been made across the world in designing and implementing renewable sources and energy storage, including wind and solar. The price of those sources is decreasing at double-digit rates per year and they are getting increasingly competitive with traditional sources.
  • Wind and solar generation are not only becoming cost effective, but doing so at a much smaller scale than traditional generation. Distributed generation is being installed deep in the electrical grid, at its edges or even behind the meters. The traditional and centralized grid designed by Edison is being transformed into a digital grid of microgrids integrated to local energy resources.
  • The new, distributed and digital-enabled electrical grid is more resilient because it relies on multiple and alternate energy sources and paths. The electrical grid then becomes more resilient to extreme weather events that, unfortunately, become more frequent with climate change.
  • Residential and industrial customers benefit from improved reliability as they are increasingly dependent on electricity to power our modern life in smart communities and with the advent of electrical transportation.

Innovation and wealth creation opportunities are everywhere in this context. Technical innovation is what drives the decreasing costs of renewable sources for energy users. Vendors need to invent new commercial solutions to balance the new distributed grid and ensure that customers stay powered up. Increasing energy efficiency means that we can do more with less. Utilities and entrepreneurs adopt new business models to better serve customer segments. In particular, utilities, previously defined by their geographic territories, are morphing into energy service providers, often competing with offerings from new entrants, or even competing with each other like never before, driving cost down for Canadian consumers and businesses. The digitalization of the electrical grid creates large quantities of data that new software applications can leverage to increase efficiency and create commercial opportunities. Canadian customers, now with the power of choice, can no longer be taken for granted and demand more.

What is even more dramatic is that the changes affecting the electric industry are shaking a pillar of the Canadian economy. The electric industry touches every home and business in Canada and reliable power is an essential ingredient for the competitiveness of our economy. Electric power generation, transmission and distribution utilities contribute almost $30 billion to the Canadian economy, with electrical equipment manufacturers contributing another $4 billion. This industry employs over 100,000 Canadians, but the Conference Board has estimated that 156,000 workers will be needed to carry out the renewal of Canada’s electricity infrastructure. Canada’s net exports of electricity and electrical products amount to billions of dollars every year. The Canadian electricity system is in need of massive infrastructure renewal. The Conference Board of Canada estimates that by 2030, close to $350 billion in new investment will be required just to maintain existing electricity capacity, with most of Canada’s non-hydro assets needing renewal or replacement by 2050. The importance of the electric industry scales up the potential of wealth creation, but also underlines the perils that we are facing: should the Canadian electric industry fail to renew itself for the challenges of the 21st century, the entire economy of Canada would suffer, with foreign service providers taking control and energy exports dwindling.

In conclusion, accelerating the transformation of the Canadian electric industry is essential. In an industry traditionally defined by centralized generation and rigid geographic boundaries between utilities, new linkages need to occur: utilities and customers, vendors and entrepreneurs, cities and businesses, ensuring that all see the opportunities that didn’t exist before and have the support they need to get their ideas to market quickly. The transformation of the electric industry will ensure that Canadians benefit from the billions of dollars to be invested in the electricity system. The structure of the industry will emerge transformed, with Canadian-owned service providers offering novel energy solutions, backed by a web of hardware, software, and professional service vendors. This will increase the opportunities for Canadians to export their energy, their expertise, and the fruit of their labor.