Michel Letellier
President & CEO - Innergex Renewable Energy
Part of the Spotlight on Renewable Energy

Canada’s Power Sector: Big changes ahead

Takeaways

  1. Canada can provide capital and knowledge to the renewable energy industry, but it does not have the capacity to commercially manufacture the technology.
  2. Innovation in energy storage will drive the adoption of renewable energy.
  3. Utilities will need to adapt their business model as customers begin to self-produce electricity and energy companies get open access to customers.

Action

We need to strengthen links between academic research and industry. Canada must be able to commercialize a lot of the phenomenal research findings coming out of our universities.


How competitive is Canada in the global renewable energy industry?

Firstly, Canada is blessed with a lot of renewable resources, mainly hydro, wind, and to some degree, solar. But we have not developed a lot of manufacturing jobs or companies that would produce wind turbines or solar panels since Canada is a small market.

“Canada has the ability to provide capital and services towards the development of renewable energy projects worldwide, but we do not have a significant domestic renewable energy manufacturing sector.”

On the other hand, Canadians are extremely entrepreneurial in terms of investing in renewable energy; Innergex is an example of a firm investing solely in renewable energy. Canadian pension plans and some of our banks are also quite invested in this area. So, Canada has the ability to provide capital and services towards the development of renewable energy projects worldwide, but we do not have a significant domestic renewable energy manufacturing sector. We will export our services, knowledge and capital internationally but we will not necessarily manufacture wind turbines or solar panels.


How are emerging entrepreneurs and innovation changing the direction of the energy sector?

Canada’s future energy mix is highly dependent on opportunities created by technological advancement. For instance, we will find new and cheaper ways to generate and store energy, especially at the household level. To some degree, renewable energy can be variable during the day or during the year. So, lowering the cost of energy storage batteries would make renewable energy cheaper and more viable. There will be a lot of potential for integrating energy storage into construction material as well. Electric vehicles are another fantastic opportunity to transform our transportation system.

However, when the cost of energy is already extremely low, like in Quebec, motivation to introduce and use new technology is less attractive. Therefore, effective government policies are required to drive the development and adoption of these new technologies.


How can Canadian educational institutions contribute further to the renewable energy sector?

Canada has great universities, which may need to improve their business case to sell the innovation they engage in. Canada could improve the commercial link between universities and the private sector to ensure that researchers and universities could license important findings and make money if they lead to commercial successes. Some other countries are better at integrating universities and making good use of research findings. For example, American universities are more intertwined with industry. Google, Microsoft, Apple, etc. are always on the lookout for young brains for their research and development departments.

“Canada could improve the commercial link between universities and the private sector to ensure that researchers and universities could license important findings and make money if they lead to commercial successes.”

We need to ensure that researchers and universities can license out an important finding and make money if it leads to a commercial success. This could help universities self-fund their research. In Canada, we have bright young people coming out of universities, but they often unfortunately end up going to Europe or the United States. We have to get better at providing these young talents with great opportunity in Canada.


The Innergex business model is centered around producing renewable energy and selling it to publicly owned utilities, which then supply power to consumers. How do you think this supply chain of electricity generation and distribution will change in the future and how is Innergex preparing for these changes?

The old business model is to be a producer, contractor or sub-contractor for large utilities and I think that model will still be part of the business. Obviously, producing electricity will always be very important for utilities and the population in general. But, if energy companies have open access to clients in the future, they could bypass utilities and directly reach industrial and retail customers. One of the assets we bought from Alterra in Iceland has this capability.

“If energy companies have open access to clients in the future, they could bypass utilities and directly reach industrial and retail customers.”

In order to become better service providers, companies will also have to consider raising capacity, which is why we are aggressively researching ways to integrate batteries. Innergex also wants to diversify its technology by investing in hydro, wind, solar and geothermal. Innergex is adapting to these changes and utilities will have to adapt as well. A lot of their customers will start to self-produce electricity.


How do you envision Canada’s energy mix in 2050?

Firstly, we will all be driving electric cars by 2050 and the combustion engine will be obsolete. Canadians will also not be using oil to heat households – heat pumps and geothermal energy will dominate building heating systems. To be honest, I am not so bullish about the oil and gas industry in Canada. Employment will eventually shift towards services and our manufacturing jobs that are currently linked to oil and gas will be taken over by robots and AI. Automation will make our domestic production processes and exports cheaper, and more competitive in the global market.

In terms of energy sources, wind will still dominate big projects but solar will be growing at the household and small business level. The integration of solar technology in construction material will also help buildings self-produce electricity.