Boston, MA -- (SBWIRE) -- 02/13/2014 -- With power demand highly correlated to economic activities, we maintain our relatively positive outlook for the Canadian power sector. Our country risk analysts forecast Canadian real GDP growth to move just above the 2.2-2.3% long-term trend on average in 2014 and 2015, with expansion of 2.3% and 2.5% in those years, respectively. We thus expect that in 2014 power consumption will experience positive growth, albeit at a mere 0.96%. That said, overall generation will decline as Canada's power exports to its southern neighbour will decrease slightly.
Our fundamental assumptions of the market continue to be relevant, and thus our short and long-term forecasts remain mostly unchanged. Canada enjoys the advantage of a diverse and balanced electricity mix, thanks to its abundant indigenous resources. Yet, and despite Canada's decision to withdraw from the Kyoto Protocol, environmental concerns are likely to weigh heavily on the country's energy agenda. Hence, in a picture similar to the one of its Southern neighbour, we anticipate that planned shifts in the share of various fuels will be among the key drivers of new investment in the power sector. That said, there have been a number of positive developments across every segment of the power sector during 2013:
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- We have long held the view that, although Canada's heavy reliance on coal for electricity generation and its withdrawal from of the Kyoto agreement would imply the expansion of greener technologies is not at the forefront of government policy, stringent government carbon emission regulations suggest that electricity generation from coal will decrease over our 10-year forecast period.
- Ontario's commitment to renew both the Darlington and Bruce Power nuclear. Ontario's nuclear reactors have provided more than half of Ontario's electricity over the last five years, powering one out of every two homes, businesses, schools and hospitals.
- The Canada's federal government has decided to sign the Convention on Supplementary Compensation for Nuclear Damage. As indicated by the president of the Canadian Nuclear Association, Dr. John Barrett, said, this treaty is 'a good step toward an improved nuclear liability regime. It brings us closer to a global set of rules on liability, and aligns Canada with international standards.' The international convention, already signed by the United States and 15 other countries, enables a consistent international approach to managing nuclear liability. We note however that more countries with nuclear electric power generation capability will need to ratify the agreement before it takes effect.
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