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Natural Resources
November 7, 2012

New Power Generation is Required to Meet Future Electricity Demand

A report on electricity demand concludes that Newfoundland and Labrador needs a new source of electricity generation because demand for electricity on the Island will exceed supply in the near future. The report, Electricity Demand Forecast: Do We Need the Power?, released today by the Department of Natural Resources, identifies key influencers in demand growth and supports Manitoba Hydro International’s (MHI) discussion on electricity demand forecasts in their report released on October 30.

“Electricity demand is strongly linked to economic growth and since 2002, Newfoundland and Labrador has experienced significant economic growth as a result of mining and petroleum developments,” said the Honourable Jerome Kennedy, Minister of Natural Resources. “GDP has doubled, personal disposable income per person has increased by 62 per cent, and housing starts in the past decade have been, on average, 56 per cent higher than in the previous decade.”

From 2002 to 2011, approximately 28,800 new homes were constructed with 86 per cent of them using electric heat. In 2011, there were approximately 18,600 more residential customers on the Island then there were in 2006. While industrial demand has fluctuated, growth in residential and commercial demand has sustained electricity demand.

“We are experiencing a time of unprecedented development and opportunity in Newfoundland and Labrador,” added Minister Kennedy. “Forecasted demand clearly indicates that future growth will lead to further increases in the number of households in the province and new developments in the commercial and industrial sectors.”

The current economic forecast prepared by the Department of Finance indicates GDP growth of 1.6 per cent annually for the next 20 years. The forecast shows continued growth in the economy driven by major investments in natural resource projects. It also shows that the number of households in the province and new developments in the commercial and industrial sectors are expected to increase.

Newfoundland and Labrador Hydro’s (NLH) Planning Load Forecast indicates that by 2015 the province will be challenged to reliably meet peak demand in winter months and, post-2019, there will not be sufficient energy supply to reliably meet demand through the year. NLH’s electricity demand forecast points to continued residential and commercial growth. Industrial demand will be led by the Long Harbour processing facility which will require approximately 85MW of new supply.

In addition to Island demand, an estimated $10-15 billion of investment in Labrador mining projects may be realized over the next decade. Based on projects already in construction or near sanction, existing generating capacity to meet winter peak demand in Labrador will be exhausted by 2015-17.

"Nalcor has a mandate to meet the province’s growing electricity needs. Through long-term load forecasting and prudent generation planning, we can ensure we continue to meet consumers’ electricity needs today and long into the future," said Gilbert Bennett, Nalcor's Vice President of the Lower Churchill Project. "Our load forecast clearly shows the need for a new source of power for island electricity consumers and Muskrat Falls and the Labrador-Island Link is the lowest-cost option to meet this need."

MHI validated the methodology and data behind NLH’s electricity demand forecasting process. MHI found that residential demand was higher in the 2012 forecast and that it was an improvement over the 2010 forecast. MHI noted that the Island demand forecast was well-founded and appropriate as input into the Decision Gate 3 process, but that the overall forecast was conservative which suggests there is potential for even greater commercial and industrial demand in the province compared to the forecast.

“The historical trends, present demands, economic indicators and proven forecasting experience of Newfoundland and Labrador Hydro clearly establish that new generation is essential to address demand needs,” said Minister Kennedy. “The Muskrat Falls project is the least-cost solution to this supply challenge. It is critical that sufficient generation supply exist to ensure that homes and residences have access to reliable least-cost electricity for heating and other household requirements and that business and industry have the power they need to grow.”

To view the discussion paper, please visit: www.powerinourhands.ca Opens in a new window..

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Media contacts:

Heather Maclean
Director of Communications
Department of Natural Resources
709-729-5282, 697-4137
Karen O’Neill
Senior Communications Advisor
Nalcor Energy
709-737-1427, 690-2012

Key Points

Electricity Demand Forecast: Do We Need the Power?

2012 11 07                          2:35 p.m.

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