Finding the Mix: The Choice of Generation Technologies in Canada

Canada’s electricity generation sector is in a transformational process. During this transitional period, the Government of Canada has enacted regulations that set a maximum level of greenhouse gas emissions from individual stations. As a result, Canada’s electricity generation sector faces a requirement to invest at record levels to replace and expand its capacity. This report examines several of the challenges facing electricity generators in five provinces: Alberta, Saskatchewan, Manitoba, Ontario, and Quebec. The report applies a tool from a financial portfolio analysis (Mean Variance Portfolio Theory) to the generating technology choice. The results can help inform investment decisions because they provide a benchmark for the optimal generation mix. And, the results also identify the risk/return implications of investing in any given technology—taking into account the existing mix as well as the new build options available.