A federal infrastructure agency created to finance new infrastructure — and alleviate the burden on the public purse — is not expected to back projects involving existing public electricity grids, newly released documents say.
Many provinces need to upgrade their power transmission systems to deal with green-energy projects and are desperate for money to do it.
The documents say the Canada Infrastructure Bank would only get involved in grid projects that were “structured as an isolated entity,” meaning the work would be “separate from a larger public electricity grid.”
The briefing note for a senior Infrastructure Canada official and obtained by The Canadian Press under the federal access-to-information law also says there needed to be a private backer acting as “co-financier and co-owner.”
The documents were drafted for a meeting of federal officials before the agency launched in late 2017, as the government worked on the details of how money would flow to provinces and territories to improve Canada’s electrical grid.
The agency now says only that projects involving electricity transmission will be eligible for financing, including projects connecting existing grids through what are called “interties.” Those are typically heavy-duty connections between provinces.
In general, the bank is supposed to support projects that will attract private investment because they’ll produce profits. The infrastructure bank has at least $5 billion to use to leverage billions more private-sector dollars for revenue-generating projects, which could include electricity grids funded by ratepayers.
The money is supposed to complement $9.2 billion in traditional federal funding over the next decade for green infrastructure projects, “which could include better-connected electricity systems,” reads the briefing note to a group of deputy ministers.
“(A) smart grid, not to play with words, it’s probably one of the biggest contributors to reducing our greenhouse-gas emissions,” Infrastructure Minister Francois-Philippe Champagne said in a recent interview.
“It’s just that our networks have been created over the history of our country on a provincial basis a bit more north-south than east-west. I have been asking questions of how can we better connect Canada to reduce, for example, the cost of electricity, to have more renewable energy.”
Champagne also said he is looking at how to fund interties. They’re seen as a key avenue to reduce emissions in the energy sector by connecting grids to renewable power sources built in other jurisdictions — tapping hydroelectricity in Quebec to feed industry in Ontario, for instance.
A late-2017 presentation said Canada’s “energy system needs to be transformed over the next 35 years” if the government wanted to meet its emission reduction targets.
The documents note that federal officials were told that transformation required the government to help “producers and adopters to ’tilt the system’ in favour of clean-energy transformation, supported by close integration with science and policy.”
More than 80 per cent of the electricity in Canada doesn’t cause greenhouse-gas emissions, the Canadian Electricity Association says, noting that emissions from the sector have fallen by 30 per cent from 2000 levels and are expected to fall a further 30 per cent by 2030.
The Conference Board of Canada has estimated the country needs to spend $1.7 trillion on electricity-grid upgrades by 2050.
The Canadian Electricity Association says that figure could increase because of the demand other infrastructure projects will place on grids. Chief operating officer Francis Bradley said an example was the infrastructure bank’s $1.28-billion loan for a $6.3-billion electric rail project in Montreal.
Investments in other sectors of the economy will “result in greater electrification and in the end, a greater requirement for more electricity and more electricity investments,” Bradley said.
Bradley said meetings are planned with government and infrastructure bank officials later this month to get clarity on funding details.