Is Canada joining the offshore party?

This month, Canadian province Nova Scotia announced it is looking to hold its first offshore wind tender by 2025, and plans to tender over 5GW by 2030. It wants to be an “international leader” in offshore wind-and-hydrogen projects.

This is not the same as saying it wants to have 5GW of offshore wind farms working in its waters by 2030. That is unrealistic given how far the sector has to go putting in place regulations to support offshore wind development.

Nevertheless, it is a positive sign that offshore wind may be gaining traction in Canada after years in the deep freeze.

Offshore pecking order

There were hints in the mid-2010s that offshore wind could grow in the US and Canada simultaneously.

In late 2015, Canadian developer Beothuk Energy announced plans for a 1GW project that it wanted to build in the waters off Nova Scotia, and in 2016 it teamed up with Copenhagen Infrastructure Partners to grow its pipeline.

But the firms did not make significant headway, either on that 1GW project or another development: the 180MW St. George’s Bay off Newfoundland.

The biggest blow for Canada’s nascent offshore wind sector came in 2017, as CIP shifted its attention away from Canada and towards the 800MW Vineyard Wind 1 it was developing off the coast of US state Massachusetts. This made commercial sense, but showed Canada's place in the regional pecking order.

The offshore wind fortunes of the US and Canada have diverged since then.

While there is now a 35GW-plus pipeline of offshore wind projects in the US and a host of state tendering processes, Canada has not kept pace on either. In its ‘Global Offshore Wind 2022’ report, the Global Wind Energy Council said there would be 31.9GW of working projects in US waters by 2031 and only 400MW in Canada. To which we respond: “400MW? As much as that?!”

Eventually, Canada will benefit from the burgeoning offshore wind supply chain in the US. Is it time for investors to do deals in the US’s northern neighbour?

Canada conundrum

There appear to be three main areas with offshore wind potential in Canada: Hudson Bay, the Labrador Sea and in the Great Lakes.

GWEC has reported that Canada has 9,321GW of technical offshore wind potential, of which 7,282GW is on sites requiring floating foundations and 2,039GW on sites that could use fixed foundations.

The Canada Energy Regulator is looking at how the country could achieve an electricity grid with net zero emissions, which bodes well for offshore wind in the long-term.

The nation could also benefit from the fact there are Canadian firms active in offshore wind globally, such as Northland Power, Enbridge, the Canada Pension Plan Investment Board, and Ontario Teachers’ Pension Plan. That is before we mention companies working in the US could grow northwards in due course.

So, there are reasons to get excited about the potential for offshore wind in Canada and we would not be surprised to see developers dusting off project plans in the coming months. The opportunity to develop offshore wind and link it up with green hydrogen production may spark some interest among the country’s fossil fuels sector too. But let’s keep this in perspective.

Nova Scotia’s announcement is just one tendering process and it is not due for three years. It is a good pointer for future activity, but that's about it.

Meanwhile, the 400MW that GWEC said could be built by 2031 must refer to Hecate, a development by Northland off British Columbia. But that will need British Columbia, off the western coast, to make similar commitments as Nova Scotia, off the eastern coast. That hasn't happened yet.

Finally, the Impact Assessment Agency of Canada has committed to study the potential for offshore wind in four areas off eastern Canada. This is potentially good news, but the process was only announced in April 2022. This is another process where the benefits will take time to emerge.

So, should investors look seriously at Canada? Yes, but they must accept it is a long-term play. We may see an attractive development pipeline in five years, and it will be ten years before steel is in the water. A quick win it ain’t.