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How to mitigate risks when building major infrastructure in the energy and utilities sector

How to mitigate risks when building major infrastructure in the energy and utilities sector

5 Minute Read

Leaders in the energy sector face many risks when building the major infrastructure required to achieve Canada’s net-zero objectives — including climate change, a labour and supply shortage, and community resistance. To overcome these obstacles, leaders in the energy sector must prioritize:

  • Setting achievable timelines
  • Leveraging available resources and technologies
  • Collaborating with local stakeholders
  • Fulfilling the duty to consult with Indigenous groups
  • Prioritizing climate resiliency

Seizing these opportunities can help mitigate the risks of building major infrastructure and help you navigate the path toward a net-zero future.

Consulting Leader, Energy and Utilities

Canada’s transition to a net-zero electricity supply will have a significant impact on the energy and utilities sector. It is necessary to build new major infrastructure to generate, transmit, and distribute clean energy to households and businesses across the country — and you may be wondering how to reduce risks and seize new opportunities as a leader in your industry.

Community resistance, a labour and supply shortage, and climate change are just a few of the risks you may face when building net-zero infrastructure. Let’s review the challenges ahead and several steps that may help your company overcome obstacles on the path toward net-zero.

What are the risks associated with building major infrastructure?

New major infrastructure is essential to achieve a sustainable net-zero electricity supply. However, it is important to maintain awareness of the potential risks associated with these projects, including:

Climate change

It is more essential than ever to build resiliency into major infrastructure as the climate across Canada continues to become more volatile. Extreme weather events such as wildfires, floods, or storms can result in service disruptions to Canadian households and businesses when they may need access to electricity the most. As the climate continues to change, energy sector leaders must make climate adaptation and resiliency a key priority for these projects.

Environmental and social impacts

Hydroelectric power plants provide a reliable net-zero electricity supply to provinces such as B.C., Manitoba, Ontario, and Quebec. However, many of these power plants are now aging, and building new hydroelectric plants may cause considerable environmental and social impacts.

The flooding caused by hydroelectric power plants may disrupt local ecosystems or cause community displacement. Additionally, many of these power plants are built in northern Canada — disproportionately affecting Indigenous land and communities.

Labour and supply shortage

Building new major infrastructure will require significant resources — including people and materials. However, companies are currently struggling to hire and retain the talent needed to construct major projects. Additionally, many workers are retiring from the industry and are not being replaced at the same rate. These issues, along with supply chain disruptions, can lead to increased costs and delay the construction of major infrastructure to support Canada’s net-zero objectives.

Community resistance

The wind turbines and solar panels required to generate electricity take up a substantial amount of land. These types of infrastructure are frequently constructed in rural areas and can lead to conflict over land use — especially in communities where agriculture is prevalent. Concerns about noise from wind turbines or the loss of potential farmland can result in community opposition toward the infrastructure required to generate a net-zero electricity supply.

Impact on Indigenous rights

New infrastructure projects have the potential to impact Indigenous rights throughout the construction, operation, and maintenance phases. This infrastructure may have a considerable impact on harvesting rights such as hunting, trapping, fishing, or gathering. It may also impact governance rights such as the right to steward the environment. If the potential impacts to these rights are not properly assessed or mitigated, it may result in Indigenous opposition toward infrastructure projects or cause substantial project delays.

How to mitigate risks

Community resistance, a labour and supply shortage, and high maintenance costs are just a few of the risks associated with building major infrastructure projects to support Canada’s journey toward a net-zero electricity supply. These steps can help your company navigate the path forward:

Set achievable timelines

The shift toward a net-zero electricity supply will involve careful planning to mitigate risks, allocate resources, and ensure regulatory compliance. Review the timelines for the construction of major infrastructure to ensure that the time you have allotted for each project is achievable.

The labour and supply chain shortage may delay your timeline for construction — and factoring in the time required to assess climate resiliency, environmental and social impacts, and other potential risks may extend your deadline even further. It is important to include each of these considerations when you set your project timelines to ensure a reasonable timeframe for construction.

Leverage available resources and technologies

A wide variety of technology is emerging as Canada works toward its net-zero commitment. Battery storage capabilities are evolving to hold more power generated by intermittent resources such as wind and solar. This will support provinces that lack hydroelectric resources such as Alberta, Saskatchewan, New Brunswick, and Nova Scotia on the journey toward net-zero.

Additionally, advances in carbon capture technologies can help reduce the impact of carbon-emitting resources on the environment. Many provinces are relying on natural gas to bridge the transition period to a net-zero emission grid. Exploring all available opportunities to harness renewable resources or available technologies will be essential to reach net-zero successfully.

Collaborate with local stakeholders

Collaborating with stakeholders can help overcome local resistance to the construction of solar or wind infrastructure in rural communities. Proper planning to minimize risks and maximize the potential benefits of each project can also help address community concerns and reduce opposition.

Fulfill the duty to consult with Indigenous groups

To understand impacts on Indigenous rights and interests, energy sector leaders must ensure that the duty to consult is adequately discharged when triggered either provincially or federally. In some cases, companies may be delegated with the procedural aspects of consultation where they must work to identify impacts to Indigenous rights and interests. In other cases, the company may be responsible for Indigenous engagement while the Crown retains the duty to consult.

Regardless of the level of the duty required, Indigenous groups should be involved early, often, and with sufficient provision of capacity to allow for meaningful project engagement. This level of engagement can help companies fulfill the principles of free, prior, and informed consent which is enshrined in the United Nations Declaration on the Rights of Indigenous Peoples and within current Canadian legislation.

Energy sector leaders can also connect with Indigenous groups as potential project partners in parallel to fulfilling the duty to consult. This may help to enhance the economic participation of Indigenous groups in these projects.

Prioritize climate resiliency

It is more important than ever to build climate resiliency into your infrastructure as the weather across Canada continues to become more volatile. Conducting vulnerability and risk assessments in advance or making these a requirement during the design and build procurement process can help make generation, transmission, and distribution assets more resilient to extreme weather and natural disasters.

Additionally, careful site selection, adaptive design, and backup systems and redundancies can help prevent service disruptions from severe weather events. Prioritizing resilient infrastructure will help ensure Canada’s electricity supply remains safe, available, and reliable in the future. 

Get started on the path toward net-zero

Leaders in the energy sector face considerable risks on the path toward building major infrastructure to support Canada’s net-zero electricity objectives. Climate change, community opposition, and a labour and supply shortage are just a few of the obstacles you may face on your journey. However, there are also exciting new opportunities ahead — and leveraging available technologies, collaborating with local stakeholders, and building with climate resiliency in mind can help mitigate the risks of constructing major infrastructure.

For more information about how the transition to net-zero will impact the energy and utilities sector, contact a member of MNP’s Energy team. Our advisors understand the challenges you are facing and can help you seize new opportunities along the path toward a net-zero future.

Contact us

To learn more about how MNP can help your organization, contact Gord Chalk, MBA, CMC.


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