Good morning, everyone. I'm Randy Mah, the Director of Investor Relations for Capital Power. Welcome to our 11th Annual Investor Day event here in Toronto. This event is being webcast, so I'd like to welcome the listeners participating on the webcast. Earlier this morning, we issued a news release that outlined some of the highlights that we will be discussing today. We hope that you find the information presented today helpful in understanding the Capital Power story. Before we begin, let me cover off the standard disclaimer regarding forward-looking information. Certain information in today's presentation and responses to questions contain forward-looking information. I ask that you refer to the forward-looking information disclaimer at the end of the presentation, as well as our disclosure documents filed on SEDAR for further information on the material factors and risks that could cause actual results to differ.
I'll start off with an introduction of the management team that are here today. We have Brian Vaasjo, President and CEO, Kate Chisholm, Chief Legal and Sustainability Officer, Bryan DeNeve, Senior Vice President, Finance and CFO, Darcy Trufyn, Senior Vice President, Operations, Engineering, and Construction, and Mark Zimmerman, Senior Vice President, Corporate Development and Commercial Services. We also have Jacquie Pylypiuk, who heads up our Human Resources department. This is the agenda for today. We'll start off with presentations by Brian, Darcy, and Mark, and Bryan DeNeve, we'll take a mid-morning break around 10:20. We'll finish off with Kate and Brian Vaasjo. We'll go to a Q&A for about half an hour. After the break, we have our guest speaker, Dr. Stuart Licht, the founder of C2CNT, will present on the innovative technology of transforming carbon into carbon nanotubes.
Brian Vaasjo will talk about the commercialization of C2CNT. Finally, we hope that you can join us for lunch afterwards. I'll pass it over to Brian to start things off.
Thank you, Randy. Good morning, ladies and gentlemen, and especially those who are tied in this morning electronically. Welcome to our 11th Annual Investor Day. As our news release outlined, we have a lot of exciting developments for next year and beyond that we'll be discussing with you today. I'll actually start off with where we left off last year. This slide highlights the major theme of last year, five years of delivering results. Those five years started in 2013 when we went through a significant repositioning of the company. Our focus areas were AFFO per share, renewables, natural gas assets, contracted EBITDA, and diversification. I could go through a very similar discussion as I did last year. It, however, would be repetitive. The conclusion, another year of strong delivery. However, I do believe there is a very significant message in that.
Capital Power is delivering shareholder value year in and year out without changing strategy, without going into new countries, without going into new businesses. What will be clearer after today's discussion is that we are getting better and better at what we do. Last year, I also discussed how we think investors should view Capital Power. The message was sticking to our strategy and delivering on that strategy over the short and long term. This year, I'd like to add another dimension to how investors should think about us at Capital Power. Although I can say our basic strategy has not changed over the past six years, our strategy and tactics have evolved modestly. This was largely because we've been very focused on anticipating the future and evolving to be sustainable and prosperous in that future. Two examples are our focuses on operational excellence and growth.
Looking at operational excellence, if you go back to about 2013, we spoke about a track record of six projects being completed on time and on budget. We were working towards moving from being third quartile from an operating performance perspective. We developed an approach of increasing performance, reducing costs while reducing risks. We achieved results well beyond our expectations, which we shared with you annually through to 2017. In 2016, we commenced the GPS Program to reduce emissions at Genesee by 11%, whether in coal or whether in natural gas service. As of today, as Darcy will describe, we are well into the top quartile. We announced this morning that the final stages of GPS will achieve a 12% reduction at Genesee by mid-2021, while at the same time, we're finishing our capability to burn 100% natural gas.
Genesee 3 will have the lowest CO2 emissions profile per megawatt hour than any other comparable plant in North America. When burning 100% natural gas, the entire Genesee complex will have the lowest CO2 emissions per megawatt hour of any converted plant or potentially converted plant in North America. With the completion of Whitla 1, we've completed five more projects on time and on budget or better. What we thought we had to do in 2013 to be competitive from an operations and construction perspective, I now believe has brought us to a point of being a true competitive advantage. Tomorrow, we'll continue down a path of actually creating real shareholder value from operational excellence, as Darcy will describe. Part of that is under the Ops 2030 initiative and continuous innovation, which will keep us on the leading edge of operational excellence and retain the competitive advantage we enjoy today.
How we've executed on growth. In 2013, we commenced a strong focus on growing our contracted cash flow from approximately 30% of EBITDA in order to support dividend growth and our credit ratings. We indicated that path was through disciplined execution on renewables and natural gas generation opportunities. We now have reached our goal of two-thirds contracted EBITDA through Genesee 1 and 2 coming off contract. We achieved this in large measure through prudently investing over CAD 5 billion since 2013. We've had great success over these past six years from our natural gas acquisitions. Mark showed you a scorecard last year about how we've done in regards to those acquisitions. He's updated that, it's an even better story this year.
Mark will also share with you a report card on renewables and how we've done in respect of our renewables projects over the last year. We're equally proud of that. Contributing to that pride is the completion last week of Whitla 1 early and on budget. Looking forward to tomorrow, we'll continue to have a significant component of our cash flow from long-term contracts. We'll continue to invest in wind and eventually solar as we move forward, as well as eventually storage. As both Mark and Kate will discuss, our natural gas strategy, especially linked to the development of carbon capture and storage, continues to be very robust. Our operating, construction, and commercial expertise will deliver this future without strategic turmoil. Lastly, I want to comment on how we are, have, and expect to be positioned from an ESG perspective.
For almost two decades, CO2 has been prominent in our thinking. When we proposed Genesee 3 two decades ago, we were volunteering to offset its carbon footprint to a natural gas equivalent. Early in this decade, we had developed the largest carbon credit position in the province, not just by trading, but by supporting technologies in a variety of businesses. As of this last July, we've set emissions targets, which Kate will describe further in a few moments. We are actually reducing CO2 emissions. We've always prided ourselves on social responsibility. We have a tremendous safety track record, achieving the CEA President's Safety Award for the past six years. We are a leader in diversity at senior leadership levels. We do well from a governance perspective.
Everything from the board outreach program, which started three years ago, to ESG performance targets, making up 20% of our executive compensation, to moving forward rapidly on integrated reporting. Kate will go into more detail, but these are not all new initiatives just to make us look good from an ESG perspective. These are elements that have been evolving in our organization and will continue to evolve. We believe we are a leader, and we will continue to be so. ESG can be added to the list of elements Capital Power has been delivering on. This overall performance over time has resulted in delivering shareholder value. From 2013 to this week, Capital Power shareholders have enjoyed an average 19% per year total shareholder return, significantly outperforming both the TSX and the Utilities Index. All in all, an excellent record which warrants investment.
I will now turn it over to Darcy.
Well, thank you, Brian. Good morning. Over the years at Investor Day, I've talked about some of the competitive advantages we have in construction, engineering, and operations. Today, I'm going to reinforce those aspects and speak specifically about our sustained excellence in operations, how operations has and continues to create new value with existing, with developed, and with acquired assets. I'll provide you with updates on both our Whitla 1 and Cardinal Point Wind projects. From an overall fleet perspective, we continue to achieve excellent plant availability and have averaged 95.5% with our fleet since 2014, inclusive of this year. 2020 will be an unusual year as both Arlington and Decatur have steam turbine overhauls, and with that, the plants will be dark. For 2020, we're projecting availability of 93%. However, post-2020, we see a return to the 95%+ availability figures.
From a renewables perspective, we are very pleased with the overall performance of our fleet and are continuing to average over 97% availability. We recently did some benchmarking with our thermal fleet. We got data from NERC, a lot of data. We went through and through that, what we were able to determine is we were actually in the top decile with fleet performance. Very proud of that. I've spoken about our proactive maintenance culture over the years I've been here. I very much believe in that because it's fundamental to our success. A forced outage can cost millions and millions of dollars in direct repairs and in lost revenue. Having a robust maintenance program and a maintenance culture is a must. We continue to look at upgrades and improvements. For example, over the last two years, we've upgraded our maintenance software.
We're just finishing rolling it out to the entire fleet, and it's a real strength now to have that. With that, we've tied it in with our safety, and so there's a natural link then with safety and maintenance. On risk, over the years, we've taken numerous measures to mitigate and manage risk, from key critical spares to agreements on some of our higher risk equipment. I would note that on insurance, we are actually claims-free for the last six years. Few operators can say that. With that, we have a great relationship with our insurers. They know our plants inside out, and their rates reflect the lower risk that they view of Capital Power. Lastly, we're very proud of our safety performance. As Brian mentioned, we have been recognized by the CEA for the past six years with their President's Award.
We have consistently demonstrated that safety and operations performance go hand-in-hand. Later on this morning, Mark's going to run through the overall commercial performance of our major gas acquisitions. Over the next two slides, I'm just going to take you through what operations is working on with Mark's team to add value from an operations side to these acquired assets. Firstly, we review all of our assets with a long-term lens. On those that we acquire, it means that we have, or we may have allowed to spend some money in the early years to bring them up to our standards. The first step for operations after the acquisition is the initial integration. Most of the activities are typical to any operation, but there are two key differences with Capital Power.
The first is we have a central operations philosophy, and the other is our cultural integration that we believe is equally as important. All the plants we have acquired have been operating on a decentralized basis. At Capital Power, we feel we are much stronger, more successful, and have much less risk if all of our plants operate through a central office. It starts with us first integrating the plant into how we work and to the company tools and standards. We introduce them to our support group, which at Capital Power, we possess a wide cross-functional group of specialists and technical experts that the plants would not normally have internal access to. From engineering and operations support like turbine specialists, water chemistry, boiler and HRSGs, high voltage-to cross-functional support. Virtually all of the plant's needs can be filled from within Capital Power.
Now, the cultural part of the integration is the longer process. It starts with us communicating that our intentions are to own the plant for the long term, treating our employees fairly, and making them feel that they are part of the company. Then we do the things like leadership and Board visits. Brian Vaasjo as an example, he visits our thermal plants at least twice a year and tells them how things are going and how they're doing. Really what we want them to do is understand that they are part of Capital Power and wear the colors of the company with pride. Once everything is operating as it should, we identify operation opportunities to optimize in order to create additional value.
This can be operational in terms of how they actually do the work, or it can be technically as to physically how we can improve the equipment and the systems that they have. How are we doing? Well, from a plant perspective, performance-wise, we are tracking ahead of availability objectives with the exception of Decatur, which because of the upgrade we did to one of the CTs, the combustion turbines this year, it is slightly down. Everything else is tracking extremely well and Decatur will be, after the outage, it is running extremely well. This summer, for example, in Arlington, the plant had its best record performance ever in its history at 99.9% availability. Consistently demonstrating that our plants are reliable, they are efficient, and they are well run are key parameters that our offtakers look at when dispatching.
These are the same factors we believe they will also look at when it comes time to recontracting. From a cost perspective, again, while we may find the odd outlying expenditure, I'm confident that year-over-year, we will meet and beat all of our operational business plan objectives. How do we do that? One of the advantages I mentioned earlier is that we have that internal team of specialists versus third-party contractors and consultants that the plants previously used. There is a savings there, but it's more than just labor. It's the expertise being provided. Having an in-house turbine specialist, for example, saves us literally hundreds of thousands of dollars a year.
We also have a very strong supply chain group that provides much better buying and uses company leverage and a fleet-sharing philosophy versus the buying and warehousing that the plants have typically done on their own. From a sustaining capital perspective, we have a central projects group that implements the company priorities, ensures we attain the necessary paybacks and executes according to plan. Reining in capital expenditures to only those things that add value or are required to maintain performance or safety, as we have demonstrated consistently over the many years, adds savings. Regarding adding value, at Decatur, we saw an opportunity last year to substantially improve the asset value and make it more attractive by modifying the combustion turbines. We made the first upgrade earlier this year, as I mentioned, and it has been extremely successful.
The plan is to upgrade the other two CTs by the end of 2021, ultimately adding 100 MW and improving substantially the heat rate. At York, we are in the process of increasing the plant's peak firing capability by 14 MW and are working to substantially extend the wear life of the CTs. At Arlington, there are several major initiatives we are working on to add value. Mark's team saw an opportunity at time of acquisition to increase the plant's utilization significantly, almost doubling the plant's capacity factor. To do so meant we had to double the plant's water evaporation capacity. First, rather than doubling it, what we did is we improved the efficiency and the existing water discharge we reduced by 20% or more. We are now proceeding with the construction of another evaporation pond, this time it's only half of what the existing is.
As commercial got more into the details of expanding the plant's utilization, it became clear that there would be further benefit if we could alter the plant's dispatch capabilities. To accomplish this, normal engineering solutions would have cost about CAD 4 million. One of our senior engineers came up with a solution. It cost us CAD 250,000. Real value added for that plant. Also at Arlington, we are working on an energy storage system that will enable us to chill water off-peak and use that additional cooling on-peak, and thereby reducing its parasitic load. Another area that is growing in importance as we grow our critical mass is our planned outage costs. As a result, we've done some restructuring internally. We're already seeing results, and we believe this is an area that we can significantly improve on over the next few years. Regarding Ops 2030.
Well, firstly, in our short 10-year history, Capital Power has established a track record for innovation through optimization and performance improvements. Beginning in 2013, we embarked on a journey to optimize our plants from a cost and reliability perspective. That program was a huge success and delivered approximately CAD 50 million in improved EBITDA from our existing assets. We also made major reductions in our sustainable capital spend. Then in 2016, as Brian mentioned, in response to the new carbon tax, Capital Power embarked on a five-year carbon intensity reduction program called Genesee Performance Standard, or GPS, which we believe is unique anywhere in the world. That program is in its final stages and will be a major success. Today, I'm presenting our new program. It's called Ops 2030, and it's about creating the sustainable plant of the future.
We envision a 10-year program that continues the optimization of our fleet through the use of technology, digitalization, and other innovation. All of you know that in your own worlds, new technology is pushing the boundaries of what is possible. Capital Power wants to be leaders in the power plant transformation and retain our competitive advantages. There are three focus areas. Each have large opportunities for improvement. As technology evolves from extended parts wear to higher plant efficiencies and outputs, to new ways of doing operations and maintenance, the opportunities are significant. Included in our 2020 plan are several Ops 2030 projects that will enhance our plans. Projects like the Arlington energy storage that I previously mentioned. We are in the process of developing a 10-year roadmap for Ops 2030 and will be building those objectives in our long-term plan, just like we've done with past initiatives.
Now from a data perspective, to put things in perspective, we collect approximately 1 million bits of data every hour. We intend to restructure how this data is collected across the fleet, such that in future, this data will be used in a proactive manner for maintenance. Another significant area for cost improvement is on our parts wear. I can cite two examples at our plants today where through technology, we are looking to extend the wear by 30%. Now, there are all sorts of other changes we see coming with digitalization and technology. Again, some of that is already creeping into our current work. The renewables group is actually about a year ahead on their Ops 2030 journey, versus the rest of the fleet. A remote operation center has already been set up and a software system commissioned, and we are already seeing positive results.
Now, while all of our wind farms are covered by service agreements, it is our intention to get much more involved with these assets. As we grow our renewables fleet and grow our database, we will expand our technical capability. This will enable us to further optimize both the operations and long-term maintenance of these assets. We are doing many other things to improve these assets. In some locations, however, we are restricted because of the nature of the offtake. Where we can, we are looking at software upgrades to improve turbine performance, aerodynamic upgrades, blade repair aids, and other innovations to improve wind capture. The transformation of Genesee is well underway on a number of fronts. On Genesee Performance Standard, GPS. I just want to follow the bouncing ball. When we first brought it out, as Brian mentioned, in 2016, it was at 11%.
Last year, I came in here and I said 10%, and that we would be reducing our capital spend as a result. Since then, we've worked hard and we've actually found a way to increase our carbon intensity reduction to 12%. That's through the addition of a new rotor on G3. For the dollars, our capital costs have gone up to CAD 45 million, but now we're projecting 12% reduction of carbon, and when you do the math and you look at 2022, that 12% equates to CAD 38 million in annual savings, which is substantial. As Brian mentioned, the performance of Genesee, but specifically if we look even at G3 itself will be the lowest emitting coal plant in all of North America. As we move to gas, as Brian mentioned, those percentage reductions, they carry forward.
Huge benefit over the remaining life of those assets. Today, we announced that we are proceeding with 100% dual conversion of G3, in addition to the previously announced dual-fuel conversions of G1 and G2. Creating dual-fuel capability cost effectively on a supercritical like G3 has been a bit of a challenge, but we finally got there. We have delayed the G3 outage subsequently from the fall of 2020 to the spring of 2021, so that we will be able to do this conversion and as well install the high-efficiency rotor in the G3 unit. Not only does that rotor upgrade allow us to reduce CO2 emissions, we get an extra 7 MW output. We are planning to do all three of these fuel conversions during our normal outage durations, which I think demonstrates the competitive advantages we have with in-house engineering and construction expertise.
Lastly, on our outages, over the past few years, we have started to lengthen the periods between our major overhauls on various modules of the steam turbines and generators. This optimization has not impacted availability. On outage cycles, however, our high availability we attribute to our two-year cycles. As we move to higher gas use, we expect to see lower boiler erosion. At that point, we will likely extend the outage periods to a longer cycle. We announced today the successful completion of Whitla 1, one month ahead of schedule. In order to win Whitla 1 against a very strong field of contenders, we took a different approach to building Whitla. That strategy paid off. Our engineering and construction teams took charge of all aspects of the design and construction of that project. We were successful.
Earlier this year, we reported that we were going to be slightly over budget. I am pleased to advise that with the earlier completion date and with things like completing the turbine systematically to start generating revenue early ahead of commissioning, we have been able to bring this project in on budget. Another successful development for Capital Power. On Cardinal Point, it is also proceeding very well, and we are forecasting it to be complete by the planned March 2020 date. It is also tracking to finish on budget. In summary, from an operations perspective, Capital Power continues its strong year-over-year performance. Optimization and finding new value is embedded in operations, and new assets are providing lots of opportunity for new value creation.
Capital Power is embarking on a new 10-year program to transform its assets to the sustainable plants of the future through the use of digitalization and new technology. At Genesee, numerous initiatives and changes are underway that are transforming this major asset. In new developments, Capital Power continues its track record with the successful completion of Whitla 1 and the forecast successful completion of Cardinal Point in Q1 of 2020. Capital Power is delivering responsible energy for tomorrow. Thank you. I'll now pass it over to Mark.
Thanks, Darcy, and good morning, everyone. For the last year, and Darcy just mentioned it, we've been referencing Responsible Energy for Tomorrow. What do we really mean by that? Simply put, we're building a power company for the future. We do that by delivering goals. As you all know, we're in the middle of an exciting transformation in our industry. With any transformation, some uncertainty can arise, but it also provides a real opportunity for us to capitalize on. In this environment, though, it is critical that our goal is to remain nimble and resilient, ready to navigate that uncertainty and capture those opportunities. By doing so, we'll continue in our growth plans and extend our track record of consistent and stable returns. Today, I'll explain how our disciplined strategy and our portfolio of assets are uniquely positioned us for steady returns and growth in any environment.
Specifically, our advantage portfolio contains great assets that are strategically positioned in markets with strong fundamentals. Our high-performance teams have a solid track record of creating value through portfolio management, optimization, and integration. We see a bright future ahead with ample opportunities to continue our disciplined growth path. By executing our plan, our portfolio characteristics will continue to evolve and strengthen, becoming more diversified geographically into sustainable technologies and contracted cash flows. Since 2013, we have doubled our EBITDA, but it has not come from sticking with what we had done in the past. Rather, it has come from an intentional move with disciplined execution. As a result, we've been evolving our generation portfolio fuel mix and have geographically diversified our operations. We are proud of the last six years, and we are confident in our future.
By continuing to do what we have been doing, we envision a future where we will meet or exceed our past performance. When we step back and look at our portfolio of assets, it has a number of key characteristics. It's competitive, young, and efficient, as many of our newest acquisitions and construction projects have a remaining life of greater than 20 years. The majority of our portfolio is strategically located in markets that rely on their capabilities for grid reliability. It has low volatility as most are substantially contracted as we have focused on contracted M&A opportunities and originate long-term offtake arrangements for development projects. With the operational and commercial talents for our people, our assets are reliable as we maintain, as Darcy has said, and continually look for ways to make them more efficient.
Finally, we have diversified our risk to any one market by owning assets in different regions. By doing so, we reduce the political market fundamentals and environmental risks. Overall, our assets offer optionality and are well-positioned. Our gas assets are strategically positioned, efficient, and flexible. Our wind assets are located in relatively strong wind regimes. Our coal fleet will soon be dual-fuel. I should note, we did have some trouble representing that on this slide. To clarify, in essence, Genesee 1, 2, and 3 are capable of co-firing today. They'll become 100% gas-fired capable during the dual-fuel period starting in 2021, and will be only gas capable starting in 2030. In short, we ran out of bubbles and colors, but hopefully, I've explained the transition here. When we dig a little deeper into the strategic positioning of our assets, I would offer some of the specific observations.
In Alberta, we have wind with high capacity and capture factors geographically dispersed to mitigate correlation effects with other wind farms due to their location. We have both efficient gas assets that are low in the merit curve, as well as peaking gas facilities that can optimally monetize volatility. With our current announcement on dual-fuel capability at Genesee, we've increased our optionality even further going forward. As other coal units that are high on the dispatch curve, they will get pushed out by new generation well before our units do. Our thermal sites are also close to load centers, Edmonton and Calgary, with access to low-cost gas and large transmission corridors. Further, there's an opportunity for us to mitigate some carbon exposure through offsets and by building renewable developments such as Whitla 2.
In Ontario, Goreway is one of a handful of large, clean natural gas generators located in the high-value Greater Toronto Area. It is very efficient and sits low on the dispatch curve and can capture operating reserve revenues. York and East Windsor are also located in the same high-value areas. East Windsor is located close to Ontario's southwest wind production region. York, like Goreway, is also in the high-value Greater Toronto Area region. Both facilities are quick-start units that provide valuable flexibility to the IESO and can run when the system operator needs to balance the system due to unforeseen circumstances such as wind forecast uncertainty. All of our facilities have access to major gas storage and transportation infrastructure and have secure fuel supply. This portfolio provides real value to Ontario that is difficult to replicate, and we believe should be recontracted and even expanded.
Indeed, we currently represent approximately 45% of the installed high-value flexible thermal generation in the GTA. In the U.S. South, we have relatively efficient units that can fill in for coal retirements. As an example, Arlington is right beside Phoenix, a large growing demand center. As it is difficult to build new gas in these regions due to cost as well as gas moratoriums, accelerating renewables penetration and coal retirements will increasingly require gas generation to provide stability to the overall system. As a result, we see a high likelihood of recontracting here as well. And finally, in the U.S. Midwest, although load growth is more muted than in the past, there are companies looking to contract renewables, such as technology companies and companies looking to build data centers, leading to demand for renewable output. Strong wind regime also makes for competitive wind projects, especially as the coal projects retire.
The markets are liquid and allow for contracting of renewable projects. This positions us very well for further renewables growth in this area. Diving a little deeper into Alberta, we see a positive outlook for the unique Alberta market and the associated power price expectations. The demand growth outlook is 1%-2% combined with a decline in baseload supply. As we look forward, we expect a similar environment as we've seen in the past and within which we have succeeded. From a market perspective, we are seeing high spark spreads continue due to low gas prices and high carbon prices. Our gas units are relatively efficient and are positioned to thrive in this environment. Further, our dual-fuel initiative, which will allow us to use 100% of either fuel, combined with our swap for 100% of G3, provides us the flexibility and optionality to enhance revenue along with better reliability.
When this bullish environment is combined with the superior execution of our team, we deliver and have demonstrated a proven track record of success. In Alberta, we have continued to economically grow while proactively managing our assets and successfully optimizing our portfolio revenue. This has been applied into other jurisdictions in which we operate. Origination is becoming an increasingly important complement as we contract with aggregators for both power and environmental commodities and look to secure commercial and industrial offtake arrangements. Our commercial management activities have provided additional certainty of cash flows to Arlington, and we continue to work closely to capture capacity and heat rate improvements while engaging in recontracting negotiations. Our M&A efforts are focused to stay in the deal flow in order to capture high-quality opportunities in a disciplined way.
Finally, the market skills developed can be applied to optimization opportunities while capturing synergies and effective integration. These competitive advantages are critical and will be maintained as we continue to expand our portfolio. We see the results of these efforts in the recent results of our newest additions. Because of these competencies, our four major acquisitions are generally meeting and exceeding our original investment decision expectations. These assets are now fully integrated, and we continue to further optimize and enhance. As we continue to apply our capabilities to future operations, we'll continue to enhance overall returns. As Brian mentioned, a similar story appears when we look at our recently added renewable fleet.
While we have had some setbacks on quality due to terrain and capacity factors, which we are addressing with technical solutions by working with Vestas and exploring operational solutions, our other efforts have been meeting and exceeding our original investment case. Like our acquisitions, our teams are in place to continue to work the assets in order to surface even more value as we move forward. A specific example of this post-integration optimization is Decatur. We are in the process of spending $60 million U.S. to upgrade our combustion turbines. The upgrade will provide us 100 megawatts of additional capacity, and the fuel efficiency improvements from the upgrades will flow through to Decatur. In addition, we have been busy working on negotiating a toll extension and are in advanced discussions, which we expect to announce either later this year or into Q1 2020.
We have announced this morning that we will proceed with the second phase of Whitla . Whitla 2 is an approximately 97 MW expansion of Capital Power's Whitla Phase 1 project at an expected cost of CAD 165 million. It is located in Alberta, 60 km southwest of Medicine Hat, and will begin commercial operation in Q4 2021. We continue to pursue commercial and industrial offtakes. The project will realize synergies from Phase 1, such as shared infrastructure, like the transmission operations and maintenance building, and take advantage of our Alberta market expertise. With this project, we continue to diversify our portfolio in Alberta. While we continue to work our assets and growth initiatives, we are also attuned to the ever-evolving outlook in the power generation sector.
The growth in U.S. renewables will continue as costs are increasingly competitive and appealing to society. We expect a similar profile in Canada. Equally important is that gas facilities are projected to be a meaningful and growing component of the grid, as illustrated on this slide, and reinforced by many other reputable long-term projections. In short, gas provides a cleaner replacement for coal generation that is being retired. It is reliable technology to fill the need for baseload generation and provides the flexibility to cover for variable renewables that can cause system issues. Therefore, our outlook for growth remains the same. More renewables, including solar and wind, more gas to help incorporate those renewables into the grid.
This future perspective is a view shared by many others, including the likes of Bloomberg New Energy Finance, who are one of the more bullish entities on the penetration of renewables into the North American grid. Even they acknowledge, and I quote, "The U.S. electricity sector continues to replace aging coal and nuclear with cheaper renewables and gas, which becomes the premier source of power generation." To summarize, coal and nuclear retirements will lead to a significant gap in the supply mix that will likely be filled by cleaner economic technologies, such as wind, solar, and gas. The proliferation of renewables will require reliable and flexible capacity for the system, stability, and reliability, which will require gas technologies for the foreseeable future. Low gas prices and high barriers to entry make strategically placed existing gas assets very advantageous.
Within this environment and as we look forward, we'll continue to build on that success of our past. With respect to greenfield developments, we'll continue to assertively pursue the development of our remaining development sites. We will also be looking to refill our opportunity pipeline of sites through structured relationships or outright purchases of operating and development portfolios. We do see a potential slowdown in the U.S. wind development due to possible elimination of tax incentives, we are bullish on wind development over the long term. We also continue to look at solar. Project-level returns are lower than we would like, we continue to explore ways to make it economically work for us while maintaining competitiveness. To maintain our solar options, we have made a modest investment in inverters to maintain the available safe harbor tax attributes necessary for us to remain competitive.
We also remain alert to emerging technologies as we continue to look at other technologies that are complementary to our existing fleet, including storage and carbon capture utilization and storage. One such example of such an initiative is C2CNT, which we'll be having a special presentation on later today. We also continue to look at acquiring strategically placed mid-life contracted gas assets. Rest assured, while we have looked at numerous projects over the last couple of years, we have maintained the discipline to only execute on those projects that provide the strategic and economic attributes that align with our strategy. It is the combination of all these activities which give us confidence that we will be able to deploy CAD 500 million a year into our target markets and technologies. What should you expect from us at a minimum for the next year?
Continue to deploy the approximately CAD 500 million into materially contracted gas and renewable opportunities. Part of which will be in the form of at least one additional renewable development site, or project, pardon me. We will remain in the deal flow to be aware of any strategic gas or renewable opportunities to capitalize on. I'll end where I did last year as we look to our aspirations by 2030. When we bring it all together, you can continue to expect a few things from our growth initiatives. A sustainable fuel mix that is focused on efficient and flexible gas facilities, wind, and other new technologies, including solar, CCUS, and batteries. Continued growth of contracted and recontracted cash flow. A diverse footprint across North America that allows us to navigate unforeseen events in any one market.
Continued increases in cash flow, which allow us to sustain business expansion and support dividend growth. Ultimately, our disciplined growth will continue to support increasing returns to shareholders. Thank you, and I'll turn it over to, I think you're next, Bryan.
Thanks, Mark. Good morning, everybody. There'll be four, or actually three key messages I'll be delivering from the finance perspective. The first is that our growth in AFFO per share continues to support our growing dividend guidance as we move forward. Our Capital Power continues to generate sufficient discretionary cash flow to fund the CAD 500 million of growth that Mark alluded to, without needing to access the equity market. We'll continue to manage our balance sheet in a manner that will support investment-grade credit rating. Each year I review our financial strategy. It hasn't changed, but just to reiterate, there's four principles. The first is to maintain a consistent growing dividend over time within an AFFO payout ratio of 45%-55%, and provide dividend stability through contracted cash flow. The second principle is to maintain a competitive cost of capital through maintaining investment-grade credit rating.
Which also allows us to access the capital markets when needed through various business cycles. It also is a great signal to investors about the stability of the dividend as we move forward. The third plank is managing financing risk to, again, maintain investment-grade credit rating through properly laddered debt maturities and effective management of our interest rate exposure, foreign exchange exposure, as well as counterparty risk. Finally, building on what Mark had mentioned, ensuring economic discipline and growth through adherence to target return expectations that supports our target growth in AFFO per share. Just to expand a bit on the contracted position of our portfolio. With the expiry of the Genesee 1 and 2 PPAs at the end of 2020, we will still have 2/3 of our EBITDA under long-term contract. This slide illustrates the remaining terms of those PPAs.
We're currently in discussions with BC Hydro on Island Generation and also on Decatur in terms of extending those contracts. For both of those, hope to hear or be in a position to announce, as Mark said, either by the end of this year or early next year in terms of the status of those discussions. One of the things that's important to note is with recontracting of those two assets, our next major recontracting doesn't come up until the end of 2025 with the Arlington facility. Turning to capital allocation. We basically look at our capital allocation, starting at the top is our Adjusted Funds from Operations. We allocate approximately half of it to dividends back to common shareholders and dividend growth, and the other half to investment and growth opportunities. When you look at the growth opportunities, there is a hierarchy we look at as an organization.
As Darcy went through, there is a number of opportunities, both from the operations side and commercial side, to improve the performance of our existing assets. Those investment opportunities typically generate returns that far exceed our target levered returns for growth projects. The examples, like Darcy mentioned, is increasing the capacity and capability of units, increasing their efficiency. What we are seeing happen is that the amount of investment we are putting back into our assets has been increasing over time, and almost CAD 100 million is targeted for next year. That higher investment in our existing fleet we expect will continue at higher levels as we move forward. Looking second on the list, we have our growth projects. As Mark laid out, we have been very successful both in terms of acquisitions and development projects, and being able to exercise our competitive advantages on both those types of growth opportunities.
Typically, however, we will prioritize development projects to extent they're available over acquisitions. We always are mindful and will be monitoring for those acquisitions that are good fits strategically. Finally, the final level is share buybacks and debt repayment. Our strategy is basically that we'll only entertain repurchases or debt repayment to the extent proper growth opportunities aren't in the immediate future. You've seen us over the last several years, when we've had excess cash and sufficient dry powder to maintain our growth strategy, look at buying back shares or paying down debt. The split between the two is all driven by ensuring we maintain the strength of our balance sheet and investment-grade credit rating. It's been a busy year on the finance side. We've raised CAD 1.2 billion of capital in 2019.
I'm extremely proud of our team in terms of the success we've had this year, as well as fantastic support from the banking community. Some of the representatives are here in the room today. When you look back, we started out accessing the Canadian debt market with a seven-year term. That was sort of down the fairway, but we weren't too excited about that one in terms of how it turned out. We then went with the acquisition of Goreway, which we announced, and went to market to raise some common shares and some preferred, and largely driven by the large size of that acquisition of nearly CAD 1 billion. Following that, we completed a private debt placement in the U.S. and had a very strong response there with terms of 10, 12, and 15 years.
Certainly, we felt that that signaled to the Canadian debt market the appetite to invest in longer-term debt with Capital Power. We ultimately saw that when we went back to the Canadian market just recently here for CAD 275 million at a 10-year term and at a rate of 4.424%. We've been able to extend the term of the debt. It's certainly reflective of the confidence fixed income investors see in Capital Power's outlook over the longer term. At the same time, of course, reducing our overall financing costs. Definitely a very good story over the past year. This is a graph we've put up for a number of years and continue to speak to. Mark had a slightly different version of it, but decided we would refresh our traditional one also here, and we like the different colors on it.
It really highlights the fact that we have a brick by brick approach, we like to call it, to growth. We feel that allows measured and disciplined growth, and it has served us well since 2012. As you can see, as we scroll forward to 2020, we see that continued expansion of EBITDA coming from a full year of Goreway, in addition to the EBITDA from Cardinal Point and completion of the Whitla Wind facility. In terms of guidance for 2020, as you saw in our press release earlier today, Capital Power is guiding to CAD 525 million of target AFFO. Just building up from starting at last year's investor day. Not last year's investor day. Sorry, let me back up. Our target guidance following the Goreway acquisition was CAD 510 million. Just the evolution to the CAD 525 million.
The first thing we do is normalize for the 2019 Arlington toll. The Arlington toll covered a larger number of months than the current toll. We spoke to this a year ago at Investor Day. We always expected that reduction of CAD 40 million in AFFO. That's the first step to get us what we call a normalized AFFO target of CAD 470 million. We expect our current tax expense will be higher in 2020. That's just driven by basically in 2019, we do have the accelerated CCA off Whitla, given it was completed this year, and some other loss carryforwards that are more effective from a tax perspective in terms of AFFO than what we will be doing in 2020. That's about a CAD 15 million downward move. A slight change in CapEx year-over-year. Then we see the positive lifts relative to 2019.
The first is continued strengthening in the Alberta market. This is driven by, again, the strong pricing that Mark spoke to. As well, a fairly attractive natural gas market from our perspective, in terms of lower fuel costs for our facilities. That gets enhanced, of course, as we move to dual-fuel capability at the Genesee facilities. Also, when we look at the Alberta uplift, we are seeing continued strong capacity factors at our peaking gas facilities in the province. Of course, the other factor I've already spoken to is completion of Whitla, Cardinal Point, which will add CAD 25 million of AFFO. Finally, the full year of Goreway, which is an additional CAD 30 million. That takes us to the CAD 525 million guidance for 2020. Just turning to 2019. Our guidance at Investor Day a year ago was CAD 460 million-CAD 510 million.
We subsequently revised that guidance, lifting it by CAD 25 million following the Goreway acquisition. Based on actuals through October and our projections for the last two months of this year, we are now lifting that guidance to CAD 535 million-CAD 555 million. Very strong results this year. A lot of it driven by great returns we're seeing in the Alberta market, but also strong performance across our fleet and assets. In terms of 2020, with the CAD 525 million of adjusted funds from operations, it breaks down to about 40% will go to common share dividends. That includes the 7% dividend increase that we're intend for mid-year of next year. The balance of the cash flow, which will be about CAD 350 million, we refer to it as discretionary cash flow, will be available for deployment into growth initiatives.
This leaves us with a AFFO payout ratio of 40%, which remains well below our long-term target of 45%-55%. Generally, we're continuing to see our AFFO per share growth is exceeding our dividend growth, resulting in a very healthy payout ratio. It's also important though, of course, to look at the guidance on an AFFO per share basis, given we did issue some equity last year, netting off, of course, some of the share buybacks we did this year. In terms of our guidance for 2020, it's CAD 4.98 on an AFFO per share basis, which is a 12% increase over the normalized AFFO per share in 2019. Again, that normalized number of CAD 446 million, that's taking out the CAD 40 million of Arlington uplift we experienced in 2019.
Looking out and given the continued growth we've had in contracted assets as an organization, for 2022, we're providing guidance, extending our guidance to increase the dividend, but we have reduced it from 7% to 5%. The reduction in the guidance is driven by the low interest rate environment, which has put downward pressure on returns we can expect from growth opportunities as we move forward. We do believe, though, in this current interest rate environment, 5% is an appropriate long run target for the organization. Certainly if we see a recovery in interest rates or increasing returns, that may be a factor we'll consider down the road.
Generally, as I mentioned, our discretionary cash flow supports at least CAD 500 million of growth investment without needing to access the equity market. Just some high-level math of that is, the growth opportunities that Mark's teams are pursuing generally will throw off an EBITDA multiple of approximately CAD 10 million, so CAD 50 million of EBITDA per year. When we translate that into an AFFO number, it's CAD 38 million, which results in 7% AFFO per share growth without needing to raise equity. That's growth just off our CAD 500 million investment. Of course, what the organization is also doing is, as Darcy was describing, optimizing the value of our existing assets. When you add that, we expect long run, as Mark said, to be more around 9% AFFO per share growth, which more than covers, of course, that 5% dividend growth guidance.
When we look forward to 2020, we anticipate we'll be coming back to the Canadian debt market for approximately CAD 200 million. In addition, we will be putting in place a tax equity investment with Cardinal Point, which will be announced early next year. Together that raises about CAD 400 million of financing in conjunction with our funds from operations. When you look at those dollars and the uses of that cash flow, of course, we have our common and preferred share dividends, debt repayment, which will be primarily our credit lines, but also a debt maturity we have in November of next year. The anticipated investment in C2CNT, this is the investment to increase our interest to 40% in that technology. Enhancement CapEx, those projects that we're doing at Decatur, Arlington, dual-fuel capability at Genesee, will total CAD 95 million in 2020.
We have growth CapEx of CAD 150 million, which includes the completion of Cardinal Point, as well as some anticipated initial investments to safe harbor some solar equipment. Also in terms of the initial investments in the commercial scale C2CNT facility at Genesee. Of course, we have a CAD 500 million target of committed capital over and above this. It isn't reflected here, but of course, we're well-positioned with our balance sheet to be able to fund that growth. Lastly, as we talked about, sustaining maintenance CapEx of CAD 95 million. As we typically do, we've updated our Alberta commercial portfolio position. Just to remind everybody, this is the EBITDA that is basically subject to merchant pricing in the Alberta market. Currently represents about 20% of our overall EBITDA.
When we roll into 2021 with the expiry of the G1, G2 PPA, it will increase to about 1/3 of our EBITDA. In terms of percentage of our base load length sold forward, we're currently sitting at 63% in 2020. This is somewhat lower than what we typically have experienced at this point as rolling into the prompt year. A lot of that was driven by very low liquidity in the Alberta market in the first portion of 2019. You can see, forward prices remain very robust in Alberta. At the end of November, we were at CAD 58 for 2021 and CAD 54 for 2022. Certainly, pricing that reflects the cost of a new build, new generation, and also, as Mark showed, both forwards and third-party forecasts reflect that price level on a go-forward basis.
In terms of our credit metrics, we monitor, of course, very closely those metrics that have been articulated by DBRS and S&P. When we look forward to 2020, we feel very comfortable being able to maintain those targets and maintain the investment-grade credit rating as we roll forward. In terms of our debt maturity schedule, you can see the new debt that has been raised this year, in terms of the CAD 300 million going out to 2026. The U.S. private placements in the lighter gray bars, then the CAD 275 million of 10-year debt. That lengthening term of our debt, as you can see, has very much pushed out our debt maturity schedule, which is, again, as I mentioned earlier, reflects the increased confidence in the long-term outlook for Capital Power. We're happy to see that our dividend yield has dipped below 6% again.
One of the things I'd like to emphasize on this graph is if you go back to December of 2014, we were almost at 5% dividend yield. That was with a portfolio that was very much more concentrated in Alberta, very much higher percentage of merchant EBITDA. Given the de-risking we've had in the Capital Power portfolio, we believe we're still trading high relative to where our dividend yield should be. In this interest rate environment, we feel it should be back down at least around the 5% level. Certainly that's a catalyst we see for our share price on a go-forward basis. Just turning to guidance for 2020. We did want to spend a bit of time with a bit more detail on a few areas. The first one is on sustaining CapEx.
One of the things that's happened, as you're aware, we completed the K3, G3 swap with TransAlta. What this has meant is that, of course, we're responsible for 100% of the maintenance and sustaining CapEx for Genesee 3, whereas we had 50% before, and 50% of Keephills 3. Those outages were always staggered year-over-year. When we have two outages at Genesee, which will be the case in 2021, you now see a spike in our sustaining and maintenance CapEx. When you roll through the next several years, we have for 2020, we have an increase in our sustaining CapEx, which is due to the Arlington outage, major outage there. That gets us to CAD 95 million in 2020.
When we look forward to 2021, as I mentioned, we are going to have two outages at Genesee, and those outages are, of course, the normal maintenance outages. During those time, we will also be taking the opportunity, as Darcy said, to implement dual-fuel capability as well as rotor upgrades. That increases our sustaining maintenance CapEx there, by CAD 30 million, and takes us to about CAD 120 million for 2021. However, when we roll forward to 2022, we will be back down to one Genesee unit on outage, that reduces it by CAD 30 million. In addition, we will be through the Decatur and Arlington major outages. We will be back down to approximately CAD 70 million in 2022. When you look longer term, basically you will see our maintenance and sustaining CapEx sort of averaging in that CAD 85 million-CAD 95 million level.
Those years where we have two Genesee outages, it'll be higher, one, it'll be lower. That just gives you a sense of the profile as well as the long-run sustaining maintenance CapEx for the organization. One thing I do want to just clarify is that dollars spent on dual-fuel capability at Genesee, we don't view that as sustaining maintenance CapEx. We view that as effectively growth CapEx because it's enhancing the capability of the asset. That wouldn't be included in the sustaining CapEx numbers. As in previous years, we've provided some guidance around modeling EBITDA on U.S. wind projects. Consistent with that theme, here's Cardinal Point. Of course, the very high front-loaded EBITDA is a result of the production tax credits in MACRS that the tax equity investor sees. We consolidate these investments on our balance sheet.
That front-loaded EBITDA is really just reflecting the tax benefits that flow to the tax equity investor. From Capital Power's perspective, we see that pre-tax cash flow, which we see around CAD 10 million. Then as the PPA term ends, because it's a very low contract price, we will see some uptick in terms of our financial returns on the project. The other element I just wanted to touch was the shape of our AFFO in 2020. Our AFFO actually has a very large element in Q3. Almost 45% of our AFFO we're projecting will come from Q3. There's a number of factors that drive that. The first reason is the majority of our scheduled outages occur in the first half of the year. The second thing is we receive the off-coal compensation payment. That CAD 50 million is in Q3.
The third element is that Q3 is typically the highest margins in the Alberta market. The reason being is we have fairly healthy electricity prices due to the cooling load in the province, but also very low natural gas prices. That drives the higher margins on our commercial portfolio in Alberta in Q3. Finally, we do have contracts that are more heavily weighted to Q3 in terms of the shape and profile. On a go-forward basis, we're going to be providing this breakdown, just to give everybody a sense of how we see the allocation in AFFO throughout the year. To wrap up, the highlights, continued strong balance sheet to support our investment-grade credit rating and to be able to fund CAD 500 million of growth without having to access the equity market.
We're still tracking well below our long-run payout ratio of 45%-55%. Very good outlook in terms of recontracting the Decatur and Island Generation facilities. Finally, confirming our dividend guidance of 7% growth through 2021, extending the guidance of 5% through 2022. Thanks.
All right. Thanks, Bryan. We're slightly ahead of schedule, so we'll take a break, let you refresh your coffees, and start up again at 10:30.
Capital Power has been on its sustainability journey for a very long time. Doing the right thing has always been part of our DNA. The only part of sustainability that's new to us is broadcasting it. We've long believed that sustainable sourcing and responsible energy production will make us a supplier of choice. This is why we volunteered to have Genesee 3 comply down to the emissions level of a combined cycle plant long before regulation required it. It's why we've been playing in the CCUS space since 2005, when we began our first gasification study. We also believe that our employees are our most important resource and have striven for a long time to be an employer of choice. We know that being welcomed in the communities in which we operate expedites permitting and minimizes operation disruptions.
Today, I'm going to tell you about some new initiatives and remind you of some existing initiatives that all fit together to make Capital Power a strong ESG investment. What's new this year in sustainability at Capital Power? Well, to answer that, turn your imaginations with me, if you will, to a world in which demand for electricity has grown due to electrification and democratization. Renewables have been built out to the maximum possible wherever possible. Batteries are widely used to elongate the benefits of intermittent renewables. Cost to consumers and reliability of power generation is maintained by natural gas and without emitting carbon dioxide, even in China, India, Africa, and other places where reliance on thermal generation is unlikely to abate in the foreseeable future.
We at Capital Power believe that the quickest, most efficient, and most likely way for the world to meet our collective Paris targets is not to aim exclusively to go to 100% renewables as soon as possible. We believe we'll only be able to realistically confine climate change to two degrees or less by proliferating technology to remove carbon from natural gas generation so we can use it as well. In Canada, the provinces of British Columbia, Manitoba, and Quebec are very lucky. They're blessed with rich hydro resources. Alberta, Saskatchewan, Ontario, and the Maritimes are not. Different regions are blessed with different natural resource mixes, and so their approaches to climate mitigation must accordingly differ. This is not a political statement, just a realistic fact. My favorite example to illustrate the importance of natural gas to power generation is Alberta during the month of February 2019.
I hope many of you weren't there. It was our coldest February in 50 years, and renewables were available less than 5% of hours. In many hours, there wasn't a single kilowatt of reliable power. In other words, Alberta needed to meet 100% of its load in those hours with non-renewable energy. Many well-intentioned people would suggest that we should abandon fossil fuel and aim to fulfill such a need with batteries. Just for fun, I asked my team to calculate what February 2019 would have looked like if Alberta was using only renewables and batteries based on the actual renewable capacity factors in that month. Bearing in mind that the Alberta pool price currently averages around CAD 0.055 per kilowatt hour. As you can see from this slide, using the renewable battery mix for just 24 hours would raise prices to CAD 0.08 per kilowatt hour.
For a full week, the price would rise to $0.56 per kilowatt hour, and consumers would pay $2.24 per kilowatt hour for a month like February. Importantly, that's the energy price alone. It does not include any portion of the transmission bill that would be necessary to deliver that result. Many other regions are similarly constrained, like large parts of the U.S., Europe, Asia, Africa, and India. This is why the world needs an all-of-the-above solution to conquer climate change. I know Mark spoke to you about this earlier, but it's a pretty important point. Even in California, which is arguably the greenest, most forward-thinking U.S. state, and one with a very, very strong solar resource, this holds true. This slide comes from the California ISO, and it depicts a portion of time in March of 2019.
I chose that particular time period because the average temperature in California in March is nine degrees Celsius at night and 19 degrees at midday. It's not too cold, and there's not too much air conditioning load, just mild, sunny weather. The yellow spots are the daily periods when solar is available. The purple is natural gas, and the gray is all the imports, which are primarily natural gas as well. You can see that California uses natural gas to fill in the gaps left by renewables because of natural gas's low cost and flexibility.
By the way, for the same good reasons depicted in these slides, so do BC Hydro, Manitoba Hydro, and Hydro-Québec. Besides continuing to need natural gas for supply shaping purposes, we also believe that assuming we can render it into a non-emitting resource, there are additional considerations that will make it desirable over the long term. It takes up less space and uses less arable land. It's low cost for consumers. Its flexible dispatchability enables the system to assimilate the maximum renewable capacity while also ensuring reliability. It's easily integratable on a low short-term and no long-term emitting basis where supply is available. This is precisely why so many government climate plans, including the EIA, the UN's Intergovernmental Panel on Climate Change, and Canada in our own Pan-Canadian Framework, are increasingly reflecting the importance of CCUS to the world's climate change fight and specifically mid-century decarbonization goals.
Our investment in C2CNT, which you'll hear much more about later this morning, is only one example of what's possible with carbon conversion. Carbon conversion differs from other forms of CCUS, like storage or sequestration and utilization for EOR and other purposes, because it takes the captured carbon and converts it into valuable products that can be sold to earn revenue that offsets the cost of capture. In addition, many of those converted products are completely benign and inert, so they don't pose the risk of later release of the carbon. If you're lucky, like C2CNT, you can also create carbon benefits downstream.
There's a lot of uber cool work being done on carbon conversion right now, and the materials produced by it vary widely, including everything from jewelry and vodka to graphene and carbon nanotubes, textiles, methanol for fuel and feedstock uses, polymers and plastics for 3D printing, sodium bicarbonate or baking soda, and the manufacture of stronger, lighter car parts, plane skins, boats, and trains. Of course, you've probably all heard by now of Lush Cosmetics' famous carbon soap. CCUS will play an essential part of the world's cleaner energy future. Here is a description of Capital Power's road to Paris at a high level. This is the first time we've shown you how our work in CCUS and our natural gas portfolio will follow a logical linear pathway in support of mid-century decarbonization. This is really important. Write this down.
Note that 2,500 tonnes of carbon nanotubes can be produced from 10,000 tonnes of captured carbon. Those 2,500 tonnes of nanotubes will avoid 2 million tonnes of carbon in the production of cement. The downstream benefits in aluminum production are three times higher. We believe this strategy is both responsible and resilient. We also continue to assert ourselves as a neighbor of choice in all of the communities in which we operate. Examples of the ways in which we walk this talk include thank you to Scotia, who noted in 2018 that we devote more to community investment than our peers on the basis of percentage of revenue. We mandate all senior plant management to become the face of Capital Power in the local community, developing relationships and participating in the community. By the way, doing this increases plant staff engagement as well.
We were also the first in Ontario to compensate adjacent neighbors of our wind farm landowners, a practice which we have continued to follow elsewhere. Others have now started to imitate this practice, which we interpret as a grand compliment. We'll also obviously continue to work on becoming an employer of choice that can recruit and retain top talent in all of our relevant fields. Now, this is also the first time we've announced specific targets for our sustainability program. They're ambitious, and they are the right thing to do, while also clarifying how investors and other stakeholders can expect Capital Power to ensure responsible, reliable power for decades to come.
Capital Power's TCFD 2.0, which will be published as promised last year in February of 2020, will incorporate more detail regarding the risks and opportunities to Capital Power's business from climate change and specifically how resilient our corporate strategy is expected to be. As also promised, our 2019 year-end disclosure will integrate transparent ESG and financial reporting into one place where investors can understand exactly how Capital Power plans to do well by doing good. The only area of achievement on this slide I haven't yet touched on is the G part, where I think we're also doing very well. In this respect, please note that as of 2020, fully 20% of our executive short-term incentive pay will be based on meeting ESG targets, so we are literally putting our money where our mouths are.
Of course, there's a lot more ESG information about Capital Power that will be made transparent in our year-end report. With that, I'll turn it back over to Brian to wrap things up. Thank you ever so much for your attention.
Thanks, Kate. As we do every year, we provide annual priorities and targets that we speak to each and every quarter thereafter. This year, the nature of our annual targets are unchanged from 2019. Looking first at our operational targets. For availability, we are on target for 95% in 2019. 2020 drops temporarily to 93% as a result of planned outages associated with growth and enhancement capital programs. Our sustaining capital expenditures are trending within the target range for 2019. The 2020 target range is CAD 90 million-CAD 100 million, up CAD 10 million from 2019. Trending to our financial targets, adjusted EBITDA for 2019 is expected to come in at the higher end of the target range, CAD 870 million-CAD 920 million. For 2020, the adjusted EBITDA range is from CAD 935 million-CAD 985 million. Adjusted Funds from Operations for 2019 is estimated to come in between CAD 535 million and CAD 555 million.
This is well above our target range of CAD 485 million-CAD 535 million. Our AFFO target range for 2020 is CAD 500 million-CAD 550 million. This is an increase of 12% over the 2019 midpoint of CAD 470 million, normalized for the Arlington toll. In addition to the significant amount of work being done for our existing assets, our targets for growth are similar to prior years. We have a committed growth capital target of CAD 500 million, similar to the last few years. Completion of the Cardinal Point Wind project on budget and on time, and continuing the advancement of Whitla 2 for construction in 2021 are both 2020 targets. We expect an additional renewable project to be advanced in 2020. I'll conclude by getting back to how should investors think about Capital Power.
First, we have a solid six-year track record of growth yielding AFFO per share of 13%, dividend growth of 7%, and average annual total shareholder return of 19%. This is consistent with our guidance of 7% for 2020 and 2021. Our 5% dividend growth guidance for 2022 is reflective of changing costs of capital. We are forecasting exceeding the AFFO range for 2019 and normalized AFFO growth of 12% for 2020. With the improvements in Alberta, our excellent long-term outlook, and continuing record of results year after year, we believe there should be a further improvement in our dividend yield. In summary, Capital Power represents an attractive investment opportunity. Thank you.
Okay, thanks, Brian. We are happy to take your questions. If you could use the microphone before asking your question and also to identify yourself. Any questions? Right at the front here.
Hi, Rob Hope, Scotiabank. Maybe can you just comment some additional thoughts on Whitla 2, whether or not you're going to keep that merchant or if you are looking for some long-term contracts there, as well as what realized pricing you think you can get on a merchant facility that's wind in Southeastern Alberta, as well as the amount of green magnitude or green attributes you're going to spit off there?
Thanks, Rob. Maybe I'll unbundle the questions a little bit. First off, much of the benefits or the economics that we're seeing from Whitla 2 itself aren't just solely the off-take. There's great offsets that we'll have to mitigate some of the compliance obligations we have in relation to our carbon footprint in Alberta. There's also some tax benefits in the form of accelerated tax depreciation that'll help us as well. Even at that starting point, not 100% of the economics are solely exposed to the merchant curve. That being said, we are continuing in a number of different discussions with a variety of commercial and industrial folk, and there is interest in buying those green attribute sort of generation. They have yet gotten to a point where they're willing to commit over the long term for some of those elements.
We're very encouraged, but they're not there yet. We would expect some amount. All that being said, because of the attributes that we'd be getting for our own benefit, both tax and carbon compliance, we are prepared to move ahead and have this thing constructed because we also see great synergies that are available to us when combined with our Whitla 1 facility. All in the package remains very appealing. If we ultimately get to where we have it contracted out, all the better.
Questions at the front here or at the back.
Robert Kwan, RBC. Just around the outlook and the lower returns, can you just first talk about what are your IRR hurdles at this point and compare that to where they were before? As you think about the 5% dividend growth for 2020, you also talked though about those lower returns generating 7% AFFO growth and if you can do some of your optimizations, you might be up at 9%. Why are you looking at the 5% growth? Is there something else where you're kind of provisioning for some of the contract run-offs at the same time?
In terms of return expectations, certainly it varies depending on the nature of the opportunity. Our levered return targets are sort of in the 10%-12% range right now. Previously, if we look back, it was more around 11%-13%, 11%-14%. That reflects that downward movement in the cost of capital. In terms of the 9% versus the 5%, it's not so much the recontracting. It's more, we do realize that even though we have a very young fleet, we are going to reach a point where some of those assets will retire. Certainly, what you'll see happen, of course, is our payout ratio will continue to decline because of that gap.
At some point, we do want to be mindful of the fact that some of those assets will eventually be retired, and that gives us the ability then to continue the dividend growth through those retirements.
If I can just ask one other question. Just on Decatur, you mentioned that you expect to meet or exceed your recontracting assumptions. Can you talk directionally about what you're expecting? Were you expecting it to be flat, or is there something else?
I'll hand that over to Mark.
Let me push the right button here first. Given where we're at in the negotiations, we're very confident that we'll be able to be in a position to announce something here shortly. As you can imagine, many of the details of that are quite sensitive. I would say that we aren't looking for a wholesale step-down immediately. There will be some shaping elements that will come into play in respect to the contract or the recontract period. We'll, of course, be able to describe that much more fully once we draw to the conclusion, bring it out, but we're not looking for a material year-over-year change.
Actually, could I add just a comment to that? Just a point of clarification. I think what Mark actually said was that No, and I don't mean just now, but when he was speaking earlier, I believe his comment was around the business case, the original business case, not the recontracting. I don't believe Mark said that the recontracting was better than our expectations, but the overall business case. Recognize also that we're adding another 100 MW to the plant, and as an overall bundle, overall, it's meeting and exceeding our business case, not the specifics of consideration of recontracting.
Thanks, Brian.
Question at the front here.
Thanks. John Mould, TD Securities. Maybe just starting with the dual fuel at Genesee and how that plays in with where the carbon price is maybe going. I know we're still waiting for some finality there with the federal price and whether that is going to get through the Supreme Court, et cetera. Assuming we're moving to a CAD 50 price in a couple of years, how much do you see Genesee actually burning coal as a % of its output in that environment? I know we're going to hear more about the nanotube side of things, but how relevant is that plan to potentially enabling more coal firing down the road?
In terms of gas consumption at the Genesee facility, certainly with a CAD 30 carbon pricing, which it's currently at, I think we're going to be in around the range of 40% of the fuel will be coming from natural gas. If we do see ultimately that price increase, it's going to be pushing more natural gas through the plant. That's one of the things with the dual-fuel, is providing us that capability to mitigate the impact of higher carbon prices.
Can I add to that, Bryan?
Yeah.
You raised the carbon tax issue. Equally important to keep in mind is the price of the natural gas commodity as well. It had been quite low given the bottleneck that we had seen on transportation. There was some steps taken by the industry and TC Energy to temporarily adjust to what we had seen a rise in gas price. That volatility in the gas price will also be factoring very much into that equation.
Then maybe just one other question on your growth targets. In your news release, you referenced CAD 500 million of growth not explicitly contracted, although that's in your slide deck. You also referenced renewable developments and not wind like you have in the past. I guess, are you seeing more of a line of sight to potential solar developments? Can you talk a bit about that more? Potential for more renewable opportunities on the merchant side in Alberta beyond the Whitla Wind announcement from today?
Maybe I'll give a stab at some of that. We're conscientiously saying renewables in the sense of both wind and gas. We would expect in the U.S. over the next couple of years that there may be a bit of a slowdown on the wind side. Many expect that as the PTCs expire, the same level of price support isn't there, and so the price of wind goes up a little bit. That being said, you're seeing an increasing penetration of solar into many resource plants that are out there, many states, et cetera, that want to see greater utilization of solar. We have participated in solar in the past. We feel we have the competencies to participate in that in the future.
We would acknowledge that is one of the areas that we see some pressure on returns, as there seems to be a lot of money that is directed to that, especially for longer-term in-service solar opportunities. Straight up, those returns are fairly skinny, but we are actively exploring if there's other ways, whether structurally or through other arrangements and joint ventures, if there's a way we can get to having those solar opportunities be economic for us. The final point would be, we did make an investment in some inverters, because as part of that need to be competitive in solar on the offtake, there was also those tax subsidies that were out there. We wanted to ensure that we get some of that safe harbor equipment inside that can maintain the competitiveness for us. It is a pretty fungible commodity, though.
It's not solely utilized in just one type of installation. It can be spread around. We wanted to maintain that competitiveness while we figure out how we can best play in this space. Over the long term, we would expect it would be both wind and solar and other technologies.
Just to add one thing to Mark's response is, our target returns on solar are virtually the same as what they are on wind development. We're not going to be chasing lower returns on solar. As Mark said, we're finding ways that we can develop and build those projects and generate the same shareholder value that we have with the wind developments we've done.
Question on this side.
Mark Jarvi from CIBC. Maybe just extending, I think there was a question along the lines of more merchant as well in the last question. Just as you hit two-thirds contracted, that a target that's important for credit metrics, credit rating agencies, what's sort of the appetite, again, for more merchant or gas contracts maybe aren't fully contracted as you think about maybe not just so much as pursuing contracted, but just total return optimization?
It's kind of a part and part on the balance sheet side. I'll let Mr. DeNeve speak to that. You did mention on the gas commodity side. We are fully aware of the increasing exposure that we have on the gas side as we have more and more gas utilization. We've been very active in also managing and mitigating what that fuel exposure is, especially for that fuel exposure that isn't a flow-through component into the price ultimately, i.e., the fuel that we're exposed to on our side. We are actively managing that. In addition, our future requirements, we have addressed at Genesee in terms of access to the necessary fuel that we'll need as we move forward with our dual-fuel plans. In terms of the overall balance sheet, though, and the rating agency, Bryan, maybe you want to?
Yeah. We have reached that threshold, where with G1, G2 coming off PPA, we're going to be above the 2/3. Certainly, that was the prime objective. What I would say is we're going to be very diligent to make sure we remain above that 2/3. We are not going to be doing anything that will jeopardize that ratio. Certainly, given that we have now reached that point, we will also want to be mindful of the risk-reward trade-off we see on various opportunities. Certainly, we'll be evaluating and taking that into account. I think the most important thing to stress is that 2/3 is very important to us, and it is something that will be sustained as we go forward.
Just maybe, there was comments around opportunities in Ontario long term. I know the IESO's talked about maybe blend and extend and opportunities. Maybe just talk about timelines you think for deploying capital, and what kind of projects that would be in scale and scope.
It's interesting when you take a look at the new integrated resource plan they have, especially factoring in the nuclear refurbishments and the retirements that may be ongoing. It starts looking like a fairly sizable gap. Negative reserve margin might be developing, which would require new capacity to be developed or transported in. We start seeing that, I think it's in the neighborhood of 1.5 GW-2 GW in the 2023, 2024 sort of timeframe. What excites us about that opportunity is both at our York facility and our Goreway facility. We do have the infrastructure in place, the excess land. To the extent they move towards having part of that solution provided in the form of additional gas-fired generation, we would look to participate in any sort of RFP that comes out of that.
Once you get past that time frame, there's also another block that may be coming forward, depending upon load growth and electrification of the transportation sector, that could cause a second round of more capacity being required. Given the strategic location of both Goreway and York within the GTA and the challenges in siting new greenfield plants and/or increasing transportation into the GTA, we think both of those plants are well-positioned to be competitive in either of those rounds. Net-net, it's probably a bit of time off, four or five years or beyond, but it does look very promising.
If I could just go back on the merchant comment or the question. Just to be clear, as Bryan commented, we'll be very diligent in looking at risk/reward balances as it relates to merchant and contracted. Just to be clear, we wouldn't be looking at merchant any place but Alberta. You wouldn't expect to see all of a sudden investment in PJM or because we thought we may have had some room on the merchant side. It's really focused on the province of Alberta and the opportunities we see there.
Question?
Yep. Thanks. Pat Kenny, National Bank. Looking at the forward prices on slide 29, doesn't look like there's any step down in the curve in 2023. Wondering if that's reflective of your views, given the Suncor plant coming on, and if so, maybe walk us through why you think the market can absorb that incremental supply.
I'll kick it off, and Mark will add, of course, as he sees fit.
Brian will clarify what we both say.
One of the things that was a big positive was when Suncor clarified that that facility would be coming in in the second half of 2023. Certainly, I think Darcy's team would confirm that's probably the best timing that they will achieve given what they're doing. That allows quite a bit of time of load growth to sustain that supply-demand balance. The other thing is that Alberta's now in a place with the end of the PPAs, that all the supply is going to be in the hands of commercial entities that will be making decision on whether it makes sense for older facilities to continue to operate them or whether to mothball them or shut them down. That is dramatically different than what we experienced, of course, in the 2016, 2017 period here in Alberta.
We see in 2023, virtually no impact because of the timing of the act. 2024, some slight downward pressure. Of course, then we believe we'll have 1% to 2% load growth in Alberta that will then absorb that. Again, more importantly is you'll see a response on the supply side, which you didn't in the past. We think that bodes well in terms of long-term prices for the province.
Maybe just as a follow-up on with Whitla 2 under development, and maybe tying into some of Kate's comments around the ESG front, can you just confirm maybe if you're looking at developing the batteries and the energy storage in conjunction with the wind projects, or, I guess, what's the outlook and the timing for the cost to come down that it makes economic sense to bring those into the projects?
We've been actively engaged in discussions with a number of battery suppliers out there and looking at the economics and do look at opportunities to incorporate that in other developments, whether that be with wind or solar or natural gas plants for that matter. I would observe that it seems to be getting closer where things can make more economic sense, and there's an increasing societal appetite that is out there. That is also encouraging. To this point, we have not proceeded to a great depth to bring a project like that forward, but it does seem that the stage is being set that a bundled solution could be very attractive to a number of offtake parties. It's also getting to the point where it's very comparable to other solutions they may have.
Thanks.
We'll take question in the middle there.
Hi. Excuse me, Ben Pham, BMO Capital Markets. I just want to make sure on the contracted targets, 2/3. I know that's where you're going to with Genesee 1 and 2 coming off. You mentioned you wanted to be above that. I guess for a company that's trading at a discount to peers and really paying a pretty healthy dividend and there's some growth, isn't there really an urgency to really get that contracted portion to 80% or more? Just where you are right now. If you are up 2/3, does that contemplate any change of leverage or payout ratios when you think about that on a sustainable basis?
In terms of payout ratio, I don't think there's anything that gets changed because of the contracted percentage. Certainly, for us, the 45%-55% again is aligned with that strategy to have sort of half our capital going to sustaining a growing dividend and half being available for growth opportunities that we put to work. Certainly, there's benefits to having a high contract percentage. Certainly, right now, with 20% of our EBITDA being merchant, certainly a very stable portfolio. What we want to make sure, though, that is how it all ties in, again, to our credit rating. Certainly, we want to make sure, again, we're going to sustain that 2/3, and certainly, having a percentage above that is prudent. Again, as we move forward, as Brian mentioned, most of our growth is focused on contracted because it is growth outside of Alberta.
As things unfold, certainly we would expect that percentage to continue to increase, just naturally based on where our growth focus is and the fact that we will only be doing merchant in the Alberta context. To be frank, with Suncor moving ahead with their cogen facility, that's going to take up a lot of the need for new supply, as well as Sundance 5 being repowered. Again, you have to see how these markets evolve and unfold. I think you can be pretty confident that balance of probabilities would be that contracted percentage will increase over time.
Okay. Can I ask then on the dual-fuel strategy, what's the thought process on the end goal 2030? Is it new CT units you're adding on or are repowering? Then just to that, I don't know if Kate knows or somebody else, just with ESG funds, do they view that dual-fuel as still coal? Because you can switch back and forth. I know it's a nuance there, but just curious about that as well.
You'll notice that we didn't present the dual fuel as a sustainability target. That's because you can switch back and forth. It will have significant improvements in the decade between 2020 and 2030 on our emissions profile at Genesee. We're not presenting that as a sustainability win. Although the government, and there are lots of parties who view it as a social win because of the jobs that will be preserved and the insurance against high natural gas prices for consumers.
Just the end goal on the 2030 new CCGT or repowering.
Currently, once we reach 2030, we'll no longer be burning coal at that point. We'd look at those facilities just continuing forward at 100% natural gas on a simple cycle basis. Having said that, though, lots of work internally to evaluate repowering those facilities, similar to what TransAlta is doing at Sundance 5. Certainly, that's work that continues to be underway within the organization, and it wouldn't be surprising to see that we could very easily reach a similar conclusion, and at some point, as we roll towards 2030, make an announcement that we're moving to repowering one or more of those units.
Yeah. I might add to that, Bryan. To have the existing infrastructure in place, the buildings, the water, the transmission, does provide a real competitive advantage versus many other new greenfield opportunities. The brownfield potential, which not only applies on this facility, but many of our others, is also a significant future value that perhaps is not fully appreciated.
Question on the side here.
Andrew Kuske, Credit Suisse. A bit of a multi-part question that relates to the volatility in the power market in Alberta that we're going to see in the next couple of years, and you yourselves have mentioned it. You're not as contracted right now, just given the volatility expectations. You've had really good capture of vol over the years, just historically, we can look at a lot of different data. When you start to think about just the market behaviors, how does that change your portfolio optimization strategies from what you've had in the past to the future? Maintenance, how does that change on a go-forward basis? How should the underlying value that we think about that portfolio being worth, if there's greater vol, does it translate into lower multiple?
Maybe I'll take a stab at the first part, just in terms of the market itself. We do expect greater levels of price volatility to start coming back into the Alberta marketplace. In fact, there's been a few days over the course of the last month where we did hit triple digits as some units had come off, et cetera. I would reinforce what Bryan had said earlier. Now that that capacity is increasingly and will be fully more in commercial hands, add to the uncertainty connected with what the pricing environment was going to be in a capacity market, where carbon tax was going to be at, whether it was a federal program or the TIER program. The Balancing Pool's activities in respect of that. As that all starts to diminish, I think that's why you're seeing a more bullish forward curve starting to emerge.
We haven't yet seen liquidity come back, because I think a lot of those guys have really benefited from floating in the market over the last few years with the lower spot prices. As that starts to migrate up, we would see between the volatility and liquidity that our guys should be able to maintain that sort of performance that they've been able to achieve in the past, in terms of an absolute price that you see on that chart of ours. Brian's going to clarify for me here.
No, just in terms of, you had asked another part of the question is, does it change the way we sort of operate and think about things? Some recent work that we had done, because it's important to understand, are you paying for availability and do you need to? Would you be better off having a lower availability and lower maintenance costs, et cetera? In our recent work, and it's consistent with what we've always said, is that availability and the way those units operate are actually going to be more important in the future than it has been in the past few years. The work that Darcy and his folks are doing in terms of ensuring that those units are available and at very high levels is extremely important to the financial benefits of the Alberta market going forward.
All right. Question at the front here?
Yeah. Rob Hope, Scotiabank. Just a clarification on your 2020 guidance, then I'll get a question in on Genesee. The uplift in Alberta of CAD 25 million, that's off the old guidance that you did prior to the update from today. Is the expectation that 2020 looks pretty similar to 2019 ?
I think, if you go back to our view of 2019 at Investor Day a year ago, it is certainly 2020 is higher. Better. Higher margins on our Alberta portfolio relative to 2019. I think as we've gone through the year, and Mark's team has optimized around the trading side, it closed the gap between the two. You've seen that with our succeeding guidance in 2019. Certainly, that's moved closer together, but still, we still see 2020 being healthier.
Then just looking at the 2021, any updated thoughts on any impact on the PPAs on G1 and G2 rolling off, if there's going to be an uplift or down lift there?
Yeah. It really is going to come down to what we're able to lock in for prices in 2021. As Mark mentioned, liquidity has been slow to recover, but it is recovering. As the chart I showed earlier, we've hedged quite a bit in 2022, interestingly enough. 2021, we've seen a lot of volatility, and our trading group has taken advantage of that. Actually buying and then selling, and that's pushed up the capture price. At the end of the day, if we capture in sort of the high CAD 50s on our Alberta portfolio, we should be close to maintaining the EBITDA of those assets as we go through the transition off the PPAs.
Question right on the side here. Go ahead.
Yeah, thanks. David Quezada, Raymond James. A quick follow-up here on just the recontracting. Can you just give us any thoughts on the case for recontracting at Island, and directionally, what you expect to happen there, and then maybe some early thoughts on Arlington as well?
The discussions thus far have been more along the lines of the absolute need for those facilities and the observation that they have been running a lot more than they have been historically, and hence the importance. We quickly get into the discussion of not only the recontract price, but the recontract term. That's where the art really comes in, because we also have to factor in what are flow throughs, what are on their account, our account, et cetera. Very early days on the Island side. Overall returns, one would expect to be similar on a go-forward basis. To have any more granularity at this point, given that it's really a triangulation of all those variables, is difficult to pinpoint. We would expect a similar sort of thing with Arlington as we have those discussions. It is needed. It's providing great value.
On the off-season, we've now got another counterparty that does like to tap into it. When we get to a point of having those recontracting discussions, again, it will be not only term and price, but what sort of elements are on our account versus theirs. Overall, though, we still think the economics keep circling out to similar what they have been historically.
Great. Thank you.
Any further questions? Okay, if not, I'll pass it over to Brian to start us off on the C2CNT discussion.
I'll just make a couple of comments while we're shuffling, and Stuart's joining me on stage. Kate has described in her discussions the strategic reasons why Capital Power has invested in a venture like C2CNT. In fact, I have stated to a number of you over the last year or so that I believe that this technology has the potential to move the dial on climate change by itself. In 2018, Capital Power made a direct investment in C2CNT, an entity which owns all the nanocarbon intellectual property Dr. Licht and his team had developed, is developing, and will develop. Capital Power is committed to a 9% interest, but we expect to increase our interest to 40% through the exercise of options through 2020.
Through this 40% ownership interest, in addition to participating in, of course, the great technology, we'll benefit from the continued production at the Shepard development site, as well as the future commercial arrangements C2CNT enters into with third parties. In time, we'd expect that C2CNT may enter into some direct investments in other facilities. We are excited to announce that next year, we'll start the development of the Genesee Carbon Conversion Centre. This will be the world's first commercial-scale production of CNTs directly from carbon. We will permit the site early next year for 7,500 tonnes per year of production. Phase 1 will be targeting 2,500 tonnes per year. Construction should commence mid-2020, with completion sometime in 2021. Capital cost is expected to be between CAD 20 million and CAD 25 million.
As the note indicates on the bottom of these two slides, both the increase in ownership and proceeding with the Genesee Carbon Conversion Centre are contingent on technology being successful. An investment in new technology is speculative by its nature. We are, however, very bullish on this opportunity. Of course, Capital Power will go through further detailed due diligence at the time of making additional financial commitments. Before I introduce Professor Licht, I would like to comment that in what you see in terms of our projections in our outlook for 2020, we've included the capital necessary to move forward on both the investment and in terms of the Genesee Carbon Conversion Centre. We have not included any financial results or any uptick associated with that.
Part of that goes to the fact that there's different financial commercial negotiations that are going to be taking place over the next year, and certainly having any kinds of indications as to what we think or what would be coming out of C2CNT is commercially not wise at this point in time. There are no implications other than, of course, the capital included in our 2020 outlook. With that, I do have the pleasure of introducing Dr. Stuart Licht. Dr. Licht's research focuses on providing technical solutions to climate change. The research introduces and scales up a new chemistry to transform the greenhouse gas carbon dioxide into the strongest material known, carbon nanotubes. Stuart Licht is Professor of Chemistry at George Washington University.
Professor Licht's C2CNT team is currently competing as a finalist in the Carbon XPRIZE competition to form the most valuable product from carbon dioxide. Professor Licht is an electrochemist with over 400 papers and patents focused on sustainability. He served as Program Director in the Chemistry Division of the National Science Foundation, is a Fellow of The Electrochemical Society, and recipient of numerous industry and societal research awards. Mr Licht helped establish fundamental chemical principles of the field of photoelectrochemistry, as well as some of the highest efficiency solar cells. He has broadened the foundation of understanding of environmental electrochemical phenomena, ranging from carbon capture to generation, collection, micro electrochemistry, chemical speciation, analytical chemistry, energy conversion, and water purification. With that, Dr. Stuart Licht.
Thank you very much, Brian, and it's my pleasure to be working in partnership with Capital Power. It's even more than a synergistic relationship. It's a warm relationship, and it's been very constructive. Also, thank you very much today for taking the time to participate in Capital Power's Investors Day. We're faced with what seems to be an insurmountable challenge. Carbon dioxide emissions are making the planet less habitable through climate change. On the other hand, the continuation of civilization, the advancement of civilization, depends on a continuous source of electricity, an expanding source of electricity. We at C2CNT think we can reconcile these two challenges, that they're not an insurmountable challenge. Our mission is to transform anthropogenic carbon dioxide into valuable carbon nanomaterials to incentivize reduction of this greenhouse gas and pioneer a nanocarbon economy to save the planet from the impacts of climate change.
I'd like to focus for a minute on this concept of a nanocarbon economy. We're trying to be the instigators of a revolutionary shift in the economy. In the 1940s, we had this shift to a plastics economy. You remember the famous line from The Graduate, plastics. I believe that someday virtually every material in this room can be made from carbon nanomaterials, be made with better properties, stronger or more conductive or lighter weight, and that these materials can be made from carbon dioxide. Truly a nanocarbon economy. C2CNT's revolutionary technology transforms CO2 directly into valuable carbon nanotubes, carbon nano-onions, graphene, and ultra strong carbon structural materials at a fraction of the cost of current manufacturing processes. The left-hand slide shows a carbon nanotube. It's one of our products, our principal product, made from carbon dioxide.
The scale of that scanning electron microscopy image is on the order of overall three or four human hairs in diameter. Here we have a collection of our carbon nanotubes. The middle photograph is a transmission electron microscope image. It zooms in on one of those carbon nanotubes and looks at the tube. You can see in the cross-section the open center, the tubular nature of it. You can see the walls. If we zoom in even further on the right-hand side, on the left-hand side, excuse me, of that photo. Am I saying that right?
On the left-hand side of that photo, we can see the individual components of the walls of those carbon nanotubes. Graphene is a substance which is two-dimensional. It's very, very strong. It's based on specific carbon bonds. If we take that graphene and we roll it up into a cylinder, we give it a three-dimensional strength. If we take those cylinders of different diameters and have one inserted in the other, we have the strongest material on the planet. Carbon nanotubes have the highest tensile strength of any material measured to date. Next slide, please. The C2CNT process has some important features that are unusual. It soaks up CO2 like a sponge. It has a high affinity for CO2. The CO2 is then transformed directly into a portfolio of carbon nanomaterials.
This tremendous affinity for carbon dioxide allows us to not only capture carbon dioxide directly from a high CO2 stream, perhaps an ethanol plant for the ethanol and fuels, which are fermentation, nearly pure CO2, to a moderately high CO2 stream like a cement plant, 30% or so CO2 in the stream, to a low but significant CO2 stream, such as the 4%- 5% CO2 in a natural gas power plant flue gas. Even more than that, the C2CNT process is highly immune to impurities, and it can accomplish without concentration of the CO2, direct air capture. We can capture CO2 directly from the air or from flue gas. The carbon nanotubes we make and the other carbon nanomaterials can be tailored for a wide variety of applications. Some of these applications are suggested on the lower portion of the illustration.
We can make things like bodies for transportation vehicles, for planes, that are much lighter than the current carbon composites, which are based on carbon fibers, carbon nanotubes, an order of magnitude even stronger, and therefore lighter weight. We can make the cables for bridges. We can make the cement for bridges much, much lighter. In terms of cables, carbon nanotubes have been described as one of the few materials that has the possibility to achieve that dream of a space elevator that Arthur Clarke discussed years ago. It's the only material probably strong enough to accomplish that. We don't have to stop just at bodies and structural materials. We've shown that our carbon nanotubes made from carbon dioxide store more electricity in lithium-ion batteries. T
We can envision an electric vehicle with a lighter weight body made from our carbon nanomaterials and higher battery storage capacity based on our carbon nanomaterials. While there was a nice discussion a few minutes ago of some of the wind technologies, of course, we can make the blades for the turbines, the wind turbines, lighter, bigger, larger, which would allow to another cost reduction in wind-generated electricity. Next slide, please. C2CNT is one of five finalists in the NRG COSIA Carbon XPRIZE Natural Gas Track. It's a CAD 10 million competition for turning CO2 emissions into valuable products. The winner converts the most carbon dioxide into products with the highest value. Determined by how much CO2 per day is converted, it range between 2 tonnes-5 tonnes , and the net value of the product. The competition is hosted at the Alberta Carbon Conversion Technology Centre, the ACCTC.
It's a unique facility built to demonstrate CO2 capture and conversion technologies. It's funded with support of the governments of Alberta and Canada. It's located at the Shepard Energy Centre, co-owned by Capital Power and ENMAX. We were there opening our doors for the first time in that cold February 2019. I wonder, that was discussed a few minutes ago. Next slide, please. Well, how does the CO2 to carbon nanotube process work? This is a little animation with audio that I presented at the American Chemical Society. I think it's available on YouTube.com and also at the National Academy of Sciences, if you could just click once. In this process, we place two electrodes in a molten carbonate bath here. It's shown as lithium carbonate. The lower electrode is the cathode where reduction occurs. We apply electrical current.
In the electrical current, the lithium carbonate is split into carbon and lithium oxide at the lower electrode. At the upper electrode, it simply forms oxygen, releases oxygen gas. This lithium oxide formed along with the carbon at the lower electrode is very special because it allows us to bubble in CO2. CO2 continuously reacts with lithium oxide, renews the lithium carbonate, and so the electrolyte is never consumed. The net reaction is quite simple. Carbon dioxide goes to carbon plus oxygen, and a beautiful carbon grows on the lower electrode in time. Solid carbon grows on the cathode as carbon dioxide is consumed. This carbon is formed at full Coulombic efficiency, low energy, very low energy. Much more than that, it's very special. The carbon is pure carbon nanotubes. With controlled electrolysis, we simply generate carbon nanotubes and oxygen from carbon dioxide.
With our proprietary process, we tweak. We can have very strong control over these electrochemical conditions to vary that product, to make short or long carbon nanotubes, thin or thick-walled, to make carbon nano-onions, which are nested balls. Each ball is a graphene folded into a ball, one inside the other, like nested Russian dolls, to make graphene sheets. Each of these products is very, very valuable and has phenomenal physical, chemical properties. Next slide, please. The known applications include as an additive to materials, textiles, batteries, electronics, and other carbon materials. Numerous applications for carbon nanotubes have been studied extensively, but the current market price of over CAD 100,000 per tonne make utilization uneconomic. Reducing the cost by an order of magnitude significantly increases the potential utilization. Let me emphasize the cost-effectiveness of this technology.
This is a new chemistry. The technology is very similar to the way that aluminum is made, aluminum smelting. Instead of taking an oxide of aluminum, bauxite, and putting it into a molten electrolyte and applying electricity to make the aluminum, we take another oxide. We take carbon dioxide. We don't use any exotic materials. We don't use any noble metals. We also just dissolve that carbon dioxide into a molten electrolyte, apply electricity, and we make wonderful carbon nanomaterials at one electrode and hot oxygen at the other electrode. Next slide, please. The materials have wonderful properties and give us incredible opportunities to save downstream carbon dioxide. One tonne of carbon nanotubes added to several thousand tonnes of cement or aluminum or steel or other structural materials like titanium or magnesium, greatly strengthens that material.
When we make cement, for example, we can make a cement block of the same strength with much less cement. That savings allows us downstream at the cement plant to need to produce much less cement. With one ton of added carbon nanotubes, we prevent the emissions. We don't have to produce approximately 1,000 tonnes of cement, of 938 tonnes of cement. This results in a savings of 840 tonnes of carbon dioxide. The savings are even greater with aluminum because aluminum has an even more massive footprint in production than cement. Every ton of aluminum made emits about 12 tonnes of carbon dioxide. With each ton of carbon nanotube added to aluminum, we need a thinner aluminum block for the same strength, and we save some 4,000 tonnes of CO2 from the added ton of carbon nanotube and so forth. This translates into massive markets.
The market for structural materials is several billion tonnes of cement, several billion tonnes of steel every year. This is just the first market that we're addressing. There's, of course, additional markets and very exciting new textiles, very strong suits and uniforms, and whole new fashion designs because we can hold up more weight in bulletproof suits and taser-proof suits. This will be the first market that we're addressing. More specifically, let's go to the next slide. We're addressing the cement market. There has been in the literature, in the scientific and engineering literature, an exponential growth in interest in these remarkably strong composites made by a very small amount of carbon nanotubes added to a larger amount of the cement or concrete.
None of these publications, none of these studies had a practical implication because they had been working with carbon nanotubes that have a massive carbon footprint to make, that require a great deal of energy to make, and are extremely expensive. C2CNT makes our carbon nanotubes from carbon dioxide, so we have a different approach, and we can realize very large greenhouse gas reductions. Next slide, please. Our first product is the concrete CNT composite admix, as shown in the illustration. A 3,000-tonne block of cement of a certain strength is achieved with only 2,000 tonnes of concrete but with added one ton of carbon nanotubes. This eliminates the production of that top thin block of concrete, that 1,000 tonnes or so of concrete. That eliminates the 840 tonnes of carbon dioxide associated with that production. The overall balance is very simple.
At the Shepard energy facility today, we take flue gas, we convert 4 tonnes of CO2 to 1 tonne of carbon nanotubes, and that 1 tonne of carbon nanotubes downstream in the cement plant eliminates another 840 tonnes of carbon dioxide. We are working with a strategic partnership with the world's largest producer of structural materials and aggregates and cement, Lehigh Hanson. Here, Lehigh Hanson, Alberta, they're conducting all internal and external testing of the concrete at their cost. Testing is actually underway. We're also at my research labs at George Washington University, optimizing the nanotube for the concrete. We're very fortunate to be tapped into them, Lehigh's distribution network of the product, and marketing of the CNT enhanced concrete in Alberta is early next year. Next slide, please.
We think that our cooperation with Capital Power is directly addressing this, and reconciling this challenge between the society's need for accessible electricity with the growing concerns of the CO2 emissions. I would like to thank you very much for your attention. I welcome your questions. Yes, please. Can you introduce yourself too? I'd appreciate it.
When we think about applying it in concrete, has there been any discussion about the building standards that need to get changed to include this additive?
Yes. That's why we've targeted specific products at the beginning. We're very fortunate to be working with Lehigh Hanson , with their expertise in this matter. For this reason, our first product is a concrete admix. There are standards made for it. The amount of additive is very low, the carbon nanotube is 0.05%. There already is existing the standard for this. There are other admixes with other materials. This is just a lower percentage. Because the standards are in place, we anticipate that it will go through the standardization process very quickly. Thank you for the question.
Actually, maybe if I could just clarify that. In both Canada and the U.S., for example, in Canada, it actually doesn't need express CSA approval, simply because of where it's added to the process. The same as in the U.S. On the chemical side or on the cement side, there are no regulatory approvals. The case is simply Lehigh does their testing, gets comfortable with it, gets their customers comfortable with it, and then they move forward. It's more an engineering comfort with the materials on a case-by-case basis.
Yes, please.
Hi. There we go. Harold Holloway, TD. Just a basic question just because I don't understand sort of what comes out of the process. I think you mentioned it was sheets, and I guess, or is it a mix? How do you, once you've created it, what does it look like? Obviously, it's a solid. How does it move along in the process after you've created it?
The carbon nanomaterials, in this case, the carbon nanotubes, grow on the cathode as a big, beautiful block of carbon, jet black block of carbon, which easily pops off of the cathode. That then is processed into a powder form, basically grinding it up. Then we disperse it for distribution. That's proprietary at this point. I will say that the entire processing is non-chemical, it's mechanical, and it fits very smoothly into the distribution network of Heidelberg Materials. Envision the product that's coming up. Flue gas is coming in the front door of our plant. Out the back door is the product ready to add to the cement trucks, which are going out.
Over here on your right. Yes, please.
It is Kelsen Vallee with CIBC. Question for you on the parasitic load. I don't know if that's the right term because it's not a parasite, you're actually creating a product. How much load, if you were to consider it as parasitic load, given the electrolysis required to make the product?
It's extraordinarily low. It depends on your perspective, though. It was mentioned earlier that there is on the order of a CAD 30 per tonne carbon levy, which is probably going up to CAD 50 in place. The equivalent cost per ton of CO2 removed before we sell the carbon nanotubes is an order of magnitude less. The actual parasitic load is about 2 MW per tonne of CO2 processed. We're not just removing that tonne of CO2. We're removing that additional 800 or more tonnes, or 4,000 in the case of aluminum, tonnes of CO2 downstream from the production plants there. It's 2 MW power then per 1,000 tonnes of CO2. It depends at what point you do the analysis. In terms of the mitigation of the CO2 removed, it's incredibly low.
Maybe I could just add, just one of the things that we're doing at the Genesee Carbon Conversion Center is that as Dr. Licht described, you get carbon and you get oxygen. We'll actually be putting oxygen back into the boiler so that it increases the efficiency of the unit even further, reduces the emissions profile, and in an indirect way, reduces the parasitic load.
Yes, it's much less sexy to talk about the oxygen, which is the other product. The carbon nanomaterials are great. The hot oxygen gives us the opportunity to do what's called the oxy-fuel process and to feed oxygen directly in for the combustion and to improve the efficiency of that.
Robert Kwan, RBC. Dr. Licht. Just wanted to ask or follow up on the last answer you gave. It's one thing to have a carbon tax, it's another thing to actually take the carbon out, which is kind of the exciting part of what you're doing. Is what you're saying the cost of actually taking the carbon out less than the CAD 30-CAD 50 a tonne?
Absolutely. To a first order, to a straightforward analysis, today aluminum costs CAD 1,500-CAD 2,000 a tonne in the open market. That's approximately the cost of making the aluminum from getting the oxide from the bauxite from the ground, cleaning it, processing it, adding electricity, doing the electrolysis. We're doing an electrolysis process. Our oxide is free. It's carbon dioxide. It's the greenhouse gas, carbon dioxide. Our costs are low.
That's both the variable and the capital cost of constructing further?
Yes. The CapEx is quite equivalent. Again, they're running a molten electrolysis process. As with them, we use firebricks and other materials to make kilns. We're running at about 200 degrees cooler Celsius than they are. They're running at 960 degree Celsius we're running about 750 degrees Celsius. We're working with a much less noxious electrolyte. They have this cryolite, this fluoride. Sorry if I get too technical. We're using just melted simple carbonates. Seashells are calcium carbonate, for example. We're using inorganic carbonates. We don't have any unusual CapEx costs. It's a very similar infrastructure.
Okay. If I can just finish. Your technology specifically, can you compare it to other carbon nanotube technologies that are out there? Also, are you doing something different with the fibers that addresses, and it's very early, but there is some concern that carbon nanotubes may be a possible carcinogen?
The principal way that carbon nanotubes are made commercially now is by a technique called chemical vapor deposition, CVD. It has an extraordinarily high carbon footprint. I mentioned that 12 tonnes per tonne of aluminum. It's on the order of hundreds of tonnes. It's electrically intensive. We jump forward because they're working with gases, we're working with the carbonates are pure material to be readily made into carbon nanomaterials in there. We're working with liquids on a solid. There's a lot of reasons, but it's much less energetic. That is the principle process. The jury's out there, as you said, on the environmental impact of carbon nanotubes, but it looks good. There's a tremendous number of studies using carbon nanomaterials for medical delivery applications. They're injecting them into people's bloodstreams. It has to be much more heavily explored.
However, our carbon nanotubes don't hit the environment. They don't. As I said, after we grind this up, we put it into a form that's ready for distribution, and there's this for the cement for this particular application. They're entirely enclosed within this material. There's just no exposure of particulate matter.
Thank you very much.
Actually, could I just make a couple comments on your question? This is from the Capital Power perspective and in respect to the Genesee Carbon Conversion Center. In terms of cost, and just to sort of connect a couple of dots, today, the market value, and therefore implicit the cost of production, is between $100,000 and $400,000 a tonne U.S. I think as we've stated in the material and so on, we'll be bringing that down by at least an order of magnitude. That's what opens up the commercial opportunities and in testing it in some areas like specifically cement. Those kind of numbers suggest very broad utilization. Those are numbers that make it work in a very broad sense. In terms of the issues of the potential for carbon nanotubes being a carcinogen, that's something that we've been looking at.
Certainly, as we move forward with the Genesee Carbon Conversion Center, that'll be a topic of discussion with Alberta Environment as to in the production, are there any risks? I think as Dr. Licht described, in the production process, there's no dust, to put it another way. Nonetheless, we'll be going through that process, and if there's anything that we need to do to protect employees, we definitely will be doing it. Again, the jury's out a little bit in terms of the utilization in materials and so on. Of course, with asbestos was never an issue unless it becomes airborne. There's a lot of work being done on just nanotechnology in general, not just carbon nanotubes. We're watching that closely. As indicated, there's nothing yet that's been definitive that has said that's an issue.
Certainly, in the various application, different, I'll say, mechanical realities would suggest to us initially that it's not an issue. Having said that, part of the due diligence I was commenting on, we'll be looking at that more closely, as will, for example, Lehigh Hanson in terms of in looking at it. It's something that needs to be addressed, but we don't see that it is an issue that would impair the progress of moving forward.
Of course, these are pure carbon, and graphite, another allotrope of carbon, is just layered graphene sheets. We're instead rolling up the graphene sheets concentrically in these carbon nanotubes. The issue, the question is the nano nature, the small size of them. Again, we have to do the correct due diligence, but we're quite optimistic in that regards. It's a good question.
Hi, Andrew Gay with Verition Fund Management. Can you flesh out the relationship between C2CNT and Capital Power just a little more, just in terms of who will be commercializing the potential further developments? What employees? Is it employees of C2CNT that are helping commercialize these further developments, or Capital Power will take that lead, and just how the economics are split between the two?
Well, let me just say up front that Capital Power has been the wind behind C2CNT's sails. C2CNT has an independent employee base, which is growing quite rapidly. Capital Power is supporting with the first major rollout, the Genesee project, the general model in which the capital for implementing the larger and larger C2CNT units. We have to scale up rapidly if we want to tick the needle on the CO2 levels. The companies that we license to, and Capital Power is the first company we'll be licensing to, pays the capital for building the plant, and we have a licensing arrangement with them where the profits go back to C2CNT from that.
Maybe to add a little more flesh to that. If you think of C2CNT today as owning and operating the facility at Shepard, and the production capability of that will be reasonably significant by the time it gets to the end of the test period or near the end of 2020. That, I believe C2CNT has the expectation will continue and be where a significant amount of further research and development, et cetera, takes place. Just to be clear, Capital Power, other than being morally supportive, is not involved in the research and development side at all. We'll facilitate and help buying materials or things that we can do as a broader organization and have helped out in terms of hiring people for C2CNT in Calgary. That is 100% C2CNT.
When you move to the Genesee Carbon Conversion Center, that will be a facility that Capital Power will own and operate. It'll be under a licensing agreement with C2CNT. It'll be hopefully more favorable than other commercial arrangements they'll make with other parties. As Dr. Licht pointed out, the massive proliferation of this technology can best be achieved by licensing agreements. I would speculate that with, depending on the penetration in other areas and so on and so forth, I would expect there to be numerous licenses out for this technology being applied in different parts of the world fairly quickly. Capital Power would hope to build additional facilities under license, like Genesee, as time goes forward. We do not see us as an exclusive supplier of C2CNT to the market at all.
We see ourselves as participating in that market and being sort of the first movers. Again, as Dr. Licht described, his objective is to have this technology out there as rapidly as possible and reducing the carbon footprint, again, as quickly as possible, and that can only be done through licensing agreements across the world.
Mark Jarvi from CIBC. A lot of good technology doesn't always move to market as quickly as people think and get commercialized, and so I can appreciate the avoided cost of carbon for Capital Power, but how do you build the business case to companies like cement companies in terms of how you price carbon nanotubes and make sure that you guys get your fair share of the economics that you're giving them?
Well, the business case is the value added of the carbon nanomaterial-containing products that we roll out. The added benefit is making various industries greener. There is a great deal of flexibility in the pricing because of the low cost of the process, and we will be building that in as we move forward. It's quite a straightforward cost estimate. If we are adding 0.1% of CNTs to aluminum, and if the cost of aluminum is CAD 1,500 a tonne, we will price the carbon nanotubes such that we don't significantly change the price of the aluminum at all. So aluminum will be presented, but it's much stronger, that's much lighter weight, and at about the same cost. That's how we'll be moving forward with our pricing as we look at it.
When you put some of those preliminary numbers together with these people you engage with, are they on board with it or?
Yes.
If you think back through the process of getting this to scale here now, maybe just going to walk us through some of the challenges you've had and as you work through now this next phase of commercialization, where do you see some of the sort of pinch points and challenges?
Well, the history is a series of remarkable adventures. We were, in my laboratories, splitting carbon dioxide and molten carbonate since 2010. We've been publishing on that, doing that all the time. I'm fortunate to have a close cooperation with the National Science Foundation in the U.S. It brought into my facilities a bench top, one of the first bench top scanning electron microscopes. The rapid pace that we've seen, incredible pace, is because we can do a production run and immediately look at the product. As soon as we had that SEM in the lab, we suddenly discovered we weren't just making carbon, we're making carbon nanotubes, and we're making pure carbon nanotubes. Moving forward, the integration of the process will be very much benefited at Genesee by the close cooperation with Capital Power.
Right now, due to certain regulations in the Carbon XPRIZE that we're involved in. We are not sending the oxygen back to the plant. We are not tapping the flue gas at the temperature that we want. They're trying to make a generic flue gas for all the Carbon XPRIZE teams. We're actually the only Carbon XPRIZE team that's using the flue gas. Everyone else is using concentrated CO2 from the flue gas, because we can do that. We're very fortunate that we're the only Carbon XPRIZE team that moved forward on both tracks of the Carbon XPRIZE, making the most valuable product from the flue gas of a coal power plant and from a natural gas power plant. We're perfectly situated to move ahead with the hybrid, the dual-fuel feature that Genesee is giving us.
I'm looking forward very much to this plant. It gives us even more options, and it gives us an expedited linkage as we make the larger facility.
There's a question over here.
Yes.
Jeremy Rosenfield from Industrial Alliance. Just a question in terms of the scalability and what are some of the limiting factors as you move from the testing onto the whatever's going to be done at Genesee. At what scale can you actually produce carbon nanotubes? What are the limiting factors? Are there issues with water? Are there issues with access to lithium-ion? What are some of the things that you have to look forward in terms of anticipating those obstacles as this ramps up?
Water is not a part of the process other than in the final cement distribution stage. The scalability is part of the R&D that's ongoing. It's going ahead well. For example, as we move up the Shepard facility at the Alberta Carbon Conversion Technology Centre facility from 100 tonnes to 250 tonnes CNT annually, we're going to take advantage of three dimensions. The aluminum process that I spoke of is stuck with horizontal electrodes. The product that they make floats to the bottom, liquid aluminum, and that sits on the bottom electrode, which is horizontal. We don't have that limitation. We can use vertical electrodes. In our plant, we're building up. The scale up, we can use bigger and bigger surface area electrodes. Just as with batteries, electrosynthesis is simply linearly related to the electrode size, electrode area, if you will. That's the challenge.
We have to supply a great deal of DC current. It's an electrolysis process. That's how aluminum is made. There is an incredible opportunity at Genesee. Just outside the door of the Genesee plant is one of the few DC transmission power sites. They transmit their power by DC current. The DC is already there. What we're using at Shepard is our own rectifiers to convert the AC to DC is there now. There's some benefits, too.
Maybe just in terms of talking about the Genesee site and some of the benefits and a look at scaling and maybe I'll just put my promoter hat on for a little bit and just comment that one thing that is not, or that as you look through the material and I think the chart on showing you how much work has been done in the cement industry, not to the same degree, but there is a tremendous amount of literature, science, work done in applying nanotechnology, nanotubes, nanomaterials to, as I say, there's a recent study out of India that applies it to aluminum, comes up with the same conclusions about adding to the strength of aluminum, doubling the strength of titanium. That's all science that's known. The inhibition of having these technologies move a little bit further and actually into significant production is simply cost.
It's just out and out cost. When we look at whether this enterprise is going to be successful or not, I talked earlier about it being at least an order of magnitude reduction and have tested it against prices and so on. Certainly, it works in cement and we believe it'll work in other products. We've got that confirmation from the cement industry. The issue is then, or where your questions are going to is, are you going to achieve in a cost and a scale that's going to make it happen in when you look forward at Genesee? I would say when you look at the cost of production that Professor Licht is going through today at Shepard, it is economic, even if you don't scale that up.
You just have a larger footprint, greater production area, and it's a little bit more labor-intensive than it probably could be ultimately. There's a lot of scaling that will certainly help the economics, help the production. In terms of it being economic, I would say at the state it is today, it's economic. Anything else is upside. Well, if there's no more questions, I'd like to thank you all for joining us this morning to talk about Capital Power, what we've been doing and where we're going, and certainly appreciate you sharing in our excitement around C2CNT, where it's going, the whole issue of carbon capture, carbon conversion, and the challenge that we're all facing in terms of greenhouse gas and climate change.
I think as we've outlined and commented on a number of times through this morning and in past years, it is a very serious issue to us. We've been on a track of reducing emissions profile for a number of years, and this is another step. I think in 10 years, when we look back, we will see this was an absolutely amazing step for not only the organization, but for carbon reduction on a much, much broader basis. Thank you very much for joining us this morning, and keep buying those shares.