The trend toward larger capacity machines with tower heights approaching 100 metres is expected to continue, with all established turbine manufacturers in Canada now offering models in the 3MW range. This will enable developers to obtain a better return on investment and harness more wind power in areas that would otherwise be unable to meet performance requirements.
There are five tower-manufacturing facilities in four provinces, blade factories in three provinces and a variety of companies producing turbine sub-components, from nacelle covers and frames to power electronics and specialised machining services from firms that have seized the opportunity to diversify into wind.
Turbine makers will continue to rely on global supply chains to source many major components. One obvious piece of the puzzle missing from the Canadian supply chain is nacelle assembly. There is still room for plenty of growth here and more turbine and major component suppliers may enter the market in the short term.
Close to home
The good news is that most of the manpower required to construct wind farms comes from the Canadian labour pool and often from quite close to the projects.
A case study of Brookfield Renewable Power’s 51MW Gosfield wind farm in the town of Kingsville, Ontario, found that the contractor selected to build the plant, Mortenson Construction, invested over C$20 million (US$20.4 million) in Ontario, with more than 90% of expenditure within a 75-kilometre radius of the site. The majority of equipment rental, permanent materials, professional services, subcontractors and 99% of the labour needed to build the wind farm came from less than one hour’s drive away, resulting in a substantial boost to the local economy during construction.
The operations-and-maintenance sector is also taking shape. A recent study of the Ontario market by ClearSky Advisors on behalf of Canadian Wind Energy Association (CANWEA) predicts that demand for permanent workers to operate and maintain wind farms in 2016 will exceed 1,350, with another 1,200 spin-off jobs created. Colleges in each of the major markets now offer specialist programmes that give students a comprehensive education in wind-turbine technology. And as concentrations of wind farms grow, the same local construction firms building wind farms today can leverage their expertise to service them.
Job boom in Quebec
The supply industry in eastern Canada is expanding in step with market growth. US manufacturer GE is working to complete the contract it won in 2003 to supply a total of 1GW to eight wind farms in Quebec by 2012, while German makers Enercon and Repower are beginning to ramp up production to meet similar-sized contracts with Hydro Quebec, signed in 2005.
Quebec’s component industry, largely concentrated ?in the Gaspé region, is the most developed in the country, with blade, steel and concrete tower, turbine electronics and some nacelle component production capacity in place. There are currently close to 5,000 people working in the wind-energy sector in the province, according to a 2010 study, commissioned by CANWEA, on the economic benefits of wind energy in Quebec. More than 37,000 construction-phase jobs are predicted to be created between 2005 and 2015 in order to install 4GW, driving investment of C$10 billion.
Nova Scotia is leading the supply chain in the Maritime provinces, through its partnership with Korean company Daewoo Shipbuilding and Marine Engineering, to form blade and tower manufacturing facility DSTN — in which the province holds a 49% stake.
Election jitters hold back expansion
The Ontario market offers both the greatest opportunities and the greatest risk to the supply chain in the short term. According to the ClearSky report, the market could grow to more than 7.1GW by 2018 under the province’s current long-term energy plan, outlined in its Green Energy Act — an expansion of more than 5.6GW from 2010 installed capacity.
Investments in new major component plants since the advent of the act are linked to power purchase agreements for 870MW signed by Pattern Energy Group and Korean partner Samsung Renewable Energy with the Ontario Power Authority. German manufacturer Siemens is set to start blade production in the province and Korean CS Wind is preparing to roll out its first towers made with Ontario steel this autumn. US tower provider DMI Industries, an early mover into the Ontario market, celebrated its fifth anniversary in June.
However, uncertainty triggered by the October provincial election may have slowed the flow of new supply-chain investments in Ontario. This could create problems when domestic-content requirements double from 25% to 50%, from January 2012.
A significant number of feed-in tariff (FIT) contract holders with FIT and commercial operation dates scheduled for this year are expected to accept the Ontario Power Authority’s one-year extension offer — with no change to domestic-content requirements — to relieve pressure on the government’s permitting resources. The backlog will keep some manufacturers occupied, although other FIT contract holders with 2012 operating dates could be left with fewer vendor choices if manufacturers cannot offer a firm 50% domestic content and still be competitive on price and delivery.
Many original equipment manufacturers still rely on out-of-province suppliers, particularly when it comes to blades, and expanding their operations in Ontario could ease supply-chain bottlenecks.
West to supply labour and services
Alberta looks to be the centre of most development west of Ontario for the next few years, as the Alberta Electricity System Operator moves forward with its wind plans. Its recent draft, long-term transmission plan includes provisions to allow integration of up to 3.2GW wind, although market conditions may limit growth to about 1.6GW over the next five years.
Manitoba and Saskatchewan will likely see modest growth, while British Columbia’s electricity utility, BC Hydro, plans to release its integrated resource development plan before the end of 2012, with wind expected to play an important role.
Most supply-chain opportunities in the west will come in the form of construction, supply of local products and services and, over the long term, operations and maintenance. Turbines and major components are likely to come from the east and south.
In the short term, Canada’s wind sector will be active. But, to ensure it reaches its full potential and becomes a strong economic player over the long term, key developments are necessary.
A stable policy framework with longer time scales is needed, as well as acceptance of wind power’s role in all major provincial markets by all political parties. Removal of inter-provincial and cross-border trade barriers would help turbine manufacturers and major suppliers build a case for choosing Canada for new production facilities. And companies need to be able to make decisions without excessive interference from policy makers. Governments’ desire to ensure there is a return on public investment is understandable, but too many diktats is counterproductive.
Finally, innovation by Canadian businesses will be crucial in ensuring that the industry thrives after the current wave of development ends. Businesses that design and manufacture turbines and components with more cost-effective and sustainable processes, delivering better return on investment for developers, will be the true anchors for a sustainable Canadian wind industry for decades to come.
Stephen Rach is former supply chain manager, Canadian Wind Energy Association