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Canada

Analysis - Ontario developers play waiting game on tariffs

CANADA: Wind producers in Ontario are under growing pressure to get about 2.5GW of feed-in tariff (FIT) projects up and running as commercial operation dates outlined in their contracts loom closer.

Ontario's developers have been looking for clarity on when the province will be in the market for more wind power while simultaneously attempting to build projects.

The Ontario Power Authority awarded about 3.2GW of FIT contracts in three tranches between April 2010 and July 2011, giving developers three years to bring projects online. But delays, largely around getting project approvals, have challenged the industry.

Although there have been some extensions, including the granting of an extra year for projects included in the first round of contract awards, CEO Colin Andersen said the authority is expecting developers to meet contract commitments.

"It is going to take a large effort to see the projects through. I encourage you to stay focused on your work. Getting these projects built and operational within the framework of the contract is key for the future of wind in this province," he said.

Bruce Fowler, a partner at law firm Borden Ladner Gervais, said at the recent Canadian Wind Energy Association (CANWEA) annual conference: "We're bumping up against those deadlines and I think the indications from the Ontario Power Authority are quite clear that there won't be extensions except for valid force majeure issues."

Andersen said much will depend on the province's new long-term energy plan, which is expected to be issued later this year. "With regard to a new procurement window for large-scale renewable energy projects, I expect it won't happen until 2014," he said.

The size and timing of future wind purchases is a question right across the country, conference delegates heard. A sustainable Canadian wind industry needs a market of at least 1GW a year, said CANWEA president Robert Hornung, and energy strategy reviews under way in Canada's four largest power markets will decide whether it materialises. The wind industry, he said, has to be at the table. "We have 18 months to put our best foot forward," Hornung added.

Without long-term transparency, panelists agreed, Canada risks losing investment. "If Canadian markets are sending the wrong policy messages, resources will migrate elsewhere," said Peter Clibbon, senior vice-president at developer RES Canada.

In the meantime, CANWEA is expecting a record build of about 1.3GW this year to bring Canada's installed capacity close to 8GW by the end of 2013. Another 5GW of projects already under contract are scheduled to be installed over the following three years.

As the country's installed base grows, attention is turning to operation and maintenance issues. Michael Jeffery, president of blade inspection and repair firm Complete Wind Corporation, presented statistics showing that of more than 1,850 blades his company has inspected in North America since 2008, 84%had at least one defect. Just over half the defects were related to manufacturing, 44% to wear and 3% to transportation and construction. The ages of the blades ranged from newly delivered to post-warranty.

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