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Canada

Canada

Talk filled hole left by absence of action

Discussion of how best to tackle the liberalised power market dominated the 1997 Canadian Wind Energy Association (CanWEA) conference, which had the atmosphere of a political rally with no opposing party. The utility, Hydro Quebec, announced it will create a task force to develop a "wind energy strategy." CanWEA also released its proposal for how to enter the opening created by Ontario Hydro's imminent scheduled shutdowns of nearly half of its oldest nuclear reactors.

A record 200 delegates attended the 13th annual conference of the Canadian Wind Energy Association (CanWEA), but it was political debate rather than business issues which dominated the event. In the absence of progress on the few large scale domestic wind projects for which plans have been made, attention was focused on policy discussions aimed at helping Canada build its market for wind and other renewable energy sources.

One piece of news, however, was broken at the conference, held at the Chateau Frontenac in Quebec City from October 20-22. The executive vice president of Hydro Quebec, Michel Clair, announced the utility will create a task force to develop a "wind energy strategy." According to Clair, Hydro Quebec should develop wind to promote its exports to the US, which is now looking for a renewables mix in utility energy portfolios. "In order to win the trump cards needed to capture an increasing share of the American market, Hydro Quebec has every interest in adding wind energy to its supply mix," claimed Clair.

Quebec's minister of Natural Resources, Guy Chevrette, also made an effort to boost Quebec's image on the wind front, telling delegates that wind energy can become an important complement to Hydro Quebec's generating system, owing to the close relationship between electricity demand and the seasonal distribution of wind energy. Moreover, Hydro Quebec can "store" wind energy in its hydroelectric reservoirs. "Considering all of its advantages, we have decided to develop wind energy as a Quebecois resource, like hydroelectricity," he asserted.

Actions speak louder than words, however. In an announcement released in Montreal and coinciding with the last day of the wind conference, Hydro Quebec reaffirmed its traditional reliance on large hydro generation. In a $13 billion "Strategic Plan" for the years 1998-2002, the utility plans to greatly increase electricity sales and income from its existing large hydro projects, via partial river diversions, and from other unspecified new hydroelectric generation projects. Subsequent to the CanWEA conference, Hydro Quebec was awarded a US power marketer license by the Federal Energy Regulatory Commission (FERC), which allow it to export electricity throughout the eastern US.

Hydro Quebec could find its strategic plan curtailed, however, by the newly formed Quebec energy board, Regie de l'Energie. Delegates were told by the board's Richard Carrier about how it will begin regulating Hydro Quebec and shaping energy policy. "Concerning wind energy É the (Quebec) energy policy stipulates that a "share" could be reserved for it by the Regie in the context of the resource plan," Carrier said. "The government also anticipates the possibility of a "green rate" being offered to consumers wanting to by renewable power, one that is similar to the green pricing programmes of some North American energy producers." Such a green rate would tacitly acknowledge that its large hydro stations and their electric output are "non-green," he noted.

Policy issues

Meantime, presentations by American and British wind lobbyists on structuring markets for renewables attracted a deal of interest. They elaborated on policies aimed to support renewables in a liberalised market. Ryan Wiser of the Lawrence Berkeley National Laboratory in California outlined the features of three approaches garnering the most attention lately: the Renewable Portfolio Standard (RPS) championed by the American Wind Energy Association (AWEA), which obliges electricity distributors to buy a fixed amount of renewable energy each year; policies that levy a direct surcharge on electricity to pay for renewables; and green power marketing, which takes advantage of a customer's willingness to pay more for a "green" energy supply.

"Combinations of these policies will be much more effective than any single approach in isolation," Wiser said. Green marketing is alone insufficient to foster a large market in renewables, he added, while surcharges are unpopular and difficult to maintain. He urged Canadian policy makers to seek a set of long term, stable policies rather than a political "quick-fix."

On hand to describe the intricacies of the RPS was Nancy Rader, an AWEA analyst. The RPS, Rader explained, has two products: a percentage of power to the grid designated from renewable energy and renewable energy credits. These two can be sold separately or bundled together. While tradable renewable credits could become widespread in Canada, Rader believed large hydroelectric supplies could potentially "flood the market" with credits -- although the large hydro plants would be unlikely to be accepted as "renewable" under the RPS. Environment Canada excludes hydroelectric stations above 20 MW from its definition of green energy in its EcoLogo green energy certification programme.

Andrew Pape of the British Columbia Task Force on Electricity Market Reform told conference delegates about the results of his research on the economic effects of renewables pricing policies. The RPS, he said, maximises green power development with gradual cost and rate impacts and is the most cost effective policy he studied. Surcharge funded policies, Pape said, maximise diversity and low cost, but have the disadvantage of up-front cost and rate impacts. He said environmental tariffs, such as a carbon tax, would perhaps have the most effect in western Canadian provincial economies. Tariffs have the lowest emission abatement cost because they affect existing generators. But a carbon tax has already been rejected by the Alberta government and prime minister Jean Chretien.

Wind on credit

Representatives were present from a renewable energy credits programme that has raised eyebrows in the wind industry by hooking a utility as one of its first customers. Fred Gallagher and Jason Edworthy, of Vision Quest Windelectric Inc, elaborated on their sales of energy credit blocks to ENMAX and the town of Pincher Creek, stemming from two Vestas wind turbines in southern Alberta (Windpower Monthly, November 1997). The attraction of the wind credits to ENMAX is linked to the national Voluntary Challenge and Registry (VCR), Canada's main attempt to stabilise greenhouse gas emissions. Buying green credits is one way of complying with the VCR. ENMAX will pass on its three million kilowatt hours of credits to the federal government, which will apply them to the VCR. Similarly, Pincher Creek will use its 24,000 kWh of emission reduction credits for the programme as part of its allegiance to the "20% club" of Canadian municipalities that have committed to reducing their 1990 greenhouse gas levels by 20% by 2000. "Although emission credit markets are in their infancy, we believe they will become very large," Gallagher said.

Despite these examples, Clifford Lincoln, a parliamentarian from Quebec, criticised the federal VCR programme. "It's time to say that voluntary actions to reduce emissions of greenhouse gases do not work," he said. Lincoln was formerly a Quebec environmental minister. Proof that the VCR did not work, he said, could be seen in Canada having soared 13% above the international goal of stabilising greenhouse gas emissions at 1990 levels by the year 2000.

Amidst the policy ruminations, CanWEA released its mammoth proposal for how to enter the opening created by Ontario Hydro's imminent scheduled shutdowns of nearly half of its oldest nuclear reactors. The utility has already announced it will replace the power with that generated from coal and oil fired plants.

"This is unacceptable for reasons of public health, environmental protection and climate change," CanWEA's proposal stated. "Ontario Hydro should now seize the opportunity to substitute clean renewable energy for dirty conventional energy." CanWEA urged Ontario Hydro to reinstate its cancelled Renewable Energy Technologies (RETs) competition, which is currently tied up in litigation from 47 of the companies who had issued proposals before the project was scrapped (Windpower Monthly, September 1997). The utility should award contracts to independent producers, then issue a second request for proposals for 1000 MW of independent, nameplate renewable capacity, including an allocation of 500 MW for wind capacity, CanWEA said.

Former Ontario Hydro employee Brian Kelly, at one time in charge of the RETs programme and now of EcoPathways Consulting Inc, also advocated that the RETs competition be revived. He noted the irony that Hydro cancelled the request for proposals, yet promptly found C$5-8 billion to repair its newer nuclear units and to buy replacement supplies of coal fired power.

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