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Canada

Canada

REQUEST FOR PROPOSALS GROWS

Ontario Hydro has significantly increased both the capacity and budget for its request for renewables, now up to 125 MW. The decision to adopt renewables is a major reversal of the utility's past preference for large nuclear, coal and hydroelectric stations. Objectivity will be a must in assessing project proposals since Hydro's own business units will compete with private sector proponents. The Independent Power Producers' Society of Ontario is urged by the New York Power Authority to continue its strong promotion of renewable non utility generators' power to break the Canadian utility monopoly.

Although strongly criticising the "anti competitive" policies of the Ontario Hydro utility, Canada's independent Power Producers' Society of Ontario (IPPSO) has nonetheless welcomed the public utility's decision to request proposals for 125 MW of Renewable Energy Technologies (RETs). IPPSO's acclaim of Ontario Hydro came at the society's sixth annual conference in Toronto, December 12-13.

Ontario Hydro's request for proposals -- a significant amount of which will be reserved for wind -- is expected this year (Windpower Monthly, November 1994). The official announcement of Hydro's RETs strategy, by Ontario premier Bob Rae on November 15, increased by about 25% the capacity earlier predicted and substantially increased the budget. The strategy will be budgeted at $110 million in 1995-1999, to help Hydro acquire up to 125 MW of grid-connected renewables, and other off-grid plant, even though the public utility claims to have an excess generating capacity of 10,000 MW. The new programme "sets the stage for a cleaner, more cost-effective future, and will benefit Ontario's green industry sector and individual consumers," said Rae.

Hydro president Allan Kupcis says Hydro will work with a range of partners and stakeholders to gain operating experience, overcome market barriers, and find cost effective commercial uses for RETs in niche markets. Brian Kelly, Hydro's director of environment and sustainable development, adds that RETs will "make green power available to customers preferring it." The decision to adopt renewables heralds a major reversal of the utility's past preference for large nuclear, coal and hydroelectric stations. In addition to wind turbines, solar thermal, photovoltaics, managed wood, biomass, microhydro, landfill, sewage gas, and fuel cells will all be encouraged, along with district energy systems.

In stage one of the RETs programme in 1995-1999, Hydro will solicit requests for proposals for up to 125 MW of nameplate renewable generation, in projects of about 5 MW. Non utility generators (NUGs) will contend for contract awards in "open competition" with Hydro's own business units. The utility will also develop renewables, especially in remote communities, and is committed to net billing, where the metre can run backwards to the benefit of customers operating small (50 kW) renewables facilities. The value of the energy they generate would be subtracted from their electricity bills.

Stage two of the RETs programme after 2000 will be aimed at the commercialisation of grid-connected RETs and full integration of renewable electricity as a major utility system supply source.

Hydro has been advised on its RETs strategy by Jeff Passmore of the Canadian Wind Energy Association (CanWEA), who is also IPPSO's senior vice president. His extensive report pointed out that decisions need to be made about the size of projects Hydro is requesting and the share of capacity allocated to the various renewable technologies. Moreover, objectivity will be needed in assessing project proposals since Hydro's own business units will be actively competing with private sector proponents.

Passmore advocates external assessment of all proposals, and "a clear statement of the RETs strategy and of Hydro's goals." Passmore noted in conclusion, "The concept of a 125 MW RFP for renewables sounds positive. But 125 MW is not a large amount of capacity considering, for example, that wind developers tell us that 50 MW and preferably 100 MW wind farms are the most cost effective."

The theme of December's IPPSO conference was "Competition: The Next Wave." Conference keynote speaker, David Freeman, the new president of the New York Power Authority, urged IPPSO to continue its strong promotion of renewable NUG power to help break open the Canadian electricity market to competition. Unlike the US, and California in particular, Canada never developed progressive legislation to stimulate NUGs.

xxxxUntil the last dead dog

Freeman suggested comparisons between Hydro and the Tennessee Valley Authority and the Bonneville Power Administration in the US (historically, the TVA was modelled upon Ontario Hydro by President Roosevelt). All three of these large public utilities have so far successfully resisted opening their transmission lines to third party power producers to preserve their monopolies on the electricity market. He suggested that such monopolies will resist competition "until the last dog is dead" due to the almost religious belief in low-cost public power. Competition will need to be imposed upon them.

Toronto lawyer Andrew Roman argued that the intrinsic central planning nature of Ontario Hydro is responsible for the utility's poor decision making, which has led to the 10,000 MW of excess capacity, and high-cost nuclear power station "stranded assets." He asserted: "Hydro has stranded assets today because of past management's mistakes. Hydro will have stranded assets tomorrow because of its present management's mistakes√Čit is a systemic problem arising from the absence of accountability of Hydro management, due to the absence of competition. The only way to cure the cancer is to cut out the monopoly."

Roman continued: "The market can choose whose excess capacity should be preserved by allowing suppliers of electricity to offer their services to the various customers. If a NUG competitor can offer electricity at a lower price, it should have its electricity purchased. In this way, the market will eliminate the excess capacity of the least efficient operator."

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