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Canada

Canada

Lessons from Canada

Measured in wind power megawatts, Canada has come a long way in a short time. In the past 18 months it added nearly 1000 MW of wind capacity to its generation mix, an achievement that propels it into a second tier of wind power nations alongside the UK and Portugal in terms of market size. Canada is not in the same league as the top tier, containing the US, which added 3500 MW in the same period, or Germany, Spain and India, which added about 2500 MW each, but for a country that just five years ago could muster no more than 207 MW of wind capacity to its name -- and had taken five years to get there from 21 MW in 1997 -- it has made considerable progress. From a position perpetually at the starting gate Canada has become a front runner, with 1590 MW in the ground, at least another 7000 MW in view, and nearly 3000 MW of that already building or contracted. What got it moving?

Canada did not, as might be supposed, suddenly discover wind energy. While not quite in at the start of the industry, by the late 1980s it was doing research and putting up single turbines and in 1994 the province of Alberta became host to what was then one of the largest wind stations in the world, the 9 MW Cowley Ridge facility. By 1996, Ontario Hydro was issuing requests for proposals under its Renewable Energy Technology Support program and Quebec was well under way with the process that culminated in the 100 MW Le Nordais plant coming online in 1999, a huge development at the time. But from that point it took Canada another five years to crawl from 200 MW to 450 MW before the market finally got seriously rolling in 2005 and then doubled in size in 2006.

The catalyst for market growth was action by federal government. Towards the end of 2002 it introduced a flat rate wind power production incentive (WPPI), in essence a one cent subsidy for every kilowatt hour fed to consumers for the first ten years of a wind plant's life. On its own, the incentive, half the value of the United States production tax credit for wind, would not have made a blind bit of difference. But it fell on fertile ground. Terrorism had made security of supply a hot topic and the prospect of the US as a huge potential export market loomed. Global warming realities were biting home and Canada's ratification of the Kyoto climate protocol came within weeks of WPPI's birth, signalling a fundamental shift in political attitude; notoriously volatile fossil fuel prices would now be increasingly loaded with the cost of emission reduction obligations. So when the federal government delivered WPPI and told provincial governments it was now their job to get regional wind markets on the go, they were ripe for action.

In Canada, which has not moved far towards privatising its electricity sector, most provinces have a single electricity retailer -- a government-owned utility -- and when the government says buy wind power, it does. Typically, the utility approach has been to issue requests for proposals (RFPs) for specific volumes of capacity or generation and then select the bidder or bidders offering the best deal.

So much for the broad brush picture. Beneath the surface, the individuality of each province's approach has turned Canada into a breeding ground for wind power policy experiments. Quebec, with a focus on creating jobs and stimulating its economy, is successfully masterminding huge concession contracts for big projects, just like Spain and China. Ontario has proved itself adept at managing big government-controlled RFPs where other countries have failed -- an effect of WPPI (now remodelled as the EcoEnergy For Renewable Power incentive) and its overall capacity cap has been to quickly move projects beyond mere selection and into construction. Manitoba, with a huge resource and not much use for it, is specifically harnessing wind energy for export, while the sponsor of a project in Prince Edward Island has gone a step further on the export trail and sent both power and renewable energy credits to the US. Meantime, Alberta is demonstrating that wind can be sold straight into the market on a merchant power basis.

A catalyst for change

The diversity of market fertiliser does not stop there. A string of provinces, Ontario, BC, Quebec, Nova Scotia and Manitoba, are also looking to stimulate development of small wind projects. Ontario, alongside its big RFPs, offers standard contracts for power purchase from small projects that make use of spare grid capacity down at the level of the distribution wires, though with somewhat muddied success to date (page 27), and BC is offering fixed prices too (page 8). In Quebec, some municipalities are trying a totally different approach to the same end with a public/private ownership model (page 30).

All this, coupled with the provinces' traditional skill at cross border power trading (something Europe could learn from), has turned Canada into a dynamic wind market with something for everybody, from multi-national power industry giants to small businesses and landowners. Combined, they are a potent force for change that will bring significant consumer benefits. What is good for the wind business -- clean and flexible power markets -- is good for the consumer too. That the Canadian wind power surge occurred despite a lack of coherent federal policies is telling: it points to the inherent attractiveness of wind power given just a modicum of long term market security.

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