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Canada

Utility rules treat wind bids unfairly -- The only non-wind province

Four wind power developers are hoping to break into the market in British Columbia, the only Canadian province with no installed wind power and no specific plans to buy any. Of 53 proposals from 37 independent power producers received by government-owned utility BC Hydro, six are for wind projects. The bids were submitted in response to BC's all-source call for power issued in December.

Together, the submissions, which also include hydro, biomass, waste heat and coal, represent approximately 1800 MW of capacity. No details about individual projects have been released. BC Hydro is seeking 2500 GWh a year of firm energy, which producers can opt to balance on a monthly basis, and associated non-firm energy from projects larger than 10 MW. It also wants 200 GWh a year from small-scale projects.

But BC Hydro's senior vice president of distribution, Bev Van Ruyven, says the utility may end up buying even more. The firm energy tendered through the call totals about 6500 GWh a year. "We now have the potential to acquire more than that target." The utility's Integrated Electricity Plan (IEP) reveals the west coast province has been a net importer of electricity over the past five years and is facing a 25-45% supply gap over the next 20 years. It is now looking to private sector producers to play a lead role in filling the gap, with planned calls for power in 2007 and 2009 that will each seek 5000 GWh a year.

But at this stage, says CEO Bob Elton, there are no plans to target wind power like many other jurisdictions in Canada are doing. Government policy allows all generation technologies except nuclear, with its only caveat being the utility should pursue a voluntary 50% clean energy target. BC Hydro, says Elton, is comfortable with whatever mix it gets that fits within those parameters. "We're really neutral as to whether one type is better than another type," says Elton. He points out that it is up to government to decide if it wants to encourage one energy technology more than any others.

Prior to the all-source call, the utility held two solicitations for green power. One wind project, the 58.5 MW Holberg project on the northwest coast of Vancouver Island, was awarded a contract but was forced to bow out after ongoing monitoring of the wind resource revealed it was uneconomic at the price bid. Elton believes there are a couple of reasons wind power has not been as successful in BC as elsewhere.

"One is that a lot of wind projects to date have been quite a long way away from the load centre, which does mean that they have very heavy transmission costs. And I think another reason is that we have other alternatives here that other provinces or jurisdictions don't have. Most of our renewables calls so far have picked up, for example, run-of-the river hydro projects," he says.

Supply mi

xAt the same time, Elton says he hopes and expects that wind power will become part of the province's supply mix. "When you think about it, we are climbing up the cost curve for run-of-the-river hydro and we are climbing up the cost curve for other projects. I think as time goes on we will see more and more wind projects becoming competitive," he adds. There are 34 run-of-river hydro projects bid into the 2006 call, as well as four hydro with storage projects.

The IEP estimates the cost of wind power in BC ranges from C$45-198/MWh, depending on location. Small hydro ranges from C$47-88/MWh, biomass C$56-87/MWh, gas C$48-100/MWh and coal C$43-83/MWh.

Unfair rules

For wind power, a study by international consulting firm Garrad Hassan found the lowest prices tend to be in the Peace River region in the province's northeast, where five of the six projects competing in the current call are located. Despite that, the Canadian Wind Energy Association (CanWEA) is concerned the rules of the game put wind power at a disadvantage relative to other technologies. The association says the requirement for a monthly firm bid, with liquidated damages for failure to comply, "greatly increases risks to developers who are aware that one or two low wind months would be detrimental to their business."

The result is fewer participants and increased bid prices, by an estimated C$10/MWh, to cover that risk, says CanWEA. During consultations leading up to the call, BC wind producers argued they should be allowed to calculate firm energy deliveries on an annual basis.

Specific to wind

CanWEA is urging that future calls are better designed to account for wind's operating characteristics. It also suggests the government consider asking the utility to issue a call specifically for wind capacity, a route Manitoba and Quebec, which operate the country's two other large reservoir-based hydroelectric systems, have taken. They are targeting 1000 MW and 3500 MW of wind capacity, respectively, within ten years. "With large-scale wind developments, BC Hydro can use its hydro reservoirs to support short term wind output variations and in turn use wind to support long term variations in hydro levels," says CanWEA.

The wind companies bidding in the 2006 call are Quebec-based Axor Group, owner of that province's 100 MW Le Nordais project, with two projects in Chetwynd and Tumbler Ridge, Dokie Wind Energy with two projects in Chetwynd, Bear Mountain Wind LP with a project in Dawson Creek and Mount Hays Wind Farm LP, whose project is located near Prince Rupert on the northwest coast. Contract awards are expected be announced this summer.

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