Yet the discussions remained positive, and the vision of what might be did not disappear.
Although this year's Canadian Wind Energy Association (Canwea) conference was the largest in the industry's history, it seemed a relatively restrained affair. Canada is closing in on a new record for annual installed wind capacity and the conference kicked off just days before the province of Ontario's game-changing launch of its feed-in tariff programme for small and large-scale renewable energy projects.
Yet uncertainty over federal support for wind development and nagging questions about how to build the market to a scale that attracts significant new investment and takes advantage of Canada's enormous resource potential were very much on the minds of the 2300 delegates who met in Toronto in September. "While there has been a lot to celebrate in 2009, it is also true that this year has brought some policy uncertainties and challenges that must be addressed," Robert Hornung, Canwea president, said in his status report to the industry.
One of the biggest question marks is what will happen when the federal government's Eco-Energy for Renewable Power (ERP) programme, which pays a C$0.01/kWh production incentive for the first ten years of a project's life, runs out of money this autumn. Delegates at the opening session may well have looked across the stage from Hornung to Canada's natural resources minister Lisa Raitt in the hope of a clear answer from the government, but they did not get one.
Raitt did at least unveil plans to create a National Round Table on Renewable Energy that brings together industry, government, financiers and community leaders to examine how wind and other renewables fit into the country's energy future. A newly released Wind Technology Roadmap, an industry-led effort to identify what needs to be done to increase wind power's contribution to Canada's electricity supply from about 1% that it is now to 20% by 2025, will play a key role in their discussions, Raitt said.
Yet her plans did little to satisfy the sense of urgency that emerged throughout the two-and-half days of discussion and debate, where industry leaders made it clear that the longer it takes for Canada's national government to signal its policy intentions, the more difficult it will become for the country to compete.
"Capital is like an electron - it will go along the path of least resistance," said Kent Brown, CEO of Canadian Hydro Developers, a Calgary-based firm that leads the country in operating wind capacity. "Policy that is clear, consistent and continuous is really important. If we don't have that in Canada, investment will go elsewhere."
For the Canadian wind industry, elsewhere means the US, where President Barack Obama's administration is pouring billions of dollars into initiatives to support wind project deployment and new manufacturing capacity, and where Congress is debating long-term targets for renewable energy. "When I travel in the United States I'm impressed by the focus and emphasis on green energy," said Jayson Myers, president of Canadian Manufacturers and Exporters, a national association that is targeting the wind energy supply chain to replace some of the half million jobs shed by Canada's manufacturing sector in the last six years. "I'm impressed by how many people are engaged in this issue at the highest political levels. I don't have that sense in Canada."
That lack of political engagement shows, said Steve Sawyer, secretary-general of the Global Wind Energy Council (GWEC). Clear policy support for renewable energy development and a commitment to live up to Canada's obligations under the Kyoto Protocol would send a strong message, he told delegates.
"That's what's missing," Sawyer said. "That's why investors aren't flocking to the second largest landmass area in the world with a very large percentage of the best onshore wind resources in the world that are easily and cheaply exploitable with existing technology. It's perfect."
While federal leadership is important, said Christian Kjaer, chief executive of the European Wind Energy Association (Ewea), Canadian provinces also have a key role to play. He pointed out that it was state government action in the US and three countries going it alone in Europe that initially drove wind industry growth in those jurisdictions. "Strong policies in the provinces can be a facilitator and put pressure on the federal government," Kjaer said. "It doesn't necessarily have to come from the federal government. It can come the other way."
Pushing the point
In fact, provincial energy ministers participating in a provincial policy session at the conference tried to prod their federal counterparts into action. New Brunswick energy minister Jack Keir is building a strategy around a study by Denmark's EA Energianalyse that found it is economically feasible to develop 2.5-4.5 GW of wind power in his province. A critical market for that power is the US Northeast but, said Keir, there is little incentive for developers to consider building north of the border into Canada despite what a recent study found to be better wind regimes and lower development costs in Canada's Maritime provinces (Windpower Monthly, September 2009, p61). "Without a level playing field in North America, investment will flow south (of the border) and this absolutely needs to be addressed," he said. "Now is the time to invest to aid the transition to what is commonly referred to as the green economy and the Obama administration sees that. They get it. In Canada we have to as well. It's a must that we see it the same way." Richard Brown, the energy minister in neighbouring Prince Edward Island, agreed, encouraging the federal government to come forward on this.
While all regional jurisdictions are pressing on with plans to bring wind power on to their electricity grids, the panellists agreed that the best opportunity for what Hornung called a "step change" in the industry's growth lies in Ontario. Earlier this year, the province passed precedent-setting legislation providing guaranteed feed-in tariffs (Fits) for a range of renewable energy technologies. Onshore wind projects will be given C$0.135/kWh, with an extra cent added on for small-scale community projects and an additional C$0.015/kWh for First Nations projects involving indigenous people. The tariff for offshore wind is set at C$0.19/kWh. But Ontario's approach goes well beyond set pricing - it also promises a streamlined process for securing permission to build wind farms and sets up a system to trigger transmission builds into areas where new wind projects are planned in time to meet the need.
The Ontario provincial government did not officially launch its Fit programme and release vital implementation details until the day after the Canwea conference ended. Instead, the province's energy minister, George Smitherman, chose to use his keynote address to delegates to announce that he has directed government-owned Hydro One, which operates 97% of Ontario's electricity transmission system and about one-third of its distribution system, to immediately proceed with planning and implementing 20 transmission projects in the province. Some will boost capacity of existing transmission corridors, while others involve construction of so-called enabler lines that branch out to tap into areas with rich wind and hydro potential. Investment over the next three years is expected to total C$2.3 billion, he said.
"When we talk about the province of Ontario we're talking about a jurisdiction that has wine-making regions in the south and polar bears in the north," Smitherman told delegates. "And in between we have a plentiful array of opportunity. Of course, some of that opportunity needs further investment in transmission to be able to unlock it. This (investment) sends a signal to green power producers about the certainty of connection."
Ontario has been "heading very fast to a wall" when it comes to available transmission capacity for wind power, said Mike Crawley, CEO of AIM Powergen, a wind power developer based in the province. "This is essentially the minister stepping in and saying we know where a lot of the proposed projects are, why not just jump start what the Fit programme would have done anyway in terms of driving new transmission expansion, and do it by way of a directive," he explained. "Certainly from a developer's standpoint, it is good news because it gets that process started earlier, particularly since it takes five years at least from start to finish to get a new transmission line built."
Rick Jennings, an assistant deputy minister with the Ontario Ministry of Energy, told delegates that by the time the transmission upgrades are complete, they are expected to allow up to 14 GW of additional renewable energy projects to be connected. The kind of numbers that Ontario is talking about would be a big step towards creating the kind of critical mass the Canadian market needs to not only tap into its full resource potential, but also to capture the attention of investors and manufacturers. "I think anything you can do in the Canadian market to give it scale is important," said Vic Abate, vice-president of renewables for GE Energy. "I think size and scale will attract investment."
Yet scale in Canada is not easy to come by. The country's population is relatively small and each province operates its own electricity market according to its own rules. Interconnections between the provinces tend to be weak, with most electricity trade occurring along north-south ties with US markets.
Wind and water
Those pathways into the much larger market to the south provide an advantage that Canada can use, said Ewea's Kjaer. So does the fact that 60% of Canada's electricity supply comes from hydroelectric generation. Hydro can be turned on and off quickly to balance short-term variations in wind output. In Canada, wind energy production tends to be highest in the winter months, which is when water flow into hydro reservoirs is at its lowest, as much of the precipitation across the landmass falls as snow. This means that the utilities can make use of the wind to help meet high winter demand, and continue to store the water power for when it is needed.
"The wind resource base and the other technologies on the grid in Canada scream for wind energy," Kjaer told delegates. "It is probably one of the countries where we can produce the cheapest electricity with the lowest grid integration costs. What you have here in Canada is an enormous battery. It could be the battery for North America."
Utilities in Canada to date have chiefly bought wind energy to serve the domestic load, something that Patrick Lemaire, CEO of Montreal-based Boralex, believes needs to change. "If we only go with our consumption and our own need, it is going to be a small market," he told delegates.
How receptive US states will be to buying Canadian wind is a question still very much up in the air. Some states are already looking at restricting renewable energy imports from outside their borders in order to ensure they get the jobs and investment dollars.
That kind of protectionism has been "creeping more and more into the discourse" around the world since the global financial crisis hit, said GWEC's Sawyer. "I think if we go down that road it is going to be a problem and it is going to hamper our growth overall."
North American markets should actually be moving in the opposite direction, argued Roby Roberts, senior vice-president of external relations for Vestas Americas. "One of the most provocative things ... is that electrons don't understand political jurisdictions and they don't understand borders," he said. "They follow the laws of physics. We would all benefit if there was one North American market and we shared our policy agendas and worked on transmission integration together."
Beyond jurisdiction boundaries
At the very least, said the head of Ontario's Independent Electricity System Operator, integrating large amounts of wind is going to take more co-operation across jurisdictional boundaries. The province, Paul Murphy told delegates, has interconnections with Manitoba, Quebec, Minnesota, Michigan and New York that will become increasingly important as the industry grows. "Many of those jurisdictions have their own ambitions with respect to renewable development as well," he said. "I think if each of us thinks of ourselves locally, we are going to start to run into barriers at some point. If we can work together more broadly on a regional basis and in regional markets, I think we'll be able to accommodate an awful lot more renewables by taking advantage of the different characteristics of the different systems to be able to work together and balance the variability."
Roberts also warned about a growing tendency to insist upon a local element to projects, something to which the Canadian market has not been immune. Quebec went down that path by tying the contracts it has signed for nearly 3 GW of wind energy to turbine manufacturers willing to set up shop in the province. Ontario's Fit programme also stipulates that a portion of a project's costs is spent in the province, starting at 25% today and increasing to 50% in 2012.
"If I had a nickel for every politician who asked me when are you going to put a manufacturing facility in my political district, I'd be a very wealthy man," Roberts said. "Obviously we're very excited about what Ontario is doing, but if every province has a domestic content standard, I just don't know how as an industry we're going to be able to accomplish that. So we have got to figure out a way to deal with that issue."
GE Energy's Simon Olivier, Canadian sales manager for GE's renewable energy business, agreed: "We have just spent half an hour talking about barriers and obstacles for the wind industry in Canada, and you don't want local content to become one of them. The way we look at it, it has got to make sense. You don't want to slow down the process."
From a developer's perspective, said Canadian Hydro's Brown, boosting the level of local benefits from wind development is an opportunity: "We're looking at certain projects in Ontario that are huge multi-year, multi-decade projects. That allows us to go to the suppliers and say we have this project, we have the certainty and we have the government policy, the feed-in tariff, so let's join together and let's bring more jobs and more manufacturing to the province."
Yet, it can also have drawbacks for power producers, by limiting the number of suppliers able to play in the market, cautioned Lemaire: "It could close doors to more profitability for us or better technology for Canada."
Local content policy cost
Steve Snyder, CEO of Calgary-based TransAlta Corporation, also voiced some concern about the potential cost of the local content policy. "I think one of the keys for success in wind is we need to drive the cost down and make it a low-cost source as well as a carbon-free source," he told delegates. "It needs to have both attributes. So anything that would increase the cost is a bit of a negative. I think that if we get the volume up, the industry will follow. I think it will get there."
TransAlta, whose 8 GW generation portfolio includes 62% coal, 23% gas and 15% hydro, geothermal and wind, is looking to ramp up the renewables portion significantly in the forthcoming years. Snyder told delegates that he expects to see progress on policies to help drive that investment, at least until the industry becomes self-sustaining. "My experience has been that you really make fast progress when good public policy is also good politics," said Snyder. "They don't match up that often. There is the potential to match up, I believe, on electricity because it has the potential for economic benefit and it has the potential for environmental benefit, both in the short term and long term. That's why I'm optimistic."