Policy: Canadian provinces key to incentives

CANADA: The Canadian Wind Energy Association (CANWEA) has dropped all mention of new incentives for the industry from its annual pre-budget submission to the federal government and is shifting its attention to making wind policy gains at provincial level.

The federal ecoEnergy for Renewable Power programme, which pays a C$0.01/kWh production incentive for the first ten years of a project's life, was scheduled to run until March 2011. But it allocated all of its C$1.48 billion budget earlier this year with more than 6GW of projects still looking for support.

Industry lobbying

The wind industry had been lobbying the government for more than two years to either put more money into the programme or come up with an alternative mechanism. When the current ruling party did neither in its 2010 budget "it sent a very clear message with respect to wind, and that was that the Conservatives do not favour direct incentives", says CANWEA policy vice-president Sean Whittaker.

"We felt that in our submission for the 2011 budget there was absolutely no appetite from this government to pursue ecoEnergy, and that is why it is not there," he says.

The Conservatives' position is that the best incentive for wind development is the establishment of a carbon market to level the playing field with conventional generating technologies, explains Whittaker. But the government has also decided it needs to follow the lead of the US, Canada's largest trading partner, when it comes greenhouse gas and carbon pricing, and US legislators have given up on passing climate change legislation this year.

"There is not a high likelihood we are going to have a healthy functioning carbon market before late 2012 or 2013," says Whittaker.

The situation has left Canada's wind sector looking to the provinces, where many of the biggest gains for wind have been made in recent years.

"The narrative of wind over the past ten years has been interesting in its shift from federal to provincial," says Whittaker. The federal government really got the ball rolling in 2001 with the wind power production incentive, which was then morphed into ecoEnergy.

"The provinces at the time were really not doing a lot in wind, but what we have seen since then is that they have really taken the baton and are running with it. The provinces are really showing solid leadership and CANWEA priorities are reflecting it. Our activity at a provincial level is much higher than it has ever been before. I would say that is really where the game is."

Federal presence lacking

At the same time, says Whittaker, the lack of a federal presence in wind puts the Canadian industry at a competitive disadvantage. "The bottom line is that foreign investors don't look at Canada as ten provinces," he says. "The signal they need in order to be confident in investing in Canada really comes from an assessment of the country as a whole, and the federal government must take a leadership role there."

CANWEA will continue to encourage the current government to re-engage, says Whittaker. "We're also working with other political parties as well to explore ways they may be able to promote wind because there's a keen interest there." A federal election is likely in Canada sometime in the next year or so.

Meanwhile, CANWEA's 2011 budget request focuses on smaller initiatives that the industry hopes the federal government will be interested in supporting.

It wants a C$25 million investment over five years for a so-called Wind Energy Capacity Development Initiative, which would boost research and development, encourage supply-chain development and accelerate the development of small wind technology.

"We felt that one of the roles the federal government could and should play is in research and development," Whittaker says. The money would take the government's average annual expenditures on wind research and development from what Whittaker calls an "extremely low" C$2.5 million a year to C$7.5 million a year. On a per capita basis, that is equivalent to what the US is spending on its wind energy research program.

The industry is also seeking C$63 million over five years for a Northern and Remote Wind Incentive Program to spur development of wind-diesel systems in Canada's northern industrial facilities and remote communities.

The programme would provide capital grants to six projects at off-grid industrial facilities and 20 projects in remote communities.

The projects would have a total wind energy capacity of 47MW and generate enough electricity to meet roughly 8% of all electricity demand in northern mines and remote communities. It would eliminate the need for more than 500 million litres of imported diesel fuel, saving roughly C$500 million in fuel costs over the life of the projects and reducing greenhouse gas emissions by 80 kilotonnes a year.

There are also industrial development benefits, says Whittaker, pointing out that Canada is home to more than half of the world's ten or so manufacturers of turbines in the 30kW to 100kW size range, which are best suited to remote applications. But right now, 87% of their sales are to export markets.

"While these manufacturers still maintain a significant market share in this range, a lack of a domestic market has started to erode their dominance," CANWEA's submission says.

CANWEA's pre-budget submission also renews its request for federal funding a pan-Canadian wind integration study, expected to cost C$3-4 million. The study would be similar to the work the US Department of Energy did in developing a blueprint for 20% wind by 2030 in that country. The work is critical to the long-term growth of the industry, says Whittaker.

"This is foundation stuff," he says. "This isn't icing, this is cake."

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