"Canada is a country of ten countries," says Sean Whittaker, vice-president of policy for the Canadian Wind Energy Association (CanWEA).
"There is always a reflex in a particular province to say ‘our conditions are different so we have to have different rules’. But a bird is a bird in Quebec or in Alberta.
Sound doesn’t travel any differently in British Columbia than it does in Prince Edward Island.
"And issues around safety are the same in all the provinces," he says.
"Our job is to draw the common thread and provide the best science we can on those issues."
Provincial purchase plans already total 12GW by 2015 and CanWEA is pushing to have wind produce 20% of Canada’s electricity by 2025.
Whittaker believes efficient permitting practices are key to bringing projects online in a timely way.
"When it comes to permitting and approvals, provinces often have a lot more in common than they realise," he says.
When developers start the basic groundwork of the permitting process, it can quickly bog down, he explains.
"Wind development is like a set of dominoes — if you have a delay or a problem at any one point, it can have a knock-on effect through the rest of the process and even involve things outside permitting," Whittaker says.
"Financing is the big one. Turbine acquisition is another one."
Over the coming year, CanWEA plans to analyse permitting procedures across the country and establish a benchmark against which to measure each jurisdiction.
Whittaker explains: "There is little understanding across provinces of what the comparative ease or difficulty is of going through the approvals process.
"Now that we’ve got a good four or five years of experience with projects going through, we want to see who is doing this best and who is not.
"That will be very revealing."
Simplified process
One province that has lessons to share is Ontario.
When the provincial government passed the Green Energy Act in May 2009 and officially launched its groundbreaking renewable energy feed-in tariff (Fit) programme four months later, it established a simplified approvals process to bring the regulatory review process under one umbrella.
Developers now require only one single permit, the Renewable Energy Approval (REA). The system guarantees a final decision on applications within six months and removes projects from municipal zoning authority.
The changes were designed to eliminate the cumbersome patchwork of local by-laws, end the regulatory overlap that led to costly project delays and provide much-needed clarity over how long permitting would take.
It is a model from which other provinces can learn when it comes to creating an investor-friendly environment, says Whittaker.
"The basic principle of the Green Energy Act was providing investor certainty," he says. "It carried through on the renewable energy approval side as well.
"The intention was that the REA would address certainty through the regulatory process. There is absolutely no doubt that, in all jurisdictions, that’s a critical element."
Other jurisdictions can also take a lesson from the challenges that Ontario’s new system is experiencing as the first projects to receive contracts under the Fit programme negotiate the process, says Whittaker.
Devil in the detail
The REA is still a long way from what it is supposed to be in theory, he says, adding: "I think everyone recognises that it is a work in progress and I think everyone recognises that the government is doing everything it can to make it work.
But we’re seeing some issues that developers are having with the various elements within the REA.
In some cases, it’s a matter of rules changing in mid-play; in others, it is timelines attached to individual parts of the permitting process that don’t mesh very well. We’re seeing that, truly, the devil is in the details."
The industry will be keeping an eye on those details in another province with big plans for renewable energy investment. British Columbia (BC), which is just getting its wind industry off the ground, passed a Clean Energy Act in June.
This requires the province to reach electricity self-sufficiency by 2016, with 93% of power coming from clean sources.
It also introduced an important change to exports, which historically have involved only neighbouring markets in the US and Alberta on a short-term basis, and only contracted for renewable energy supply to help meet domestic demand.
The act requires electricity utility BC Hydro to secure long-term export of renewable power to markets across the western part of the continent.
To meet those objectives, says Whittaker, BC will need a simpler approvals process. "BC has long been a difficult place to permit projects.
At one point, I believe there were about 75 agencies and departments that had to sign off on a given project," he says.
"BC also has particular considerations around First Nations and treaty rights that other provinces don’t have. So it’s a complex environment."
Whittaker believes government officials see wind as key in meeting its objectives. "They know if they want to access export markets, become energy self-sufficient and make money at it, then wind is a big part of that equation," he says.
"They’ve established the end goal and a streamlined permitting and approvals process is a key element in getting there. Our hope is that, in developing that, they will not be starting from scratch but drawing on best practices from elsewhere."
CanWEA is hoping the best practice benchmarks that it develops will not only help the BC and other provincial governments to design better permitting systems, but also to tackle some of the more arbitrary requirements of permitting authorities.
Two years ago, for example, regulators in Quebec wanted to prohibit turbines within 20 kilometres of a nesting site of an endangered species of raptor, a distance that, in the experience of other areas, was excessive.
"If you thought there was one of these birds anywhere near your turbine site, you essentially had to do helicopter surveys and tagging procedures and engage in this pretty lengthy and very expensive process that would have jeopardised many projects," says Whittaker.
"In that case we were able to sit down and present best practices in other jurisdictions," he says.
"In a lot of cases, just having that dialogue, presenting experience from other places, helps a great deal."
THE FINANCE FACTOR REMOVE UNCERTAINTY TO SIGN UP LENDERS
Along with securing permission, finance is key for project go-ahead. Manulife Financial, the leading lender to Canada’s wind energy industry, aims to ensure that a project it finances will perform to expectations, using due diligence and rigid underwriting standards.
During its 12 years in the sector, the finance team has been involved in more than 50 projects with a debt requirement totalling C$2.3 billion.
"In our experience wind farms, on average, underperform," says Bill Sutherland, senior managing director of project finance for Manulife.
Lenders look at projected energy yields at proposed wind farms in terms of the amount of uncertainty attached to them — expressed as a probability of exceedance "P" value.
A P50 energy yield, for example, has a 50% likelihood of being exceeded.
"Some projects have come close to projected P50 over time, and others are well, well short.
"Few, if any, have actually exceeded P50. You would expect around half of them would exceed P50 over time and the others may be less than that.
"But they don’t. On average they’ve underperformed about 10% or so," Sutherland says.
Before investing, Manulife spends a good deal of time studying the wind resource at a site. This includes a visit to see the complexity of the terrain and the placement of meteorological towers, and reviewing the wind assessment reports.
The longer the developer has been collecting data the better, says Sutherland, especially on a complex site. Manulife also wants to see the data correlated with long-term measurements from, for example, a nearby weather station. If the data is suspect, he says, "we won’t do them".
Once a project passes scrutiny, Manulife decides how much money it will lend using a debt service coverage ratio, which measures the cash flow available to meet annual interest and principal payments on debt.
It usually looks for a ratio of 1.50, meaning the project generates 50% more income than is required to meet the payments.
This is more cautious than other lenders. "Our experience tells us this is the prudent thing to do," says Sutherland. "Frankly, we haven’t had any troubled loans."
"There is always a reflex in a particular province to say ‘our conditions are different so we have to have different rules’. But a bird is a bird in Quebec or in Alberta.
Sound doesn’t travel any differently in British Columbia than it does in Prince Edward Island.
"And issues around safety are the same in all the provinces," he says.
"Our job is to draw the common thread and provide the best science we can on those issues."
Provincial purchase plans already total 12GW by 2015 and CanWEA is pushing to have wind produce 20% of Canada’s electricity by 2025.
Whittaker believes efficient permitting practices are key to bringing projects online in a timely way.
"When it comes to permitting and approvals, provinces often have a lot more in common than they realise," he says.
When developers start the basic groundwork of the permitting process, it can quickly bog down, he explains.
"Wind development is like a set of dominoes — if you have a delay or a problem at any one point, it can have a knock-on effect through the rest of the process and even involve things outside permitting," Whittaker says.
"Financing is the big one. Turbine acquisition is another one."
Over the coming year, CanWEA plans to analyse permitting procedures across the country and establish a benchmark against which to measure each jurisdiction.
Whittaker explains: "There is little understanding across provinces of what the comparative ease or difficulty is of going through the approvals process.
"Now that we’ve got a good four or five years of experience with projects going through, we want to see who is doing this best and who is not.
"That will be very revealing."
Simplified process
One province that has lessons to share is Ontario.
When the provincial government passed the Green Energy Act in May 2009 and officially launched its groundbreaking renewable energy feed-in tariff (Fit) programme four months later, it established a simplified approvals process to bring the regulatory review process under one umbrella.
Developers now require only one single permit, the Renewable Energy Approval (REA). The system guarantees a final decision on applications within six months and removes projects from municipal zoning authority.
The changes were designed to eliminate the cumbersome patchwork of local by-laws, end the regulatory overlap that led to costly project delays and provide much-needed clarity over how long permitting would take.
It is a model from which other provinces can learn when it comes to creating an investor-friendly environment, says Whittaker.
"The basic principle of the Green Energy Act was providing investor certainty," he says. "It carried through on the renewable energy approval side as well.
"The intention was that the REA would address certainty through the regulatory process. There is absolutely no doubt that, in all jurisdictions, that’s a critical element."
Other jurisdictions can also take a lesson from the challenges that Ontario’s new system is experiencing as the first projects to receive contracts under the Fit programme negotiate the process, says Whittaker.
Devil in the detail
The REA is still a long way from what it is supposed to be in theory, he says, adding: "I think everyone recognises that it is a work in progress and I think everyone recognises that the government is doing everything it can to make it work.
But we’re seeing some issues that developers are having with the various elements within the REA.
In some cases, it’s a matter of rules changing in mid-play; in others, it is timelines attached to individual parts of the permitting process that don’t mesh very well. We’re seeing that, truly, the devil is in the details."
The industry will be keeping an eye on those details in another province with big plans for renewable energy investment. British Columbia (BC), which is just getting its wind industry off the ground, passed a Clean Energy Act in June.
This requires the province to reach electricity self-sufficiency by 2016, with 93% of power coming from clean sources.
It also introduced an important change to exports, which historically have involved only neighbouring markets in the US and Alberta on a short-term basis, and only contracted for renewable energy supply to help meet domestic demand.
The act requires electricity utility BC Hydro to secure long-term export of renewable power to markets across the western part of the continent.
To meet those objectives, says Whittaker, BC will need a simpler approvals process. "BC has long been a difficult place to permit projects.
At one point, I believe there were about 75 agencies and departments that had to sign off on a given project," he says.
"BC also has particular considerations around First Nations and treaty rights that other provinces don’t have. So it’s a complex environment."
Whittaker believes government officials see wind as key in meeting its objectives. "They know if they want to access export markets, become energy self-sufficient and make money at it, then wind is a big part of that equation," he says.
"They’ve established the end goal and a streamlined permitting and approvals process is a key element in getting there. Our hope is that, in developing that, they will not be starting from scratch but drawing on best practices from elsewhere."
CanWEA is hoping the best practice benchmarks that it develops will not only help the BC and other provincial governments to design better permitting systems, but also to tackle some of the more arbitrary requirements of permitting authorities.
Two years ago, for example, regulators in Quebec wanted to prohibit turbines within 20 kilometres of a nesting site of an endangered species of raptor, a distance that, in the experience of other areas, was excessive.
"If you thought there was one of these birds anywhere near your turbine site, you essentially had to do helicopter surveys and tagging procedures and engage in this pretty lengthy and very expensive process that would have jeopardised many projects," says Whittaker.
"In that case we were able to sit down and present best practices in other jurisdictions," he says.
"In a lot of cases, just having that dialogue, presenting experience from other places, helps a great deal."
THE FINANCE FACTOR REMOVE UNCERTAINTY TO SIGN UP LENDERS
Along with securing permission, finance is key for project go-ahead. Manulife Financial, the leading lender to Canada’s wind energy industry, aims to ensure that a project it finances will perform to expectations, using due diligence and rigid underwriting standards.
During its 12 years in the sector, the finance team has been involved in more than 50 projects with a debt requirement totalling C$2.3 billion.
"In our experience wind farms, on average, underperform," says Bill Sutherland, senior managing director of project finance for Manulife.
Lenders look at projected energy yields at proposed wind farms in terms of the amount of uncertainty attached to them — expressed as a probability of exceedance "P" value.
A P50 energy yield, for example, has a 50% likelihood of being exceeded.
"Some projects have come close to projected P50 over time, and others are well, well short.
"Few, if any, have actually exceeded P50. You would expect around half of them would exceed P50 over time and the others may be less than that.
"But they don’t. On average they’ve underperformed about 10% or so," Sutherland says.
Before investing, Manulife spends a good deal of time studying the wind resource at a site. This includes a visit to see the complexity of the terrain and the placement of meteorological towers, and reviewing the wind assessment reports.
The longer the developer has been collecting data the better, says Sutherland, especially on a complex site. Manulife also wants to see the data correlated with long-term measurements from, for example, a nearby weather station. If the data is suspect, he says, "we won’t do them".
Once a project passes scrutiny, Manulife decides how much money it will lend using a debt service coverage ratio, which measures the cash flow available to meet annual interest and principal payments on debt.
It usually looks for a ratio of 1.50, meaning the project generates 50% more income than is required to meet the payments.
This is more cautious than other lenders. "Our experience tells us this is the prudent thing to do," says Sutherland. "Frankly, we haven’t had any troubled loans."
Follow us: