"You're starting to see jurisdictions across Canada take a bit of a longer-term view in terms of what their supply needs are going to be," says Mike Crawley, president of International Power Canada, a renewable-power developer, owner and operator.
In British Columbia, the province's booming resource sector is pushing load growth well past what local utility BC Hydro was expecting just 11 months ago. A new report commissioned by the Canadian Wind Energy Association (CANWEA) projects 12TWh of new industrial demand by 2017, nearly double the level included in the utility's December 2010 load forecast. By 2025, the report says, industrial load could be 17.TWh higher than BC Hydro estimates.
Next door in Alberta, the province's electricity system operator expects demand to grow an average of 3.2% a year over the next 20 years after a market slowdown in 2008 and 2009. In Ontario, attention is starting to focus on the 2016-23 period, when all the coal generation currently on the system will have been phased out and the province's nuclear fleet will be in the midst of significant rebuilding. "Ontario is the biggest supply gap market in Canada and one of the biggest in North America, with a huge opportunity in the long term," says Uwe Roeper, president of Ortech Consulting.
For a sector that has been struggling with a recession-fed drop in electricity demand across much of North America in recent years, the prospect of a healthy market for new generation is good news. "I'm a lot more positive than I was six months ago," says Crawley.
Exactly how wind energy will play into that market over the long term is not clear. The industry is on track to install around 1.4GW in 2011 and has power purchase contracts in place to add more than 1GW a year for the next five years. In theory, there is even more to come. "If you look at all the commitments that have been made by provincial governments and add them together, we will see 14GW of wind in Canada by 2016," says Canwea president Robert Hornung. "That represents a lot of business, but a lot of it hasn't been procured yet and we're not exactly sure how it will be procured at this point." Looking past 2016, few jurisdictions have even started to consider how wind fits into the mix.
"On one side of the coin we have a very rosy picture for the next five years, and on the other side we have at least the seeds of concern," says Hornung. The industry has a lot of work to do to not only to ensure current commitments are met, he says, but that future opportunities emerge. The challenge is that "we're doing this in an area that is incredibly sensitive politically".
Electricity prices are a case in point. Consumers in Canada have historically paid relatively low prices for electricity and expect this to continue. But bills are rising and in some jurisdictions, most notably Ontario and British Columbia, new wind and other renewable-energy projects have become the political scapegoat. The issue is exacerbated by the fact that most utilities in Canada are government-owned, which makes the ties between politics and power even tighter.
"As long as you still have politicians who think they can go out there and promise the kind of world where electricity prices are going to stay at the level they've been at for 30 years, then renewables and wind will always be subject to accusations that we're the ones that are going to drive up prices. And that's not at all true," says Hornung.
In British Columbia, for example, a study commissioned by the local Clean Energy Association found renewable-power purchases are responsible for less than one tenth of the 32% rate hike over three years that BC Hydro was seeking earlier this year. The bulk of the increase, which has since been slashed in half by the provincial government, was needed to maintain the utility's ageing hydro generating facilities, reinforce its existing transmission system and modernise the grid.
The study also found that when the cost of wind is compared with other potential new sources of generation in the province, including BC Hydro's flagship 900MW Site C dam proposal for the Peace River, it stacks up well. The study, as yet unreleased, benchmarked wind at C$83/MWh (US$80/MWh) compared with C$86/MWh for run-of-river hydro and C$91/MWh for Site C.
The problem is the information is not resonating with policymakers like it should, says Paul Kariya, the association's executive director. "I don't think we're in a place where the facts alone are going to carry the day."
The result is market uncertainty for investors. "I actually think that one of the key things we need to do to create new opportunities is work to depoliticise wind energy," says Hornung. But Tristan Grimbert, who heads EDF Energies Nouvelles's renewable-energy business in North America, doubts that is possible. "I don't think we can depoliticise wind," he says. "This is a political issue. It's a choice for society. It's a choice about how we want to live in the future. What we have to develop is broad, bipartisan support for wind."
Wind in Canada has a good story to tell from the perspective of job creation, local economic development, energy security, price stability and emissions reduction, says Roby Roberts, vice-president of communications and government affairs for EDP Renewables North America. But with low natural gas prices making combined-cycle gas generation an attractive option for utilities and their political bosses right now, it will be important for the industry to pitch its product as part of an integrated portfolio that makes power systems more resilient to changing market and policy fundamentals.
"If you are only going to think about the short term, gas is cheaper right now. But where are prices for gas going? I would suggest they are only going to go up or at the very least they are going to be volatile. And ultimately there will be a price for carbon," Roberts says. "We have to have a bigger-picture, longer-term conversation about what the role of wind on the system is."
Action on greenhouse gas emissions has to be part of the discussion, says Martha Wyrsch, president of Vestas Americas. "A price on carbon would help us as an industry create the long-term market opportunity," she says. Crawley agrees. "It would be much better just to have a price on carbon to drive all policy decisions going forward. It would have a much broader and longer-term impact."
But while several provinces have taken steps to tackle climate change, it is far from a priority at the federal level right now. In fact, Grimbert finds the lack of any federal presence in renewable-energy development puzzling. "I'm surprised there is not a willingness in the federal government to put some kind of framework in place. Taxing carbon is a very good one," he says.
Despite the challenges, there is little doubt the level of activity and the prospect of sustained growth over the next several years is drawing investor attention to the Canadian market right now. Grimbert, whose company is building out more than 1GW of wind in Quebec, sees Canada as "one of the best places to do business in this industry on earth". The ongoing policy uncertainty in the much larger US market has also helped turn the "focus for the business up here", says Wyrsch. "That means you have an opportunity to build on what I think is already a very strong base."