Canada's wind industry is looking to a continent that is searching for climate-change solutions to provide the impetus for its continued growth. But there is considerable uncertainty over where the market is heading.
The country is enjoying a building boom, driven by a strong pipeline of projects with power purchase contracts. Installations in 2014 are on track to top the record 1.6GW added to the grid in 2013. New build is expected to surpass 1GW in 2015 and 2016, but will then start to fall off. According to Make Consulting's most recent forecast, by early in the next decade annual installations will range from 300-980MW.
Exactly where it falls on that scale depends largely on whether Alberta and British Columbia, the only two major Canadian markets where growth in electricity demand is expected, take steps to bring more wind energy into their supply mix. "I think it is going to be very difficult for Canada, to be honest," says Luke Lewandowski, research manager at Make Consulting.
The situation has focused the industry's attention on developing new markets where wind energy might find a competitive advantage. An important driver will be carbon policy, argues Robert Hornung, president of the Canadian Wind Energy Association (CANWEA). "It opens up another door that wind could possibly walk through," he says.
The climate path is not exactly a straightforward one for the industry, however. Nearly 80% of Canada's electricity supply already comes from non-emitting sources, mainly a massive network of hydroelectric dams and reservoirs that make the country the third largest hydro producer in the world. In 2012, the power sector was responsible for only 12% of the country's overall greenhouse gas emissions. And although federal regulations will see Canada's ageing coal fleet start to retire at the end of this decade, natural gas is expected to replace it. But gas is only a short-term fix, argues Hornung, and in provinces with no coal to replace, the lure of using cheap gas for generation could actually serve to increase power sector emissions.
What is needed, says Hornung, is a way to price carbon properly. "Clearly any climate policy has the potential to increase the competitiveness of wind relative to natural gas and help facilitate its access into the market," he says.
Given Canada's emissions profile, however, just focusing on the power sector will not be enough. Strategies to increase electrification of transportation and industry will be required to drive demand for new sources of clean electricity that wind energy is well-positioned to meet, says Hornung.
There is also opportunity in the market for emissions reductions outside Canada's borders, he adds. The US government issued draft regulations earlier this year designed to limit carbon emissions from its existing fossil-fuel generation. Even before that, there was significant interest among policymakers, particularly in the north-eastern states of the US, which have large power demand, relatively high power prices, natural-gas transmission bottlenecks and difficulties siting wind generation, to find ways to tap into Canada's clean-energy supplies.
"There are many proposals to build new transmission lines that would take Canadian power south. You have obvious interest from the United States. The Massachusetts governor came to the CANWEA conference last year specifically to speak about this issue," says Hornung.
Existing transmission links between Canada and the US
The question is how big a role wind is likely to play in serving that market. "The economic argument for exporting Canadian wind power to the US depends on many factors, from proximity to load centres to transmission requirements, but my initial reaction would be: why not just tap into existing hydro?" says Lewandowski.
The answer will depend largely on the customer, according to Hornung. "It is certainly true that in the north-eastern US, large hydro development has not always been viewed with a favourable eye," he says. This is because of the environmental impacts of flooding large tracts of land for reservoirs. "From that perspective, we believe wind energy can facilitate, for lack of a better term, the social licence for hydro exports into the US."
The combination of the two could also look attractive when compared to alternatives such as installing higher-cost offshore wind or building major new transmission lines to bring wind east from the US Midwest. "The low-cost base of existing hydro integrated with some new wind should clearly be very competitive relative to other options," says Hornung.
This is a solution, however, that is going to require the wind industry to push the value proposition. "I think there are a number of positives that will be associated with the export of wind energy. But I also think it is a case that continues to need to be made on both sides of the border," says Hornung. "Frankly, it is important for the wind industry to become more involved in these discussions because it obviously represents a very significant opportunity in terms of potential demand."
Quebec may provide the best near-term chance to turn that opportunity into reality. The province's wind sector employs about 5,000 people, but Quebec is nearing the end of its planned 4GW of wind-power purchases and, with state-owned utility Hydro-Quebec projecting electricity surpluses out to 2027, the province has little need for new wind projects to help keep those jobs alive. It plans to issue a new long-term energy strategy next year and has created a task force specifically to figure out how wind fits in.
One thing the province is clearly focused on, says Hornung, is finding new markets for its vast clean-electricity resources through measures that include attracting new industry looking for low-carbon power, electrifying transportation and expanding electricity trade. "These are real things that are being talked about now," he says. "Quebec needs to be clear about what it's trying to accomplish. If it's trying to attract industry, if it's trying to be a leader in greenhouse-gas reduction in a North American context, then I'm quite confident wind will find a role to play."
Need for coordination
Ultimately, though, many in the wind sector believe that to really move the industry forward in Canada will require a much more coordinated clean energy and climate strategy than individual provinces can offer. But getting there is a huge challenge, given that energy in Canada is a jealously-guarded provincial responsibility and that jurisdictions like Quebec and Alberta, for example, have about as much in common on the energy front as Spain does with Brazil. The result is fragmented power markets and little cohesive thinking about the kind of energy future Canada should aim for and how to get there. Where the federal government could take the lead, such as on climate policy, it has been slow to act.
The good news is that at their annual meeting in August, the premiers of Canada's ten provinces and three territories agreed to move forward over the next year with development of a national energy strategy that has addressing climate change among its goals. Although the jury is still out on what they might actually be able to accomplish, Roby Roberts, vice-president of communications and regulatory affairs for EDP Renewables North America, believes a more focused effort on clean energy has a lot of advantages. "I think Canada, in a lot of ways, could be the enabler of a North American clean energy system. It has extraordinary storage resources in its hydro system that can really help in integrating intermittent sources of electricity. And if you add demand response and efficiency, you can create even more flexibility," he says. "To me it is a market opportunity that is extraordinary."