Canada

Canada

Cost-competitiveness to 'underpin Canadian wind growth'

The key drivers of Canada's wind capacity lie in grid decarbonisation, electrification, and corporate procurement, according to the country's wind energy association, CanWEA.

Last year, 566MW of new wind power capacity was installed in Canada (pic: Max Pixel)
Last year, 566MW of new wind power capacity was installed in Canada (pic: Max Pixel)

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And as the production tax credit (PTC) support scheme phases out in the US, Canadian wind power developers could also target exports to its neighbour, CanWEA president Robert Hornung suggested.

As these factors provide opportunities for new generational capacity, wind-power’s track record and proven economic case in Canada will make it well-positioned for growth.

Last year, 566MW of new wind power capacity was connected to the grid in line with expectations.

However, with the right conditions in place, future growth could be closer to 1GW per year, Hornung suggested.

"Future growth depends on a wide range of factors: electricity demand growth and climate change policy, for example.

"But one thing we are certain about is that when there is need for new generation, wind energy will contribute a lot of that growth," he told Windpower Monthly.

Decarbonisation & electrification

Canada plans to phase out its coal power by 2030, according to its environment and climate change plan from December 2018.

This will provide opportunities for other generation sources to fill the gap, Hornung argued.

He added the need to increase electrification in buildings and the transport industry, for example, would also increase demand for electricity, creating opportunities for new generation.

In both cases, wind's ability to meet a growing need for new capacity will be underpinned by its economic viability, Hornung said. This has been proven in recent auctions.

For example, prices inched up in Alberta’s auction in December, but at C$39/MWh (US$29.12/MWh) they remain low.

Meanwhile, Potentia Renewables was successful with a bid of below C$35/MWh for a 200MW project in Saskatchewan.

Tenders make it easier to forecast annual predictions in the near future, Hornung pointws out.

CanWEA’s 1GW forecast for 2019 comprises the nearly 600MW awarded in Alberta’s first auction in 2017, as well as more than 400MW under construction in Ontario and the 20MW Western Lily site in Saskatchewan that was commissioned in January.

Even in provinces hostile to clean energy, wind power’s competitiveness should give politician’s second thought, said Hornung.

In Ontario, for example, contracts for hundreds of renewable energy projects, including wind farms with a combined capacity of more than 150MW were cancelled after failing to meet key development milestones.

Ontario energy minister Greg Rickford said the projects were "unnecessary and wasteful" and explained the government’s priority was lowering bills for ratepayers.

The province had introduced a feed-in tariff program in 2009, with contracts being signed for C$135/MWh. But by 2016, a competitive tender resulted in projects securing contracts for less than C$70/MWh.

Given the recent results in Alberta and Saskatchewan, wind energy procured in Ontario today would be considerably cheaper than wind energy procured in the past, Hornung said.

"The government has clearly indicated that their key motivation in taking decisions on the electricity sector is reducing the cost for ratepayers," he explained.

"Just from an economic perspective, there will be no way (Ontario) can avoid considering wind."

It will also be up to provinces to enable corporate power purchase agreements (PPAs), which have been a key driver for wind power growth in the US, for example.

There is currently no such mechanism in Canada, Hornung explained, but, with the right policies in place, wind farm operators would not be short of potential buyers.

"It wouldn’t be an overnight change," he claimed. 

"But given the cost of wind today, (the idea of corporate PPAs) has attracted the interest of industrial energy users looking to reduce greenhouse gas emissions while retaining competitiveness."

Export opportunities

New buyers in markets may also emerge after the end of the year when the PTC support scheme is phased out in the US, Hornung suggested.

With the end of US government subsidies, Canadian wind would become more competitive, and developers are already exploring the potential for exporting wind power to the US.

Developers were first turned on to the possibility of exporting Canadian wind to the US in Massachusetts’ request for proposals in April 2017.

The tender was ultimately won by Hydro Quebec, which will transmit output from Canadian hydro and wind projects to Massachusetts and Maine.

But there is still "tremendous interest" in the idea, Hornung claimed.

And when the PTC is phased out at the end of 2019, the economic case for exporting Canadian wind to northeast US states with ambitious renewable energy targets will only be strengthened.

This could work with offshore wind, as well as with onshore, with the most promising sites being in the Great Lakes along the Canadian-US border.

"Canada has a tremendous (offshore wind) resource with untapped potential, but the challenge is we don’t have the major load centres near the coasts. 

"Therefore, there are certainly people who are looking at the prospect of developing offshore wind in Canada to flood the US market.

"Canadian wind has the potential to play an important role in decarbonisation in the US," Hornung explained.

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