"I think there will be lots of wind, and it will jointly dominate alongside the run-of-river hydro projects," says Steve Davis, president of the Independent Power Producers Association of BC. His statement stands in stark contrast to the province's wind power record to date, best illustrated by the cancellation in 2003 of BC's first wind power purchase contract. By 2006, things had improved somewhat, with six wind projects bid into BC's request for proposals (RFP). Three made the cut to be among the 38 projects eventually awarded contracts.
But it is all a far cry from wind's experience in other provinces, where it has been the clear leader among renewable energy technologies. Davis thinks there are a number of reasons why. First, run-of-river hydro in BC has been 10-20% cheaper than wind. "It is a unique resource to British Columbia, which has steep and deep creeks that can access glacier and snow melt. That to me is the simplest thing that has caused wind to be slower in BC," he says.
In the eight years since BC Hydro started going to the private sector for new power supply, however, much of the low hanging fruit has been plucked: run-of-river projects are moving up the price curve. In the independent power production (IPP) business, "the wind group is getting more and more competitive," says Davis.
Back from the dead
What has also happened this time around, he adds, is that more wind power projects have the resource data they need to make supportable bids. "From about 1993 up until about 2001, the IPP industry in BC died, and so no one was chasing any projects, let alone wind projects," he explains. "Then it takes two or three years, not just to get the wind power data, but also the rules of the game in place." For wind development, says Davis, the key was getting a policy in place for the leasing of government-owned land, which makes up about 94% of the south-west province's entire land base. That was not finalised until late 2005.
The rules of the game in the current RFP are a bit of a mixed bag for wind. BC Hydro is looking for firm energy bids from developers - a requirement which a variable source like wind has difficulty meeting. But it will also buy the rest of a project's non-firm production at either a fixed price or market-referenced price.
Bidders can calculate their "firm" energy deliveries on a seasonal basis, promising to deliver a certain amount of energy within a specific time frame. While that is far from a perfect market structure, says the Canadian Wind Energy Association's David Huggill, it is an improvement over the 2006 call, when the utility required monthly firm bids.
BC Hydro also plans to add a "wind integration adjustment" of C$10/MWh when it is assessing bids. But Davis says hydro producers face their own set of issues, particularly a provision that limits what BC Hydro will pay for power generated during the spring freshet, a time when run-of-river production is at its highest. "There are kind of equivalent challenges on each side," he says.
Huggill does not believe any of the RFP terms and conditions will turn out to be showstoppers for the industry. "I think the time is right for wind. I think with the maturity and sophistication of the industry throughout the rest of the country, and certainly in North America, I think we are in a position where we can really bring our A game to the table, and I think that's what we'll see," he says.
The target of 5000 GWh a year is equivalent to about 1600 MW of wind and there is no doubt, predicts Huggill, that the RFP will be oversubscribed. The list of registered bidders, which includes 168 projects, bears that out. "There may well be a supply-to-buy ratio of four or five to one. So it is going to be very competitive," says Davis.
BC Hydro has no specific plans to follow up with additional clean power RFPs in the next two or three years, but Davis believes that the market fundamentals for renewables are strong. The province is currently a net importer of electricity and the provincial government's strategy, released last year, calls for BC to be energy self-sufficient by 2016, with clean or renewable resources making up of 90% of total generation. All new electricity projects must have zero net greenhouse gas emissions and nuclear is not allowed.
This past year, BC passed legislation calling for greenhouse gas emissions reductions of at least 33% below 2007 levels by 2020. As part of its plan to get there, the province has instituted a revenue-neutral carbon tax and joined the Western Climate Initiative, a group of seven US states and four Canadian provinces with plans to implement a regional cap and trade program to bring down emissions. On top of all that, BC Hydro is facing a 25-45% gap between supply of electricity and demand for it over the next 20 years.
"The main and most obvious and most attractive buyer remains BC Hydro," says Davis. But at the same time, he says, there are future prospects for exporting green power south. "We're in a pretty good spot. We're north of that giant sucking sound called California air conditioners. It is in the right time zone. They're a summer peaker, we're a winter peaker."
Davis also points out that state government mandates for the purchase of renewable energy are powerful tools for driving wind power purchase. Of the nearest 14 states to California, 11 have laws requiring that a percentage of electricity demand be met be green power, he says. "That is one of the things that has caused California to look north at British Columbia as a potential future source for renewables."
Earlier this year, Pacific Gas and Electric, which serves 15 million customers in north and central California, released the results of the first phase of a US$14 million study of BC's potential to feed the state's appetite for green power. It estimates there may be anywhere from 4.4 GW to 10.3 GW of wind generation in the province that could be available by 2016, the time when a proposed US$3.2 billion, 1600-kilometre transmission line, running from south-eastern BC through Washington and Oregon to central California, could be complete. This would have capacity enough to carry generation from 3 GW of renewable energy,
A potential sticking point, says PG&E's Jennifer Ramp, is that small hydro, with an estimated potential of 3100 MW to 6150 MW, is currently not eligible for meeting California's green power mandate. "We cannot say, at this point, that wind generation can substitute for small hydro generation," she says.
Vancouver's Sea Breeze Power, with wind power projects under development in several regions of BC, is also working on merchant transmission projects, meaning users would pay to access the wires, to connect the province with US markets. One link, a 550 MW HVDC-light submarine cable running from the southern tip of Vancouver Island to Port Angeles in Washington, has already been granted authorisation from Canada's National Energy Board and the US Department of Energy.
In the meantime, the BC Transmission Corporation is in the middle of a three-phase wind integration study, and next year the BC Utilities Commission will be launching an inquiry into the coastal province's transmission infrastructure and capacity needs covering the next 20 years. The wind industry is working with both the organisations involved to make the case for wind, according to Huggill.
"I think that's one of the opportunities with wind hitting mainstream right now in the province. There is a very good collection of policies and regulatory frameworks out there in the rest of North America that we can draw on that should serve us very well," he adds.