In his December budget speech, federal finance minister Paul Martin surprised wind power producers with the announcement of a production based incentive for wind that starts at C$0.012/kWh and gradually declines to C$0.008/kWh by the fifth year of the program. It will be paid for the first ten years of a project's life. "It's the first significant financial endorsement from the federal government recognising a kilowatt hour of wind is different from a kilowatt hour of coal or nuclear," says Guy Painchaud, president of the Canadian Wind Energy Association (CanWEA). "It's sizeable as well, so I think it's going to provide a real kick start to the industry."
Even before the federal announcement there were signs that wind is beginning to catch on in Canada. A record 70 MW of new wind plant were installed last year, bringing the country's wind capacity to 207 MW. But as important as the magnitude of the new development is its distribution. Although much of the new capacity was still concentrated in Alberta -- the country's only deregulated electricity market -- Saskatchewan, Ontario and Prince Edward Island arrived on the wind map too. Project proposals, too, now cover the country from coast to coast and could add another 300 MW to Canada's total.
"The fact that activity was so widespread is encouraging," says Painchaud. "I think there are two reasons for it. One, the cost of wind is going down. Also, international protocols like Kyoto are a factor. Wind is an obvious answer, an easy one. I think a lot of jurisdictions in Canada have decided to try it."
More than experiment
For Canada's wind industry to reach its 10x10 target of 10,000 MW of installed capacity by 2010, however, the provinces will have to do more than just experiment with wind. Although the federal production incentive is important, "It's not going to be enough, on its own, to get us there," says Painchaud.
The industry is now turning its attention to the provinces, each of which controls its own electricity market, urging them to institute policies like renewables portfolio standards, set-asides and government purchases to attract wind power development. Painchaud says the wind lobby hopes to use the prospect of federal money flowing into their energy economies to convince the provinces to act. "It should create some competition among the provinces. The one with the best incentive is going to get the biggest share of the federal incentive. It will be the one that reaps the most benefit."
Already, the industry seems to be making inroads. Nova Scotia's new energy policy identifies wind as "best opportunity" for utility scale renewable generation and promises a mandatory renewables portfolio standard (RPS) within three years. In Ontario, which opens its power market to competition May 1, a government committee says all renewables policy options, including an RPS, are on the table. On the west coast, British Columbia's energy policy task force is emphasising the province's immense coal resource, but also recommends a "strategic direction" to advance alternative energy. Quebec's provincial utility, Hydro-Quebec, has laid out its plans to buy 50 MW of wind a year. And in its recent 2003 budget, the Quebec government added wind power production facilities to the list of industries eligible under a government investment fund designed to provide financing assistance to businesses locating in the province.
The wind industry is also beginning to attract the attention of Canada's oil and gas heavyweights. Suncor Energy began work on its first wind farm in 2001, bought a minority stake in a Vermont renewable energy company and formed a joint venture with Spain's Energia Hidroelectrica de Navarra to develop wind projects in Canada. "We have an opportunity that we at Suncor particularly, and I think industry in general in Canada, look at as being staggering," says Gerry Manwell, vice president of alternative energy.
The growing interest in wind is leading to a growing belief that CanWEA's 10x10 target is possible. "What seemed to be wishful thinking two years ago is getting more realistic. We can feel it. Everyone's extremely busy right now. I'm getting tons of calls from people wanting to do wind," says Painchaud, who runs a renewable energy consulting company in Montreal. "There's a momentum building and I'm finding it very encouraging. People who have been successful abroad are starting to look at Canada and that is a good sign as well. These guys have been around, they've seen successes and now they think it is Canada's turn."
Painchaud believes the first 2000 MW, which CanWEA hopes to have in the ground by 2005, will be key to the industry's effort. "What we've seen in other countries is that growth can be exponential," he says. "The installed capacity is going to be, itself, a big reason to go for more. We'll have more momentum, more developers, more attention from the government."