In many ways, the Canadian Wind Energy Association's 18th annual conference was a reflection of an industry straining to break out. With 2500 MW of proposed projects lined up looking for a piece of the federal government's wind power production incentive (WPPI), many of the record 270 delegates who filled the event's opening session beyond capacity were first-timers ready to tap into what they see as an emerging opportunity. In the jammed exhibition halls of the event, held October 21 to 23 in the Atlantic port city of Halifax, project developers, wind turbine manufacturers and associated service providers exchanged a steady stream of business cards and introductions, while the conference's formal sessions tackled the very practical issues facing a growing industry.
The reason for this momentum is not hard to see. In addition to the federal WPPI, introduced late last year, several provinces are taking steps to make wind a part of their overall energy strategies -- and clean energy has burst onto the political agenda with Prime Minister Jean Chretien's vow to ratify the Kyoto Protocol before Christmas. But even after a year of unprecedented progress on the policy front, wind veterans and newcomers alike could not escape the sobering reality that there is much work left to do before the industry has a realistic chance of meeting its goal of 10,000 MW by 2010.
"The remaining gaps are quite significant," warned Andrew Pape-Salmon, CanWEA's director of government relations. "We are not going to meet 10,000 MW given the current policy environment." Consumer engagement is lacking, market access is limited and the industry still doesn't have a good understanding of the resource in many parts of the country, said Pape-Salmon, but easily the widest chasm to cross is in the area of provincial policy. Because the WPPI covers only one quarter to one half of the cost premium for wind power in Canada, he explained, complementary provincial and territorial programs are essential if developers are to lift their projects off the drawing board and onto the power grid. "We have 13 jurisdictions coast to coast, and only four have established policy to support wind power."
Ontario and Alberta
There are signs, however, that more provinces are prepared to follow suit. With no mechanisms to promote renewables, no clear transmission rules and no developed green market, Sky Generation's Glen Estill told delegates, the environment for wind in Ontario, Canada's largest power market, is "pretty bleak" right now. But the provincial government says it is ready to make changes, including implementing a renewables portfolio standard (RPS) -- a mandate for the proportion of renewables in the provincial supply portfolio -- and is expecting a report on how to proceed before the end of the year. "We're cautiously optimistic," said Estill, "but the proof is in the pudding."
Alberta wind producers, who have been struggling in a market where wholesale prices average less than C$0.01/kWh during off-peak hours, where retail competition is stagnant and where the province has steadfastly rejected special incentives for renewables, are also seeing some progress on the policy front. Chretien's Kyoto pronouncement, made at Johannesburg's World Summit for Sustainable Development, touched off a firestorm of debate that prompted the government of Alberta, one of the accord's most vocal opponents, to propose its own climate change action plan.
The Alberta strategy includes emissions offset trading, disclosure of the emission intensity of electricity marketed by retailers, green power purchases to cover 10% of electricity consumed at provincial government facilities and, most significantly, a pledge to increase the renewable and alternative energy portion of the province's total electricity generating capacity by 3.5% by 2008. "It is not very clear what that means, but it is interesting that the province has figured out how to spell RPS," said Enmax Energy's Theresa Howland. "That's a big step forward."
Saskatchewan
The Kyoto debate is also at the forefront of corporate decision making at SaskPower, the Saskatchewan government's own monopoly utility. SaskPower produces half its electricity with coal and another 28% with gas -- generation sources that together account for one quarter of all CO2 emitted in the province. The utility, which has just completed its first 5.9 MW wind project and is buying the output of an 11 MW wind farm, sees the technology as a serious option for meeting its emissions reduction obligations. "I don't think you'll see it coming in six or eleven megawatt chunks," SaskPower's Mark Peters told delegates. "Rather, I think you'll see it coming in fifty or one hundred or one-hundred-and-fifty megawatt chunks, and likely in the not too distant future," he added.
Utilities in Nova Scotia, Newfoundland and New Brunswick have reached agreements in principle with the federal government to provide it with green power. All expect to use wind as the source of supply. Even Manitoba, which produces more than enough low-cost hydropower to meet its needs, is getting into the act. Manitoba Hydro plans to invest in a comprehensive monitoring program, says the utility's Ed Innes, believing the province's resource could be a "natural extension" of neighbouring North Dakota's, which has more wind power potential than any other US state.
How well this growing interest among the provinces will dovetail with the five-year federal WPPI, however, is very much on the minds of project planners. The end of the program's first year, when the incentive level is at its highest, is approaching and only four projects seem likely to make the March 31, 2003 commissioning deadline. Those that do will receive C$0.012/kWh for the first ten years of their operation. The incentive level drops to C$0.01/kWh for projects commissioned before the end of March 2006, and to C$0.008/kWh for wind farms that begin operation before March 31, 2007. "We need to see an expansion of the wind power production incentive, not only into provincial programs, but I'd like to advocate the extension of the 1.2 cents so more players can actually benefit," said Toronto Hydro's Joyce McLean.
Even in provinces that have already enacted policies to support wind power, timing is an issue. Quebec will launch its plans to buy 1000 MW of wind energy over ten years by issuing a request for proposals early next year, but Helimax Energy's Richard Legault is not sure how easily large developers will be able to take advantage of the federal incentive. Given Quebec's complex terrain, land acquisition challenges and two year environmental assessment process for projects larger than 10 MW, developing large projects takes time. By the time they are ready to build, he said, the limited amount of WPPI funds available may be committed elsewhere.
"As far as I know there are not hundreds of MW ready to be built tomorrow," said Legault. "I think it is going to take close to five years before you see substantial activity on the ground besides small, less than ten megawatt, projects. That may be a bit pessimistic, but we need to see more action in terms of wind monitoring and studies if we want to build a thousand megawatt."
In British Columbia (BC), the province's monopoly utility has set a 10% target for renewable energy purchases, but even among a limited pool of green technologies wind may not be ready to compete. BC Hydro recently issued its second request for proposals for 800 GWh of green power in less than three years, and the utility's Niels Nielsen expects small hydro proposals will once again dominate. "I don't think any wind can come in at the prices we're offering," he said. But over the next three to five years, as hydro sites get more difficult to access and wind's costs continue to come down, he added, that price gap will close. Nielsen is also hopeful that provincial government action will help drive the process. "BC's forthcoming energy policy is expected to mandate a renewables portfolio standard. We hope that will mean more opportunity for wind to take centre stage."
Spurred by the industry's growing experience, and by the need to give the flood of newcomers a solid understanding on which to build, this year's conference program delved into a wide range of hands-on issues surrounding grid integration, siting, financing and community consultation. As the industry pushes into areas of the country new to wind development, several speakers warned, the lack of familiarity with the technology has the potential to create problems that could prove costly for developers. Negotiations around connecting Huron Wind, Ontario's first multi-turbine installation, to Hydro One's distribution system took "every second" of the 18 months the project was under development, said British Energy's Liz Cussans, who described how her team was forced to contend with changing rules, bureaucratic decision making and onerous connection standards. "The only way the situation will change is if there are more generators connecting to the grid with more wind farms, so there are more people interested in this discussion."
Developers in several regions are also coming up against local opponents who are holding up permitting with concerns about noise, visibility, property values and impacts on birds, prompting some delegates to suggest CanWEA needs to develop some type of "best practice" guideline to aid the process. Vision Quest's Justin Thompson said his company's experience shows that the more information developers provide and the more responsive they are to concerns, the more likely they are to succeed.
"Communities need time to digest, understand, to get their heads around whether there's going to be a wind project in their community or not. If you foist this on them, when you try and move too quickly, people don't react well. Public involvement early on is very important."
investment opportunity
Despite the ongoing challenges, Canada's growing momentum and vast wind power potential is making both the conventional energy industry and international wind community take notice. Enbridge, which operates the world's longest crude oil pipeline system and Canada's largest natural gas distribution company, has completed its first wind project, an 11 MW joint venture with Suncor Energy, and is ready to do move on to the next.
"We think there is just a tremendous amount of opportunity for future investment," said Chuck Szmurlo, issuing an open invitation to developers looking for a partner with deep pockets. "Since I run the planning process, I've slipped in considerable amounts of money for wind power in our plan -- and I think I'll be able to sell that if we can get our criteria satisfied."
Colin Palmer, of Britain's Wind Prospect Limited, was also at the conference looking to build partnerships and to be ready to move when the Canadian market does. "I don't expect it to be something that is going to happen instantly, but part of the reason for coming is to get in early."
For an industry that seems perpetually at the starting gate, the Halifax conference helped emphasise that progress is being made. Taking the threads of support that are starting to emerge and helping weave them into policies that work for wind is the industry's major challenge going forward, said Fred Gallagher, CanWEA's past president. "We're at a critical stage now where our work and advocacy and presence is even more vital than it was two, three, four or even five years ago."
