"We're at the start of the wave," says Hornung, while acknowledging that Canada is still only among the mid-level players internationally, even though it has one of world's best wind resources. "What is positive is that we now can envision, at least, a market of enough size that would allow us to capture more of the economic benefits of wind energy development, to potentially capture some manufacturing opportunities," he adds
The province of Alberta, Canada's only deregulated electricity jurisdiction, once again led the country with just over 105 MW of new wind plant installed last year. But the prairie province may have trouble hanging on to the top spot now that Ontario and Quebec, which are among the largest power markets in North America, are looking to wind to help meet their growing thirst for electricity.
Last year, Hydro-Quebec announced it would buy the output of nine projects totalling 1289 MW, to be built between now and 2012. It has promised another 1000 MW request for proposals this year, a 20-fold increase over the province's current installed capacity of 113 MW. Quebec has also launched a public energy strategy debate that could push the utility's wind power purchases even higher. "Socially, there is very good support from the population," says Guy Painchaud, head of the Montreal-based consulting firm GPCo. "In two polls conducted quite recently, wind was the winning source by far."
In Ontario, wind power accounted for about 90% of the 395 MW worth of winning bids in a recent request for new renewables generation, the first step in the province's plan to add 2700 MW of renewable energy to its supply mix by 2010. A second request is expected early this year.
Significant progress was made in 2004 in a number of other provinces as well. Manitoba announced it would add 1000 MW of wind energy to its 5500 MW hydro-based electric system over the next decade. SaskPower, Saskatchewan's government-owned monopoly utility, began construction of its 150 MW Rushlake Creek project, which will bring wind's penetration to slightly more than 5% of the province's 3500 MW of mostly coal and gas-fired capacity.
Prince Edward Island, a small market with a big vision, legislated a renewable energy target of 100% by 2015, while Nova Scotia passed a law requiring that 5% of the province's supply come from renewables by 2010. New Brunswick opened its electricity market to limited competition in October and began work on the design of legislation mandating a minimum standard of renewables electricity, which it plans to implement early this year. In all three provinces, the targets will undoubtedly be met largely with wind.
Pieces of federal puzzle
A big part of Canada's wind policy puzzle also fell into place on the federal side when the government announced in October that it would quadruple its wind power production incentive (WPPI) program to support the development of 4000 MW of new capacity. Exactly when that will happen and what the expanded program will look like is still not clear.
"I think it is true that in terms of broad framework policies, we're not completely there yet, but we made a lot of progress in 2004," says Hornung. "Over the course of this year, I think we could see a lot of that broad framework formalised. Then the focus shifts to details."
Projects in some parts of Canada are already starting to face challenges, and increasing costs, when it comes to issues like transmission access, new interconnection requirements, balancing charges, environmental assessment and municipal permitting. In Alberta, the electric system operator's newly released ten-year transmission outlook says the grid simply cannot handle the 560 MW of new wind capacity that has been proposed for interconnection in the southwest by 2006. Finding ways to remove these kinds of roadblocks will be key to the industry's growth, he says. "We're now at the level of where the rubber hits the road. But that is all very positive. It is part of an evolution for the technology, and we are very fortunate to be at that stage."
Environmental concerns, economic development goals and system diversity are all factors driving Canada's interest in wind, but the evolution of the broader electricity industry is also having an impact. Fluctuating hydro reservoir levels and rising demand led Quebec's energy board to warn that the province could be facing supply challenges between now and 2011. In Ontario, the government is not only trying to fulfil its commitment to shut down 7500 MW of coal fired generation, but deal with what the Independent Electricity System Operator describes as a "potentially severe shortfall" over the next ten years and with predictions that, by 2020, it needs to refurbish, rebuild or replace 25,000 MW of generation. Alberta will need another 4176 MW of generation over the next ten years to meet growing demand and C$1.5 billion in transmission upgrades to connect it.
Other jurisdictions are facing similar supply crunches, exacerbated by the impeding retirement of a significant volume of capacity built during an explosion of power plant development that occurred shortly after the Second World War. "In many parts of Canada there is a recognition that we need a major investment in energy supply and infrastructure and that that investment is going to lead to the production of power at higher cost than has been the case in the past," says Hornung. "And within that framework, that is very favourable to wind."
Also encouraging is the growing interest of conventional energy companies in the wind sector. Last year saw TransCanada Corporation, whose C$20.5 billion in assets include 39,000 kilometres of natural gas pipeline and 20 power plants with a combined capacity of about 4700 MW, leap in with both feet, taking a 50% stake in a company that won 740 MW in contracts with Hydro-Quebec. Nexen Inc of Calgary, a petroleum producer and energy marketer, announced plans for a 70 MW joint venture project in southern Alberta, while Calgary oil producer Suncor Energy and Enbridge, which operates the world's longest crude oil pipeline system, collaborated last year on their second wind farm, the 30 MW Magrath development. That project also marked the entry into the Canadian market of Spain's Corporación Energía Hidroeléctrica de Navarra (EHN), an international developer.
"These are companies who are looking to invest dollars in the most profitable opportunities they can," says Hornung. "The fact that more and more ... are looking to wind as an investment opportunity indicates how wind is increasingly able to compete in the electricity sector."