Canada

Canada

Industry pushes for incentive extension -- Federal budget needs a boost

Canada's wind industry is calling for a C$2.8 billion expansion of the federal ecoEnergy for Renewable Power (ERP) incentive program that would triple its installation target to 12 GW and extend its deadline by three years. The ERP, the main market driver in Canada at federal level, has been in place since January 2007. The Canadian Wind Energy Association (CanWEA) wants the new money to be included in the 2009 federal budget. It stresses the necessity of further government spending if Canada is to continue to attract investment from the wind industry in a fiercely competitive global marketplace.

The ERP program, designed to stimulate the installation of 4 GW of new renewables, provides a C$0.01/kWh production incentive for the first ten years of a project's life. Provincial governments are expected to match the incentive from their own funds. ERP, with a budget of C$1.48 million, was to run until March 31, 2011. But the latest estimates from Natural Resources Canada, the federal government department that administers the program, anticipate it will allocate all its available funds at least a year ahead of schedule.

There are no plans to extend the program and no guarantee that the government will take the industry up on its proposal, says CanWEA's Robert Hornung. "We will have to work hard to secure it. Nonetheless, we think we can make a compelling case for the extension and expansion," he insists.

Adding 8000 MW to the program's target is consistent with CanWEA's expectations for renewable energy development within the 2014 timeframe, says Hornung. "It also brings us to the point when it is hoped we will have a truly functional carbon market in Canada." The federal government plans to introduce a greenhouse gas emission offset trading system next year, but its climate change strategy calls for a gradual move to a fully market-based carbon price. Environment Canada estimates that the average price will not reach European levels -- currently C$30/tonne -- until 2014.

Eight thousand jobs

About 10 GW of renewable energy projects have registered for the ERP program, 72% of them wind. By August, contribution agreements had been signed for about 1000 MW of projects, with 64% of the C$324 million in committed funds going to ten wind projects and the rest to six small hydro facilities. Funds under ERP are allocated on a first come, first served basis as projects start construction.

CanWEA estimates its proposed expansion will generate a minimum of C$6 billion dollars of investment and 8000 new jobs over the next five years. To ensure it leads to wind deployment in Canada's remote communities, many of which are powered by diesel generation that can cost upwards of C$1.50/kWh, CanWEA also wants the federal government to set aside C$61 million of the proposed budget to provide capital grants and a high enough production incentive to support the deployment of 34 wind projects in the north. A C$0.01/kWh payment, says CanWEA, will not do the job.

"These projects would have a total capacity of 55 MW and would meet roughly 10% of all electricity demand in remote communities, therefore eliminating the need for almost 300 million litres of imported diesel fuel," argues the association.

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