Signals good but action lacking -- Canada government disappoints

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Canada's federal government needs to send a signal soon that it is ready to "think big" about wind energy after failing to provide critical new funding for the wind power production incentive (WPPI) in its 2004 budget, says the president of the Canadian Wind Energy Association (CanWEA). "We're in a situation right now where a number of provincial governments are in the process of drafting legislation, receiving bids [on requests for proposals] and essentially contemplating the bigger scale wind initiatives. But a lot of those are not yet done deals," says Robert Hornung.

Without more federal money to help close wind power's price gap, Hornung says, CanWEA fears the provinces will scale back their own plans. "We need a commitment in the short term. We're saying this spring."

Right now, payments under WPPI are limited to 1000 MW of new capacity, with a cap of 300 MW for any single province. The five-year program, which makes payments averaging C$0.01/kWh for the first ten years of a wind plant's life, is set to expire in 2007. But Natural Resources Canada, which administers WPPI, predicts the program's C$260 million budget will be spent well before that date.

CanWEA lobbied finance minister Ralph Goodale to expand WPPI to support 4000 MW, extend the deadline to 2010, and remove caps that limit how much of the WPPI money any single project, developer or province can access. The expansion would cost an average of C$50 million a year for 16 years, but leverage C$6 billion in investment and create 42,000 job-years of employment.

While Goodale did not specifically set aside money for WPPI, his budget left the door open. It pointed out that C$695 million out of C$2 billion set aside for climate change initiatives in the 2003 federal budget has yet to be allocated. "Energy efficiency and renewable energy initiatives, such as wind power incentives, could be considered for funding," the budget plan says.

Goodale also announced a plan to sell the government's 19% stake in Petro-Canada, one of the country's largest oil and gas producers, and invest C$1 billion of the proceeds in environmental technologies. Only C$200 million of that has been committed so far. "Potential investments include the further development and demonstration of clean coal and CO2 sequestration, renewable energy, and cellulose ethanol technologies," budget documents say.

With a C$1.5 billion pool of potential funding, says Hornung, there are grounds for hope. "I think the odds of CanWEA getting an expansion of WPPI are actually very good. It is the timing that is unclear," he says.

Sooner is better not just for the provinces, says Hornung, but for European wind turbine manufacturers who are looking to open production facilities in North American. "They are facing real issues and concerns around freight costs and around the appreciation of European currencies. They have a really strong incentive to be looking at this right now," he explains.

Unique opportunity

With the US wind market in limbo, due to the government's failure to extend wind's federal production tax credit, a signal from Canada that it can provide a stable market could prove attractive to turbine makers. But, says Hornung, if they get the sense that both the Canadian and the US markets are unstable, the advantage for Canada is lost. "We think right now there is a unique wind of opportunity," he says.

The lack of specific support for wind and other renewables in the Canadian national budget sends a negative message to investors and consumers who, says John Keating, CEO of Calgary-based Canadian Hydro Developers, "will not be persuaded that the federal government sees a legitimate role for green power to compete with conventional power."

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