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Canada

Still in search of political commitment in Canada

Despite celebrating the successful completion this year of one of the world's flagship wind power plants--the 100 MW Le Nordais wind farm--delegates to CanWEA '99 had little else to be optimistic about. Despite the wind farm's existence, national and provincial politicians clearly still regard wind power as a potential energy technology of the future, instead of a commercial option for today.

For Canada's wind power proponents, the Canadian Wind Energy Association's 15th annual conference offered a rare opportunity to celebrate. Developers of the 100 MW Le Nordais wind farm took advantage of the industry's presence on Quebec's picturesque Gaspe Peninsula to dedicate their just completed project, which single-handedly quadrupled the country's installed capacity to 133 MW. But even as delegates sipped champagne amid the 57 towering 750 kW NEG Micon turbines installed under the second, and final, phase of the project, it was hard to escape the all-too-familiar questions about how to put wind on Canada's political agenda.

"Is the inauguration of Le Nordais a conclusion, or the beginning of something, an opening to new development?" remarked CanWEA vice-president Jean-Louis Chaumel. "We're not at all convinced either way." Like many of the record 205 participants at the September 27-29 event, Chaumel had hoped the decision to hold this year's conference in Quebec would help convince the provincial government to provide at least some of the answers the industry is seeking.

More than a year ago, the province's Regie de l'energie released a report urging the government to institute a wind set-aside of 50 MW of installed power per year, starting in 2002. But instead of using his keynote address to finally announce a decision to go ahead, Quebec's Natural Resources minister, Jacques Brassard, could only assure conference delegates that his government is "working on it." He pointed out the proposed start date for the set-aside is still more than two years away. "It is now the autumn of 1999, so I don't think we're behind schedule. There are certain conditions which must be in place to proceed. The question of cost is a central factor."

In its report, the Regie recommended the government pay the difference between Hydro-Quebec's current purchase price for electricity, about C$0.03/kWh, and the price for wind power. With the maximum price for wind under the set-aside fixed at C$0.058, the estimated cost to the province would be C$3 million the first year, rising to C$19 million per year once all 450 MW is installed.

Wait and see

It is a financial burden that Brassard's cash-strapped government does not want to bear alone. He told delegates that Quebec sees a role for the federal government in providing tax incentives to reduce wind energy development costs, and has broached the subject with federal finance minister Paul Martin. "I will see if these efforts produce any results in the next federal budget," he said.

For Greenpeace's Steven Guilbeault, the delay is unacceptable. "I agree with M. Brassard that the federal government has an important role to play in helping various provinces in Canada develop wind energy. But Quebec has to make its intention clear, and it hasn't done that. Beyond rhetoric, there's been nothing," he said. "A strong commitment from Quebec would not only help convince the federal government to act, but also send a strong signal to industry that the province is serious about wind."

Guilbeault is concerned the wind industry will lose the momentum, and the expertise, generated by Le Nordais. With no new Canadian orders on the horizon, NEG Micon's assembly plant in Boucherville, Quebec, has been forced to lay off 12 workers, leaving only administrative staff. The lack of direction is also a concern for Chaumel, who believes the set-aside was at least partially responsible for the surprisingly strong international interest in this year's conference. "We need to have decisions."

Brassard's efforts to win federal tax breaks for renewables have an ally in CanWEA. The association has long lobbied Ottawa for changes that would give wind developers the same access to tax write-offs as Canada's petroleum industry. It won a partial victory in 1996, when the government created the Canadian Renewable and Conservation Expense (CRCE) tax category to allow developers to flow-through eligible pre-production expenditures to investors.

But Yvan Dupont, president of the Axor Group, the co-developer of Le Nordais, said the tax relief provided by CRCE was "clearly insufficient" given the scale of the project. "CRCE represented about ten to twelve per cent of the total capital cost of the project. It's very little incentive compared to oil and gas or mining," he said.

In need of targets

Although Le Nordais "is a most convincing demonstration that wind energy is the way of the future," Dupont told conference delegates, moving ahead is going to require government support and the development of some clear targets. Even though Quebec's set-aside remains in limbo, it is still the only firm plan, from coast to coast, to promote renewable power. "Without a long term development strategy, it will be very difficult, if not impossible, to lay the groundwork for a wind energy industry," he said.

Still, Dupont remains optimistic. After the inauguration of Le Nordais, he hinted that by next year Axor will be ready to announce new projects "here and abroad." And he is convinced his plans will proceed with the kind of government backing the wind industry needs to gain a foothold. "I am very confident that by next spring we will have something, both federally and provincially," he said.

Dupont's optimism is grounded in Canada's commitment, although not yet ratified, to reduce its greenhouse gas emissions 6% below 1990 levels by 2012. In the two years since Kyoto, 16 expert panels have been examining the country's reduction options. With work scheduled to wrap up by the end of this year, speculation is that the federal government will begin to implement the findings in its year 2000 budget. And while several speakers reminded delegates that there is no "silver bullet" solution to climate change, all agreed that renewables, particularly wind, will make a significant contribution.

Wind a low cost option

CanWEA researcher Justin Thompson told delegates research conducted by the panel examining Canada's generation mix shows new natural gas and large hydro generation will account for the bulk of emission reductions in the electricity sector. But rising gas prices and increasing demand, coupled with long lead times for the construction of hydro projects, will also make wind "a very good low cost option."

By 2010, depending on the level of export demand, Canada could see the addition of 3300 and 10,000 MW of new wind. "In order to realise that opportunity we have to take steps now to make sure the industry is ready," warned Thompson. Canada, he said, lacks the "critical mass" of expertise needed to cope with the installation of thousands of new MW over the next decade. And with little domestic manufacturing and an electricity infrastructure unfamiliar with utility scale wind, "we are going to need to put in place immediate measures" to build the market for renewable energy.

Given Canada's decentralised political structure, however, which places the greatest control over natural resources and energy policy in the hands of the provinces, the chance of implementing a single mechanism that will cut across jurisdictional boundaries is remote. Instead, Thompson advised, wind advocates need to identify the most appropriate policy options in each region and look to the federal government to use its spending power to leverage activity. "Perhaps a production credit in Quebec, perhaps a renewable portfolio standard in Saskatchewan, perhaps a green consumer credit in Alberta. I think that's more realistic given the Canadian policy context." Gaetan Lafrance, from the University of Quebec's Institut National de la Recherche Scientifique, told delegates that hydro and wind are "on the same side of the battle" to reduce emissions and argued "common efforts" to develop the two could increase the competitiveness of both.

The seasonal distribution of wind energy not only closely matches electricity demand, but complements water inflow, enabling more water to be kept in hydroelectric reservoirs and optimising management of the system. This increased efficiency, said Lafrance, will allow producers like Hydro-Quebec to better respond to the needs to North America's emerging competitive electricity markets.

Potential in trading

Emission reductions trading will also open up new opportunities for Canadian wind power producers, said Andrew Pape of the Alberta based Pembina Institute for Appropriate Development, but only if care is taken to safeguard the "environmental effectiveness" of the system. Pape sits on the technical committee of Canada's Greenhouse Gas Emissions Reduction Trading Pilot, which is experimenting with the buying and selling of emissions reductions.

Pembina, said Pape, has pushed for a process that accepts only new projects with incremental atmospheric benefits. That means that while a new wind plant on Alberta's coal dominated grid would qualify, natural gas generation would not. "Chances are it would have happened anyway. Gas is the most cost effective technology on the market, and the marginal resource in Alberta. To gain credit for that is wrong."

The discussion of markets for wind power was enhanced by the presence of a number European speakers, who explained the forces underlying the explosion of wind power development on that continent. Arthuros Zervos, vice-president of the European Wind Energy Association, told delegates that although wind power has experienced phenomenal growth this decade, the fact that 82% of global installed capacity is concentrated in five countries puts the industry in a "delicate situation." He offered an advance look at EWEA's ambitious new blueprint to broaden wind's penetration and supply 10% of the world's electricity from wind power by 2020. For his Canadian audience, the challenge laid out by Zervos sounded strikingly familiar. "The resource is there," he said. "The only question is how we go about exploiting it."

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