North America Report: Maritimes look to US for exports

Canada's Maritime region could become a key supplier of competitively priced wind power to the US Northeast, but it will require some significant changes to the way the separate jurisdictions run their electricity networks.

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The three provinces on Canada's windswept south-eastern coast have a big opportunity to sell wind power demanded by their neighbours in New England - if barriers hindering Canadian developers' entry into the market south of the US border can be overcome.

An analysis for the Canadian Wind Energy Association cites a Danish study that says the Maritimes - comprising New Brunswick, Nova Scotia and Prince Edward Island - have the potential to produce 5500-7500 MW of economically viable wind capacity. That is a greater amount than would be required to meet the peak demand for the entire Maritime region.

Yet just across the border, New England's states could use much of the surplus. The report, by market analyst Power Advisory, says that in order to meet renewable energy obligations, the six New England states are likely to need 2500 MW of wind capacity by 2020. But the study adds that this is based on a conservative assumption that wind will produce less than half of all renewable power used by the region in that time. It also says that voluntary green power programs could increase the wind energy capacity required by 2020 by 160-480 MW.

"There is clearly a market need," says John Dalton, president of Power Advisory. "The issue is that New England has found it very difficult to build its renewables capacity and the market has been left short. As such, people haven't been able to meet their renewable obligations and have had to pay penalties."

The study found wind from the Maritimes is typically between US$20 and $30 cheaper than New England supply per megawatt hour. Although the difference in cost is ostensibly an advantage for Canadian producers, it is one that can be quickly eroded by transmission costs, says Dalton. Projects in Nova Scotia and Prince Edward Island not only have to pay a transmission tariff in their home province, but also face an additional fee to transport it through New Brunswick to the US. The study recommends adopting a single uniform tariff for the region, but Dalton accepts that the three Maritime provinces will need to debate such a move. "The likely flow of power to the US is through New Brunswick," he says. "So that province is potentially going to be losing revenue from our suggested strategy."

The transmission of the power from its Maritimes source to its market in the US Northeast is also riddled with potential problems. Studies have shown that only about 2100 MW of wind energy capacity can be integrated in the Maritimes without internal grid reinforcements within the provinces themselves.

Financial obstacles

Even if the necessary wind capacity can be integrated into the Maritimes' own grid, more snags present themselves around the border itself. There are only two points of connection that straddle the border. Building new transmission capacity designed to facilitate increased wind power exports is one solution, says Dalton, but there are concerns that such infrastructure development does not stack up financially. This is because wind's chief competing source of energy in the area - gas - is cheap and plentiful.

"Current market prices are not at a level where they really support any allocation of the cost of a new transmission facility to wind project developers," says Dalton. "Gas prices are so low right now it makes it difficult to justify that investment."

But things could change, he says. "I think you need to probably step back and take a broader, longer-term perspective." As the US economy rebounds, he says, natural gas prices are likely to rise. In addition, President Barack Obama's plans to introduce a cap-and-trade system for greenhouse gas emissions in the US are likely to further increase demand for low-carbon generation sources.

In the interim, says the study, the three Maritime provinces should look at ways to better coordinate the operation of their separate power systems to allow increased electricity interchanges and more flexibility in dealing with intermittent generation. There have already been some moves in that direction, says George Porter of the New Brunswick System Operator (NBSO).

Flows between New Brunswick and New England are set for any given hour, which means operators cannot alter the flow of energy across the border to accommodate changes in wind energy production. But the NBSO and regional transmission organisation ISO New England have launched a pilot project that will allow them to make adjustments on the half-hour as well. "With a small amount of effort," says Porter, "we can get a fair bit of gain."

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