Canadian wind has grown past, particularly in the province of Ontario,
but progress is now threatened by recent political changes, popular
opposition, subsidy cuts and an upcoming WTO report.
Newcastle, UK --
For Canadian wind, the last few years have been pretty good. Growth
has accelerated and by the end of 2011 its generating capacity totalled
5265 MW – of which 1969 MW were in Ontario – accounting for about 2.3%
of Canada's total electricity demand.
The next few years are also expected to see rapid growth. On
current forecasts of projected plants and those under construction,
Canada will top 10 GW of wind energy by 2015. And the Canadian Wind
Energy Association (CanWEA) has felt confident enough to outline a
strategy in which wind energy hits 55 GW by 2025, meeting 20% of the
country’s energy needs.
On current trends, this seems only slightly optimistic. More than
1300 MW of wind will be built this year, a modest rise from 1267 MW in
2011. Three provinces have reached major wind milestones: Ontario has
broken 2 GW while Alberta and Quebec have each arrived at 1 GW of
installed capacity. In Quebec, in fact, the 80 MW Saint-Robert-Bellarmin
wind project means EDF EN Canada, a unit of French renewable energy
group EDF Energies Nouvelles, will alone have more than 1 GW installed
in the province by 2015.
New onshore projects are also being commissioned in British Columbia,
Manitoba, Nova Scotia, Prince Edward Island and the Northwest
Territories. In offshore wind, several potential sites have been
identified on the north coast of British Columbia. Meanwhile, the boom
in mining, gas and oil extraction in British Columbia, Alberta and
Saskatchewan is expected to fuel demand for new sources of power
generation. On the east coast, community wind programmes in Nova Scotia
and New Brunswick are attracting attention.
The town of Pincher Creek, Alberta, known as the wind capital of
Canada due to its Chinook winds, has taken on a key role in the
rapidly growing wind power industry (Vestas Wind Systems A/S)
But the long-term view is less rosy. Several provincial electricity
grids are reaching their limits for wind power integration. Low gas
prices continue to erode opportunities in Alberta and are making wind
less competitive in other markets. In addition, mounting public
hostility to wind farms has brought extensive permitting delays and
aggravated legal and regulatory challenges.
Ontario’s Backing for Wind
At a federal level, Canada lacks a comprehensive clean energy policy.
But provincial support – in Ontario – has driven the country’s wind
boom.
Ontario is currently the only province with a fixed feed-in tariff
(FiT) for wind, launched in 2009 to encourage the development of
renewable energy technology, attract investment and create new jobs as
part of a plan to phase out the province’s coal-fired generation by the
end of 2014. Ontario’s FiT programme foresees 7 GW of wind power
projects by 2018. By most measures the programme has been a great
success, exceeding the expectations of its backers. A scheduled two-year
review of the FiT programme in October 2011 found that more than 2500
small and large FiT projects had been approved.
By the end of 2011, contracts for over 4750 MW of new renewable power
had been offered and another 16 GW of applications were pending. Of the
contracts offered, 3165 MW were for wind, with just 1332 MW for solar,
193 MW for hydro, and 63 MW for bioenergy. These contracts leveraged
more than $10 billion in private investment and brought significant new
wind manufacturing capacity. On the basis of this progress, Ontario
expects to hit its target of 10,700 MW of non-hydro renewable energy
generation by 2015, with 2900 MW of FiT projects currently moving
through the Renewable Energy Approval (REA) process.
Yet the review also brought a 15% reduction in wind FiTs. The
guaranteed rate for wind power from any source dropped from 13.5
Canadian cents per kWh to 11.5 cents, while prices for biomass, biogas,
water and landfill mass were unchanged. Although the drop was less than
some had anticipated, it provoked a mixed reaction from the renewables
sector. Robert Hornung, CanWEA president, said the new price would prove
‘extremely challenging for many projects and could prevent a number of
them from proceeding’.
‘This is particularly true for smaller projects and new entrants to
the industry, reducing the number of communities and the diversity of
players able to contribute to and benefit from the government’s
ambitious objectives,’ he added.
The review also recommended a further study of Ontario’s supply and
demand forecast through to the end of 2013 to determine whether an
increase in the state’s renewable energy targets would be justified. ‘We
made every effort to develop final recommendations that would balance
the interests of all Ontarians, recognising ratepayers, community
participants and the renewable energy sector,’ said Ontario’s deputy
energy minister, Fareed Amin, who carried out the two-year FiT review.
While the cuts will lower the high returns investors have so far
achieved from Ontario renewable energy investment, the government’s
action has brought clarity to the sector, unblocking stalled projects,
if they can overcome bureaucratic inertia. But regulatory uncertainty
has clearly hit renewable energy project financing in Ontario. According
to Clean Energy pipeline data, the volume of completed renewable energy
project finance raised in the province fell to $1 billion in 2011, down
from $1.2 billion in 2010. And while many FiT contracts have been
approved, the province’s permitting process forms a bottleneck. The
review suggests approval timelines could be cut by up to 25% if
regulating ministries ‘better align approvals with the size and
characteristics of a project, reduce duplication, improve service
standards and streamline the process’.
Despite these niggles, and largely thanks to the FiT programme,
Ontario has been able to close eight of its 19 coal-fired plants, and
the rest are scheduled to shut by the end of 2014. Renewable
technologies will have to make up the difference, throwing the spotlight
back on wind, particularly offshore wind.
Ontario could develop 2000 MW of offshore wind power over the next 15
years, according to a report issued in late 2010 by the Conference
Board of Canada, a non-profit research group. This would add between
$4.8 billion and $5.5 billion to the province’s economy between 2013 and
2026, it concluded.
A Gathering Backlash
Unfortunately, prospects for offshore wind have faded in recent
months after Ontario’s McGuinty administration put all plans for
offshore wind power on hold in early 2011. The province also cancelled a
contract with Windstream Energy for a wind farm on Lake Ontario and
said it would not approve the four other projects on deck until it knows
more about the impact of wind power within freshwater environments.
CanWEA is, unsurprisingly, up in arms about this latest development.
Hornung sounded off in a statement about the ‘unfortunate decision.
‘Ontario lifted a ban on offshore wind development about two years ago,
only to now resurrect it. Ontario is proving itself a leader in driving a
new clean energy future that delivers emission-free power and new jobs
for our skilled trade workers. This is an unfortunate decision that
surrenders the province’s leadership role in exploring the potential for
offshore wind energy in the Great Lakes and creates significant
uncertainty for investors.’
Concern over the shore-side visual impact of turbines poses another
challenge for developers. In many locations, particularly the Great
Lakes, water depths plunge steeply. Taller turbines, while feasible,
would be far more expensive than conventional devices. Then there is
political opposition to wind turbines, which in Ontario is substantial.
McGuinty’s green energy initiatives have often been attacked by local
residents, many of whom see wind turbines as harmful both to human
health and the environment.
In 2011, the province announced a moratorium on offshore wind power
until at least 2014, when the results of a Health Canada study into
possible ill effects from low-frequency noise will be released. This has
sparked lawsuits by wind energy developers, which claim their projects
were already in the works. Meanwhile, some members of the Progressive
Conservative Party are calling for a moratorium on all wind energy
development in the province.
Health Canada announced in July that it would conduct a study
exploring the relationship between wind turbine noise and the negative
health effects such as sleeplessness, inner ear problems and depression
reported by nearby residents. ‘The McGuinty Liberals did not conduct an
in-depth study into the health effects surrounding wind turbines before
they invaded rural Ontario with their big green energy dreams,’ said
opposition MPP Lisa Thompson. ‘And we have heard from many throughout
the years that that dream has turned into a nightmare.’
By the end of 2011, wind power generating capacity in Canada
was 5265 MW, of which 1969 MW were in Ontario, accounting for
around 2.3% of Canada’s total electricity demand (GWEC)
The wind industry appears to be increasingly aware that its continued
growth depends on countering these claims. Considering the multitude of
projects scheduled to come on line next year – and over coming years –
the wind industry needs to work harder on ‘social acceptance’, said
Hornung recently.
‘We need to do a better job in telling our story,’ he stressed. ‘To
realise our full potential, we need to work together. We need to roll up
our sleeves and do the hard work.’ Educating the public and working
with stakeholders is CanWEA’s top strategic priority for the next three
years, he added.
Ontario’s unwillingness to proceed with offshore wind is particularly
galling to wind energy proponents in light of developments south of the
border. The US has pipelined a plethora of offshore wind projects in
the Great Lakes region, where the Department of Energy rates the wind as
‘outstanding’ in some locations.
‘You will never find a better spot than the Great Lakes,’ said John
Kourtoff, CEO of Trillium Power Wind Corp, a Toronto company that plans
to begin erecting turbines in Lake Ontario in 2013.
Meanwhile, in August 2012, The New York Power Authority began
considering four proposals for its GLOW (Great Lakes Offshore Wind)
Project. The project aims to construct wind farms in either Lake Erie or
Lake Ontario, or both, totalling from 120 MW to 500 MW. Further along
are Scandia Wind Offshore’s 500 MW project for Lake Michigan and Ohio’s
plans for a 20 MW farm near Cleveland about six miles into Lake Erie.
Aside from the environmental challenges, the cause of wind power in
Ontario received a serious setback in October 2012 when provincial
premier Dalton McGuinty resigned. McGuinty was one of the chief
architects of the province’s Green Energy Act (GEA), which established
the FiT, and he has been a strong, powerful and vocal advocate for wind
energy in the province over the past few years.
Indeed, only last October, Ontario’s wind energy industry was
extremely relieved when pro-renewables McGuinty defeated Progressive
Conservative Party candidate Tim Hudak, who had promised to repeal many
of the GEA’s core tenets and terminate a host of wind and solar energy
initiatives that were already underway in the province. A successor to
McGuinty has not yet been named, but industry experts believe the GEA
will remain in place, at least for now.
‘As one of Canada’s foremost champions of wind, McGuinty’s leadership
and support has been critical to Ontario’s success,’ said Hornung. ‘The
[Green Energy] Act is a policy of the Liberal government, and we expect
that to continue.’ CanWEA will reach out to the provincial government
to ensure it continues its renewable energy leadership and its efforts
to increase Ontario’s wind energy capacity, he added.
WTO Delivers Another Setback
Also in October, Ontario’s wind energy policies received another
serious setback, this time from the World Trade Organization (WTO) over
policies that force companies to buy equipment from local manufacturers.
The WTO has issued a preliminary report that agrees with Japan and
the EU in their complaint about Ontario’s support for its renewable
energy industry. If the preliminary report stands, Ontario might have to
dismantle parts of its FiT programme, which prompts producers of wind
(and solar) to buy a proportion of their equipment in the province.
A final ruling is expected in November, but the WTO seldom backtracks
on its preliminary reports. The WTO says the local content rules break
non-discrimination rules in the General Agreement on Tariffs and Trade.
Japan initially filed its complaint with the WTO two years ago, saying
that Ontario’s green-energy plan unfairly pressures producers of clean
energy to buy hardware from manufacturers in the province. The EU joined
in the complaint in 2011, saying European exports of wind and solar
equipment to Canada would be higher without the local content rules.
Complaints at the WTO are lodged against countries rather than
provinces, so the filings were against Canada rather than Ontario. The
Ontario energy ministry says it believes that the FiT programme is
consistent with Canada’s WTO obligations. ‘Should the panel disagree, we
are ready to pursue all options with the federal government, including
an appeal of the decision.’
Stuart Trew, who works as a trade campaigner for the Council of
Canadians, said the ruling, if it stands, will be ‘a terrible loss, not
just for Canada, but also for countries globally who are looking for
ways to make their economies more dynamic.’
Trew believes Ontario will likely put pressure on the federal
government to appeal the final decision, if it goes against them.
Ontario might also be given the option to amend the problematic portions
of its energy policy to bring them on side. ‘It is going to be a long
process,’ he said.
If Canada is to continue to grow its wind industry, then there are
clearly issues that need to be addressed. These will involve allowing
more overseas companies to compete for contracts and giving foreign
investors a greater role in the industry. This may, however, have the
side effect of making wind energy less politically acceptable to voters.
There is also a growing need for a political consensus, particularly
in Ontario, where in the absence of a strong wind advocate to replace
McGuinty, the long-term growth of the wind industry now appears less
certain than at any time in recent memory.
http://www.renewableenergyworld.com/rea/news/article/2012/12/crunch-time-for-canadas-wind-sector?page=2
