GENERATION

Wind Power Task Force Reports on Role of Renewable Energy in Ontario

With the on-set of deregulation of the electrical power sector in Ontario many individuals and companies are interested in the opportunities presented by the market opening. Ontario has begun the process of finding what works for all parties affected, from the former virtual monopoly, Ontario Hydro, to the individual residential ratepayer. One of the issues accelerated to the forefront of deregulation is the role of renewable energy in the new power market.

In April 2001, the Ontario Wind Power Task Force (WPTF) was established to explore the potential, of the world's fastest growing form of renewable energy...wind. This article is a brief summary of the final report tabled to the Government of Ontario and the Select Committee on Alternate Fuel Sources, a bi-partisan committee charged with advising the Government on matters related to the impending Bill 35 and market deregulation.

The report represents the efforts of several industry participants, assisted by representatives of the Ministries of Natural Resources, Environment, Energy and Technology, Finance, Economic Development and Trade, Northern Development and Mines, and Agriculture, Food and Rural Affairs. Industry representation spanned a wide range of interests, including:

• Developers/marketers/financiers; e.g., OPG, Great Lakes Power, Seine River Power, Regional Power, British Energy Canada, Vision Quest, Sky Generation, Probyn and Co., and Suncor;
• Manufacturers of wind turbines and components; e.g., Vestas American Wind Technology, Blenkhorn and Sawle, Steelcraft, Wenver-Vergnet, and Enron;
• Service and skills providers; e.g., Zephyr North, Acres International, and Brock University
• Industry associations; e.g., the Canadian Wind Energy Association (CanWEA) and Independent Power Producers Society of Ontario (IPPSO).

The priority objectives of the WPTF were to:

• Identify a market climate that would invite private investment in wind power projects
• Quantify the benefits in investment from the development of projects and the permanent manufacturing jobs created by predictable growth
• Provide an industry perspective on a renewable energy strategy for Ontario and how wind generation can play a significant role helping Ontario reduce and meet emission reduction targets.
• Propose regulatory policies for this form of energy generation and help determine the leadership role of Government in this new industry
• Clarify the current status of the Ontario wind resource data. Examine the opportunities for industry and government co-operation to help Ontario 'catch up' on this assessment with other countries such as the USA, Germany and Denmark
• Provide the Ontario Government with constructive recommendations that, if adopted might help make Ontario leaders in wind energy

Each committee was charged with assessing the technical aspects of wind power on a world basis. Areas of concern varied but were based on the wind potential in Ontario. The areas included -- the present situation of existing developments; the manufacturing potential; effects of additional wind generation on electricity pricing; use and cost of crown land; legislation and approval process changes to streamline developments; potential environmental and social effects of wind; investment attracted should the goals of industry be achieved; financial incentives that could be provided by Government; wind generation relationship to existing generation.

Besides the present Canadian industry, the major wind energy markets such as India, Europe, the UK and the USA were examined. WPTF participants agreed that policy recommendations to Government should be offered well before market opening and before the completion of the report of the Select Committee on Alternate Fuel Sources. To that end, an aggressive 6-month schedule was established and met (April 2001 to September 2001).

Task Force Recommendations
To maintain credibility and propose realistic goals, the WPTF examined the potential of wind on the grid in relation to present capacity for new generation, and in light of what was believed to be the level of competitive pricing for renewable energy in the new market. The recommendations from the main committee were to advise the Government on ways to create, through the proposed legislation, a market for renewable energy. In other countries, tangible Government commitment to renewables has led to a rapid development of these new "green" technologies (wind, methane, solar and biomass). Where the legislation has been short-termed, as with the USA's Production Tax Credit, the effect has been a staggered and unpredictable growth pattern. Fifteen priority recommendations were supported and assembled from the sub-committees into the final WPTF report.

The two single largest stimuli for growth of the industry in other jurisdictions have been the use of the Renewable Portfolio Standard (RPS) and the Production Tax Credit (PTC). The RPS is a market-based policy that requires any energy seller in Ontario have a percentage of demonstrable green energy as part of their electrical energy sold to their retail customers. This certified green energy or RECS (Renewable Energy Credits) is required from all sellers and therefore is competitively neutral in the marketplace. The recommendation of the WPTF was for an 8 per cent RPS to be brought in over 8 years (by 2010). A derived benefit from a RPS is also the reduction in the amount of Green House Gases (GHG), produced by power generators. The report also recommended that the Ontario government adopt the same example set by the provincial governments of Saskatchewan and Prince Edward Island, that is, for Ontario to purchase a portion of its energy consumption from certifiable green sources.

The Production Tax Credit (PTC) is the favorite tool of the U.S. government for addressing the high capital cost of renewable energy forms like wind energy. As a flow through tax credit, it is designed to mitigate the capital-intensive nature of wind farm development. The two-year renewal of this PTC is in limbo in the U.S. Unfortunately, this has resulted in a stalled wind generation industry there. Both CanWEA (Canadian Wind Energy Association) and the environmental coalition CARE have been lobbying the Canadian Federal Government for a similar PTC incentive. A recommendation of the WPTF is for the Government to join this lobby to have the Federal Government establish a PTC in Canada. Many were surprised and pleased when the Federal Government announced a 15-year, $ 260 million dollar Production Incentive (PI) program in its December budget. For most developers this was a huge jump-start for their planned activities.

Since a significant amount of wind lands in Ontario are Crown owned, it is recommended that policy for the use of Crown land for wind farms be developed. The policy to be spearheaded by the MNR, should involve items such as royalties for land use, lease terms with renewable options, etc.

One of the most exciting challenges in the Industry is CanWEA's objective to have 10,000 Megawatts of wind generated electricity produced by 2010. This is a $ 15 billion dollar job creation program if the equipment is manufactured in Canada. The current cost of wind generation is $1,500/kWh. Presently most equipment is made in the USA or Europe and will likely remain so until Canada has a predictable demand of 100 Megawatts per annum, as stated by Philip Andres, Vestas American Wind Technology. The Danish manufacturer Vestas, is one of the world's largest wind systems manufacturers. This annual production requirement is the critical mass for the development of an industrial cluster within Ontario. The manufacturing sub-committee reviewed reports from a number of industries in Ontario that are actively manufacturing wind generation components such as switchgear (Blenkhorn and Sawle Limited), towers (Tri-Service Metal Products), blades (Polymarin-Bolwell Composites), small turbines (Wenver/ Vergnet Canada) for domestic and export markets. These organizations believe that for an industry to grow a predictable demand for product is needed.

The sub-committee also identified the need for public education programs in schools and for the consumer. An evident drawback to meeting CanWEA's goal is the lack of skilled people required to construct and operate the new facilities. The WPTF recommended that a Centre of Excellence be set up at an Institution (like those that exist for Solar and Fuel cell technologies). Several suggested activities for the Centre would be skills development programs necessary to support the industry and the creation of "wind units" for school curriculum.

Other recommendations involving further development were tabled with the report involving provincial employees. To facilitate the coordination of various ministries in the approval phase of projects and to encourage accelerated growth it was suggested that the Government establish a single point liaison for all wind energy activities involving its ministries. This liaison office would be properly funded to undertake the coordination with Industry. The WPTF report was intended to serve as a primer in educating provincial employees. Further education on various issues will need to be undertaken by employees working with the public and industry on wind issues.

Recognizing the changing times, the WPTF suggested that the province work with Industry to develop a renewable energy strategy to include wind. This is hopefully one of the outcomes of the work of the Select Committee on Alternate Fuel Sources.

There is a significant relationship between agricultural lands and wind generation in the U.S. and Europe. Government ministries such as OMAFRA need to continue to investigate the benefits and requirements for development of Wind Farms on agricultural lands. The revenue for the farmer participating in a wind farm development project could be as much as $110 per hectare. This is a significant second revenue stream. Less than 1 per cent of the land is needed for a wind development project.

Wind resource assessment in Canada is sporadic and generates information that is often irrelevant for wind farm assessment and use in the pre-development phase. One of CanWEA's prime objectives is to create a Canadian Wind Atlas. This could take years for the whole country. In the interim, the WPTF recommended that five permanent sites be established, in Ontario, at elevations relevant to present turbine heights to help develop a provincial database.

A number of recommendations to the provincial government called for alterations to the process of approval of wind generation projects; e.g., PST tax exemption, capital tax amendments, property tax assessment and the present regulations for approval of generation projects. All these aspects need to be examined by the government specifically in light of the capital-intensive nature of wind farm developments.

Transmission grids, as in other areas where deregulation has taken place, and the intermittent nature of wind, can present some of the most difficult obstacles to the successful deployment of wind farms. The WPTF recommended that Industry, the OEB, the IMO and Hydro One work together to streamline the connection process to the grid of wind farms.

Since no one form of generation perfectly suits the needs of the marketplace, the WPTF main committee's objective was to work together with the existing power generators in the province. It is recommended that Government and Industry examine the relationship of wind with respect to present energy production.

Presently, Canada has 200+ Megawatts of wind farms operating across Canada and another 70 Megawatts under development. Wind is the fastest growing form of renewable power generation in the world, expanding at an annual rate in excess of 30 per cent. However, Ontario has a long way to go to meet the goal of CanWEA within our province. Ontario's potential developable wind resource exceeds 35,000 Megawatts. For this industry or any form of sustainable energy development to take place in Ontario, both industry and various levels of Government must cooperate to create a long-term, stable demand with predictable growth. Despite the apprehension surrounding deregulation, the many people involved in the WPTF initiative are looking forward to wind generation being a successful industry in the new Ontario energy market.

Claude Mindorff is the Manager of New Business Development for the Switchgear Manufacturer Blenkhorn and Sawle Limited in St Catharines Ontario. He was the Chairman of the Manufacturing and HRD sub-committee of the WPTF.
For further information, please contact David Boileau, Chair, WPTF Tel: 807-597-4368 or dboileau@nwon.com. Photos courtesy of OPG. ET