A scan of the political landscape shows that Hornung has grounds for optimism. Ontario, one of North America's largest power markets, is looking for 300 MW of renewable energy to be in service as soon as possible, the first step in its plan to have 10% of all generating capacity come from renewables by 2010. Bids in Hydro-Quebec's massive 1000 MW wind power request for proposals are due in June, while in Saskatchewan, the government-owned utility plans to meet all new load growth to 2010 with clean energy technologies, including 150 MW of wind. Next door, Manitoba Hydro utility has allocated 250 MW, nearly 5% of its current generating capacity, to wind development and is studying how much additional wind can feasibly be added to its hydro-dominated grid. In British Columbia (BC), the government has decreed that half of all new power is to come from clean sources.
Several provinces are also considering a renewables portfolio standard (RPS) in their electricity marketplaces. An RPS is regulation for a standard minimum amount of renewable energy in power supply portfolios, facilitated by a flexible system of tradable renewable energy credits. In Nova Scotia, the provincial government recently accepted the recommendation of a stakeholder task force calling for a target of 5% renewables by 2010, while Prince Edward Island has set a goal of at least 10% over the same period. Alberta is aiming for 3.5% by 2008 and a larger, longer-term objective after that.
New Brunswick says it will enact an RPS when it restructures its power market in the spring, but in the meantime New Brunswick Power has set its own target of 100 MW of wind by 2010. While Newfoundland's isolated grid has more than enough supply to meet demand until the end of the decade, the government is still planning to move ahead with a 25 MW wind demonstration project. Up north, Nunavut Power is in discussions with two groups about a long term wind development program for the northern territory.
Triggering 4000 MW
Together, the initiatives would trigger the addition of about 4000 MW of new wind power to Canada's electricity mix. "The provinces are at different points on the trail, but they all got started, which puts us significantly further ahead of where we were last year," says Hornung. "Canada, for the first time, appears to be getting close to the point where it has a reasonable broad framework policy in place. That will be an important signal that will kickstart a lot of stuff."
The industry, however, is not declaring victory yet. Not all the provincial plans are guaranteed to go ahead, says Hornung. Whether they do may depend on how much the federal government is ready to contribute to help bring them to fruition.
CanWEA wants the new Liberal government in Ottawa to quadruple the budget for the federal wind power production incentive (WPPI) to support the installation of 4000 MW, to extend the program deadline to 2010, and remove all caps that limit how much of the WPPI money any single project, developer or province can access.
Right now, payments under WPPI are limited to 1000 MW of new capacity, with a cap of 300 MW for any single province. The program, which makes payments averaging C$0.01/kWh for the first ten years of a project's life, will expire in 2007. Wind developers, says Hornung, are afraid provinces will look at those limits and scale back their own plans to fit. "The federal government, when it introduced WPPI, essentially challenged the provinces to be partners," explains Hornung. Now that the provinces have come back with plans that go far beyond what Ottawa envisioned, he argues, "it is incumbent on the federal government to step up now and say it is still a partner."
The argument is capturing the attention of federal officials, says Hornung, although he could not predict whether that interest would translate into new money when the next budget is introduced, most likely this month. "I think our proposal is definitely still in play and, I think, under serious consideration," he says. "I think it is more attractive for the federal government than some things they've seen in the past because it explicitly acknowledges a role for provincial governments."
Push and pull
A combination of provincial market mechanisms and a federal fiscal incentive could also prove attractive to European turbine manufacturers looking to locate facilities in North America, an argument that is not lost on policy makers. Although the after-tax value of the WPPI is only one quarter to one-third that of the US production tax credit, "if that value can be made up through other mechanisms, like those we are talking about at the provincial level, then I think it definitely provides a much more stable framework for developers than what we see in the US," says Hornung. "That more stable framework would, in our view, probably also be more appealing to manufacturers. Given the failure of the [US] energy bill to pass in the last Congress, I think there is a window of opportunity right now," he says.
Broader electric industry issues are also helping push wind forward as a generation option. Many parts of Canada are facing a supply crunch and natural gas is no longer seen as the panacea. "You can't overestimate the extent to which the electric utility industry has really been shaken up by natural gas prices," says Hornung. "Five years ago we were moving to a world where all the new stuff was going to be natural gas. Now for a lot of people that is increasingly off the table."
There is a growing recognition, he says, that wind can add new incremental capacity quickly and provide a hedge against volatile gas prices. "In many jurisdictions the historical perception of wind as a niche technology is breaking down."
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