Under the two pronged program, wind projects in large northern communities receive a capital grant of C$200 per installed kilowatt of capacity as well as a C$0.02/kWh production incentive for ten years. For small communities, a capital grant of C$900 per installed kW of capacity is proposed along with a payment of C$0.10/kWh over ten years.
The capital grants, says CanWEA policy director Sean Whittaker, will help developers deal with the higher costs that come with building projects in remote areas. The guaranteed ten year cash flow from the production payments will provide a strong impetus to keep projects operating over the long term, which has historically been a challenge. "The key is to develop the local capacity and infrastructure needed to ensure ongoing operations and maintenance of the facilities. An annual production payment is an effective way of doing this," says Whittaker.
The program would target a few promising communities where demonstration projects could be built over the first four years. The second phase, running for the following six years, would open the program to all other remote communities. "Success breeds success," explains Whittaker. "It is one thing to know that a wind project in your northern community is theoretically possible. But it is a totally different thing if you can actually see a wind project up and running in a community similar to yours."
The cost of the program is expected to be about C$74 million, enough to help fund 34 wind projects with a total capacity of 87.4 MW. Together they would produce an estimated 153 MWh a year, equal to roughly 12% of electricity demand in Canada's 300 remote communities.
Electricity costs in those communities range from about C$0.40/kWh to C$1.50/kWh. Power is produced largely using diesel generators running on fuel that has to be shipped in from the south. "You've got a dirty, expensive technology that doesn't really bring many economic benefits to the community," says Whittaker. "When you look at it in that context, wind starts to be a very attractive alternative. But there is a high hurdle it has to get over because the diesel generators are already there and the infrastructure is there to support them."
The projects would eliminate the burning of almost 400 million litres of diesel over the life of the program, saving about C$375 million dollars in fuel costs. They would also reduce greenhouse gas emissions by 122 kilotonnes of CO2-equivalent a year. Climate change is expected to hit the north particularly hard, points out Whittaker. "It makes sense to bring climate change solutions to northern communities." Burning less diesel fuel, he adds, will also improve local air quality and reduce the risk of water and soil pollution from spills.
The plan has industrial development advantages too, says Whittaker. About half of the world's manufacturers of turbines in the 20 kW to 100 kW size range, which are best suited to remote applications, are Canadian.
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