Forecast: High Winds

So many public and private entities are jumping on clean technologies like wind power, they're weighing down the bandwagon.

A riotous scene with police standing by outside a town hall while Windrush Energy president John Pennie faces a crowd of protesters-it’s your average public consultation on a proposed wind farm, somewhere in Ontario.

There are as many anti-wind groups in Canada as there are wind developers. But CanWEA (Canadian Wind Energy Association) Vice President of Policy Sean Whittaker says there’s nothing wrong with a little healthy cynicism; it keeps developers honest. “In the end, the truth will always out,” he says. Whether they’re right or not, anti-wind lobbyists are a barrier, not an impasse. When I ask CanWEA’s Ulrike Kucera what the barriers to wind energy are, she has one word for me: “infrastructure.”

“Transmission is the issue,” says Whittaker. Pennie says each project means years of zoning applications, Ontario Energy Board (OEB) hearings, environmental assessments, elevation changes to satisfy locals, then after all that time and money spent, “you end up stranded.” No wires, no electricity.

That hasn’t stopped provincial governments from ordering up more megawatts of wind energy. This May, Quebec announced it will exploit its potential for wind generation and is aiming to connect 4,000 megawatts of wind power to the Hydro-Québec grid by 2015. Quebec will likely get as much interest as other provinces-and that’s a lot.

In PEI, Maritime Electric put out an Expressions of Interest for wind projects. The maximum electricity demand there is around 200 megawatts-they got proposals for 1,500.

“A province says ‘let’s explore wind energy’ then gets buried with submissions and realizes that the key is wires,” says Whittaker.

In Nova Scotia, there are around 2,000 megawatts of wind power in the connection queue. There are similar restrictions in Alberta, with “serious transmission constraints in the southeast portion of the province,” says Whittaker.

It’s the same in Ontario, where some projects have had their connection approvals revoked, leaving developers with a land use permit but the inability to build any infrastructure. In the last year and a half, contracts have been given out for 1,300 megawatts of wind power in Ontario, all put on hold while the Ontario Power Authority (OPA) reevaluates the Standard Offer Program (SOP).

The idea behind the standard offer was to encourage local communities to put together ten megawatt projects. The OPA provides small electricity generators (from residential photovoltaic rooftop generation of one kilowatt up to small wind farms of ten megawatts) with a standard pricing regime. John Kourtoff, president of Toronto’s Trillium Power Wind Corporation says, “The SOP is very good, but it’s been abused by the industry. It was meant for community power, but developers chopped big projects up into smaller, ten megawatt parcels.”

“The windy part of the southwestern Ontario is now totally blocked with projects,” says Pennie. “And a large percentage of them can’t get connections until upgrades are made to the Bruce Transmission line.” Upgrades to that line are scheduled for completion in 2011, but Penny says it will likely just mean a limited feeder upgrade, limiting the market to large capacity projects. “In the orange zone (southwestern Ontario) all turbines are at capacity and it won’t get better with new transmission in 2011,” says Penny. “It won’t change the standard offer.”

According to Kourtoff, it’s the standard offer-or its regulator-that’s the problem. “I don’t think the OPA’s plans are dynamic enough,” he says. “You can’t determine what the market will be with an IPSP (Integrated Power System Plan) created four years ago, a plan that’s not even approved yet.” He would rather see a feed-in tariff like the one used in the European market. Something like the European REFIT (Renewable Energy Feed-In Tariff) will the ability to assign a separate category for small community power.

Ontario’s new energy minister, George Smitherman, said at the World Wind Energy Conference in Kingston this June that he’s open to introducing a Green Energy Act that would substitute the current SOP.

Pennie says at the very least there needs to be a change in SOP pricing to reflect the cost of turbines. This is a global market and, as Penny says, “there’s a world shortage of turbines.” This increased demand, along with a shortage of skilled labour (see page 6) and the high price of oil has pushed the cost of turbines up by 34 per cent in the last two years. New manufacturers of turbines are showing up, but Penny says five turbines costs about $25 million-”you need to borrow at least $20 million.” And banks won’t finance a start-up company’s product. That leaves developers with only a handful of vendors to choose from. Their capacity is constrained and the prices reflect it.

“A lot of developers won’t even respond to an RFP anymore unless they know they’ve got the capacity,” says Pennie. Michael Bernstein, executive director of infrastructure and utilities at Macquarie, said they’ve been stockpiling turbines for years because they knew the increased demand was coming.

But Trillium Power has something else in mind-potentially better than stockpiling, if it works. They’re working a deal with German offshore wind turbine manufacturer Multibrid (see sidebar, page 32) who plans to build a turbine manufacturing plant in North America-more specifically, in Ontario. Hundreds of megawatts of onshore wind farms have been built around Ontario, but the turbines were imported from plants in Europe or the United States. “Ontario lost the wave for onshore-that business has gone elsewhere in the world-but we can be a major player in offshore,” says Kourtoff.

Kourtoff says the only thing stopping them right now is, basically, the same thing stopping everyone else: “there’s no opportunity for us to participate in the Ontario grid right now.” Trillium’s proposed project in the Great Lakes depends on their ability to make a power-purchase agreement with Ontario, and the OPA’s current position is that offshore projects are too expensive.Kourtoff says the numbers in a report (prepared by Helimax Energy) recently submitted by the OPA to the OEB are inaccurate.

Whittaker says offshore wind farms do cost more to build, but the wind resource is better. Basically, they’re a good idea for anyone who can make the numbers work. Kourtoff is sure it will work-he says Trillium has 30 years worth of data to back that up. “Offshore development is like an economic tsunami-in a good way-and it’s unstoppable.” He also stresses that it’s the OPA, not the government, giving them trouble. “The government has been great,” he says, “but now it’s up to the private sector to step up to the plate.”

This article appears in our July-August 2008 Issue