Canada’s wind industry is on the way to a record-breaking year with almost a billion dollars invested and a doubling of installed wind capacity.
And experts are predicting that sometime over the next decade, this country will begin to produce more electricity from wind power than from natural gas.
“Wind generation has moved out of the margins and into the mainstream in Canada,” says Robert Hornung, president of the Canadian Wind Energy Association (CanWEA).
CanWEA represents more than 250 wind energy com-panies including wind turbine and component manufacturers, wind energy project developers, electric utilities and service providers.
Federal policy is one of the current challenges to the industry, says Hornung.
Funds in the federal Wind Power Production Incentive program (WPPI), which has subsidized a portion of the cost of establishing wind farms since 2001, have been frozen since April as the Conservative government hammers out its energy and environmental policies.
Developers across the country are committed to start projects after winning competitive power supply contracts based on bids in which the WPPI funds were calculated as part of projected revenues. “The economics of the projects change completely without those funds,” says Hornung.
He predicts there will be a 10-fold increase in wind power generation over the next 10 years. Combined provincial targets call for a minimum of 10,000 megawatts (MW) of electricity from wind energy by 2015.
By the end of 2006, it’s expected more than 700 MW of new wind energy projects will have been installed across the country, boosting the national production capacity to 1,218 MW – enough to power 370,000 Canadian homes.
Natural gas-fired generation now supplies about four per cent of the country’s electrical needs. For wind energy to supply five per cent of the country’s needs, it would need 13,000 MW of installed capacity.
Wind power is Canada’s fastest-growing energy source, agrees federal Natural Resources Minister Gary Lunn. “We want to ensure (its) development continues to grow,” Lunn said in a taped message to CanWEA’s 22nd annual conference held recently in Winnipeg.
But analysts say any uncertainty about policy can persuade international investors to look elsewhere – and there is plenty of competition.
For years, Canada has enjoyed a better investment reputation than the United States, where wind-power subsidy programs were less reliable. But now the U.S. has committed to a longer-term development strategy.
Although wind power has always been an attractive “green” alternative for electrical generation because it produces no air or water pollution, it’s pricier and intermittent (wind isn’t guaranteed to blow when demand for power is at its peak).
“Cost does matter,” says Ed Wojczynski, manager of the power planning and development division of Manitoba Hydro.
But when there’s a sudden increase in demand, wind power can quickly help out. “It only takes a couple of years” for a wind farm to become operational, Wojczynski says, versus a decade for new hydroelectric developments.
Coal and gas are cheaper means to produce electricity. But wind has become more attractive due to recent increases in commodity prices, coupled with greener generation policies of many nations as they work to meet Kyoto greenhouse gas-emission standards and make improvements in operational efficiency and wind prediction.
In Saskatchewan, government officials have set a goal that by 2030, one-third of the energy needs of the province will be met by renewable energy sources. “Wind is part of that mix,” says Roy Schneider, spokesman for Saskatchewan Industry and Resources.
About five per cent of the electricity produced in Saskatchewan now comes from wind power.
In Canada, 2006 wind energy revenues are expected to double from the $548 million in 2005, which was double 2004 figures. Direct employment in the industry is expected to increase to more than 5,000 full-time-equivalent jobs over the next five years.
But a surge in international demand has pushed the cost of wind turbines up between 20 and 30 per cent, playing havoc with construction budgets and timelines in Canada, says Hornung. The industry “has been victim of our own success,” he adds.
But that opens opportunities to either attract international turbine manufacturers to Canada or to develop an industry here.
“A robust Canadian wind turbine-manufacturing industry could enhance economic development, provide export opportunities and mitigate effects of the international supply situation,” says Shona Moss Lovshin, a commerce officer with Industry Canada’s electric power equipment and services team.
Industry Canada is currently identifying potential candidates “that could transfer their technology to the wind sector and make sure they are aware of the opportunity,” she added.
If Canada meets current targets, the wind energy industry is projected to generate up to $19.5 billion in investments and create 32,500 direct and 104,000 indirect job-years of employment, not to mention cutting greenhouse gas emissions by 11.5 million tonnes per year.
But the growing shortage of skilled workers could be a limiting factor. Electric utilities, the primary competitor for workers in the wind energy industry, expect to replace or repair about a third of their aging production facilities in the next decade.
But this will need to be done at the same time their workforce is predicted to dramatically shrink, says Catherine Cottingham, executive director of the not-for-profit Electricity Sector Council, a group that promotes development of the electricity industry workforce.
One-third of the workforce is expected to retire in the next eight years, and half the employees working on the transmission side are expected to leave. “We’re going to be short people to build power lines,” Cottingham says.
A shortage of transmission capability is already stalling development in Alberta.
Alberta’s transmission system in the southwest is at capacity, one of the reasons the Alberta Electric System Operator (AESO) temporarily capped transmission of power generated by wind at 900 MW (current production is about 350 MW). The other reason is to allow planning for integrating intermittent wind power into the base to ensure there is always enough power to meet demand.
“The Alberta government does not have a cap on how much wind power can be generated,” says Jerry Bellikka, communications director for Alberta Energy.
“It’s very much part of our long-term strategy,” he added, that will include renewable sources such as solar and biofuel, and sustainable sources such as clean coal (Alberta has an 800-year reserve of coal.)
About $1 billion is being spent upgrading Alberta’s transmission system and enhancing it to support new wind power development is one of three key transmission goals.
Improving inter-provincial transmission lines is also on Manitoba’s mind and is one of four challenges facing wind power development in that province, says Manitoba Hydro’s Wojczynski. Others include cost-effective generation, dependability of supply and balancing economic development and environmental protection.
“Transmission lines to Ontario, Saskatchewan and Alberta (all) need improvement,” Wojczynski said at the CanWEA conference.
The province exported $818 million of electricity in 2005, beating the previous record of $596 million set in 2001. Sales to the U.S. were up 12.9 per cent, but Canadian exports were down 30.7 per cent.
(Sharon Adams can be reached at firstname.lastname@example.org)
Sharon Adams, Business Edge