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Accounting for Wind Energy Deployment Outcomes in Canada
Honours Thesis
Environmental & Resource StudiesTrent University
Chris Ferguson-MartinApril 25, 2010
Supervisors: Dr. Stephen HillSecond reader: Dr. Asaf Zohar
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Table of Contents
1 Introduction.......................................................................................................................................42 Research Approach.........................................................................................................................52.1 Research Framework.............................................................................................................52.2 Why These Regions? ..............................................................................................................7
2.2.1 National vs. Provincial Analysis ................................................................................72.2.2 Justification of Province Selection........ .......... .......... .......... ........... .......... .......... ....... 8
2.3 Geographical Wind Resources ...........................................................................................93.2 Electricity System & Dominant Technologies........ .......... .......... ........... .......... .......... .... 112.4 Planning Policies ..................................................................................................................14
2.4.1 Governmental Wind Policies................................................................................... 142.4.2 Regulatory Approvals and Siting Processes........... ......... ............ ......... ........... .. 15
2.5 Financial Policy Incentives............................................................................................... 162.5.1 Wind Energys Economic Barriers ........................................................................162.5.2 Types of Financial Policy Incentives for Wind Power ........... ......... ........... .... 18
2.5.2.1 Feed-in-Tariff (FIT) Based on (Lewis & Wiser, 2007)............ ......... .. 192.5.2.2 Renewable Portfolio Standards (RPS) Based on (Lewis & Wiser,2007) 202.5.2.3 Government Tendering Based on (Lewis & Wiser, 2007) ........... .... 212.5.2.4 Tax Incentives Based on (Lewis & Wiser, 2007) .......... .......... ........... .. 222.5.2.5 Carbon Trade & Offsetting Systems Based on (S Hill & Thompson,2002) 232.5.2.6 Carbon Tax based on (S Hill & Thompson, 2002) ............................... 25
2.6 Stakeholder support and opposition............................................................................ 262.6.1 Pro-Wind Movements................................................................................................ 272.6.2 Anti-Wind Movements............................................................................................... 28
2.7 Ownership Patterns ............................................................................................................ 302.7.1 Community Wind Power...........................................................................................312.7.2 Corporate Wind Power based on (Kildegaard & Myers-Kuykindall,2006) 32
2.8 Canadas Federal Government........................................................................................ 333 Findings & Results........................................................................................................................ 34
3.1 Ontario...................................................................................................................................... 343.1.1 Geographical Wind Resources................................................................................ 34
3.1.2 Electricity System & Dominant Technologies......... ........... .......... .......... .......... . 353.1.3 Planning Policies .......................................................................................................... 37
3.1.3.1 Regulatory Approvals and Siting Process.......... ........... ......... ............ ........ 423.1.4 Financial Policy Incentives....................................................................................... 433.1.5 Stakeholder Support and Opposition............. ........... ......... ............ ......... .......... ... 46
3.1.5.1 Pro-Wind Movements........................................................................................ 463.1.5.2 Anti-Wind Movements ......................................................................................50
3.1.6 Ownership Patterns....................................................................................................523.2 Alberta...................................................................................................................................... 53
3.2.1 Geographical Wind Resources................................................................................ 53
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3.2.2 Electricity System & Dominant Technologies......... ........... .......... .......... .......... . 543.2.3 Planning Policies .......................................................................................................... 56
3.2.3.1 Regulatory Approvals and Siting Process........ ........... .......... .......... .......... . 583.2.4 Financial Policy Incentives....................................................................................... 593.2.5 Stakeholder Support and Opposition............. ........... ......... ............ ......... .......... ... 60
3.2.5.1 Pro-Wind Movement..........................................................................................603.2.5.2 Anti-Wind Movement ........................................................................................ 62
3.2.6 Ownership Patterns....................................................................................................623.3 Manitoba..................................................................................................................................63
3.3.1 Geographical Wind Resources................................................................................ 643.3.2 Electricity System & Dominant Technologies......... ........... .......... .......... .......... . 653.3.3 Planning Policies .......................................................................................................... 66
3.3.3.1 Regulatory Approval and Siting Processes........ ........... ......... ............ ........ 69
3.3.4 Financial Policy Incentives....................................................................................... 703.3.5 Stakeholder Support and Opposition............. ........... ......... ............ ......... .......... ... 713.3.5.1 Pro-Wind Movement..........................................................................................713.3.5.2 Anti-Wind Movement ........................................................................................ 74
3.3.6 Ownership Patterns....................................................................................................743.4 Nova Scotia............................................................................................................................. 75
3.4.1 Geographical Wind Resources................................................................................ 763.4.2 Electricity System & Dominant Technologies......... ........... ......... ........... .......... . 763.4.3 Planning Policies .......................................................................................................... 78
3.4.3.1 Regulatory Approvals and Siting Process.......... ........... ........... .......... ........ 803.4.4 Financial Policy Incentives....................................................................................... 81
3.4.5 Stakeholder Support and Opposition............. ........... ......... ............ ......... .......... ... 833.4.5.1 Pro-wind movement .......................................................................................... 833.4.5.2 Anti-Wind Movement ........................................................................................ 85
3.4.6 Ownership Patterns....................................................................................................864 Conclusions..................................................................................................................................... 87
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1 IntroductionWind energy is the fastest growing electricity generation technology in the
world, having doubled in installed capacity every three years since 2001 and
currently accounting for 2% of the worlds installed generation capacity (WWEA,
2009). Despite the distributed multitude of wind, actual wind energy
implementation that is, wind turbines and farms is scattered unevenly
throughout the world.
Canada is no different. It is home to some of the windiest areas in the world. One
must simply venture to the shores of Atlantic Canada, the prairies on WesternCanada or the Great Lakes of Ontario. But while some regions have taken full
advantage of the wind resource and implemented high levels of wind projects,
others have curiously low amounts of wind energy implementation. This begs the
question, why? Certainly there must be other forces at play.
Evidence suggests that several main factors beyond physical wind resources can
influence wind energy systems. Indeed, a similar study to mine was performed in
the European context that identified and analyzed the role of planning policies,
financial support systems, stakeholder support & opposition and local ownership
patterns on wind energy deployment rates (Toke, Breukers, & Wolsink, 2008).
Building on the work of Toke, Breukers & Wolsink, the purpose of my thesis is to
assess the role of these factors in a Canadian context using the provincial case
studies of Alberta, Manitoba, Ontario and Nova Scotia and identify additional
factors that might influence provincial wind deployment rates.
This thesis document is structured as follows. First, I provide a review of the
research approach taken throughout the study, with emphasis on the conceptual
framework developed by Toke, Breukers & Wolsink. The next chapter provides a
detailed overview of the institutional and structural factors explored in the study.
Third, the findings and results of each province are explored by examining each
factor in detail. Finally a summary of the findings is provided in conclusion.
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2 Research Approach2.1 Research Framework
In 2008, a study was published that sought to explain the differing deployment
outcomes of wind energy schemes throughout Europe by identifying and analyzing
four institutional factors the study is hereby referred to as the European Study
(Toke, et al., 2008). These factors included: government planning policies; financial
support systems; landscape values; and local ownership patterns. The study builds
on the framework developed by Toke, et al. in 2008. Indeed, a study such as mine
was specifically warranted by the authors, as the article clearly states: This gives
the opportunity to other research programmes to test, and refine, these hypotheses
in other case studies.
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Figure 1: Overview of institutional factors affecting the transfer of geographic potential into
implementation (Toke, et al., 2008)
As such, my study applies similar research methods. Like the European Study, mine
is an examination and comparison of case studies, specifically that of the provinces
of Alberta, Manitoba, Ontario and Nova Scotia. (The justification for selecting these
provinces is discussed in greater detail in the section below). However, in the case of
Canada (and specifically the individual provinces), very few case studies existed, so I
was required to the construct provincial case studies. In order to accomplish this
effectively, a significant review of existing literature, policy documents, media
reports, industry reports and other stakeholder publications was completed.
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Drawing from the European study, an historical institutionalist research approach
was applied to the study. When applied to wind energy in my study, institutions are
treated as decision-making structures, forms of organization of wind power,
planning systems and norms and agreements, which underpin wind power policy
and practise (Toke, et al., 2008). Moreover, it is recognized that institutions can
evolve or change over time due to functionalist, cultural and political factors
(Thelen, 2003). This theoretical approach was used to identify and understand the
main influencing factors of wind energy deployment. However, a historical
institutionalist approach alone was not sufficient to properly account for the
deployment outcomes in Canada, as it was clear that structural factors like the
physical structure of the electricity system and the historical presence of other
energy technologies have been extremely influential in all the provinces considered.
It should also be stressed that in no way does my study attempt to quantitative
results or conclusions. Rather, everything analyzed in the study is examined using a
qualitative lens.
2.2 Why These Regions?2.2.1 National vs. Provincial Analysis
Unlike the analysis of deployment outcomes in the European Study, this thesis does
not compare national jurisdictions. Rather, it looks at four sub-national
jurisdictions. In the North American context, this is likely appropriate for a number
of reasons. Canada is a federation and some of the responsibilities that might fall
under the jurisdiction of national governments in some other countries are instead
given to the provinces. Among these responsibilities are education, health care and
natural resources. A fourth major responsibility, particularly important to this
thesis, is electricity policy (Government of Canada, 2010a). Provinces are mandated
to control their own energy supplies and consumption without a significant role
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from the federal government although the federal government is involved with
any nuclear energy in Canada. As a result, when it comes to setting wind energy
policies, the province is the key governmental player. Moreover, Canadas provinces
are comparable in geographical size to many of the European countries analyzed in
the European Study.
2.2.2 Justification of Province SelectionTime limitations prevent a detailed comparison of every Canadian province and
territory. As a result, only a handful of provinces can be compared: Alberta,
Manitoba, Ontario and Nova Scotia. These four provinces were selected for fourreasons.
First, they represent nearly every major region of Canada: Alberta in the West;
Manitoba in Central Canada; Ontario as its own region; and Nova Scotia in the
Atlantic Provinces. These regions are separated by significant geographical
distances, but also represent a diverse mix of regional cultures.
Second, each province has considerable onshore or offshore wind resource
potential. Because this factor is roughly equal for each province, it can be viewed as
something of a control factor and makes it much easier to assess the impacts of
other factors.
Third, each province has employed a unique policy framework and financial
incentive system to encourage wind energy deployment. Policy incentive programs,
as discussed above, are often a key factor in the development of wind energy
systems and a comparison of different economic systems is of central interest to this
thesis.
Fourth, in addition to the differing economic incentive systems employed, the four
provinces have a wide variety of other differences, including but not limited to:
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socioeconomic statuses; governing political parties; and existing electricity systems,
generation technology and ownership.
2.3 Geographical Wind ResourcesThe key factor influencing the development of a wind power system is the physical
presence of geographical wind resources. Indeed, wind is the energy systems main
input. Even if hundreds of turbines are built in an area, no electricity can be
produced without the necessary wind conditions. One might liken it to a coal plant
without any coal.
Wind resources vary with geography. In generalist terms, the strongest winds can
be found at the mid-latitudes as the warm air originating from the equator interacts
with cooler air coming from the poles (Mares, 1999). Additionally, coastal regions
are especially windy, as temperature differences exist between water bodies and
landmasses.
Wind resources are measured by wind power density (often in units of watts per
square metre W/m2) or wind speed (metres per second m/s) at a particular
height, typically 30 m, 50 m and 80 m. In North America, the most accessible and
general data is available in the form of graphical wind maps, such as Environment
Canadas Canadian Wind Energy Atlas (2003) and the United States Department of
Energys (USDOE) Wind Resource Maps (2009). My study uses the Canadian Wind
Energy Atlas to assess geographical wind resources at an altitude of 80 m above
ground level and on an average annual basis in order to account for intermittency
and seasonal variations.
According to the American Wind Energy Association, in order for projects to be
economically viable, an annual average wind speed of at least 5.0 m/s should be
available (AWEA, 2009).
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Figure 2: Average Annual Wind Energy Density in Canada at 80m (Environment Canada, 2003)
A very detailed assessment of the United States wind energy potential was
completed in 1991 that measured the wind energy potential in each US state and
took excluding factors into consideration, such as national parks and transmission
capabilities (Elliot, Wendell, & Gower, 1991). As a result, it was able to calculate, in
megawatts, the potential supply of wind energy in the United States. Similar studies
have been completed for European countries and were used for the European
version of this study (Wijk & Coelingh, 1993). Unfortunately, such a study
especially one looking at each province individually has not yet been completed in
Canada. As a result, this study is not able to draw on fully quantifiable geographical
wind resources.
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Figure 3: Average Annual Wind Speed in Canada at 80m (Environment Canada, 2003)
While it is recognized that this lack of specificity is a shortfall of the study, it should
not overshadow the fact that each selected province has significant and often
economical wind resources. Moreover, the specific windy regions are explored in
much greater detail in the case studies below.
3.2 Electricity System & Dominant Technologies
The size, style and adaptability of a regions electricity system is one the most
significant factors influencing the development of wind power systems. Because
wind power is naturally decentralized, its relationship to the grid is unique from
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traditional centralized electricity generation. Most existing electricity transmission
in Canada is based on a centralized production network, meaning that large, single
power sources throughout the region and each feed directly into a central grid
(Centre for Energy, 2009). Transmission lines are therefore connected to these
relatively few sources of generation and then fed throughout the region. Some
regions use only one central grid and provide uniform access to the grid for every
consumer, while some have a series of groups often utility companies providing
access to the grid. In cases where a central grid is not available or accessible, regions
will create decentralized grids, which use a specific portfolio of energy generation
sources. Decentralized grids can be frequently found in remote areas located far
away from the central grid where it is often too expensive or inefficient to connect
to the central grid. Additionally, a rare option pursued by some is to simply take
their home off the grid.
One of the greatest advantages offered by wind power and frequently cited by its
proponents is its distributed nature. Unfortunately, while a distributed power
technology has several advantages, it is considerably more costly with regards toenergy transmission. The majority of electricity infrastructure throughout Canada is
centralized, meaning that generation is focused in a few prime areas and sent
through transmission lines onto the central grid. Electricity from wind power,
however, cannot operate in the same fashion. Because it is relatively decentralized,
transmission lines need to be extended to each wind power system. This can be
problematic, as many of the most generous wind sites are located far from the
existing grid. Moreover, as the distance of transmission and distribution (T & D)
increases, a greater share of electricity will inevitably be lost. In order to prevent
significant T & D losses, additional electricity system infrastructure must be built,
including substations and transformers.
Another important characteristic of the electricity system is the ownership
structure. Generally, a provincial electricity system can be classified as private,
public or a hybrid. Private systems are open and competitive and electricity is
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provided by private developers. If the grid is still regulated by the government, the
government often enters into power purchase agreements with private developers.
However, in some cases the entire system is deregulated and developers must enter
into power purchase agreements with individual customers. Private electricity
systems are generally more conducive to wind energy projects as private
developers tend to commit to the risk of developing wind projects compared to
crown corporations, especially in areas of significant wind resources. Moreover,
private systems tend to involve less bureaucratic processes, which can often delay
projects. Private systems, however, are more influenced by the supply and demand
for electricity and prices can be quite volatile. A public system consists of a crown
corporation holding a monopoly and generally being under no obligation to
purchase power from private developers. Public monopolies tend to be well versed
in technologies they are already familiar with and are less willing to develop wind
energy projects than their private counterparts. However, since public monopolies
are often established with the public interest in mind, electricity rates are kept low.
Moreover, generation, transmission and distribution are usually all controlled by
the one entity. Under a hybrid system, the electricity system is open andcompetitive, but crown corporations are competitors within the energy
marketplace.
The third aspect of an electricity system that could influence wind energy systems is
the nature of the existing and dominant generation technologies. As climate change
and energy security concerns have become more important to governments,
electricity generation technologies that are non-renewable and/or greenhouse gas
emitting are becoming more of a vulnerability. Many provinces with these
generation technologies, such as coal-fired, gas-fired and petroleum-fired
generation, are beginning to move away from them and look to green energy
technologies. However, some provinces, particularly those flush with hydroelectric
generation, have little incentive to move away from their dominant technologies as
hydro tends to be considered renewable and emissions free. Nuclear energy has also
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come under criticism and has the potential to provide governments with an
incentive to move towards wind energy.
2.4 Planning PoliciesWind power systems, like any infrastructure project, are subject to regulatory
involvement. In Canada, such involvement can come from any level of government,
be it local, provincial or federal. Planning policies as a primary institutional factor is
composed of several sub-factors:
2.4.1 Governmental Wind Policies
When dealing with energy policy, provincial governments can adopt official policy
stances to specific energy technologies. These policies indicate a strategic direction
a government will take with a particular energy technology. Energy policies focused
on a specific technology can be supportive, oppositional or even non-existent
many in the public policy area believe that no policy is indeed a policy in and of
itself.
Supportive policies can vary from something as simple as an oral statement of
interest from a government official to a complex program with firm economic
incentives and realistic policy targets. It is very important to make the distinction
between a supportive policy for wind technology versus other energy technologies.While supportive policies for wind are almost entirely beneficial for implementation
rates of wind power, supportive policies for other energy technologies may have an
opposite effect. For example, a supportive governmental policy for an expensive
technology such as carbon capture & storage (CCS) might hinder the
implementation of wind energy in the same jurisdiction by taking up a greater share
of finite financial and political resources. Supportive policies for renewable energy
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technologies (not including hydroelectric power) as a whole, however, are often
headlined by wind energy technology and frequently lead to a greater share of
implementation compared with other renewable technologies.
Oppositional policiesto wind energy can be particularly harmful to implementation
rates as these types of direct policies often consist of moratoriums on wind energy
deployment. While neither the federal government nor any provincial governments
in Canada have gone as far as to prohibit wind energy, regional and local
governments throughout Canada have done so, effectively eliminating wind power
development in those particular jurisdictions. Wind energy can, however, benefit
from oppositional policies to other energy technologies. For example, when a
government opposes the development of a particular energy technology because it
is non-renewable, the renewable characteristics of wind energy might attract the
interests of the government as an alternative energy source.
2.4.2 Regulatory Approvals and Siting Processes
Because a wind energy system even one with only one turbine is a major
infrastructure project, its development can have significant environmental,
economic, cultural and social impacts. The deployment of a wind energy system is
thus subject to a host of regulatory approvals.
The complexity of a particular projects approvals and siting process is very much a
function of the location of the project and the governing bodies given jurisdiction
over that particular location. Each level of government has particular and
sometimes differing requirements to be met in order for a project to receive
regulatory approval. Moreover, several approvals may be required from multiple
facets of one level of government. For example, several provincial departments may
have separate (and even overlapping) regulatory approval requirements for just
one project, while additional approvals may be required at federal and local levels.
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The complexity of the regulatory approvals process can have significant bearing on
the development of a provincial wind power system. Indeed, a complex approvals
process can delay the development of a wind power system and in many cases,
actually leads to the cancellation of projects. Streamlined and less stringent
approvals processes can increase the development of wind power systems, however
such processes can very well lead to social controversies & anti-wind movements,
particularly as a result of poor public participation processes.
2.5 Financial Policy IncentivesWind, like many renewable energy technologies, is considerably costlier than the
majority of traditional major energy technologies, especially those powered by fossil
fuels like natural gas and coal-fired plants. Indeed, the cost of electricity produced
by wind energy can range from $0.07-$0.12/kWh, much higher than rates from
traditional fossil fuel or large hydroelectric production, which generally range from
$0.04-$0.06/kWh (Centre for Energy, 2010). As a result, wind energy technologies
often require economic incentives to make the technology cost competitive or at
least economical to the developer, which is almost always impossible without some
form of economic incentive.
2.5.1 Wind Energys Economic BarriersWind is not always cost-competitive with other energy technologies for several
reasons. First, wind power is intermittent. That is, the wind does not always blow. It
is not uncommon to witness large turbines lying still because the winds are not
strong enough. And because the wind resource itself cannot be controlled, the
amount of electricity produced from wind power systems is unpredictable; it ebbs
and flows. Indeed, the average capacity factor which will vary slightly depending
on the location of wind technologies in Canada is approximately 30% (CanWEA,
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2008). This means that the turbine is only producing 30% of what it is built to
produce. Other energy technologies, like coal, have controllable resource inputs and
predictable levels of energy production and thus comparatively high capacity
factors. This not only makes high capacity technologies cheaper, but also makes
them trustworthier to supply the electricity grid. Additionally, limited electricity
storage technology hinders the potential of capturing and storing valuable
electricity produced from wind at low-demand times where the electricity would
otherwise go to waste.
Secondly, wind, because it is made up of air, is not relatively dense. As a result, a
large share of air needs to be captured in order to create electricity. Comparatively,
water has a density nearly 1000 times greater than air, making it much easier to
create electricity with a much smaller amount of water (Lide, 1990).
Thirdly, the environmental & health benefits of wind power are not taken into
account in the price of electricity. (These unaccounted for factors are known in
economics as externalities). More accurately, the environmental and human healthcosts of other energy technologies are not accounted for in electricity costs. Fossil
fuels, for example, which release carbon dioxide into the atmosphere, are
considered one of the prime causes of anthropogenic climate change, which is now
well accepted to have serious economic impacts throughout the world. With very
few carbon-pricing schemes existent in the world and virtually none in Canada
(except for moderate prices in British Columbia and Quebec), the economic costs of
carbon emitting electricity producers are not being fully taken into account (Carbon
Tax Center, 2009). Moreover, the air & water pollution costs of fossil fuel-related
production are rarely taken into account nuclear and even hydroelectric
technologies also have potential human and environmental health impacts. Indeed,
every energy technology has external costs not wholly accounted for in the price of
electricity. But without a meaningful price put on the external costs of other
energy technologies, particularly carbon emissions, the external benefits offered by
wind energy technology will not be reflected in the price of electricity produced.
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Fourth, wind power technology is a relatively new and emerging technology and the
supply of wind turbines is still relatively limited. Indeed, because of high global
demand and the lack of a major turbine manufacturer in Canada, Canadian wind
power projects are frequently subjected to a two-year lag time between an order
and final delivery of the turbines (CanWEA, 2003). The need to import the turbines
from abroad further increases the cost of wind power technology, as the cost of
shipping overseas and on land composes between 5-10% of the total system of cost
of a wind system in Canada, compared to only 3-5% for domestically manufactured
turbines (of which there are virtually none in Canada) (CanWEA, 2003; Lewis &
Wiser, 2007).
2.5.2 Types of Financial Policy Incentives for Wind PowerThe forms of economic incentives range greatly and the different strategies are used
throughout the world. Some offer direct financial inputs to wind power, while
others offer sweeping advantages to renewable energy technologies as a whole.Some incentive programs place penalties on the impacts of certain technologies
through a tax or fee system, while some taxes or fees are waived for wind power.
The types of economic incentive systems used and how they impact wind power are
listed below.
In addition to the presence of an economic incentive program, the stability of such
a program is also extremely important to the development of a wind power system.Generally speaking, economic incentive programs are more successful and lead to
greater implementation rates when created as long term, stable programs that
provide wind developers a predictable rate of return (Deutsche Bank Group, 2009).
Indeed, when economic incentive programs are introduced and removed or changed
only a few years later, it can stymie the development of wind power, especially
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when such removal or change is unexpected which happens quite frequently when
matched with relatively unstable political involvement.
It should also be noted that several of the incentive systems listed below need not be
mutually exclusive and can actually work quite effectively in concert. For example, a
renewable energy-specific program, like a feed-in-tariff can operate in accordance
with a more sweeping and broad program, like a carbon tax.
2.5.2.1Feed-in-Tariff (FIT) Based on (Lewis & Wiser, 2007)A Feed-in-Tariff (or FIT) is a fixed price of electricity offered to the producers of
particular technologies from the major consumers of electricity (often the
government). This fixed price is often much higher than the market rate of
electricity and is thus meant to make the production of electricity from that
particular technology more cost-competitive and economical for developers.
A FIT can be directed at a specific energy technology or incorporate several different
types. This structure offers an advantage for renewable energy development
because it allows different prices to be set for different technologies, ultimately
recognizing the differing costs between technologies and allowing all technologies
to become economically viable. If a particular FIT program is designed properly i.e.
having a high enough financial incentive and long-term purchase agreement and
remains stable and predictable, it can be considered the most desirable and effective
form of stimulating the development of a wind power system (Deutsche Bank
Group, 2009).
A FIT program, however, can offer several drawbacks. First, it is a subsidy and can
be expensive. It generates little to no revenue for the government and is thus
payable by the taxpayers. However, the costs of a FIT can also be met by marginally
raising the market rate of electricity and spreading the costs of the program among
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all consumers of electricity. Secondly, a FIT program might considered by some to
be unfair because it allows the government to pick and choose particular
technologies, rather than leaving it up to the market to decide.
FIT programs are most well known for spurring the development of wind power
systems in Europe, especially in Germany, Denmark & Spain among the worlds
leaders of installed capacity and penetration rates for wind power (Lewis & Wiser,
2007).
2.5.2.2Renewable Portfolio Standards (RPS) Based on (Lewis & Wiser, 2007)Also known as Mandatory Renewable Energy Targets (MRET), Renewable Portfolio
Standards set a minimum percentage of electricity from a particular energy supplier
(for example, a local electricity utility) to be sourced from renewable energy
sources. An RPS often covers a broad range of renewable technologies and therefore
does not focus directly on wind power, although wind because of the economic and
technological advantages listed earlier generally makes up the majority of a
suppliers renewable energy portfolio under an RPS. Indeed, in order to combat the
relative dominance of wind power in renewable energy portfolios, some states in
the USA have instituted RPS programs that require a certain percentage of the
renewable energy not come from wind power.
State and provincial governments primarily set RPS programs in North America,
while national programs have been set in regions throughout Europe and Asia. Such
programs have been particularly successful throughout the United States, especially
in Texas, which constitutes the largest installed capacity of wind power in the USA
(WWEA, 2009).
Policy scholars have identified several drawbacks of RPS programs since their
inception including both the competitive mechanism set by such programs and the
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government auctions are potentially fraught with risks of political corruption as the
competitive process might not be genuinely competitive. This drawback of course, is
not limited to wind power projects. Perhaps the biggest drawback to a government
tendering process is bad design, as was found in the United Kingdom during the
1990s. In the UK, the tenders frequently consisted of uncertainties and low
profitability and ultimately led to a strong disinterest from developers (Mitchell,
1995).
The number of potential drawbacks should not steer one away from the relatively
successful history of government tendering of wind power projects. Indeed, it has
been remarkably successful throughout the United States, China and as seen below,
Canada.
2.5.2.4Tax Incentives Based on (Lewis & Wiser, 2007)One of the greatest powers held by a government is its power of taxation. Whether
federal, provincial or local, governments have the ability to tax a wide variety of
activities, products, consumers and industries. Wind energy developers on the other
hand, like any business, generally despise taxes because they eat into the economic
viability of a project. This intersection creates a viable opportunity for attracting
investment into wind power development, as a series of different tax strategies can
be applied to wind power development to make projects economically viable. Such
strategies can include deductions or credits applied to income tax, property tax or
even capital gains.
In a detailed survey of international wind deployment strategies completed in 2007,
Wiser & Lewis found that in almost every country surveyed, tax incentives played
only an accompanying role to other more influential programs, most notably long
term power purchase agreements with added financial incentives.
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2.5.2.5Carbon Trade & Offsetting Systems Based on (S Hill & Thompson, 2002)
While the previous three strategies have been used as direct form of economic
incentive, carbon trading & offsetting programs place an economic value on carbon
dioxide and indirectly make carbon-emissions free energy technologies, like wind
power, more economically viable. Carbon trading and offsetting can be very
distinctly different strategies.
Carbon trading (also known as cap-and-trade) involves a government placing a limit
(a cap) on allowable carbon emissions from emitters and allocating permits (orcredits) to those whose emissions are below the limit. A stiff fine will be issued to
any emitter whose emissions are greater than the limit, but emitters can purchase
credits from those under the limit. While the price of a permit may initially be set by
the government, the demand for and supply of the permits that is, the open market
will later set the price.
A carbon trading system can be very beneficial to wind power technologies as it
makes competing energy technologies specifically, carbon-emitting technologies
more expensive by adding a financial cost to the carbon dioxide produced. In order
to avoid this cost, energy consumers will be inclined to shift from traditional, fossil
fuel energy sources to emissions-free sources like wind power. Moreover, wind
power firms could qualify to receive carbon credits and could sell these permits on
the carbon market, thereby making wind power more profitable.
A carbon trading system is dependent on several factors to make it effective as a
stimulator of wind power development. First, the price of carbon must be high
enough to both influence energy consumers to reduce their emissions and make the
shift to wind power technology. Arguably, elements of the former are more easily
obtained primarily through a series of alternative corridors like energy
conservation and efficiency while achieving the latter is considerably more
difficult. According to New Energy Finance, a clean energy consulting group recently
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purchased by the media conglomerate Bloomberg, an average carbon price of
US$38/tonne is required to make onshore wind power economically viable without
additional subsidy (The Economist, 2009). Offshore wind is even more expensive.
While such a price is not unheard of, no such price exists anywhere in North
America. Second, a carbon trading system must be regulatory as opposed to
voluntary as energy consumers are far less likely to participate in a voluntary
program. Third, critics of carbon trading programs frequently point to the free
allocation of permits to energy consumers by the government rather than at a cost.
While this can be politically effective, it makes the system itself far less so. Carbon
trading markets are no different from global free markets like a stock exchange or
currency exchange in that they face similar risks of market collapse and financial
crime, which both require heavy regulation and oversight to properly maintain the
market.
Carbon offset programs (based on (Cernetig, 2010), however, require no general
market for trading and are almost always voluntary in nature. It works quite simply:
When participating in some activity, be it taking a flight or heating your home, somecarbon dioxide will inevitably be emitted into the atmosphere contributing to
climate change. Carbon offset programs allow individuals to offset those carbon
emissions by paying an offset company to contribute to a project that is carbon-free
or even removing carbon. Projects commonly include tree planting, renewable
energy projects and the introduction of new technologies to the developing world,
such as energy efficient stoves (Cernetig, 2010). Wind energy can benefit from such
programs as they can act as a source of investment for particular projects.
Carbon offsetting is a relatively new phenomenon and services are provided by
hundreds of different companies throughout the world. Because it is almost all
voluntary, such programs are not particularly stable. More importantly, the
effectiveness of such programs is highly variable. For example, several projects
commit funds to tree planting, but fail because many of the trees die. Because of its
relative infancy, the carbon-offset industry is self-regulated and companies apply to
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industry standards rather than what would be traditionally more strict government
standards. Furthermore, there is no universally accepted price of carbon, even
within the industry itself and as a result firms commonly charge a differing and
arbitrary price on carbon. Indeed, several carbon-offset firms have run into trouble
after actions like overcharging and unsuccessful projects have been publicly
revealed (Cernetig, 2010).
Apart from the flaws of the carbon offsetting industry, they can still provide a source
of funding for wind power projects. Several firms within the United States
contribute much of their funds to wind energy projects. However, carbon-offsetting
programs alone cannot provide wind power systems with the necessary funding and
in many ways act as a supplementary support for wind power systems.
2.5.2.6Carbon Tax based on (S Hill & Thompson, 2002)Similarly to carbon trade systems, a carbon tax aids to provide an economic
incentive to wind power through the establishment of a carbon price. However,
unlike under a carbon trading system where the price of carbon is determined by
the free market, the price is instead fixed by the government implementing the tax.
A carbon tax works relatively simply. Once a price of carbon is established (for
example, $10/tonne), the tax is applied to a variety of products based on the carbon
emissions of each product. For example, unleaded gasoline carries a generally
consistent level of carbon-dioxide emissions when consumed in a car and a carbon
tax would add a fixed cost to the price of gasoline. By adding an additional cost to
carbon-emitting products and behaviours, a carbon tax is meant to discourage such
things and encourage both the reduced consumption of such behaviour and a switch
to non-carbon emitting products and behaviours. Wind energy can certainly provide
the latter.
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Because the costs of a carbon tax are generally applied throughout a regions entire
economy some carbon taxes only apply to certain activities, such as Quebecs
carbon tax on industrial fossil fuel-based energy generation it is consumers who
suffer the burden of the tax, rather than the industrial sector, as is the case under a
carbon trading system. This makes carbon taxes politically vulnerable. Indeed, it is
well accepted throughout the public policy sphere that the introduction of a new tax
is politically dangerous, especially if the tax impacts the entire electorate directly.
Similarly to a carbon trade system, in order for a carbon tax to be effective the price
level of carbon needs to be set at a reasonable price. What is reasonable depends on
a variety of economic, political, ideological and environmental factors, but also on
the goal you are trying to achieve. As mentioned above, onshore wind power
generally requires a carbon price of US$38/tonne, whereas offshore wind and solar
PV require carbon prices of US$136/tonne and US$196/tonne, respectively. Using a
carbon tax to encourage a specific energy technology is not particularly effective and
rarely if ever is it the main purpose when implementing a carbon tax; rather, it is
usually a jurisdictions efforts to reduce overall carbon emissions.
National carbon taxes have existed in many parts of Europe for several decades, the
highest and most effective being in Norway and Sweden (Carbon Tax Center, 2009).
In Canada, a national carbon tax proposition arguably led to the defeat of the
Opposition Liberal government, while a provincial tax has been successfully
implemented in British Columbia and Quebec (Whittington, 2008). However, as
mentioned with relation to both offsets and carbon trading systems, a carbon tax
acts as a supplementary support program for wind power.
2.6 Stakeholder support and opposition
Wind energy can have significant impact on a wide variety of stakeholders. The
presence of a turbine can bother nearby residents, while communities can benefit
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economically from projects. Farmers may see it as the misuse of agricultural land,
while governments might see it as a way to combat climate change. The list could go
on. Stakeholders have the potential to make or break a wind energy system
depending on which way they throw their support. Sometimes, no support or
opposition is even offered. Generally, the influence of stakeholders can be assessed
by analyzing the role of two distinct stakeholder movements: the pro-wind
movement and the anti-wind movement.
2.6.1 Pro-Wind Movements
The level of advocacy in favour of wind energy development has the potential to
heavily influence implementation rates in a particular region. Pro-wind movements
can vary in size, style and organization but they often share a similar mechanism
through which their impact on wind deployment is felt: government policies.
Because pro-wind movements often include members of the public or important
stakeholders, the government might be keen to listen. Of course, the level of
influence held by the movement would very much depend on the size of movement,
its arguments and the level of influence held by the stakeholders involved.
Pro-wind movements can exist for a variety of reasons. Some, such as the Canadian
Wind Energy Association are trade associations representing wind energy industry,
while some groups, like the Ontario Sustainable Energy Association, see wind
energy as a means to increase shared community prosperity. Many pro-wind
movements are now centred on concerns over climate change. A variety of specific
stakeholders are especially influential as advocates of wind energy, most notably
farmers and other agriculturalists. Wind energy is often seen as a potential boon to
farmers, especially as the profitability of small farms decreases.
Sometimes the most influential stakeholders in a pro-wind movement are not
directly advocates of wind energy, but rather their own advocacy work is indirectly
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linked to wind energy. For example, movements opposed to other energy
technologies especially those whose negative qualities are not shared by wind
energy can lead to a push for more wind energy implementation.
2.6.2 Anti-Wind Movements
Large, commercially sized wind developments are often a subject of much social
controversy and can frequently spur opposition. Social opposition to wind projects
can play a high degree of influence over the deployment of wind systems. In many
cases throughout the world, social opposition has severely hindered thedevelopment of wind power systems despite the economic feasibility and
environmental benefits.
The size, type and influence of such opposition can vary greatly. Predominantly,
opposition to wind power arises out of the local communities where a particular
project is being developed. These opposition groups can vary from a small cohort of
concerned residents to a formally organized and well-entrenched group. As will be
discussed below, opposition groups are also existent at the regional level. These
groups, which may span an entire province, are often considerably more organized
and influential than smaller, case-specific groups. National and international
movements against wind power also exist, however there is no well-organized
group with a focus specifically on wind energy in Canada.
Opposition to wind power is often attributed to NIMBYism (not in my backyard), a
phenomenon particularly synonymous with environmental issues. NIMBYism is
characterized by the selfish attitudes held by those that are in favour of a general
initiative (for example, wind power or nuclear power) many of these initiatives
are considered to be for the greater public good as long as the specific actions
involved in said initiative will not impact them directly (such as wind turbines or an
underground hazardous waste facility being placed near their property) (Devine-
Wright, 2005). However, this emphasis on NIMBY attitudes might be misplaced.
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Indeed, social opposition to wind energy projects is more appropriately explained
by the perceived impacts the project might have on the visual landscape, rather than
ones location within it (Wolsink, 2000). Moreover, Landenburg finds that ones
proximity to a wind power project has little to do with their acceptance or
opposition to the project (Landenburg, 2008).
Social opposition to wind energy projects is not limited simply to NIMBYism or
landscape values. Indeed, a broad range of factors can lead to and exacerbate social
opposition in wind power projects (based on (Wind Concerns Ontario, 2010)
Noise: Because wind turbines are frequently sited in rural areas, the noisecreated during operation creates noise levels generally higher than the
norm. Residents living or working nearby might find the noise created
intrusive and obstructive of the relative calmness found in rural areas.
Additionally, shadow flicker from the turbines can create an annoyance to
those living or working on adjacent properties.
Health Concerns: A growing concern related to the wind power industry isthe impact of wind turbines on human health. The presence of low-
frequency vibrations produced by the turbines in operation is believed by
some to be associated with a variety of illnesses, including migraines and
sleep deprivation. This issue has received relatively little academic study
and is still very contentious, but nonetheless is a significant contributor to
social opposition.
Wildlife Concerns: The presence of industrial wind turbines are frequentlycited as posing significant risks to bird and bat populations, particularly
when placed in migratory paths. While the evidence for and against these
claims is again debatable and regulations try to reduce these risks, it is also
a significant contributor to social opposition to wind power.
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Property Values: The presence of wind turbines (primarily because of theaesthetic, noise & health concerns) is widely believed to have a negative
impact on property values in the region affected by the wind turbines.
Distribution of Risks & Benefits: Wind power projects can sometimesunevenly distribute the risks and benefits of a project. For example, some
projects might be owned by a private group from another jurisdiction that
reaps all the economic rewards, while the residents nearby are left with the
risks associated with their health, quality of life and property values. When
the distribution of risks and benefits is not adequately balanced, social
opposition is often created.
Siting Processes: Regulatory siting processes can vary between jurisdictionsand each has its own package of requirements that need to be met by the
developers. Frequently, the degree to which these processes are followed
(even if followed to the full extent of the law) can lead to social opposition toprojects. Public consultation processes are particularly problematic as the
regulatory requirements are widely considered to be inadequate with
regards to effective public participation in the design and development of
the project.
2.7 Ownership Patterns
Wind power systems are typically owned in one of two fashions: corporate or
community. Both ownership styles offer their own advantages and disadvantages
and are common in different regions throughout the world. The nature of the
ownership style can have significant influence over social acceptability, profitability
and ultimately the implementation rates of wind power in a particular region.
Indeed, according to the European study, local (or community) ownership coincides
with higher deployment outcomes than corporate ownership (Toke, et al., 2008).
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However, a broad range of national traditions, including co-operative business
traditions, energy activism and government policies, also influences wind
ownership patterns. As a result, the relationship between deployment outcomes and
ownership patterns can vary greatly between regions.
2.7.1 Community Wind Power
Community wind energy projects (or local wind energy projects) are those that are
owned by and generally located near or within a community. While ownershipstyles can vary (co-operatives, local municipalities, First Nations Groups, etc),
community projects are owned by members of a community often many different
people or organizations and the benefits of the project are accrued directly back
into the community. Because the financial benefits are kept within the community,
the chain effects tend to have a greater financial impact than a corporate project of
the same size (Kildegaard & Myers-Kuykindall, 2006).
Community wind projects are generally considered to be more socially acceptable
because those most directly impacted by the project can have a say in its design
(Andersen, 1998). Also, a balance of risk and benefit is found with these projects. As
is often the case with corporate projects, much of the non-financial risk is taken only
by the community such as visual, environmental and health impacts while the
main benefits financial revenue are taken out of the community. Community
projects can eliminate such risk disparity. These projects can also increase energy
resiliency within a community, as community members become involved and by
association, begin learning about energy use overall. Community members also have
the option of choosing how the electricity from the projects is allocated.
Community projects, however, have several drawbacks. They can often take much
longer to install as community organizations generally take longer to make
decisions, become organized, raise capital, etc (Kildegaard & Myers-Kuykindall,
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2006). The projects are often much smaller and less financially viable as their
corporate counterparts, which makes it more difficult to find investors. As such,
community energy projects frequently require additional subsidies and funding in
order to become financially viable.
Perhaps Canadas most well known community energy project is the Exhibition
Place Wind Turbine in Toronto, ON. Co-owned by a Toronto community co-
operative and Toronto Hydro, the 750 kW project generates enough electricity for
250 homes (TREC, 2010).
2.7.2 Corporate Wind Power based on (Kildegaard & Myers-Kuykindall,2006)
Corporate wind energy projects are generally those that are privately owned by a
small number of investors who are based out of a non-local area. Much of the
financial risk of these projects is taken from non-local areas, and as such, much ofthe financial benefits are also returned to those areas. However, the community
takes the social, environmental and visual risks where the project is placed.
Corporate wind energy projects are by far the most common type of project and are
very much like any conventional business. Corporate projects, because they are
more heavily financed and much larger, tend to be much larger and are more
attractive under RfP processes. Moreover, they tend to be built much faster (per
kW) than community projects as the focus from developers is on the project itself,
while community member developers frequently already have main jobs.
Corporate projects, however, tend to generate considerably more controversy than
community projects. These projects tend to be designed only by the developers and
if community members are involved, it is primarily in a consultative sense. The risk
disparity mentioned above is an especially contentious issue and is often an
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underlying factor of additional issues of controversy. While community owned
projects attempt to bring stakeholders into the ownership scheme, corporate
projects tend to lease or rent the rights of stakeholders. For example, land that
cannot be purchased by developers is often leased directly from landowners, such
as farmers. Unfortunately, controversies have frequently arisen as some developers
use misleading contracts and other irresponsible tactics when dealing with
landowners.
2.8
Canadas Federal Government
Canadas federal government has had a relatively small role in wind energy policy
throughout the country. As discussed above, it has a much less active role than
provinces in the electricity generation sectors. Because its role has been uniform to
all Canadian provinces, its role will not be assessed in great deal throughout the case
studies. While its role has been small, it is worth a brief overview of the federal
governments role in wind energy policy in Canada.
From 1997 to 2001, the government operated the Federal Canadian Renewables
and Conservation Expenses program, a moderate tax deduction program for
renewable projects (Snodin, 2007). A more effective program was later introduced
in 2001 as the Wind Power Production Incentive (WPPI) program. Under the WPPI,
wind projects were given relatively small incentives of $10-$12/MWh for a period
of no longer than ten years (Snodin, 2007). The program had allocated funding for
up to 4 GW of installed capacity by 2010. The program ran until 2006, when it was
frozen and later cancelled by the Conservative government (Snodin, 2007).
In 2007, the government introduced the ecoENERGY for Renewable Power Incentive
(ERPI), a strikingly similar incentive program to that of the WPPI. Paying $10/MWH,
the ERPI was designed to provide $1.48B worth of funding for up to 4000 MW of
projects between 2007 and 2011 (Snodin, 2007). However, renewable energy
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project deployment has been so successful in Canada that the programs funding had
been fully allocated by 2010, one year ahead of schedule (Government of Canada,
2010b).
3 Findings & Results3.1 Ontario
Ontario first began developing wind energy systems in the early 1990s, as its first
wind project, the 0.6 MW Tiverton Wind Turbine, was installed in 1995 (CanWEA,
2010d). Since then it has installed a total of 26 projects with an installed capacity of
1,208 MW. Nearly all the projects are located in southern Ontario and all are located
onshore. It has the highest installed capacity in Canada nearly double to those
closest to it although its penetration rates are only sixth in Canada, as wind
accounts for 3.4% of the provinces installed generation capacity (Centre for Energy,
2009).
3.1.1 Geographical Wind Resources
Figure 4: Average Annual Wind Speeds in Ontario at 80m (Environment Canada, 2003)
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The most abundant geographical wind resources can be found on Ontarios water
bodies, specifically the Great Lakes regions. Generally, wind levels, at an altitude of
80 metres, vary at an annual average from 600-800 W/m2 (~9-10 m/s) offshore,
while the coasts gather 400-600 W/m2 (~7-8 m/s). These levels are very high. The
only other region in Ontario with comparatively high wind resources is on the
northern coast of Hudsons Bay. Much of the remaining significant wind resources in
Ontario can be found in southern Ontario, particularly in the Bruce Region where
levels are generally 300-400 W/m2 (~6-7.5 m/s) and the regions slightly north
and east of Toronto which typically garner 200-300 W/m2 (~5-6.5 m/s). These
windy areas cover hundreds of thousands of square kilometers, providing Ontario
with significant wind energy resources.
3.1.2 Electricity System & Dominant TechnologiesOntarios electricity supply system is the only hybrid system that is, open and
competitive, but with publicly-owned competitors in this analysis. The
competitiveness of Ontarios system has been particularly catalytic to wind energy
deployment rates, while the nature of the dominant supply technologies have
provided incentive to invest in wind energy technology. Transmission capacity has
not played as influential a role in Ontarios wind energy deployment, but has
dictated wind siting at times. It is expected, however, that transmission capacity will
likely play a defining role in Ontarios wind energy future.
Ontarios hybrid electricity supply system was born as a result of the failed attempt
by Ontarios Progressive Conservative government to completely privatize the
electricity market. In 1998, the government passed the Energy Competition Act,
which opened the electricity market to competition (Rowlands, 2007). Then in
1999, the overarching crown electricity corporation, Ontario Hydro, was divided
into five separate organizations, two of which Ontario Power Generation (OPG)
and Hydro One were intended to be sold off as private businesses (Ontario Power
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Generation, 1999). The full privatization, however, never came to fruition as OPG
and Hydro One continue to exist as crown corporations to this day.
Regardless of the failed privatization of OPG and Hydro One, the Energy Competition
Act has been a defining aspect of wind deployment in Ontario. OPG which is the
generating arm of what was Ontario Hydro and Ontario Hydro itself, expressed
very little serious interest in wind energy, holding true to the general North
American trend of public utilities preferring to stay away from wind energy. As a
result, almost all of the wind energy deployment in Ontario has had to come from
the private sector. This would not have been possible without the competitive
nature of Ontarios electricity market.
Ontarios electricity system is overseen by a variety of arms length agencies, most
notably the Ontario Power Authority which oversees the long term energy supply
to the province and the Ontario Energy Board whichs primary mandate includes
setting electricity pricing rates. While it is a competitive market, it is a regulated
one.
Ontario has one of the most diverse electricity supply mixes in Canada. Nuclear
energy, gas, hydro and coal all make up significant shares of Ontarios generating
capacity, at 32%, 24%, 22% and 18%, respectively (IESO, 2010). The remaining 4%
is almost entirely made up of wind energy. Ontario also has the second highest
generating capacity in Canada at 35,485 MW. Despite this high level of capacity,
Ontario is facing a considerable shortfall in future generating capacity. Because of
political commitments to phase out its coal-fired power plants, a need to refurbish
many of its aging nuclear and hydro plants and an expected increase in electricity
demand, the province is estimating a need to replace or refurbish a generation
capacity gap of 25,000 MW within the next decade (IESO, 2009). This factor, in
addition to many discussed in the following sections, has provided significant
incentive to increase wind energy deployment.
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Available transmission capacity for wind generation projects has had a moderate
impact on the deployment rates, although this impact was only felt for a relatively
short period of time. Shortly after the introduction of Ontarios Standard Offer
Program in 2006, the Ontario Power Authority issued a moratorium on wind energy
purchases by Hydro One in the Bruce Area because Hydro One did not have
sufficient transmission capacity in that area (OCAA, 2007).Nearly all of the
transmission capacity in the Bruce Area was allocated to the Bruce Nuclear
Generating Station. The cap has been partially lifted since in order to make room for
some wind energy projects, but the OPA is in the process of building enough
additional transmission capacity to add an additional 2,500 MW to the area (OPA,
2009c). This area of southern Ontario is particularly important because of its
generally high wind resources.
Transmission capacity is expected to be a defining characteristic of wind energy
deployment in Ontarios future. The OPA is not currently assessing the impact of
new wind energy projects on transmission capacity, but has stated that this will
soon be a major consideration when evaluating projects (OPA, 2010b).Furthermore, the OPA has planned for a significant expansion and renewal of
Ontarios transmission capacity. While the OPA touts the employment benefits of the
$2.3 billion investment, there is some indication that such expansion will take many
years to complete at the detriment to wind energy deployment rates (OPA, 2010b).
3.1.3 Planning PoliciesOntarios government has taken a positive and supportive approach to wind power
for well over a decade, although the support has been variable and marred by
political interference.
Prior to 2003, Ontarios government approach to wind power was one oflaissez-
faire; that is, wind power would compete in the free market with other energy
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technologies without any economic support from the government, although the
government did recognize many of the benefits of wind power. At this time in
Ontario, a free market electricity generation industry was relatively new. As part of
its conservative platform, the governing Progressive Conservatives intended to
privatize the otherwise wholly government-owned electricity industry in Ontario by
selling off the assets of what used to be Ontario Hydro (Rowlands, 2007). While the
transition to a privatized market never was never fully complete, the monopoly of
Ontario Hydro was removed and the market was open to private developers.
This represented a significant shift for the wind power system in Ontario. Because
Ontario Hydro had never expressed any substantial interest in developing wind
power rather, its portfolio consisted almost entirely of nuclear, coal and
hydroelectric power sources any development of wind power had to come from
the private sector, which was considerably more interested in wind power than its
public sector counterpart (OPG, 1999).
This move by the Ontario government was by no means directly intended to inducea domestic wind power industry. Rather, the impact felt by the Ontario wind
industry was simply an externality of a more general approach to a smaller public
role by the Ontario government. Indeed, while this move towards privatization
opened the door for private wind developers which were given no special
economic incentives and forced to compete with other energy technologies the
government introduced concurrent programs that stymied wind power
development, most notably the five-year freezing of electricity rates (Progressive
Conservative Party of Ontario, 1994). This was seen as a boon for consumers, who
had previously been seeing electricity rates rise well above 5% annually during the
early 1990s (Daniels & Trebilcock, 1996). For wind developers, this presented a
remarkably significant challenge, as such low costs made wind power prohibitively
expensive. That being said, the government was fairly certain that a certain segment
of the consumer market would demand green power and thus felt it required no
extra attention (Government of Ontario, 2000).
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The laissez-faire approach taken by Ontarios government shifted significantly
during the early 2000s. According to Rowlands, three separate issues occurred
concurrently to trigger such a shift: 1) Governmental committees were beginning to
explore support for wind power and other renewable technologies in much greater
depth; 2) The government began implementing an oppositional policy to its coal-
fired power plants, vowing to shut them down by 2015, largely as a result of strong
medical lobbies warning against the economic and health dangers of smog (this will
be explored in greater detail in the pro-wind movements section); 3) The e-coli
tragedy of Walkerton occurred in 2000, primarily as a result of an underfunded,
understaffed and undertrained government agency failing to properly oversee the
quality of the drinking water, sparking a growing concern among the public with the
governments approach to limited role of public bodies (Rowlands, 2007).
As a result of the culmination of these three events, two things occurred that are
particularly important to wind power. First, the government announced it would
introduce a renewable power standard, known as the Green Power Standard thisprogram will be explored in greater detail in the following Economic Support
Systems section. Secondly, and perhaps more importantly, the incumbent PC
government was defeated by the Liberal party in the 2003 provincial election.
Like the previous PC government, the Liberal government also implemented
oppositional policies towards coal-fired power, but instead chose 2007 as a target
year to have the plants shutdown this target continued be moved back through the
2000s as it became clear that meeting the targets would be extremely difficult
(Ontario Liberal Party, 2003). Nonetheless, the Liberal government has continued to
implement strong and supportive wind power policies since its election in 2003.
Indeed, they quickly announced targets of renewable electricity supplying 5% of the
provinces power by 2007 and 10% by 2010 (Ontario Liberal Party, 2003).
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To meet these targets, the government implemented its own version of the previous
governments Green Power Standard, using a government tendering process and
issuing a Request for Proposals (RfPs) (Rowlands, 2007). This system continued for
several years, largely because of the similarities between it and other RfP processes
the Ontario government was already very comfortable and familiar with. Again,
these policies were not focused exclusively on wind power, but because of wind
powers cost-effectiveness relative to other renewable technologies especially
important in an RfP process wind power made up a great deal of the projects.
The RfP soon became a political liability for the Liberal government, as costs of
projects skyrocketed, NIMBYism became rampant, and those not awarded RfP
contracts were left with nothing, making them particularly antagonistic towards the
government (Rowlands, 2007). But rather than backing away from supportive
policies of wind power, the government instead elected to pursue a different avenue
to support its development by introducing a feed-in-tariff, known as the Renewable
Energy Standard Offer Program (RESOP). This program was seen as considerably
more politically acceptable, largely because of the involvement of both the DavidSuzuki Foundation and the Ontario Sustainable Energy Association (OSEA), which
focused on the community and provincial development advantages of a feed-in-tariff
(Rowlands, 2007). Moreover, it garnered significant support from the provinces
agricultural sector, which could use the feed-in-tariff as an economic boon because
they could now own their own projects much more easily.
It should also be mentioned that the governments decision to move from an RPS
system to the RESOP was also motivated by political factors, namely its desire to
differentiate itself from the previous PC government in as many ways as possible
(Rowlands, 2007). Because the RESOP, unlike the RPS system, was not affiliated to
the previous government in any way, it was a politically attractive choice.
The RESOP program continued for several years and acted as the mainstay for the
governments policy towards wind power. The RESOP, however, became
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increasingly problematic, as it became clear that the approvals process and more
importantly, the price level, were delaying the development of wind power
significantly in the province (Rowlands, 2009). Concurrently, it became clear that
the governments ambitious plans to shut down the provinces coal-fired power
plants, one of the primary drivers behind the development of wind power in
Ontario, would be delayed. In 2007, the government changed its target to shutting
down all the plants by 2014 and continues to hold that target to this day (OCAA,
2010).
In 2009, the government introduced the Green Energy and Economy Act (shortened
to GEA), a wide-ranging piece of legislation that covers a broad range of
environmental and energy factors in Ontario. One of the main facets of the act was
an increased focus on renewable energy, including wind power. It introduced a
significantly more generous replacement of the RESOP, simply known as the Feed-
in-Tariff Program (FIT); much more ambitious targets of renewable electricity
over 15,000 MW of renewable generating capacity by 2025, with a strong desire to
exceed these targets ; a streamlined approvals process that would centralize theapproval for renewable energy projects; an obligation by utility companies to tie
new renewable energy projects into the grid; and a significant investment in
community power (Ontario Ministry of Energy and Infrastructure, 2009).
Interestingly, despite the 15,000 MW targets being announced and reprinted by a
variety of sources, as of April 22, 2010, the targets are no longer available on any
government website (HydroWorld, 2009; Pic Mobert First Nation, 2009; Sarnia-
Lambton Economic Partnership, 2009).
After the regulations were introduced in the fall of 2009, approximately 2,200
applications were submitted to the Ontario Power Authority the public body in
charge of managing the electricity supply in all of Ontario within three months for
a total of over 8,000 MW of generating capacity, almost all of which was from wind
power (OPA, 2009d). More recently, over 1000 MW of wind energy projects were
approved by the OPA (CanWEA, 2010c).
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The program, which is in its earliest stages at the time of writing, has been met with
significant administrative delays, but it is clear that the unprecedented scope of such
a program will garner considerable development of wind power in Ontario.
3.1.3.1Regulatory Approvals and Siting ProcessOntarios approvals process, for many years, was a fairly complex process. Wind
energy projects were typically required to go through myriad approvals from
different departments at the municipal and provincial levels. A requirement for
federal approval has been a rare occurrence as few projects take place on federal
land or are otherwise under federal jurisdiction. The provincial approvals process is
usually a mix of environmental, archaeological, construction and historical/cultural
approvals, much of which entailed some level of public consultation, such as an open
house or public meeting. For major wind energy projects, these processes could take
upwards of one year.
The municipal or local level approvals have been highly problematic for wind
energy projects. While these processes are primarily over zoning approvals,
complications can arise if amendments to the Official Plan are required. Moreover,
unlike a provincial approval which is provided by a sole government agency
zoning approvals and Official Plan amendments often require passage by the
municipal council or at least a standing committee, which can take time, especially if
the council requires more time to review the proposal. Sometimes projects can also
require approval by both a municipal council and a township council. Renewable
developers have also cited the redundancy in some of the approvals process because
the requirements at the municipal level can overlap with those at the provincial
level, such as the public consultation processes (Ontario Ministry of Energy and
Infrastructure, 2010).
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Although there is no publicly available data detailing the success rate of applications
in Ontario, developers have been long complaining that the approvals process is far
too cumbersome. Indeed, some organizations believe that as many as 50% of
projects are not approved or delay the process so long that the project becomes
uneconomical (Weis & Ratchford, 2009). They also count the refusal of utilities to
hook up the projects to the grid when using the 50% figure.
This has changed substantially within the past year. One of the controversial aspects
of the Green Energy Act has been its shifting of the approvals process. Under the
GEA, developers no longer require the myriad approvals described above. Instead,they simply require something called a Renewable Energy Approval, which is
provided by the provincial government. In order to receive an REA, a developer is
still required to go through the same assessments, but submits them at one time for
only one approval. More importantly and controversially the REA supersedes
any municipal authority on the projects. Quite simply, developers of wind energy
projects do not require any approval from the local government. This has proven to
upset many, although it, along with the obligation for local utilities to connect
projects to the grid, has contributed to a multitude of projects being approved
(Peterborough Examiner, 2009). Indeed, the Ontario government has awarded over
1500 MW of new wind energy projects within the past month (OPA, 2010a).
Assuming this shift in the approvals process is not politically capsizing, it could
signal a very rapid d