Clean Wind Power

1
Clean Wind Power
2
Political Fundamentals

• Cost of wind is decreasing
• Kyoto
• Ozone annex of Clean Air Treaty
• Cost stabilization
• Rural economic development lease income not
  agriculture subsidies
• Cost of wind is decreasing

3
Cost Drivers

• Swept areas
• Tower Heights (faster winds)
• Economies of scale
• Improved siting

4
Technology
Cost Reductions
40
500 kW
1800 kW
35
30
1300 kW
25
750 kW
Radius of rotor (metres)
20
500 kW
15
10
250 kW
5
50 kW
Source AWEA
5
Technology
Cost Reductions Tower Sizes
40M
50M
65M
80M
Taller towers capture faster winds
6
Technology Cost Reductions

• Cost driver for larger blades, is stronger light
  weight blade materials
• Cost driver for taller towers is, improved tower
  and foundation designs

7
Worldwide Wind Capacity
MW
Compound 5-Year Growth 32
SourceBTM Consult and EWEA
8
Wind Economics

• No fuel cost
• Stable fuel cost
• Strong correlation to load requirement
• More production in winter
• More production on windy days
• More production during the day

9
Correlation between Supply Demand Gaspé/Québec
14
12
10
8
of annual total
6
4
2
Demand
Supply
0
Jan
Feb
Mar
Apr
May
Jun
July
Aug
Sept
Oct
Nov
Dec
Months
Source GP CO Inc.
10
Wind Economics

• What about calm days?
• Wind complimentary to water based storage
• When wind is blowing, store the water behind the
  dam
• When calm, run water through turbine
• Canada is gt 60 water power

11
Gaspé
12
Wind Investment Fundamentals

• More capital intensive than fossil fuel
• Stable cost has public policy benefit by
  eliminating fuel cost risk
• Will never have to buy carbon credits
• Will never have to buy Nox or Sox credits
• Distributed benefits can decrease line losses
  if well located
• Jobs in rural areas

13
Impact of Capital Intensity

• Property tax 20X coal plant in Ontario
• The capital crunch in EPG makes this more
  challenging
• Capital tax distorts investment to low capital,
  high operating cost investment fossil fuel
• Capital will tend to be provided for the least
  capital intensive project

14
Kyoto Process

• Kyoto 2nd round starts 2005
• Evidence of human caused climate change will
  become stronger
• What if 25 reductions are needed?
• What if 50?

15
Result?

• Wind is THE low risk investment (and water)
• Fossil plants will become more costly to operate
  (carbon credits)
• Your regulator may not accept the argument that
  this was not forseeable

16
Federal Incentive

• 1.2 /KWH 2003
• 1.0 /KWH 2004
• 1.0 /KWH 2005
• 1.0 /KWH 2006
• .8 /KWH 2007
• Payable for 10 years
• Taxable
• Limited to 1000 MW

17
Provincial Options

• RPS renewable portfolio standard
• - require retailers to buy a percentage from
  renewables
• Green Power Procurement
• Match Federal incentive
• Systems Benefit Charge

18
Other Provincial Issues

• Rules on interconnection and transmission
• Property taxes, sales tax, capital tax
• Can the power be sold? Price paid?
• Emissions are there caps?
• Crown land policies

19
Other Support

• Resource assessment, wind atlas
• Net metering
• Streamlined approvals
• Electricity labeling

20
Gaspé
21
Wind Energy

• Truly Sustainable Energy
• for the 21st Century