Canadas Wind Energy Opportunity

1
Canadas Wind Energy Opportunity

• Robert Hornung
• President, Canadian Wind Energy Association
• Economic Club of Toronto
• May 30, 2006

2
Key Messages

• Wind energy has moved from the margin to the
  mainstream in electricity production
• A number of economic and environmental drivers
  support wind energy development
• Canada has only scratched the surface of its
  tremendous wind energy opportunity
• A foundation is now emerging for the rapid growth
  of wind energy in Canada
• Work remains to be done if Canada is to capture
  the full range of wind energys economic and
  environmental benefits

3
Wind Energys Global Growth

• Global installed wind energy capacity has
  increased from 18,000 MW to 59,000 MW between
  2000 and 2005, and now produces enough power to
  meet the needs of more than 17,000,000 homes
• In 2005, wind energy met 20 of electricity
  demand in Denmark, 8 in Spain, 5 in Germany and
  4 in Portugal and Ireland
• In 2005, the total value of new installed
  capacity of wind energy was US 14 billion
• Wind energy now employs 100,000 people in
  Germany, Denmark and Spain alone
• By 2010, global installed wind energy
  capacity is expected to be 149,000 MW

4
Who is the Wind Energy Industry?

• CanWEA is Canadas national wind energy industry
  association (230 corporate members)
• Wind Turbine Manufacturers (e.g., Vestas, GE,
  Siemens, Plastiques Gagnon)
• Component Manufacturers (e.g., DMI Industries,
  Xantrex, Hitachi, LM Glasfiber)
• Utilities (e.g., Hydro-Quebec, Manitoba Hydro,
  Nova Scotia Power, ENMAX, Toronto Hydro)
• Project Developers (e.g., Vision Quest,
  Brookfield, Ventus, Canadian Hydro, EPCOR,
  Enbridge, Nexen, Suncor, TransCanada, Northland
  Power, Atlantic Wind Power)
• Service Providers

5
Wind Energys Economic Drivers

• Technological evolution led wind energys costs
  to fall 80 over 20 years and further declines
  are expected
• Wind energy is increasingly cost-competitive with
  conventional forms of electricity generation and
  will clearly become more so
• Wind energy provides long-term cost certainty as
  there is no fuel cost
• Wind energy can be built at a variety of scales
  (1 turbine or a 400 MW wind farm) and can be
  built rapidly

6
Wind Energys Economic Benefits

• Each 1 MW of installed wind energy capacity
  represents approximately 2 million of investment
  
• Each 1 MW of installed wind energy capacity
  creates 2.5 direct and 8 indirect person years of
  employment related to project development,
  manufacturing, construction and operations /
  maintenance
• Wind energy supports long-term rural economic
  development
• Land lease payments of several thousand /
  turbine / year
• Contribution to municipal tax base

7
Wind Energys Environmental Benefits

• No industry has a greater impact on the
  environment than the energy industry
• Wind energy produces no GHG emissions
• Wind energy does not contribute to acid rain or
  urban smog and releases no hazardous chemicals to
  the air
• Wind energy does not create water pollution
• Wind energy does not create any solid, hazardous
  or toxic wastes

8
Canadas Wind Energy Opportunity

• Canadas large land mass and lengthy coastlines
  give it perhaps the worlds best wind resource
• Canadas wind resource is well distributed in
  rural areas throughout the country
• Canadas massive hydroelectric resource provides
  an excellent opportunity to integrate more wind
  energy into they system than is the case in many
  other countries

9
Wind Energy in Canada Today

• Installed capacity today 944 MW 0.41 of
  total demand
• Capacity installed in 2006 (so far) 260 MW
  (annual record)

1 MW
0.4 MW
PEI 14 MW
212 MW
104 MW
283 MW
171 MW
123 MW
NS 36 MW
10
Wind Energy Rapid Growth

• Average annual growth rate (2000-2005) 38
• Growth is accelerating 54 growth in 2005
• Total growth gt 500 MW projected in 2006

11
An Emerging Policy Framework

• Canadas Federal and Provincial Governments have
  historically created strong policy frameworks to
  stimulate the development of new energy
  industries (e.g., nuclear, oil sands, offshore
  petroleum) and this is now emerging for wind
  energy
• Federal
• Wind Power Production Incentive (WPPI)
• created in 2001 (1,000 MW goal), expansion
  announced in 2005 Budget (4,000 MW goal) not
  yet implemented
• provides an incentive payment of 1 cent / kwh
  produced for a 10 year period (note US Wind
  Energy Production Tax Credit provides 1.9 cents
  US / kwh for 10 years)
• Supportive tax policy (CRCE / Class 43.1)
• Provincial
• Renewable Portfolio Standards
• Renewable / Wind Energy procurement targets
• Standard Offer Contracts

12
Governments Are Demanding More Wind Energy

• Provincial Objectives
• Quebec 4,000 MW of wind energy (2015)
• Ontario 2,700 MW of renewable energy (2010)
• Manitoba 1,000 MW of wind energy (2014)
• Alberta 900 MW of wind energy
• NB 400 MW of wind energy (2016)
• NS 380 MW of wind energy (2014)
• PEI 200 MW of wind energy (2010)
• Currently Under Construction or with a Signed
  Power Purchase Agreement 2,800 MW

13
Currently Projected Demand for Wind Energy (2015)
9,000 MW
1 MW
150 MW
PEI 200 MW
4000 MW
1000 MW
900 MW
200 MW
NB 400 MW
2400 MW
NS 380 MW
14
9,000 MW of Wind Energy in 2015

• This would produce enough electricity to meet
  3.3 of Canadas total electricity demand in 2015
• This would make wind energy responsible for 17
  of the electricity produced from new facilities
  constructed in Canada between 2005 and 2015
• This still leaves us far behind other countries
  in terms of wind energy penetration and
  development
• US (10,000 MW to be installed in the next 3
  years), Germany (18,000 MW already in place),
  Spain (20,000 MW by 2010), China (30,000 MW by
  2020)

15
Non-Barriers to Future Wind Energy Development

• Properly sited wind energy developments pose no
  significant threat to birds (U.S. studies show
  death rates of 2 birds / turbine / year) and all
  wind energy developments undergo environmental
  assessments to address any potential concerns
• Modern wind turbines are not noisy (you can have
  a normal conversation at the base) and all wind
  energy developments must meet set-back
  requirements
• While wind farms cover a large land area, they
  only make use of about 5 of the land and can
  co-exist quite successfully with other land uses
  (e.g., farming)

16
The Variability of Wind Energy Production

• Wind turbines produce electricity 80 of the time
• Total annual production equivalent to 30-40 of
  maximum theoretical production capacity
• Wind energy production varies with wind speed but
  the impact of this variability can be lessened by
  geographic distribution of wind turbines, wind
  energy forecasting and partnering with
  complementary technologies
• It is a myth that you need 1 MW of back-up power
  for every 1 MW of wind energy (most studies show
  back-up power equal to only 10 of wind energy
  capacity is required)

17
Potential Limits to Future Wind Energy Development

• Different people have different views
  (subjective) on the visual impact of wind
  turbines wind developers are working with
  communities to address this issue
• Canada needs investment in new electricity
  transmission infrastructure this must enhance
  access to quality wind resources
• Canada can integrate much more wind energy, but
  how much more? The wind energy industry and
  system operators are working on the answer
• Like any industry, the wind energy industry needs
  a stable policy environment to grow policy
  uncertainty and instability will limit
  development

18
Conclusion

• Wind energy will never meet all of Canadas
  electricity needs, but it has the potential to
  make a significant contribution (20) to Canadas
  total electricity needs while providing
  significant economic and environmental benefits
• Canada public and private sectors now recognize
  Canadas wind energy opportunity and are
  aggressively pursuing it Canadas wind energy
  boom has begun
• Canada has the potential to be a world leader in
  wind energy, but we are starting far behind other
  countries. We have much work to do, but we have a
  strong incentive to do it