TORONTO (Reuters) - Canada’s wind energy sector has the lofty goal of supplying 20 percent of the country’s electricity by 2025, but that target is out of reach without better financial and policy support, say industry executives.
There is more than mounting concern for the environment at stake, say wind companies attending the Canadian Wind Energy Association conference in Toronto this week.
Canada must bolster its wind business now because the cost of power from aging coal- and natural gas-fired generators is likely to climb with a move to carbon taxes, while the economic of wind energy are seen improving.
Moreover, Canada can capitalize on a rich geographical resource. A coastline that stretches more than 240,000 km (150,000 miles) and expansive stretches of open prairie land are ideal locations for wind generators.
“Canada has a lot of opportunities. It’s got a great wind resource. It has a large hydro installed base ... Hydro and wind complement each other very nicely,” said Vic Abate, vice-president of General Electric Co’s renewable energy unit.
Hydroelectric power can help to offset the variability of wind speeds, which causes fluctuations in electricity production. When the wind blows the hydro power can be turned down; when the wind dies down, it can be cranked up.
Today, wind energy production accounts for just 1 percent of electricity demand in Canada, which has the world’s sixth largest electricity system.
The bulk of Canada’s electricity -- around 59 percent -- is by hydroelectric. Some 17 percent is coal-fired, 16 percent comes from nuclear reactors and 5 percent from natural gas, according to Environment Canada.
Reaching the industry’s 20 percent target won’t be easy or cheap. To generate that kind of power will cost a projected C$132 billion ($122 billion) and require about 22,000 wind turbines installed in 450 locations across the country, according to the wind energy association.
Policy poses another big hurdle.
Currently there is no overarching national plan on regulation, price incentives or approval processes, but rather a patchwork of provincial electricity and transmission plans.
All 10 Canadian provinces have plans to significantly boost installed capacity, but that will only result in a 5 percent market share by 2015, well behind what other countries have already reached.
Without an national plan for wind power, the country will not make the most of its domestic and export markets. And if Canada is to carve out a place as a wind energy supplier to the voracious U.S. market, where wind transmission studies are under way, it must act quickly, the association said.
“The big thing is consistently having a clear signal to both investors as well as developers,” said Kristopher Stevens, the executive director of the Ontario Sustainable Energy Association.
“And in Ontario and the rest of Canada you’ve seen ups and downs: a new program gets introduced and then it’s not renewed or it’s changed to something different,” Stevens said.
Ontario has taken a lesson from European countries that have brought significant renewable power on line, he said. The province’s Green Energy Act sets long-term contracts at above-market rates to encourage green power.
That kind of financial incentive is needed to “bridge the gap” until the economics of the industry improve, said TransAlta Corp Chief Executive Steve Snyder.
Three to five years from now, the subsidies will no longer be necessary, Snyder said. Costs for conventional power generation are poised to rise with a widely anticipated North American carbon market that will put a price on greenhouse gas emissions from fossil-fuel generators.
“People always say, why do we need incentives?,” said Canadian Hydro Developers Chief Executive Kent Brown. “It all has to do with who you’re competing against: it’s the U.S.”
Rob Mark, an energy analyst with MacDougall, MacDougall & MacTier in Toronto, said the United States and Europe have also created a more wind-friendly investment climate.
“We’re very rich in hydrocarbons and fossil fuels, it’s only natural that we’d be laggards coming to the party because there is not a great need for it,” he said in a recent interview.
Editing by Rob Wilson