Category: Blog

Although Quebec has been a leader in the development and deployment of wind energy since the early 2000s, the pace has somewhat slowed since the last call for tenders in wind energy, dating back to 2014. As different phases of the Romaine hydroelectric complex and approximately 4,000 MW of wind energy were put into operation, the demand for electricity was stagnating and efficiency measures reduced electricity demand by 10TWh,  making new renewable energy projects, no matter how innovative and promising for the economy, suddenly more difficult to justify.

But the situation is evolving. And quickly, at that. Efforts to promote Quebec’s green electricity as an economic advantage are coming to fruition. These efforts should be intensified with the upcoming release of Quebec’s plan for a green economy. The province’s electricity has become an asset for attracting industries to the province and for electrifying economic sectors. And this all has an impact on planning for the Quebec electricity grid.

In the fall of 2019, Hydro-Québec Distribution published a new version of its Electricity Supply Plan, which presents forecasts up to 2029. For the first time in many years, the public corporation is forecasting an energy deficit beginning in 2026 that is likely to grow until 2029.

Of course, since last fall, the landscape has changed dramatically due to the COVID-19 pandemic, which has affected us all and had a noticeable impact on electricity demand in Quebec. However, as of today, Hydro-Québec forecasts the impact to be limited in the medium and long term. In other words, Hydro-Québec anticipates that Quebec’s green electricity will be just as sought after and popular once the economy has regained its momentum.

In the past few months Hydro-Québec led a consultation of the power generation industry in which the Canadian Renewable Energy Association and several of our members actively participated. Many respondents brought up the fact that wind energy is the most cost-competitive source of new electricity generation, while the costs of solar energy and energy storage have also dropped significantly in the past decade, making them a promising solution for Quebec’s electricity grid.

The new president and CEO of Hydro-Québec, Sophie Brochu, captured the situation quite well in her remarks to the National Assembly this summer. The dams in Quebec are holding steady, accumulating latent potential, and the buyers for clean electricity will come. Hydro-Québec already sells significant amounts of electricity to its neighbours and will be able to play an even larger role in the decarbonization of electricity grids in New York State, the states of New England, the Atlantic provinces and Ontario.

In this way, Quebec’s hydroelectric production will be able to serve as a giant battery to power the replacement of fossil energy production in neighbouring grids as well as the electrification of the economy and the deployment of new renewable energy projects in Quebec.

The challenge will be to find the most efficient way to meet Quebec’s new electricity needs and achieve its objectives in the American Northeast. The independent production of renewable energy is very well positioned to contribute to this objective —it can prolong the lifespan of current assets in operation and offer innovative solutions at competitive prices to customers in Quebec, local and host communities and major buyers of electricity outside the province.

The future of electricity development in Quebec will be new and unique in the sense that it won’t guarantee quantities of energy to one technology over another. It will instead encourage partnerships: between technologies (wind, solar, storage, hydroelectricity and hydrogen), between electricity producers and Hydro-Québec’s Distribution and Production divisions. The industry is certainly facing a different world from what we have known in the past, requiring an unprecedented capacity to adapt and innovate. But one thing is for sure: the near future promises no lack of opportunities, as long as we start preparing now.

Learn more about the Canadian Renewable Energy Association and connect with our team at members@renewablesassociation.ca if you’d like to join our Quebec Caucus.

While Alberta is well known as the home of Canada’s petroleum industry, it has also become the key province of interest for developers of wind and solar energy in Canada. Throughout the latter half of 2019 and through 2020 to date, wind and solar energy developers have announced a steady stream of new projects, coming online over the next several years. These are all significant projects, including the 117 MW Rattlesnake Ridge Wind project, the 132 MW Clareshome Solar project, and the 39 MW Burdett and Yellow Lake Solar Projects. These are not the only large scale renewable projects announced in Alberta over the past 12 months, but they do have one thing in common: they have publicly announced a contract with a customer (or off-taker) that has agreed to purchase a bundle of both electricity and carbon credits.

Indeed, these projects are likely only the tip of the iceberg. The Federal Government  will soon be holding competitive procurements to obtain similar contracts and there are many discussions underway between energy users and the renewable energy producers who currently have thousands of MW of proposed projects in the Alberta Electricity System Operator (AESO) Connection Project List.

Corporate purchases of renewable energy are driving significant new wind and solar energy development globally, and Alberta is leading Canada in this “corporate off-take agreement” approach. With all this excitement, we wanted to provide some context for why it’s happening.

During the 2019 Alberta election, the now governing United Conservative Party (UCP) announced that they would be taking a market-based approach to renewable energy, and these contracts illustrate how such an approach can work.

All renewable energy developers seek to reduce risks in volatile energy markets, where prices may fluctuate hour to hour, throughout the year. Securing an agreement to a fixed price for some or all of the power produced over the length of a decades-long project reduces these risks and attracts investment to the sector. 

There are three main reasons why Alberta is leading the way for such exciting announcements in Canada, including Alberta’s first-rate wind and solar resource, the provincial energy only market and the Technology Innovation and Emissions Reduction, or TIER, regulation.

Alberta’s Wind and Solar Resource

Alberta’s solar and wind resources are among the best and most productive in Canada. The maps, prepared for the Alberta Electricity System Operator (or the AESO) for its Long-Term Transmission Plan, demonstrate the productivity, in “hours of sunlight” for solar and “capacity factor” for wind. Where the maps are yellow, orange and red, we see the most productive regions in the province.

These resources have made the southern and south-eastern regions of Alberta among the most active areas for energy development in the country. The strength of the resource in these regions is perhaps best exemplified by the result of the AESO’s previous renewable procurements, which awarded wind contracts at an average price of 4 cents per kWh, or by the result of Alberta Infrastructure’s Solar procurement, which awarded a solar contract for 4.8 cents per kWh. For comparison, the average price on Alberta’s market between 2009 and 2019 was approximately 5.3 cents per kWh.

Alberta’s Energy Only Market

It is evident from the contract prices noted above that solar and wind energy are very competitive with other forms of energy in Alberta. This makes investment in renewables in Alberta a very welcome opportunity. And unlike in other provinces, where power is supplied by a Crown Utility, which is owned by government, plans the system and sells power, Alberta is home to a de-regulated market, where private investment determines the power mix. That is, if a developer can get a project approval and find money from investors, they can connect their project to the grid and compete for a share of the market.

So, if a company thinks that they can develop a project at a low enough cost to compete with the other generators already on the system, they can make the choice to do so. Once they have connected, they have three basic options for revenues – they can sell the power they generate to the “power pool” at the hourly price, they can sell their power to a single customer who would pay for all the power generated, or they can do a mixture of both options. The first option is the riskiest, meaning that the power plant operator may collect zero dollars in revenue in some hours, but higher revenues in others. Once power starts to be sold in a contract, the opportunities for high revenue hours disappear, but so does exposure to zero dollar hours.

For many investors, the tradeoff between the opportunity for high dollar hours and the risk of low dollar hours is one that they would like to reduce, and signing a long term, predictable contract is worth the lost opportunity of the high dollar hours. Fortunately for them, Alberta’s energy only market provides with the opportunity to make that choice.

The TIER Regulation

The Technology Innovation and Emissions Reduction regulation, which provides market-based incentives for emissions reduction in the industrial sector, provides opportunity for developers to earn revenues by selling more than just power.

Here is how:

The TIER regulation sets limits on how much carbon a given industry facility can emit into the air. If they emit too much carbon, they must pay a carbon levy to government. If they emit less carbon than they are permitted, they collect credits from government, which can be sold to other facilities, who can give these credits to the government instead of paying the levy. So, if the carbon levy is $30/tonne over the limit, but you can buy carbon credits for, say, $25/tonne, and then give that to government instead, it’s a much cheaper way to be in compliance.

This type of transaction also provides a revenue stream for industrial facilities that emit carbon below their limits. This is especially true for wind and solar facilities, which have no emissions once in operation. So, for every kWh of energy they create, a renewable power generator creates a credit that can be sold to another industrial facility. In fact, generators in Alberta have realized that they can sell power and credits to customers for a long-term, locked in price, which creates two predictable revenue streams for a developer to bring to the bank. And it is this kind of business arrangement that has led to the announcements of the projects mentioned earlier in this post.

So, to recap, Alberta is currently Canada’s leading market for renewable energy investment and a lot of that is because of the unique opportunities to secure bilateral corporate off-take agreements in the Alberta market as a result of:

1. Alberta’s world class renewable resources, which make wind and solar cost competitive with other fossil fuel generation.
2. Alberta’s Energy Only Market, which provides an opportunity for entrepreneurs to make investments and sell power to customers on both an hourly and a long-term basis.
3. The TIER regulation, which provides opportunities for renewable energy generators to monetize and generate revenues from the environmental benefits they bring to the system.

Learn more about the Canadian Renewable Energy Association and connect with our team at members@renewablesassociation.ca if you’d like to join our Alberta Caucus.

With integration of energy storage, Canada’s largest sources of new electricity generating capacity will grow significantly at all scales of deployment.

A Rapid Rise to Mainstream Power Source

The synergies between Canada’s wind and solar industries – and the growing integration of energy storage – will fully entrench their shared central role in meeting Canada’s future electricity-generation and grid-management needs. But each technology has its own impressive growth trajectory, and it’s worth reflecting on their rapid rise from niche to mainstream power sources.

In 1999 Canada had about 100 MW of utility-scale wind energy capacity, distributed across small communities in Yukon, Alberta, Ontario and Quebec. The local governments and other proponents behind them were the first to begin to capture the modern energy potential of local wind resources.

In the late 2000’s the first large-scale solar projects emerged in Ontario, paving the way for an entire supply chain to support a new, clean and community-boosting industry. At a smaller scale, the few early adopters who had been harvesting the sun’s energy for decades were joined by a growing list of both urban and rural “prosumers”, who installed solar panels for a combination of reliability, cost and environmental reasons.

In fewer than 20 years, Canada’s wind and solar capacity surged from a few hundred megawatts to more than 16,000 MW. Single wind farms reached sizes of up to 300 MW, and solar achieved 100 MW at some installations. Thousands of individual home and landowners were also generating clean, renewable solar power at smaller scales on their rooftops and properties.

But even with all this growth, scale and diversity of application, the increasingly integrated renewable energy industry has the potential to contribute so much more in Canada.

Canada’s Current Status

In 2018 wind and solar generation met about 6.2% of Canada’s electricity needs, up from a negligible level 20 years earlier. With coal and other fossil fuel generation being retired at an accelerated pace – and wind and solar representing 68% of new installed generating capacity in Canada in 2009-2018 – the share of demand they meet is set for significant increases in the years ahead.

Cost is a key growth driver. Recent energy procurements in Alberta and Saskatchewan proved wind energy to be the lowest cost source of new electricity in Canada. With 13,413 MW of installed wind energy capacity today, Canada is the world’s ninth largest wind energy producer.

Large scale solar power is also pushing into new, low cost territory and is expected to match wind energy in cost well before the end of the 2020s. Canada ranks in the top 20 countries for solar energy production with approximately 3,000 MW of installed capacity spread over 44,000 sites of diverse sizes across Canada.

Growing corporate and consumer demand for these technologies is another key growth driver. RBC and Telus Communications are among the companies whose commitments to purchase wind and solar are driving new investment. The Business Renewables Centre Canada, meanwhile, has set a goal of assisting corporations and institutions to procure two gigawatts of renewable energy by 2025.  

Energy storage, meanwhile, is emerging as a key enabler of increased wind and solar integration into electricity grids. The more than 30 rechargeable storage projects currently in operation across Canada have a combined capacity of 78 MW, and are providing energy and capacity services that enable more efficient use of renewable generation.

The diversity of storage technologies that have already been deployed is remarkable, and extensive research and development continues. Beyond batteries and water storage, Canada’s grid is already benefitting from kinetic, chemical, compressed air, hydrogen and thermal energy storage. Coupled with advanced power electronics, these technologies are leading to a more intelligent grid that can more fully leverage currently untapped capabilities.

The Next Generation of Opportunity

Increasing numbers of “hybrid” power plants are now in the development queue in Canada and across the globe, in some cases combining all three of wind and solar generation and energy storage.

Integrated and tailored approaches better meet localized energy and reliability needs, while also frequently creating community-level economic and other benefits. The technical characteristics of these inverter-based resources also lend themselves well to addressing the challenges associated with increased electrification, shifting usage patterns, and the need for added grid flexibility.

These complementary technologies help make the grid more responsive and resilient while enabling broader replacement of carbon emitting and more resource-intensive power generation. They are key elements of any credible electrification and climate change strategies.

At this point in our story, Canada and the world are faced with historic economic challenges and unprecedented climate action imperatives. As the data shows, wind, solar and energy storage are now mainstream and rapidly growing technologies that provide capable, scalable and highly affordable collaborative solutions. They have a major role to play in facing our modern challenges head on.

The Canadian Renewable Energy Association represents over 300 companies working to grow wind, solar and energy storage in Canada. Join the association today: https://renewablesassociation.ca/membership/.

Economic stimulus investments in the wake of COVID-19 must support growth in wind energy, solar energy and energy storage

Canada is making steady progress in mitigating the devastating impacts of COVID-19 on the health of Canadians and the Canadian economy. While this work is far from over, public attention is shifting to the question of how governments can best stimulate economic recovery. The scale of investment required makes this a once in a lifetime opportunity to “build back better” – ensuring that new economic activity helps us simultaneously address other significant challenges as we move forward from COVID-19.

Canada faces no bigger challenge than the threat posed by climate change.  

Consistent with climate science, Canada has committed to moving to net zero greenhouse gas emissions by 2050. While there are many potential pathways to net zero, modelling and analysis consistently show that three elements will be critical:

• Canada must move to an electricity system that emits virtually no greenhouse gas emissions,
• Canada must significantly increase (e.g., double) its electricity production and use that electricity to replace other energy sources in transportation, buildings and industry, and
• Canada must dramatically increase its production of wind and solar energy, in combination with energy storage, to contribute to these outcomes.

Unfortunately, our current pathway won’t get us to the net-zero destination. The Canadian Energy Regulator’s most recent supply and demand projections to 2040 suggest that Canada’s electricity production will move from 81% non-emitting today to just 83% in 2040. Electricity production is envisioned to increase by only 14%. And while the production of wind and solar energy is expected to double over this time period, greenhouse gas-emitting natural gas is projected to be the largest source of new electricity generation.

Government stimulus strategies in response to COVID-19 can serve to create high-quality and widely dispersed jobs, while also putting us on a viable pathway to net-zero greenhouse gas emissions by 2050. This could and should involve:

• Support for labour-intensive work like the deployment of solar energy and energy storage systems for homes and commercial and institutional buildings across Canada,
• Support for major new electricity infrastructure like new transmission lines and energy storage projects, which will enable better integration and use of wind and solar energy,
• Support for the electrification of transportation and the production of green hydrogen from wind and solar energy, which could create new industrial opportunities while reducing greenhouse gas emissions from transportation.

It’s also important to remember that economic stimulus is not only a matter of new spending. Governments can also remove market and regulatory barriers to investment, and in ways that will support progress towards net zero. This could include:

• Creating transparent, fair and competitive electricity markets and procurement processes focused on deployment of the lowest-cost non-emitting generation and energy storage, and
• Enabling and supporting increased customer choice in electricity supply, including increased customer opportunities for self-supply.

If Canada is to get on a net-zero emissions pathway, we must act now. While 2050 may seem a long way off, 30 years is not a lot of time in the electricity sector. Most of the electricity generating facilities we build today will still be operating beyond 2040. Major new infrastructure projects like transmission lines can take many years to permit and build once approved.

Changing the design of electricity markets and the regulatory frameworks that govern them is also a complex and time-consuming process. Success in 2050 depends on decisions taken today – and the wrong decisions could lock us into pathways that will make it impossible to achieve net-zero emissions in 2050 without stranding assets and investment.

On July 1, 2020, the Canadian Renewable Energy Association was formed. We support Canada’s net-zero commitment and are working to enable increased deployment of wind energy, solar energy, and energy storage across Canada – from large utility-scale facilities to commercial and residential applications.

Canada already ranks in the top 10 globally for installed wind energy capacity and in the top 20 for installed solar energy capacity. Over the last decade, wind energy has been the largest source of new generating capacity in Canada and has become the lowest cost source of new generation. Solar energy costs have been falling at an even faster rate. With our massive untapped resources, however, we can do much more.

Our response to the economic impacts of COVID-19 provides that opportunity for acceleration. The pandemic has forced us to reassess many aspects of our lives and our economy. Life after COVID-19 will not be the same, and it can in many ways be better. If we are serious about climate change and our net-zero target, we need to reassess the future of our electricity system and “build back better”.

We still have time to shape the future we want, but only if we act today.

To receive regular updates from the Canadian Renewable Energy Association, please subscribe to our newsletter and follow us on Twitter and LinkedIn. To get involved, learn how you can become a member. 

The wind energy industry is demonstrating its long-standing commitment to supporting local communities in Ontario during COVID-19

Over the past several weeks, it’s been heartening to hear about acts of kindness and support from friends and strangers for those in need during this time of uncertainty in our own communities and beyond. It’s clear that even though we’re staying apart, people are coming together, collaborating and presenting solutions.

Every day, I hear of new examples of companies stepping up in local communities to help in the fight against COVID-19. The wind energy industry is no exception and there are many innovative and collaborative efforts worth noting. Wind energy companies with operations in Ontario have been involved in supporting efforts to retool facilities to begin making personal protective equipment (PPE) and wind farm operators have donated available PPE to local hospitals. Several member companies of the Canadian Wind Energy Association (CanWEA) have kicked off initiatives supporting local food banks, seniors and mental health programs to ensure their communities are supported and protected. Many have contributed to efforts for hand sanitization, food security, and PPE in developing countries as well.

The wind industry was quick to coordinate and share information and best practices to ensure it continues to safely operate essential facilities to keep the lights on. This has led to new protocols for distancing while completing operations and maintenance and virtual site visits are becoming more widely used. As an essential service, we’ve been on regular calls with government, system operators and other industry partners to ensure the health and safety of communities and employees.

Seeing global news stories of temporary improvements in air quality and reduced greenhouse gas emissions resulting from the pandemic, have only highlighted the importance of climate action. That’s why our team is still hard at work (albeit from home) on supporting in-progress renewable energy projects throughout Canada, and pressing ahead with our Vision for a non-emitting grid by 2050. Additionally, we’re monitoring impacts to the Canadian wind energy industry and to global supply chains.

CanWEA has also been collaborating with clean energy leaders to bring forward economic stimulus ideas to government for now, and in a post-pandemic world. In fact, we were a signatory to an open letter presenting a workable plan to Ottawa to get Canadians working in the near-term, while creating a diversified, low-carbon economy. We continue to meet with government officials to bring ideas to the table.

These are certainly unprecedented times, but ideas, innovation and collaboration have and will continue to make a difference. Stay safe and healthy.

March 24, 2020

In the global transition to affordable, reliable, flexible and sustainable energy systems, Canada is playing an important role — and stakeholders across the country are embracing the change.

A recent report from the Generation Energy Council — a national group of experts, industry professionals and government leaders — articulates a vision that includes more investment in clean electricity, slashing energy waste and using more renewable fuels.

To learn more about how Canada is leading the charge, we caught up with Tom Levy, a senior wind engineer and head of wind energy research and development for Natural Resources Canada at the CanmetENERGY lab in Ottawa.

Electricity Transformation Canada: What are your thoughts about the progress we’ve made in transforming Canada’s electricity system? Are you encouraged?

Tom Levy: In the early days, we were trying to understand the tools that we would need at the system level to get to five or 10 per cent penetration [of renewable energy] within the energy mix. Now we’re talking about, “What does 100 per cent look like?” Now that systems have proven reliable at five and 10 per cent penetration, we can think bigger. The tools that were identified to support system reliability at these low levels are in use, and generally speaking, they work – this is now allowing us to think big – and 100 per cent is thinking big.

Canada has made progress. System operators and the industry have collectively advanced our understanding of how to operate power systems with reasonably high levels of renewables.

And there are a few examples in Canada that we can point to that have been able to successfully do so.

The question we are asking at CanmetENERGY-Ottawa is what’s next? How do we develop the tools that are needed to move us to 100 per cent? How do the grid codes need to evolve? How can we more effectively utilize inverter-based resources to support system reliability? What new tools will be needed?

ETC: What are your thoughts about the viability of hybrid projects that leverage wind, solar and energy storage?

TL: Based on our research, it is our understanding that multi-technology solutions will be necessary. It is unlikely that any single technology will achieve our carbon reduction goals.

So certainly, the interplay between wind, solar, storage and hydro — and interconnection and flexible and aggregated demand — are all expected to be part of that picture of what the future power system looks like.

Read full interview on ETC’s official website: https://electricitytransformation.ca/blog/hybrid-projects-have-huge-potential-a-conversation-with-tom-levy/