Clean Wind PowerClean Wind Power
Political FundamentalsPolitical Fundamentals
• Cost of wind is decreasingCost of wind is decreasing
• KyotoKyoto
• Ozone annex of Clean Air TreatyOzone annex of Clean Air Treaty
• Cost stabilizationCost stabilization
• Rural economic development – lease Rural economic development – lease income not agriculture subsidiesincome not agriculture subsidies
• Cost of wind is decreasingCost of wind is decreasing
Cost DriversCost Drivers
• Swept areasSwept areas
• Tower Heights (faster winds)Tower Heights (faster winds)
• Economies of scaleEconomies of scale
• Improved sitingImproved siting
TechnologyTechnology
35
25
15
30
20
10
40
5Ra
diu
s o
f rot
or
(me
tre
s)
500 kW
1300 kW
750 kW
500 kW
250 kW50 kW
1800 kW
Source : AWEA
Cost Reductions
TechnologyTechnologyCost Reductions
Tower Sizes
Taller towers capture faster winds
40M 50M 65M 80M
Technology: Cost ReductionsTechnology: Cost Reductions
• Cost driver for larger blades, is Cost driver for larger blades, is stronger light weight blade stronger light weight blade materialsmaterials
• Cost driver for taller towers is, Cost driver for taller towers is, improved tower and foundation improved tower and foundation designsdesigns
Worldwide Wind CapacityWorldwide Wind Capacity
0
5000
10000
15000
20000
25000
1990 1992 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Compound 5-Year Growth 32%
Source:BTM Consult and EWEA
MW
Wind Economics Wind Economics
• No fuel costNo fuel cost
• Stable fuel costStable fuel cost
• Strong correlation to load requirementStrong correlation to load requirement
– More production in winterMore production in winter
– More production on windy daysMore production on windy days
– More production during the dayMore production during the day
Correlation between Supply & DemandCorrelation between Supply & Demand Gaspé/Québec Gaspé/Québec
0
2
4
6
8
10
12
14
Jan Feb Mar Apr May Jun July Aug Sept Oct Nov DecMonths
% o
f a
nn
ual
to
tal
DemandSupply
Source: GP CO Inc.
Wind EconomicsWind Economics
What about calm days?What about calm days?
– Wind complimentary to water based Wind complimentary to water based storagestorage
– When wind is blowing, store the water When wind is blowing, store the water behind the dambehind the dam
– When calm, run water through turbineWhen calm, run water through turbine
Canada is > 60% water powerCanada is > 60% water power
GaspéGaspé
Wind Investment Wind Investment FundamentalsFundamentals
• More capital intensive than fossil fuelMore capital intensive than fossil fuel• Stable cost has public policy benefit by Stable cost has public policy benefit by
eliminating fuel cost riskeliminating fuel cost risk• Will never have to buy carbon creditsWill never have to buy carbon credits• Will never have to buy Nox or Sox creditsWill never have to buy Nox or Sox credits• Distributed benefits – can decrease line Distributed benefits – can decrease line
losses if well locatedlosses if well located• Jobs in rural areasJobs in rural areas
Impact of Capital IntensityImpact of Capital Intensity
• Property tax – 20X coal plant in OntarioProperty tax – 20X coal plant in Ontario• The capital crunch in EPG makes this more The capital crunch in EPG makes this more
challengingchallenging• Capital tax distorts investment to low Capital tax distorts investment to low
capital, high operating cost investment – capital, high operating cost investment – fossil fuelfossil fuel
• Capital will tend to be provided for the least Capital will tend to be provided for the least capital intensive projectcapital intensive project
Kyoto ProcessKyoto Process
• Kyoto 2Kyoto 2ndnd round starts 2005 round starts 2005
• Evidence of human caused climate change Evidence of human caused climate change will become strongerwill become stronger
• What if 25% reductions are needed? What if 25% reductions are needed?
• What if 50%?What if 50%?
Result?Result?
• Wind is THE low risk investment (and Wind is THE low risk investment (and water)water)
• Fossil plants will become more costly to Fossil plants will become more costly to operate (carbon credits)operate (carbon credits)
• Your regulator may not accept the argument Your regulator may not accept the argument that this was not forseeablethat this was not forseeable
Federal IncentiveFederal Incentive
1.2 ¢/KWH 20031.2 ¢/KWH 2003
1.0 ¢/KWH 20041.0 ¢/KWH 2004
1.0 ¢/KWH 20051.0 ¢/KWH 2005
1.0 ¢/KWH 20061.0 ¢/KWH 2006
.8 ¢/KWH 2007.8 ¢/KWH 2007
Payable for 10 yearsPayable for 10 years
Taxable Taxable
Limited to 1000 MW Limited to 1000 MW
Provincial OptionsProvincial Options
RPSRPS – renewable portfolio standard– renewable portfolio standard
- require retailers to buy a - require retailers to buy a percentage from renewablespercentage from renewables
Green Power ProcurementGreen Power Procurement
Match Federal incentiveMatch Federal incentive
Systems Benefit ChargeSystems Benefit Charge
Other Provincial IssuesOther Provincial Issues
• Rules on interconnection and Rules on interconnection and transmissiontransmission
• Property taxes, sales tax, capital taxProperty taxes, sales tax, capital tax
• Can the power be sold? Price paid?Can the power be sold? Price paid?
• Emissions – are there caps?Emissions – are there caps?
• Crown land policiesCrown land policies
Other SupportOther Support
• Resource assessment, wind atlasResource assessment, wind atlas
• Net meteringNet metering
• Streamlined approvalsStreamlined approvals
• Electricity labelingElectricity labeling
GaspéGaspé
Wind EnergyWind Energy
Truly Sustainable Energy Truly Sustainable Energy
for the 21st Centuryfor the 21st Century