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Hydro-Québec and Mitsubishi Motor Sales of Canada to launch Canada's largest all-electric vehicle pilot project in the fall of 2010

Today, Hydro-Québec and Mitsubishi Motor Sales of Canada Inc. (MMSCAN) announced the signature of a memorandum of understanding that will lead to the launch of Canada's largest all-electric vehicle pilot project this coming fall. In collaboration with the City of Boucherville, Hydro-Québec will test the performance of up to 50 Mitsubishi i-MiEVs, the vehicle which recently won the Japanese Car of the Year award for "Most Advanced Technology" at the Tokyo International Motor Show.

The project, which is evaluated at $4.5 million, aims to test the cars under a variety of road conditions, including those due to Québec's harsh winters and is designed to study the vehicles' charging behaviour, the driving experience and overall driver satisfaction. The project is the first of its kind to include the participation of a car manufacturer, a public utility, a municipality and local businesses that will integrate the vehicles into their existing fleets.

Thierry Vandal, Hydro-Québec's President and CEO declared "This new pilot project is part of our action plan for the electrification of vehicles [...] it will allow us to advance our knowledge of the technology and its integration into our grid, which in turn, will help us plan the necessary charging infrastructure for homes, offices and public places."

The City of Boucherville was selected as the project's host municipality given its proximity to Hydro-Québec's research institute (IREQ), its role in Hydro-Québec's upcoming interactive smart zone trial and the diversity of its local businesses. The availability of a local Mitsubishi dealership to oversee the i-MiEVs' maintenance was also part of the selection criteria.

i-MiEV, which stands for Mitsubishi Innovative Electric Vehicle, is an all-electric, highway-capable, charge-at-home commuter car. Because the battery, the motor and other items are mounted out of the way beneath the floor, the i-MiEV seats four adults and offers surprising interior room and cargo space. Other i-MiEV features include excellent low-speed acceleration and a very low centre of gravity, which contributes to superior handling and stability. Moreover, the i-MiEV is extremely quiet.

"We are very proud to be leading the way to a greener, more sustainable future by developing environment-friendly vehicles fuelled by clean, renewable energy," said Koji Soga, President and CEO of MMSCAN. "Mitsubishi is a leader in electric car development and the i-MiEV represents the pinnacle of our green technologies. In the same sense, Hydro-Québec and the City of Boucherville are demonstrating their environmental leadership by participating in this unique initiative."

The electric vehicle pilot project comes ahead of the government of Québec's soon to be released 2010-2015 Electric Vehicle Action Plan, announced in June 2009 and which is expected to include incentives to get electric vehicles on Québec's roadways, as well as for car and component manufacturers to establish themselves further in the province.

Canadian government announces nineteen successful projects in response to a call for proposals under the Renewable and Clean Energy portion of the Clean Energy Fund

The Honourable Lisa Raitt, Canada's Minister of Natural Resources, today announced support for nineteen (19) projects selected in response to a call for proposals under the Renewable and Clean Energy portion of the Clean Energy Fund. Up to $146 million will be invested over five (5) years to support the demonstration of renewable and clean energy across the country, including integrated community energy solutions, smart grid technology, and renewable applications with solar, wind, tidal and geothermal energy.

Under the Clean Energy Fund, part of the Government of Canada's Economic Action Plan (Budget 2009), the government is to invest almost $1 billion over five (5) years in research, development and demonstration projects to advance Canadian leadership in clean energy technologies. This includes large-scale carbon capture and storage demonstration projects, three (3) of which have already been announced totaling $466 million from the fund, as well as smaller-scale demonstration projects of renewable and alternative energy technologies such as those announced today. Total investments under the Clean Energy Fund for large and small demonstration projects are to benefit Canada's economy by leveraging nearly $3.5 billion in further investments by industry and other levels of government.

The Government is now inviting the project proponents to begin negotiations toward formal contribution agreements to set the conditions under which funding will be delivered. The funding amounts are expected to range from $2.5 million to $20 million for each project. However, until a written contribution agreement is signed by both parties, no commitment or obligation exists on the part of the Government of Canada to make a financial contribution to these projects.

Successful Project Descriptions

A) Projects expected to receive $2.5-$5 million

1. Biomass-based Urban Central Heating Demonstration
Lead proponent: SSQ, Société immobilière Inc.
Strategic Area: Buildings/Community Energy Systems
Location: Québec, Québec
Purpose: La Cité Verte is an innovative real estate project, which combines various initiatives related to sustainable development such as renewable energy utilization, energy efficient design, the management of water consumption, energy and waste management. The funding will support the installation of a biomass and wood-based district heating system. This project combines a variety of technologies and partners.

2. Utility-scale Electricity Storage Demonstration using New and Re-purposed Lithium Ion Automotive Batteries
Lead proponent: CEATI International Inc.
Strategic Area: Electricity Storage
Location: Toronto and Cornwall, Ontario, and Manitoba
Purpose: This project will address electricity storage for renewable and high-density urban applications. The project will demonstrate utility-scale electricity storage systems using new and re-purposed automotive batteries. This concept will reduce cost for electric vehicle batteries providing a future market to meet urban electricity demand using automotive batteries.

3. Energy Management Business Intelligence Platform Development and Demonstration
Lead proponent: Power Measurement Ltd.
Strategic Area: Smart Grid
Location: Commercial buildings in Calgary, Alberta, Ontario and BCIT in Burnaby, British Columbia
Purpose: This project will develop and demonstrate smart grid technology, voluntary load curtailment and peak shaving in a commercial building setting. Most projects of this type to date have focused on residences. This technology will also enable tenants to voluntarily reduce their demand based on real-time price signals.

4. Wind and Storage Demonstration in a First Nations Community
Lead proponent: Cowessess First Nation
Strategic Area: Wind/Storage
Location: Cowessess, Saskatchewan
Purpose: This project aims to demonstrate a combined wind and storage energy system in a First Nation community. The successful demonstration would prove this system as a model for other First Nation's communities across Canada.

5. Bioenergy Optimization Program Demonstration
Lead proponent: Manitoba Hydro
Strategic Area: Bioenergy
Location: Five locations in Manitoba
Purpose: This project is comprised of five different bioenergy systems at five different project sites. The project demonstrates collaboration between utility companies and customers. It is anticipated that the project will help to remove the perceived barrier of technical and operational risk and will promote the wide-scale adoption of bioenergy systems in Canada.

6. Offshore Wave Energy Demonstration
Lead proponent: SyncWave Systems Inc.
Strategic Area: Marine/Hydro
Location: Offshore Central Vancouver Island near Tofino, British Columbia
Purpose: This project will demonstrate the performance, operations and life cycle of a pre-commercial 100-kW wave energy device in ocean conditions typical of British Columbia's open coast. Canada has potentially significant wave energy resources, and it is important for Canada to participate in demonstrations to further the technology, understanding of ocean conditions and the regulatory environment.

7. Demonstration of Waste-heat Recovery at Compressor Stations
Lead proponent: Great Northern Power Corp.
Strategic Area: Hybrid Systems/Northern
Location: Compressor Stations in Alberta and British Columbia
Purpose: This project plans to demonstrate waste-heat recovery systems on a variety of stationary, reciprocating engines greater than 1,000 hp. A successful demonstration has the opportunity to lead to commercialization and wide-scale adoption of this technology at compressor stations and other industrial applications across Canada.

8. Residential Implementation of Solar-thermal Heating Systems
Lead proponent: Enbridge Gas Distribution Inc.
Strategic Area: Buildings/Solar
Location: Greater Toronto Area, Ontario
Purpose: The project will use different types of solar collectors and storage technologies to verify and compare their costs, performance and technical qualities. The project has the ability to validate the technology and provide integrated systems at a lower cost to consumers, thereby allowing greater market penetration.

9. Food and Yard Waste Anaerobic Digestion to Electricity Demonstration
Lead proponent: Harvest Power Canada Ltd.
Strategic Area: Bioenergy
Location: Fraser Richmond Soil and Fibre, British Columbia
Purpose: This project would be Canada's first high-efficiency system for producing up to 1 MW of renewable energy from food and yard waste. If successful, this technology has the potential to be rapidly deployed across Canada as a mechanism to divert food wastes from landfills and produce renewable energy.

B) Projects expected to receive $5-$10 million

10. Demonstration of Heat and Power from Biomass Gasification
Lead proponent: Nexterra Systems Corp.
Strategic Area: Bioenergy
Location: UBC Point Grey Campus, Vancouver, British Columbia
Purpose: This project will showcase biomass gasification integrated with an internal combustion engine generator in a novel, small-scale combined heat and power demonstration suited for on-site applications at public institutions, industrial facilities, and northern and remote Canadian communities. The project has the potential to overcome the difficulty of gas clean up and opens up the possibility of significant replication in Canada and overseas.

11. Energy Storage and Demand Response for Near-capacity Substation
Lead proponent: BC Hydro
Strategic Area: Smart Grid/Electricity Storage
Location: Golden and Field, British Columbia
Purpose: This project demonstrates the integration of energy storage as a mechanism for reducing electricity demand at near-peak capacity substations. This type of solution has the ability to be used in other remote communities where the grid reliability is low and the cost of the transmission line upgrade is uneconomical.

12. Interactive Smart Zone Demonstration in Québec
Lead proponent: Hydro-Québec - Institut de recherche
Strategic Area: Smart Grid
Location: Boucherville, Québec
Purpose: This project will ensure the installation of an interactive network area in a neighbourhood of Boucherville. This will demonstrate different technologies and concepts related to modernization of electrical networks, in particular the deployment of infrastructure for charging electric and hybrid rechargeable vehicles.

13. Biomass and Coal Co-firing Demonstration in Coal Plants
Lead proponent: Nova Scotia Power
Strategic Area: Bioenergy
Location: Coal Plants in Nova Scotia
Purpose: This demonstration project aims to determine optimum fuel blends for the potential co-firing of wood-based biomass with coal as a mechanism to partially replace fossil fuels with sustainable energy sources in coal plants. If successful, there is potential for wide-scale implementation across Canada and the United States.

C) Projects expected to receive $10-$20 million

14. Tidal Energy Project in the Bay of Fundy
Lead proponent: Fundy Ocean Research Centre for Energy (FORCE)
Strategic Area: Marine/Hydro
Location: Minas Passage, Bay of Fundy, Nova Scotia
Purpose: The project plans to validate the performance and resilience of tidal current turbines in the Minas Passage of the Bay of Fundy. This will be the first Canadian deployment of commercial-scale tidal turbines. The project has the potential to advance tidal energy in Canada, provide economic impacts in the Atlantic region and place Canada as a world leader in marine renewable energy.

15. Northern Application of a Geothermal District Heating System
Lead proponent: City of Yellowknife
Strategic Area: Northern/Community Energy System
Location: Yellowknife, Northwest Territories
Purpose: The City of Yellowknife is in advanced stages of project engineering and plans to install a district heating system by extracting heat from the abandoned Con Mine. This project has the potential to provide a cost effective and a more environmentally friendly alternative to fossil fuel based heat. The information that will come out of this project on the effect of extracting ground-source heat from an existing aquifer and its associated long-term heat capacity will help determine if this technology could be replicated in other northern communities.

16. Electricity Load Control Demonstration
Lead proponent: New Brunswick Power Corporation
Strategic Area: Smart Grid
Location: Four maritime communities in New Brunswick, Nova Scotia and Prince Edward Island
Purpose: Traditionally, to accommodate the intermittent nature of wind power, other generation sources are required to follow the net effect of variation in load and wind power production. This project focuses on the integration between smart grid technologies, customer loads and intermittent renewables in a region with potentially significant renewable electricity capacity. It will allow utilities to better understand how customers will react to smart grid and which loads can be controlled by real-time demand balancing in up to 750 buildings, thereby assisting these utilities to capitalize on renewable resources in the region.

17. A 9-MW Wind Technology Research and Development Park
Lead proponent: Wind Energy Institute of Canada
Strategic Area: Wind/Storage
Location: Prince Edward Island
Purpose: The 9-MW wind park proposed will be the first wind/storage combination in Prince Edward Island. The project's research base has a strong focus on information dissemination and would be a good base for supporting additional wind research.

18. Demonstration of Fish-friendly and VLH Turbines in Existing Low-head Water-control Dams
Lead proponent: Eco Joule Inc.
Strategic Area: Marine/Hydro
Location: Mississippi River System, Ontario
Purpose: This project will demonstrate three in-stream hydro technologies including fish-friendly, low-head hydro turbines along an existing water-controlled river system in Ontario. It has the opportunity to prove the technology concept, demonstrate cooperation with a conservation organization, and reduce the barriers to commercialization.

19. Community-based Geothermal Demonstration in a Remote First Nations Community
Lead proponent: Borealis GeoPower Inc./Acho Dene Koe First Nation
Strategic Area: Hybrid Systems/Northern
Location: Fort Liard, Northwest Territories
Purpose: This project will demonstrate how a northern community can use a geothermal resource to generate electricity and heat, thereby reducing the entire community's fossil fuel demand and energy costs. A successful demonstration will provide a model for other northern and First Nations communities with available geothermal resources.

GDF SUEZ Completes New Brunswick's Largest Wind Facility

GDF SUEZ has completed construction and achieved commercial operation at Caribou Wind Park, located 70 kilometers northwest of Bathurst, New Brunswick. The largest wind operation in the province, the 99 MW facility will provide all of its power to New Brunswick Power to fulfill a 20-year power purchase agreement with the utility.

Upon completion of the project, David Hay, NB Power's President & CEO was quoted as saying "NB Power is focused on minimizing its environmental footprint through a number of initiatives such as diversifying our renewable portfolio."

Achieving commercial operation of Caribou Wind Park, which is GDF SUEZ's first generation facility in New Brunswick, brings the company's North American renewable energy portfolio to 509 MW, more than 40 percent of which is wind powered generation. The company also owns and operates two wind farms, which hug the west and north capes of Prince Edward Island: West Cape Wind Farm, with a generation capacity of 99 MW, and Norway Wind Farm, which generates 9 MW. GDF SUEZ claims that over one third of its power operations in North America are carbon-free or carbon-neutral facilities.

Producing enough electricity to supply as many as 30,000 homes, Caribou Wind Park, via New Brunswick Power, will provide power to about 2 percent of the electricity needs in the province.

World's First Osmotic Power Prototype Opens Today in Norway

Today Statkraft, one of Europe's leading renewable energy companies, opened the world's first osmotic power prototype just outside Oslo, Norway. The prototype generates power by exploiting the energy available when fresh water and seawater are mixed. Osmotic power is a renewable and emissions-free energy source that Statkraft has been researching since 1997 and that will be capable of making a substantial global contribution to eco-friendly power production.

The company's President and CEO, Bård Mikkelsen stated: "This new technology generates electricity simply by mixing water. New solutions to meet the climate challenges might be closer than we expect [...] we are proud to be presenting a renewable energy source which has never been harnessed until now."

The prototype, which was developed in cooperation with R&D organisations from many countries, will have a limited production capacity and is intended primarily for testing and development purposes. The aim is to be capable of constructing a commercial osmotic power plant within a few years' time.

The global potential of osmotic power is enormous, being estimated at between 1,600-1,700 TWh per annum, which is equivalent to 50 percent of the European Union's total power production. Osmotic power plants can, in principle, be located wherever fresh water runs into the sea; they produce no noise or polluting emissions and they can be integrated into existing industrial zones, for example, in the basements of industrial buildings.

The project has attracted a lot of international interest, and several foreign guests attended the opening, which was conducted by Her Royal Highness Crown Princess Mette-Marit of Norway.

International Energy Agency launches World Energy Outlook 2009 in London

The International Energy Agency>International Energy Agency ("IEA") today launched its annual flagship publication in London. The World Energy Outlook 2009 (WEO 2009) looks at the impact of the economic downturn on energy use, CO2 emissions and energy investment and what will be required at the UN climate conference in Copenhagen to put together an agreement that stops global temperatures rising at a price that is affordable. The WEO 2009 also focuses on the natural gas resource base, current trends and the role gas will play in the future energy mix. Finally, the publication includes a review of energy in Southeast Asia, looking at that fast-growing region and its implications for global energy markets.

The IEA's Executive Director, Mr. Nobuo Tanaka declared that "World leaders gathering in Copenhagen next month for the UN Climate summit have a historic opportunity to avert the worst effects of climate change. The World Energy Outlook 2009 seeks to add momentum to their negotiations at this crucial stage by detailing the practical steps needed for a sustainable energy future as part of a global climate deal" and added that "WEO 2009 provides both a caution and grounds for optimism. Caution, because a continuation of current trends in energy use puts the world on track for a rise in temperature of up to 6°C and poses serious threats to global energy security. Optimism, because there are cost-effective solutions to avoid severe climate change while also enhancing energy security - and these are within reach as the new Outlook shows".

In conjunction with the WEO 2009, the IEA has also released an Executive Summary which provides an overview of the publication's key findings and topics, as well as a Fact Sheet, which provides data in a bullet-point format on the following questions and issues: (1) The sustainability of our current energy pathway; (2) The Impact of the financial crisis on Energy Investment (3) Natural gas' role in the global energy mix; (4) What a low-carbon energy future might look like; (5) The impact of the financial crisis on the outlook for CO2 emissions and global climate; (6) Assumptions on Energy Prices, volatility and the future of cheap energy.

Copies of the World Energy Outlook 2009 can be ordered from the IEA Bookshop.

U.S. - Canada Clean Energy Dialogue - First Report

Yesterday Canadian Environment Minister Jim Prentice and U.S. Energy Secretary Steven Chu delivered an update on the two nations' clean energy dialogue (CED), which was first announced when President Obama met with Prime Minister Stephen Harper in Ottawa this past February. The release of the report coincided with Prime Minister Harper's meeting in Washington D.C. with President Obama at which energy was on the agenda and after which Harper reminded the U.S. at a press briefing that: "[...] Canada is by far the largest supplier of energy to the United States. And [it is] determined to be a continental partner in dealing with the [...] linked problems of climate change and energy security [...]".

The three key areas on which Harper and Obama had asked their respective delegates to work together on under the auspices of the CED were: (1) The development and deployment of clean energy technology; (2) the building of a more efficient energy grid, based on clean and renewable generation; and (3) expanding R&D into clean energy.

As part of the countries' collaboration on carbon capture and sequestration (CCS), the report states that the countries will expand on existing collaboration in CO2 injection and storage testing, share information from large-scale CCS demonstration projects such as the Weyburn-Midale project in Saskatchewan, in which carbon dioxide is piped from the Great Plains Synfuels plant in North Dakota to an oilfield operated by EnCana and injected for use in enhanced oil recovery. The report goes on to insist on working towards a consistent regulatory framework between the countries, which would include compatible CCS project rules, standards, and monitoring, as well as verification and accounting principles. Bilateral meetings between Canadian and American CCS experts are planned in mid-2010 and 2011 to share best practices and provide updates on joint activities. The two nations intend to form the "Canada-U.S. CCS Collaboration" under the existing Trilateral Energy Science and Technology Agreement, which also includes Mexico and hope to formalize the arrangement through an implementation agreement by the end of 2009.

As a result of the continued growth in electricity demand, collaboration between the two nations regarding the North American power grid will focus on the open exchange of information and electricity research, development and deployment (RD&D), reliability standards, cyber security and interoperability guidelines. Upgrades to the electric power grid will aim to increase its efficiency and promote connection to clean energy sources, as well as the use of clean energy technologies.

Joint commitments regarding Clean Energy RD&D are meant to boost economic opportunities for the CED partners and the two are to develop a "Clean Energy RD&D Collaboration Framework" and a technology roadmap which would allow both nations to meet their respective 2050 greenhouse gas reduction targets. The Framework and Roadmap would notably foster a unique North American market through common codes, standards and incentives, along with collaborative research and development, sharing of information , facilities and scientific infrastructure.

The Canadian Environment Minister and U.S. Energy Secretary are expected to release the next CED report in the spring of 2010, ahead of the next bilateral meetings.

BC's Northwest Transmission Line Project to receive up to $130 million under the Green Infrastructure Fund

Almost one year ago, British Columbia Premier Gordon Campbell announced that the Province would start the environmental assessment process and First Nations consultation on the Northwest Transmission Line, which consists of a 287 kV line which would extend 335 kilometres into the Northwest portion of the province from Terrace to Meziadin Junction and north to Bob Quinn Lake.

The estimated $404 million project which is expected to be ready for construction in early 2010 has been given a serious boost as a result of yesterday's announcement by the federal government that it has been selected as a priority for funding of up to $130 million under the Green Infrastructure Fund, conditional upon the signing of a contribution agreement with the British Columbia government under the fund.

The Northwest Transmission Line will provide multiple benefits:

As the area surrounding the project has a significant potential to generate green power, local communities will be able to access clean electricity in the future, reducing their reliance on diesel generation and resulting greenhouse gas emissions. There is currently an estimated 2,000 MW of renewable energy in the area from small hydro, geothermal, wind and biomass sources and the project could immediately serve a number of potential generation projects representing approximately 500 MW being considered under British Columbia's current Clean Power Call.

The project also provides access to the electricity grid for potential customers, which in turn will support and promote economic diversification in the area. According to the Mining Association of BC, the project has the potential to attract $15 billion in new capital investments and create almost 11,000 jobs.

Lastly, construction of the transmission line will be a key step in a potential interconnection between southeast Alaska and the North American transmission grid via British Columbia.

Clean Energy Dialogue Roundtable Meeting Concludes

The Clean Energy Dialogue between Canada and the United States continued this week as meetings between the two nations wrapped up in Washington.

The public-private meeting, held June 29-30 at the Department of Energy Headquarters in Washington, DC, brought together industry and government leaders to expand bilateral clean energy cooperation.

US Energy Secretary Steven Chu expressed optimism following the talks, stating that "by working together to develop clean energy technologies and combat climate change, the United States and Canada can spark an economic recovery that will benefit both of our nations."

The Clean Energy Dialogue was announced in February 2009 following the first meeting between Prime Minister Stephen Harper and President Barack Obama in Ottawa. Established with the intention of expanding clean energy research and development in the United States and Canada, the Clean Energy Dialogue strives to develop and deploy clean energy technology; and build a more efficient energy grid based on clean and renewable energy in an effort to reduce greenhouse gases and combat climate change.

The meeting marks a significant advancement in implementing Canada's Climate Change Plan and Economic Action Plan, both aimed at supporting a cleaner more sustainable environment. Through promised collaboration on specific areas such as biofuels, clean engines, and energy efficiency, the Clean Energy Dialogue will help Canada meet its greenhouse gas emissions reduction targets and aid its commitment to ensure that 90 percent of electricity be provided by non-emitting sources by 2020.

Discussions at the Roundtable meeting involved the initial development of an Action Plan to be presented to Minister Prentice and Secretary Chu in mid-July. The expected deadline to present a finalized joint Action Plan on Clean Energy to Prime Minister Harper and President Obama is August 2009. Consultation with the provinces and private sector leaders will continue over the next few months to achieve such goal. If all of these milestones are met, momentum towards Copenhagen in December will be at an all time high.

We will continue to monitor the Clean Energy Dialogue and will report back to you regarding the Action Plan and provincial consultations as information becomes available.

With assitance from Corie Flett, Summer Student.

The Harmonization of Climate Change

Since you've been waiting with bated breath to find out what we had to say next about the federal and provincial climate change policies, we didn't want to keep you in suspense. We blogged on Monday that the provinces are throwing together climate change legislation faster than you can say "greenhouse gases".

In related news, yesterday the Globe and Mail reported that the Alberta Conservatives are taking their federal counterparts to task over energy and environment, treatment of the oil sands and other federal government policies. The controversy arises after speaking notes prepared for Conservative MLAs to raise with federal MPs in their home ridings found their way into media hands.

A significant bone of contention for Alberta's governing party appears to be with respect to the federal government's climate change policies as they relate to coal-fired electricity. In a meeting with media on April 29, Minister Prentice was asked about what types of regulations Canada would be rolling out with respect to climate change, and specifically what its policy around thermal-coal would be. The Minister replied that any new coal-fired plants will have to be neutral in terms of emissions, (which means they must have the ability to inject the carbon dioxide at the source underground). He also indicated that once coal-fired electricity plants that have come to the end of their useful lives, and have been fully depreciated, they will be decommissioned and replaced with more environmentally friendly options.

Unfortunately, the announcement appears to have been the first time the information was relayed to Alberta. Why is this so significant for Alberta in particular? Alberta relies on coal for electricity. Virtually all of the country's 27 coal plants are here. We do not have hydro in Alberta and we rely only minimally on renewables, so thermal coal is rather important for keeping the lights on. A policy such as the one outlined by the Minister means that Alberta may "shoulder the biggest burden in complying with these regulations - and depending on how they are formulated, they could have a significant impact on the health of the provincial economy". Premier Stelmach may agree. He was quoted in the Globe article as saying "You cannot ask Albertans to carry the burden of equalization, and then also penalize them for producing the wealth that allows us to make such a massive contribution to the programs that Canadians enjoy".

While the Globe story points to the issue as being one of a frayed relationship between Alberta and Ottawa, really the problem is one of harmony of regulation, not relationship.

As Canadians, we are seeking solutions to climate change at the provincial level - this is good. But it's also challenging. Each province's emissions profile is different from the next and given its industry, Alberta's situation is particularly hard to address. Intraprovincial carbon trading, for example, is a desirable mechanism, but regulations in BC are so vastly different from those in Alberta or Ontario that they will be difficult to align. You could be trading apples for oranges. The longer the provinces have to grow and develop their own programs, the harder it's going to be to allow the various systems to operate in concert.

What will drive harmonization? Probably not climate change, but rather industry (national corporations are the same whether they are operating in PEI or Saskatchewan after all) and intra-provincial trade. Degrees of harmony have to be created.

We're just beginning to explore this topic here on the blog. Stay tuned to see our thoughts on how harmony will be achieved and how the constitutional issue will be addressed.

OEB issues notice to amend Distribution System Code

On May 14, the Ontario Energy Board ("OEB") gave notice that it intends to amend the Distribution System Code ("DSC") (see also a subsequent clarification letter). The proposed amendments will change the rules for generators who wish to apply to connect to distribution systems. While under development before the passing of the Green Energy Act, the proposed amendments appears most squarely aimed at the type of renewable generation projects that will be built pursuant to Ontario's new Feed-in Tariff system.

The OEB identified two related objectives to the proposed amendments:

• "To ensure that viable generation projects, and in particular renewable generation projects, are connected to the distribution system in a timely manner";
• "To ensure that generation projects that are not likely to proceed do not impede the allocation of capacity to more viable projects."

Six major types of changes are proposed:

• The distribution connection queue will be abolished and replaced with a concept of a capacity allocation. Projects that successfully complete a connection impact assessment ("CIA") will receive a capacity allocation instead of a spot in a queue;
• CIA applications will only be accepted for feeders or substations that have available capacity to connect;
• Proponents will have to meet certain CIA application prerequisites, including confirming available capacity, showing that projects will be ready to connect within 3 years, demonstrating site control, and providing certain technical information;
• Proponents will have to pay a Connection Cost Deposit equal to 100% of the estimated connection costs and a Capacity Allocation Deposit equal to $20,000 per MW of nameplate capacity upon execution of a Connection Cost Agreement (although these deposits may be waived for applicants who have tendered security as part of the FIT application process);
• Proponents will have to meet new technical requirements, in particular by submitting engineering designs and detailed electrical drawings to the distributor at least 6 months before the planned in-service date;
• Certain transition mechanisms will be added to accommodate applicants who have already commenced applications or who hold RESOP contracts.

As evident from the notice, the proposed amendments will have to feather together with the requirements of the FIT application process, which addresses issues like capacity availability, security deposits, approval timing, and legacy projects. However, as currently worded, the proposed amendments may not fit neatly together with the Ontario Power Authority's proposed FIT process. For example, the proposed DSC amendments provide that a CIA will not be performed if the project exceeds the technical capacity limits of a distributor's system. Presumably, this refers to the existing limits of the system. In contrast, the FIT application process contemplates situations in which a FIT contract would be awarded where capacity was planned but not actually built.

The proposed DSC amendments are one of several OEB initiatives that have or will be pushed to the front burner as a result of the passing of the Green Energy Act. Other examples include the OEB's decision regarding queue exempt facilities and letter from the Board's chair suggesting that the regulatory process for reviewing capital spending by transmitters and distributors may be reviewed
Other electricity market stakeholders are also adjusting their processes as a result of the passing of the Act. For example, Hydro One Distribution is in the middle of a consultation process regarding proposed distributed generation connection requirements.

The OEB has invited comments on the proposed amendments to the DSC until June 10, 2009.

Minister Smitherman promises to "supercharge" Ontario's green economy

Minister of Energy and Infrastructure George Smitherman addressed a crowd of 750 people this morning about the Green Energy Act (the "Act") that will be tabled on this coming Monday. He did not discuss the entire Act, but did provide some more specific hints at what we should expect.

He identified the two main thrusts of the Act as being facilitating new renewable energy projects and fostering a culture of conservation. His expects that the Act will "supercharge" the green economy in Ontario and could lead to the creation of up to 50,000 new jobs in the province.

With respect to renewables, he emphasized that the Act would provide an attractive price for power and improved certainty for project developers. The attractive pricing will be in the form of a feed-in tariff regime "inspired by Europe but engineered for Ontario." The regime would apply to on- and off-shore wind, solar, geothermal and biomass projects.

Improved certainty will result from changes to the approval process for projects. The Act will replace the need for multiple approvals with a "one window, one permit" approach. The man who tackled health care wait times also announced that the Act will include service time guarantees. Specifically, complete project applications will be processed within 6 months.

As part of streamlining project development, the Act will replace the patchwork of set-back rules made by municipalities with a province-wide set-back requirement based on the Ministry's review of a wide variety of peer reviewed studies of the health risks associated with living close to wind farms and other renewable projects. This part of the Act, which Minister Smitherman characterized as an "uploading" of responsibility from the municipalities to the province, is likely to raise the ire of the NIMBYs that Premier McGuinty criticized in recent weeks.

The Act also contemplates transmission and distribution system upgrades and investment in smart grid technology, presumably at the distribution level. More accommodation will be made for distributed generation, both by facilitating interconnection and by providing grants and low-interest loans to community and cooperative power initiatives.

The Minister also hinted at an enhanced role for first nations.

As mentioned above, Minister Smitherman did not reveal every detail of the Act (he joked that doing so would take not only breakfast but all the way through lunch). However, he did indicate that the Act proposed to amend 15 existing statutes. He confirmed that the Act will be introduced in the legislature Monday morning. Stay tuned for more details.

OEB to allow small-scale renewable projects to jump the distribution connection queue

Effective February 12, 2009, the Ontario Energy Board ("OEB") amended its Distribution System Code ("DSC") to make it easier for small-scale generation projects to connect to the grid. By default, projects that wish to be connected to a distribution system are considered on a "first come first served" basis. The amendments to the DSC exempt certain projects from the default process, allowing them to jump the queue.

Under the previous version of the DSC, "micro-embedded generation projects", defined as embedded generation facilities with a name-plate rated capacity of 10 kW or less, were exempt fron the queuing process. The amendments preserve the exemption for micro-embedded generation projects and extend it to apply also to "queue exempt small embedded generation facilities", which include the following: any embedded generation facility which is not a micro-embedded generation facility and which has a name-plate rated capacity of 250 kW or less in the case of a facility connected to a less than 15 kV line and 500 kW or less in the case of a facility connected to a 15 kV or greater line.

The expanded exemption applies retroactively to projects already in the connection queue. However, distributors retain the discretion to reject applications where the proposed project may adversely impact a larger generation project already in the queue. Such rejections must be put to the OEB for consideration. A detailed discussion of the amendments, and the discussions leading up to them, is available from the OEB.

In its press release, the OEB justified the amendments as follows: "These changes will support the development of smaller, local generation by allowing pending projects to move forward immediately, and by simplifying the process to connect new smaller generation projects."

The Green Energy Act, to be unveiling next week, may further simplify the process by requiring distributors to connect renewable power projects. The Green Energy Act Alliance (see our related posting ) has been advocating for a "right to connect." We should know by Monday whether such a right is part of Minister Smitherman's bill.

Ontario Green Energy Act imminent

There has been a lot of buzz about Ontario's Green Energy Act in recent months. This week the buzz may become reality.

The "Green Energy Act" that most people have been talking about has been the Green Energy Act Alliance's draft recommendation (see also their executive summary). Despite some apparent confusion, this proposal is not law, but merely an effective PR campaign by the Alliance, an NGO. However, Premier McGuinty announced on February 5 that his government will table a Green Energy Act bill in the legislature later this month. Minister of Energy and Infrastructure George Smitherman is scheduled to address the Toronto Board of Trade about the Green Energy Act this Friday. It therefore appears that the Alliance may soon get its wish.

But will the wish be granted in full? The contents of the bill are still unknown. If it mirrors the Alliance's proposal, it will include provisions addressing the following:

• Setting of renewable power targets for the province;
• Prioritizing conservation and renewable power over the procurement of new traditional generation;
• Recognizing additional economic benefits associated with renewable and distributed power;
• Creating renewable feed-in tariffs to encourage the development of renewable power;
• Providing priority (and in some cases guaranteed) access to the grid for renewable and distributed power projects;
• Financing green power through a public debt fund;
• Recognizing the value of community-based power projects;
• Protecting the interests of First Nations and Metis;
• Upgrading transmission infrastructure to create a smart grid;
• Encouraging conservation;
• Protecting the environment, including by expediting project approvals (perhaps by curtailing recourse to the Ontario Municipal Board (the "OMB")); and
• Protecting vulnerable consumers.

We will post again once the bill is released. In the meantime, Premier McGuinty has already said that the bill will include a major investment in a smart grid for Ontario. Of the remaining measures proposed by the Alliance, the suggestion that the province should be able to fast track project approvals despite local objections has already generated significant controversy. Premier McGuinty has spoken out against unjustifiable local opposition to projects, saying "NIMBYism will no longer prevail" (where a NIMBY is one who cries "not in my backyard"). Citizens have retorted that the Premier is unfairly painting all local objections with the same brush and that the proposed measures will undermine local democracy. We expect the controversy to intensify if the bill contains such approval fast-tracking provisions.

(Interestingly, there is already a section 62.0.1 of the Planning Act (Ontario) would already appear to give the province the option of avoiding Planning Act requirements, including recourse to the OMB, for certain energy projects. However, we are unaware of any time that this power has been used.)

Stay tuned for updates once the bill is released.

Ontario electricity consumption down 2.3% in 2008

Ontario's used 148 terawatt hours (TWh) of electricity in 2008, 2.3% less than in 2007, reports Ontario's Independent Electricity System Operator (IESO). The IESO attributes the drop to changing economic conditions, increased conservation efforts, and milder weather. Paul Murphy, IESO President and CEO, emphasized the relevance of weather: "While the mild and wet summer of 2008 won't be remembered fondly by vacationers, the increased precipitation led to record levels of hydro output and a low peak demand for electricity due to a reduction in the use of air conditioning.”

Ontario produced a total of 159.3 TWh in 2008 (net exports were 10.9 TWh) from the following sources:

• Nuclear: 53% (84.4 TWh)
• Hydroelectric: 24.1 % (38.3 TWh)
• Coal: 14.5 % (23.2 TWh)
• Gas/Oil: 6.9% (11 TWh)
• Wind: 0.9% (1.4 TWh)
• Other Sources: 0.6 % (1 TWh)

IESO highlighted that coal-fired generation was down 18% from 2007 while wind power was up 35% from 2007. This is consistent with the province's desire to phase out coal while increasing renewable generation capacity. The IESO expects wind production to top 2 TWh in 2009.

Peak demand was also down in 2008. Demand surged above 24,000 MW for only 4 hours in 2008, as compared to 62 hours in 2007.

Despite the softening demand, the average weighted spot market price for energy was $51.67 per megawatt hour (MWh) or 5.2 cents per kilowatt hour (kWh), up slightly from $50.51 per MWh in 2007.

Hydro One obtains first approval for Bruce transmission line

On September 15, 2008, the Ontario Energy Board ("OEB") conditionally approved Hydro One's application to build a $635 million high-voltage transmission line from Kincardine to Milton. Once built, the line could carry up to 3,000 MW of nuclear and renewable power from the Bruce Peninsula to the power hungry Golden Horseshoe. The project, which would be the most significant transmission infrastructure upgrade in 20 years, would address one of the "orange zones", identified by OPA as having signficiant transmission capacity constraints.

The OEB's decision is the first major approval required before Hydro One can break ground on the project. The decision is conditional upon the project receiving Ontario Environmental Assessment Act approval. Hydro One will also have to secure property rights from owners whose land will be traversed by the transmission line. The line is expected to be commissioned by the end of 2011.

States turn to courts to reform climate change rules

The US is often criticized for being an overly litigious society. However, that zeal can result in some creative uses for litigation. A prime example is a growing trend, led by the New York's Attorney General Andrew Cuomo, to use lawsuits to spur legal reform with respect to the issue of climate change. The outcome of these lawsuits may have a significant impact on the legal obligations of businesses at the smokestack and in the boardroom - both in the US and here in Canada.

Reuters reported on August 25 that New York and 11 other states commenced a lawsuit against the federal Environmental Protection Agency ("EPA"). The lawsuit alleges that the EPA violated the federal Clean Air Act when it refused to impose new source performance standards on oil refineries, which produce 15% of US carbon dioxide emissions according to the claim. The coalition of states will ask the court to order the EPA to impose such standards to control the emissions of greenhouse gases from the refineries.

The lawsuit follows a decision by the US Supreme Court that the EPA has the power to regulated greenhouse gases. It is one of several state-launched suits against the EPA. Others are intended to force the EPA to regulate greenhouse gas emissions from power plants and automobiles.

If successful, the suits could force the EPA to impose significant restrictions on the greenhouse gas emissions of refineries, power plants, automobiles and potentially other sources. Even if the suits are not successul in the courts, they may prove to be an effective public relations tool for spurring change. Certainly they send a strong signal that many states want to see the EPA and other federal agencies take a more active role in addressing the climate change problem.

The changes prompted by this type of litigation will have an immediate impact on businesses operating in the US. They may also have a knock-on effect in Canada if regulators in the provinces and in Ottawa seek to harmonize Canadian requirements with those of our neighbours to the south.

New York Attorney General Cuomo is also using litigation to force companies to disclose the financial risk that climate change poses to their businesses. Back in September 2007, the Attorney General sent letters and subpeonas to Xcel Energy, AES Corporation, Dominion Resources, Dynegy Inc., and Peabody Energy (all energy companies) demanding information about the companies' analysis of the risk posed by climate change and the disclosure of that risk to investors. The Attorney General was acting pursuant to powers granted under the Martin Act, a somewhat obscure piece of legislation that has been used in recent years to chase Wall Street fraudsters. As reported by the New York Times, New York announced on August 27, 2008 that it had reached an agreement with Xcel Energy. Under the agreement, Xcel will disclose the financial risks of lawsuits and of federal or state court decisions that would affect its business. The company must also analyze and disclose the “material financial risks” associated with global warming. New York continues to negotiate with the other 4 companies.

By using the Martin Act, Attorney General Cuomo was able to take action that the Securities and Exchange Commission ("SEC") has yet to take. The SEC is under pressure both from other levels of government and from the private sector to release guidelines regarding the required disclosure of material environmental risks. (Recall from a previous posting that the Ontario Securities Commission has already started clarifying its expectations with respect to contingent environmental liabilities.)

Companies, both in the US and in Canada, can expect that they wil be under increasing regulatory pressure to consider and disclose the risks posed by climate change. If the litigation trend continues, it may be shareholders who turn to the courts to demand this type of disclosure.

Ottawa's GHG offset system to include a "fast track" project approval system for first 6 months

submitted by Grant Boyle

On August 9 the federal government published a draft Guide for Protocol Developers for Canada’s Offset System for Greenhouse Gases. The draft Guide will undergo a 60 day consultation period before a final Guide is published. The Guide is intended to provide details on the requirements to complete an Offset System Quantification Protocol and the steps that must be followed to create offset credits under the federal GHG emissions framework.

Projects must take place in Canada, must have started on or after January 1, 2000, must be surplus to all legal requirements (federal, provincial/territorial and regional) and go beyond what is expected from the receipt of other climate change incentives (federal, provincial/territorial). Credits may be issued for reductions achieved after January 1, 2008.

The quantification requirements in the Guide are based on the ISO 14064 standard. The Guide does not provide or recommend an approach to quantify GHG reductions from specific project types and will rely on project proponents to develop and submit their own protocols to Environment Canada for approval, unless the protocol type has already been approved by the Ministry. The approvals process is expected to take 5-8 months.

During the first six months of the operation of the Offset System, Environment Canada will implement a modified and accelerated process to review and approve Offset System Quantification Protocols that are derived from a list of 40 “external protocols” from other systems, including: the Clean Development Mechanism, Alberta’s Specified Gas Emitters Regulation, the California Climate Action Registry, the Greenhouse Gas Abatement Scheme in New South Wales, France’s Offset System, and the Regional Greenhouse Gas Initiative. The Guide includes a proposed list of external protocols for “fast track” approval:

Agriculture
*Including Edible Oils in Cattle Feeding Regimes (Alberta)
*Reducing Days on Feed of Cattle (Alberta)
*Reducing the Slaughter Age of Cattle (Alberta)
*Anaerobic Decomposition of Agricultural Materials (Alberta)
*Livestock Project Reporting Protocol Capturing And Combusting Methane From *Manure Management Systems (California)
*GHG Emission Reductions From Manure Management Systems (CDM)
*Innovative Feeding Of Swine and Storing and Spreading of Swine Manure (Alberta)
*Tillage System Management (Alberta)

Energy Efficiency
*Waste Gas Or Waste Heat Or Waste Pressure Based Energy Systems (CDM)
*Residential Buildings (Alberta)
*Commercial Buildings(Alberta)
*Waste Heat Recovery Projects (Alberta)
*Waste Heat Recovery Project - Streamlined(Alberta)
*Energy Efficiency Projects (Alberta)

Forestry
*Afforestation Projects (Alberta)
*Forest Management (California)

Fossil Fuels
*Industrial Fuel Switching From Coal Or Petroleum Fuels To Natural Gas (CDM)
*Switching From Coal And/Or Petroleum Fuels To Natural Gas In Existing Power Plants For Electricity Generation (CDM)

Geological Sequestration
*Acid Gas Injection (Alberta)
*Enhanced Oil Recovery (Alberta)

Methane
*Landfill Gas Capture And Combustion (Alberta)
*Landfill Project Reporting Protocol Collecting And Combusting Methane From Landfills (California)
*Landfill Gas Project Activities (CDM)
*Coal Bed Methane, Coal Mine Methane And Ventilation Air Methane Capture And Use For Power (Electrical Or Motive) And Heat And/Or Destruction By Flaring Or Catalytic Oxidation (CDM)
*Aerobic Composting (Alberta)
*Aerobic Landfill Bioreactor Projects (Alberta)
*Coalmine Methane and Abandoned Mine Methane Capture and Destruction Projects (General Electric AES)
*Waste Water Treatment Methane Capture and Destruction Projects (General Electric AES)

Renewable Energy
*Biomass to Energy from Biomass Combustion Facilities (Alberta)
*Electricity Generation From Biomass Residues (CDM)
*Run Of River Power Generation (Alberta)
*Solar Power Generation (Alberta)
*Wind Power Generation (Alberta)
*Introduction Of A New Primary District Heating System (CDM)
*Grid Connected Electricity Generation From Renewable Sources (CDM)

Transportation
*For Gravel And Lightly Surfaced Road Re-Surfacing Projects (Alberta)
*For Freight Modal Shifting (Alberta)

Waste
*Recovery & Utilization Of Gas From Oil Wells That Would Otherwise Be Flared (CDM)
*Non-Incineration Thermal Waste Management (Alberta)

Other
*Biofuels Productions And Usage (Alberta)
*Catalytic Reductions Ofn2o Inside The Ammonia Burner Of Nitric Acid Plants (CDM)

BC Energy to US Market - Juan de Fuca Cable Permit Could Clear the Congested Way

On June 12, 2008 Sea Breeze Power Corp. announced that the US Department of Energy issued a Presidential Permit (DOE Permit) for the Juan de Fuca Cable. The Cable is a proposed 550 MW High Voltage Direct Current Light® international submarine transmission cable that would connect Vancouver Island and Washington State’s Olympic Peninsula. The Cable would be an alternative to traditional high voltage overhead lines and could be used for the transmission of electricity bought and sold between BC and US markets to the south, such as California. Currently, electricity is transmitted through a single congested pathway referred to as the I-5 Corridor.

The DOE Permit is required for any proposal to construct an electric transmission line across the U.S. international border and is the US counterpart to the Canadian National Energy Board’s issuance of a Certificate of Public Convenience and Necessity. The Juan de Fuca Cable is being developed through a joint venture between Sea Breeze Power Corp., Boundless Energy NW, Inc., and United States Power Fund, LP, a private equity fund managed by Energy Investors Funds (“EIF”).

The timing of the DOE Permit coincides with the coming announcement of the results of Pacific Gas and Electric’s $14 million US study of B.C.'s vast green electricity potential - and opportunities to bring that power to the American market.

California releases draft climate change plan

On June 26, the California Air Resources Board ("CARB") released the discussion draft of its Climate Change Draft Scoping Plan (the "Draft Scoping Plan"), enacted pursuant to Assembly Bill 32, the California Global Warming Solutions Act of 2006 ("AB 32"). The Draft Scoping Plan sets out California's roadmap for achieving greenhouse gas emissions reductions. Given that California has a history of leading environmental change, and that some of its initiatives are not confined within the state's borders, regulators and businesses operating in Canada, the U.S. and Mexico should pay careful attention to developments in the Golden State.

CARB's goal is to reduce emissions to 1990 levels by 2020, which amounts to approximately a 10% reduction from today's levels. The goal is ambitious, but should still be understood in perspective. Had the United States ratified the Kyoto Protocol, it would have been under an obligation to reduce its emissions to 7% below 1990 levels by 2012. California's long term goal is significantly more ambitious: the Draft Scoping Plan requires an 80% reduction of greenhouse gases from 1990 levels by 2050.

The following are the key elements of CARB's recommendations for achieving those goals:

• Expansion and strengthening of existing energy efficiency programs and building and appliance standards;
• Expansion of the Renewables Portfolio Standard to 33 percent;
• Development of a California cap-and-trade program that links with other WCI Partner programs to create a regional market system;
• Implementation of existing State laws and policies, including California’s clean car standards, goods movement measures, and the Low Carbon Fuel Standard;
• Targeted fees to fund the State’s long-term commitment to AB 32 administration.

CARB has emphasized the need to take a comprehensive and integrated approach to fighting climate change. Its recommendations therefore combine market mechanisms, regulations, voluntary measures, fees, and other policies and programs to reduce greenhouse gas emissions. While CARB will lead the implementation of the plan, every agency, department and division of the state government will be mobilized to put the plan into action. California will also continue to call on businesses and corporations to make climate change part of their fiscal and strategic planning.

While California is once again taking an environmental leadership role, it does not intend to tackle the problem of climate change alone. The state is already cooperating with six other states and B.C., Manitoba and Quebec in the Western Climate Initiative ("WCI") to design a regional greenhouse gas emission reduction program that includes a cap-and-trade approach. CARB intends to design a state-level cap-and-trade system that will integrate with the WCI.

The Scoping Plan is currently just a draft. CARB expects to release a Proposed Scoping Plan in October 2008 that will incorporate feedback about the Draft Scoping Plan. CARB intends to adopt the Proposed Scoping Plan in November after a 45-day comment period. Once the Scoping Plan has been adopted, it will still have to be implemented through regular lawmaking processes.

OPA changes the procurement landscape for renewable developers in Ontario

Ontario's Renewable Energy Standard Offer Program (RESOP) may be a victim of its own success. Under the RESOP, the Ontario Power Authority (OPA) expected to contract for 1,000 MW of renewable power over 10 years. After just over 1 year, it has contracted for 1,300 MW. OPA has decided it would be "prudent to review the program to ensure continued success moving forward." As part of its review, OPA announced changes to the RESOP on May 13 that will make it much harder for larger developers to participate in the program. Larger developers can take some comfort in the OPA's concurrent announcement of a new call for 600 MW of renewable power. However a shortage of transmission capacity will continue to be a challenge for both RESOP and RFP participants.

OPA announced 3 major changes to the RESOP:

• Each project proponent will be limited to no more than 10 MW of projects per Transformer Station;


• Each project proponent will be limited to no more than 50 MW of projects in development (i.e., pre-commercial operation) per resource type at any one time; and


• Projects will now be required to meet specific pre-commercial operation milestones to remain eligible for the RESOP

The changes will be most significant for project proponents who are attempting to develop more than 10 MW of generating capacity under the RESOP. For example, by virtue of the first change, a project proponent would no longer be able to build a wind farm with a nameplate capacity of 20 MW by obtaining two 10 MW RESOP contracts. Similarly, by virtue of the second change, a project proponent with six 10 MW project under development would not be able to obtain a RESOP contract for the sixth project until the first reached commercial operation. The effect of the changes will therefore be to push larger developers out of the RESOP, leaving the program available for small and community-based developers.

However, larger developers will still be able to participate in OPA's non-RESOP calls for power, including Renewable Energy Supply III (RES III) , a new 600 MW call for renewable power. OPA is also "moving forward" on several other renewable and clean energy supply procurements, including:

• Combined Heat and Power II (CHP II)


• Renewable Combined Heat and Power (CHP III)


• Northern Hydro Initiative (NHI)


• Clean Energy Standard Offer Program (CESOP)

All RESOP applications received after May 12 will be processed under the new rules. However, exactly how the changes described above will be implemented remains to be seen. For example, can a parent company circumvent the 50 MW limit by incorporating a number of companies to develop projects at the same time? What level of ownership of a project company is required to be considered a "project proponent"? Can a lender that takes a security interest in multiple projects be caught if it ultimately needs to exercise its security rights against several projects? The OPA has responded to many questions such as these by saying that the details of the changes will be addressed in stakeholder consultation and technical sessions.

These stakeholder consultations and technical sessions are already in progress. The OPA will hold three technical meetings in before the end of June. Draft revised rules and a draft update of the RESOP contract are scheduled to be released on the week of July 14. After some additional online questions and answers, OPA hopes to release the finalized rules and contract in the week of August 4.

The changes to the rules do not tell the full story. Part of the impetus for the change is the quickly diminishing supply of available transmission capacity in the province. When announcing the changes to the RESOP, OPA included a map illustrating bulk transmission capability for 2008 procurements (see page 24 of the Renewable and Clean Energy Supply Procurement Update). There is limited or no capacity in all of Northern Ontario, most of Southwestern Ontario (all the way up to the Bruce Peninsula), and in the part of Eastern Ontario closest to the Quebec border. Planned transmission upgrades will improve the situation in Southwestern Ontario, but not in the other two regions. It is unlikely that OPA will issue additional RESOP contracts in any of these regions until new transmission infrastructure is built. Transmission capacity will also be an issue for developers choosing to respond to the RES III RFP, which expressly addresses transmission constraints (see appendices P and Q of the draft RES III RFP released June 5).

BC launches Standard Offer Program for clean power projects between 0.05 and 10MW

Posted by Andrew Lord

BC continues to deliver on the BC Energy Plan: A Vision for Clean Energy Leadership. On April 11, BC Hydro launched a Standard Offer Program (the "BC SOP"). The BC SOP is intended to complement BC's traditional power tender process by giving smaller developers a streamlined way to sell power to BC Hydro.

The BC SOP sets out several eligibility requirements, including but not limited to the following:

• The project must be located in BC;
• It must have a nameplate capacity between 0.05 and 10 MW;
• The energy generated by the project must be clean, renewable or high efficiency co-generation;
• Only proven generation technologies are eligible (but nuclear is excluded). Proven generation technologies must meet specific criteria in the SOP Rules, particularly that the technology has been used in at least three plants, each for at least three years, to a standard of reliability generally required by Good Utility Practice (as defined in the Standard Form Electricity Purchase Agreement);
• All prescribed permits must be obtained before an application is submitted;
• The developer must have rights to use the proposed project site and that site must be appropriately zoned; and
• The project must also be able to interconnect to the grid. However, a formal interconnection study is not required until the project has been pre-screened by BC Hydro.

For developers, a key feature of the BC SOP is that BC Hydro will enter into a long term power purchase agreement. The proposed Standard Form Electricity Purchase Agreement gives developers the option of selecting a term of anywhere from 20 to 40 years (in whole years).

The pricing mechanism in the BC SOP is significantly different from that in Ontario's Standard Offer Program. In Ontario, the price per kilowatt hour depends on the type of generation technology used. For example, wind power fetches $0.11/kWh whereas photovoltaic power commands $0.42/kWh. Under BC's program, the price will not vary by generating technology. Instead, the price will be based on the following:

1. A base price that will depend on where in the province the power will be delivered to BC Hydro. The base prices listed in the SOP Rules currently range from $0.06994/kWh in Peace Region to $0.08423/kWh on Vancouver Island;


2. A CPI escalation of the base price up to the year when the Electricity Purchase Agreement is signed;


3. A time of day and month price adjustment. The adjustments currently range from a factor of 126% for Heavy Load Hours in February to 72% for Light Load Hours in July; and


4. The price of Environmental Attributes (if applicable). Currently, that price is set at $0.0310/kWh (to be CPI-adjusted) for any project that receives an Environmental Certification and delivers power to BC Hydro. The adjustment in point (3) will not be applied to the price of Environmental Attributes.

The price paid for Environmental Attributes reflects the fact that the Standard Form Electricity Purchase Agreement provides that the developer must assign all rights to Environmental Attributes to BC Hydro. This provision means that developers cannot sell the Environmental Attributes to other market players as part of voluntary carbon offsets, BC Emissions Reductions Units (under BC's proposed cap-and-trade law), renewable energy certificates (RECs), or other instruments that are based on Environmental Attributes. The provision may therefore limit a developer's flexibility in obtaining carbon financing for their project. However, the approval process under the BC Standard Offer Program provides developers with an opportunity to request changes to the Standard Form Electricity Purchase Agreement. Some developers may attempt to negotiate out of the Environmental Attributes assignment clause.

The SOP also provides for some cost-sharing. The developer is responsible for certain interconnection costs while BC Hydro will bear the costs of certain network upgrades.

For more information about the BC SOP, refer to the Standing Offer Program Rules and the Standard Form Electricity Purchase Agreement.

Ontario releases its 20-year Integrated Power System Plan

Submitted by Andrew Lord.

On August 29, the Ontario Power Authority filed its 20-year Integrated Power System Plan ("IPSP") with the Ontario Energy Board. According to the OPA's press release, the 4,000-page plan is intended to ensure a "reliable, adequate and sustainable long-term electricity supply for the province."

The plan is OPA's response to the government's Supply Mix Directive dated June 13, 2006. That Directive set out the following priorities and goals:

1) Maximize cost effective conservation to reduce demand by 1,350 MW by 2010 and by another 3,600 MW by 2025;

2) Maximize cost effective renewable generation to increase supply by 10,402 MW by 2010 and by 15,700 MW by 2025;

3) Make up remaining baseload requirements with nuclear power but limit installed in-service capacity to 14,000 MW;

4) Phase out coal-fired generation and replace it with committed and planned resources including gas-fired generation; and

5) Use gas-fired generation as needed to meet peaking requirements.

These priorities are in rank order. For example, the plan addresses the goal of maximizing conservation before addressing the goal of maximizing renewable generation. However, the ranking above does not necessarily represent the order in which actual projects will be undertaken. For example, a renewable energy project may be started before a conservation initiative provided that the conservation initiative will eventually be undertaken.

With respect to the controversial issue of nuclear power, the plan provides for the refurbishment of existing stations but expressly excludes the construction of any new nuclear generating capacity. Nuclear power will be used to fill a significant gap (85 TWh by 2027) between the projected baseload demand and the planned capacity from other sources. OPA also considered combined cycle gas turbine generation as a means of filling this gap. However, it concluded that nuclear power was the superior choice.

The plan also addresses Premier McGinty's very public goal of eliminating coal-fired generation by 2014. Taking into account other planned changes, the OPA concluded that there would still be a supply gap to be filled in certain regions after the coal plants were shut down. The plan will fill that gap with the construction of 1,400 MW of gas fired generation near the GTA, North York, and Kitchener-Waterloo-Cambridge-Guelph regions. Simple cycle and combined cycle gas turbines, as well as co-generation, will also be used to meet peaking requirements in the province.

Overarching all of the priorities in the plan is the issue of transmission. The IPSP repeatedly emphasizes that Ontario's transmission infrastructure will have to be upgraded to accommodate the new mix of generating capacity (particularly renewable generation capacity such as wind power, whose intermittent nature presents specific technical challenges for the grid). Upgrading that infrastructure will therefore present some of the earliest opportunities under the IPSP.

The plan also identifies the following objectives as being part of its near-term action plan for 2008 to 2010:

1) Conserving an additional 1,400 MW;

2) Procuring 2,700 MW of additional renewable resources; and

3) Procuring 2,150 MW of gas fired generation for the GTA, North York, and Kitchener-Waterloo-Cambridge-Guelph regions.

The second objective was put into motion two days before the IPSP was released. On August 27, Ontario announced that it intends to procure an additional 2,000 MW of green renewable power. This announcement doubles the McGinty government's renewable generation target to 4,000 MW. The Ontario Power Authority will commence the process for procuring the first 500 MW of additional generation by the end of 2007. All projects under the new directive must be over 10 MW. The directive therefore complements Ontario's ongoing Standard Offer Program under which the government has set fixed prices for electricity purchased from renewable generation projects under 10 MW.

Stay tuned for additional commentary about the IPSP and Ontario's energy future.

Wave Power Industry Buoyed by the Push for Renewable Energy - but Hurdles Remain

Submitted by Daniel Jarvis.

Wave power has been wanting for attention and capital, with most green and green eyes focused on biofuels, biomass bioenergy, solar and wind. Will wave power ever get its due? In the United States, the fact that the US Federal Energy Regulatory Commission (FERC) is proposing to shorten the permitting process for pilot ocean projects to as little as six months is a hopeful sign.

Harnessing the continual and limitless energy of ocean waves and currents into 100% renewable energy seems like an opportunity to good too be true. In Canada, while remaining a very promising prospect, wave energy projects face a daunting federal, provincial and even municipal regulatory and licensing burden, which has a significant commercial impact. There has also been relatively little federal or provincial support in the past for wave energy, compared to other renewable energy areas.

However, the tide seems to be slowly changing, with federal budget commitments in 2007 to renewable energy and changes to the Capital Cost Allowance (CCA) for businesses to allow a 50% accelerated CCA for eligible equipment (including some equipment that generates electricity using wave or tidal energy) on a straight line basis if purchased within the specified time period.

In BC, an Innovative Clean Energy Fund of $25 million was announced under the BC Energy Plan to help promising clean power technology projects succeed. Ocean (wave and tidal) energy projects are potential candidates of the Fund, but at this point are considered more of a future supply option with great potential, rather than an immediate commercially viable option.

The BC government estimates the cost of ocean energy production at $100 - $360 / megawatt hour, compared to $75 - $91 for Biomass and $700 - $1700 for solar. To test the waters, Canada’s first free-stream tidal power project has been installed at Race Rocks, located ten nautical miles southwest of Victoria, through a partnership between the Lester B. Pearson College of the Pacific, the provincial and federal government, EnCana Corporation and Clean Current Power Systems Incorporated. In addition, BC Hydro is developing a Standing Offer Program to acquire clean electricity from projects up to 10 MW, but it is believed that ocean energy projects will not be eligible at this point under the program which requires proven, commercial technology.

Industry is also moving forward on its own, despite the current regulatory hurdles. Finavera Renewables Inc. is proposing to operate a 5 megawatt wave power plant project off on the west cost of Vancouver Island in the District of Ucluelet. Finavera’s AquaBuOys would be moored several kilometres offshore and convert the vertical component of wave kinetic energy into pressurized seawater by means of two-stroke hose pumps. The pressurized seawater would be directed into a conversion system consisting of a turbine driving an electrical generator, and the power generated transmitted to shore by means of a secure, undersea transmission line. When operational, the 5 megawatt generator would produce enough electricity to power up to 1500 homes.

Real estate lawyers find it isn't easy being green

Jason Hicks quoted in current issue of Canadian Lawyer re: green buildings.

Congratulations Jason!

The Rising Wave Of Ocean Energy

Energy can be generated from the oceans by harnessing the kinetic power generated by currents, tides and waves, as well as by placing wind turbines offshore. And there is a lot of energy to be produced from these sources. Canada alone has more than 42,000MW of power potential, with the most potential in Nunavut, and the most sites in British Columbia. The Ocean Renewable Energy Group has prepared a few great presentations on the potential of this industry in Canada, including a presentation for the Tidal Energy Conference in Alaska last year.
But there are a number of hurdles and opportunities that this industry will have to face over the next few years including the implementation of a Crown land leasing policy; financing of R&D, pilot projects and the development of power projects; the capturing and utilization of green credits associated with the generation of emission free power; the identification of markets to purchase this power and the expansion and exportation of this technology and industry expertise to the myriad of countries with high ocean energy potential.
In BC the provincial government is moving forward on developing a solid policy regarding land leases. See the OREG's bi-weekly news  for more information. In addition, the most recent federal budget has proposed a boost to tidal energy projects in Canada and the BC Energy Plan outlines an aggressive plan for expanding clean energy power projects throughout the province.
Ocean energy power projects are beginning to appear in places like New York's east river ,  Ucluelet , BC, in the Race Rocks Ecological Reserve , BC, off the coast of Portugal  and beyond.

Getting Local Buy-In ... Literally

Hats off to the government of Prince Edward Island for coming up with a way to get local residents to literally buy into renewable energy. The governmant launched an "Energy Savings Bonds" initiative last December that has proven to be a hit. The bonds, which are RRSP-eligible, are a 5-year non-redeemable issue that pay an attractive 5% annual rate of interest. Only Island residents may purchase them (whether individual, corporate, society or otherwise). Proceeds of the bond sale are used to pay down government debt taken on to build the recently-completed 30-megawatt Eastern Kings wind farm. More than $5 million of bonds have already been sold, representing nearly 10 percent of the wind farm's $56 million cost. The issue has been capped at $20 million. Pretty impressive for a province of only 139,000 people. This is in my opinion a nice example of smart and efficient government policy. Purchasing the bonds is entirely voluntary, but those who make the purchase can enjoy the triple satisfaction of helping the environment, helping the local economy, and getting a decent rate of return too. And, while we aren't privy to the interest rate the PEI government pays on the debt it retires with the bond proceeds, we wouldn't be surprised if they are also lightening their interest burden a little in the process. For relatively little expense and no new regulatory burden, the government is effectively strengthening public support of renewable energy and facilitating the flow of investment capital into the sector.

Unintended Consequences Of Government Efforts To Promote Renewable Energy -- Japan's Recent Experience

As the British Columbia government considers options for achieving the ambitious goals set out in its recent Throne Speech and Energy Plan II, it would do well to consider the lessons to be learned from other jurisdictions.

Take Japan as an example. In 2003, Japan adopted a Renewable Portfolio Standard (RPS) system. Under this system, Japan's main energy producers are obliged to source a certain quota of their total production from renewable energy sources. The government sets the target quota periodically, and the quota increases incrementally each year to at least 2014 (the latest year for which a target has been set). This is sometimes referred to as a fixed-quantity system, and is similar to the regulatory regimes preferred in most states of the USA and parts of Europe including the UK, Italy and Sweden.

The energy producers may meet their obligation in three ways by producing renewable energy directly, by purchasing renewable energy directly from independent power producers, or by buying New Energy Certificates (NEC). Under the NEC system, a producer of renewable energy will be allocated an NEC for each kilowatt-hour (kwh) of renewable electricity it produces. It may then sell its NECs on the open market in addition to selling the electricity itself, creating a second income stream to help offset the higher cost of producing renewable energy. By law, the price for NECs must fall between 4 and 11 yen per kwh (approximately 4 - 11 cents Canadian) but the market will set the price within that range.

The intent of the RPS is to combine government regulation with a market mechanism to efficiently achieve the government policy objective of increasing renewable energy. However, recent reports in the Japanese media suggest the policy is having some undesirable unintended consequences.

One unintended consequence is that renewable energy suppliers are reluctant to build new production capacity because of flaws in the NEC market mechanism. One flaw lies on the supply side if the aggregate production of renewable energy plus NECs in any given year is greater than the established quota, then there is a risk of the NEC market evaporating entirely to the extent of the oversupply. One renewable energy producer in Tokyo found this out the hard way when it generated 422 million kwh of electricity in 2005 but has been unable to find a buyer for 160 million kwh worth of its NECs. Another flaw lies on the demand side since the only buyers are the relatively few Japanese main energy producers, the demand side of the market is illiquid in practice, especially in the present where the annual quota is still fairly low. As a result, the market price for NECs has tended to be stuck firmly in the lower end of its 4 - 11 yen price range. A related difficulty lies in matching new supply with new demand as the annual quota increases. Under the market system, renewable energy producers have no way of knowing whether or not there will be abuyer for their NECs when they bring new capacity on-stream. The NEC market flaws create considerable risk and uncertainty to be borne by the renewable energy providers and which results in a significant disincentive to building new renewable energy production capacity.

Another unintended consequence is that the introduction of the RPS is threatening to undermine Japan's highly successful solar panel program. Japan's annual solar power generation capacity has soared in recent years to approximately 1.42 million kwh, thanks in large part to the installation of solar panels on some 170,000 residential rooftops. This extensive proliferation of small-scale production capacity was made possible by a combination of government subsidies and voluntary measures by the main energy producers to purchase surplus panel power at rates far above the market price of electricity. With the introduction of the mandatory RPS system, however, the main energy producers are now openly questioning whether or not to continue with their earlier voluntary commitments.  Recognizing that solar power continues to be expensive to produce, the government decreed that solar power producers would receive NECs equivalent to double the power actually produced. Given the flaws in the NEC market mechanism and the low price for NECs, however, this is still insufficient to effectively replace the higher tariffs that the main energy producers pay under their vountary schemes. The net result is that the RPS system may have the peculiar effect of encouraging further development of renewable energy but discouraging further proliferation of distributed solar energy production.

For further information on these issues, please see "New Initiative Fails to Spark Enthusiastic Response" and "Renewable Energy Under Clouds", both on page 14 of the March 5, 2007 edition of The Nikkei Weekly.

BC Energy Plan Calls For Two New BC Hydro Power Calls

BC Hydro has been tossing around the idea of issuing a call for power focused on 'near commercial' technologies for a while now.  Near commercial technolgies include both hydrogen fuel cell plants and tidal/wave power, two sectors which are poised to take off, but with the exception of a test project at Race Rocks, have not had an opportunity to enter into the commercial realm.

 As recent as early February, a BC Hydro spokesperson admitted that a near commercial call was still a possability, but would ultimately depend on the BC Energy Plan.  Well that plan was released today, and a the BC Government announced its intention to instruct BC Hydro to explore to new power calls. 

The first call will focus on biomass facilities that utilize waste wood, and is poised to take advantage of the millions of Bone Dry Tonnes of wastewood that are burnt in beehive stacks in BC every year without producing any power and the estimated 1 billion Bone Dry Tonnes of wastewood that will result from the Mountain Pine Beetle infestation.  Coincidentally, the BC government also stated that beehive burning is not an option on a go forward basis in their Throne Speech earlier this month.

The second call will be an open call for small (under 10MW) non-firm sources of energy.  These sources include wind, ocean (tidal and wave), run-of-the-river hydro and solar.  Prices are to be set at the same price as was offered in the most recent call for power. 

To further help near commercial technologies, the soon to be formed "Innovative Clean Energy Fund" will be used partially to help market, showcase and develop 'near commercial' renewable technologies and commercial renewable technologies that have the potenital to be exported abroad.  As for the wood matter call, a new Bioenergy Strategy will be implemented to help develop the bioenergy market.  This initative should also benefit the development of bioenergy from other sources such as agricultural crop residue, organic municipal waste and animal manure.

As always, we will keep on top of these developments on this blog as more details on the Calls for power or any other 'enabling' legislation is released.

Government Commits To Renewable Energy And Combatting Global Warming

The British Columbia government made a series of dramatic commitments to renewable energy and sustainable development in its 2007 Throne Speech. 
The government dedicated roughly half of the Throne Speech to articulating a series of commitments to combating global warming and climate change, including the following pledges on energy 
·                   Net zero greenhouse gas emissions by 2016 for all new and existing electricity production
·                   90% of all electricity to come from clean, renewable resources
·                   100% carbon sequestration of any coal-fired electricity production facility
·                   Consider all forms of clean, alternative energy to meet energy needs, specifically bioenergy, geothermal, tidal, run of river, solar, wind power, wood chips and wood waste
·                   Make BC a net exporter of clean electricity
·                   Establish a $25 million Innovative Clean Energy Fund to encourage the commercialization of alternative energy solutions
·                   Require methane capture from landfills
·                   Seek new technologies to reduce energy losses in transmission
·                   Facilitate growth and development of local companies providing renewable energy and sustainable development technologies and solutions
These commitments were made as part of the government's overall goal of reducing British Columbia's greenhouse gas emissions by at least 33 percent below current levels by 2020. Other specific commitments included making the government carbon-neutral by 2010, developing a carbon-trading system, phasing in new car tailpipe emissions standards by 2016 to match California's, establishing a hydrogen highway from Whistler to Greater Vancouver and seeking to extend it to San Diego, extending existing tax incentives to encourage the switch to hybrid cars and alternative fuels, and implementing several measures to encourage personal conservation.  
The government has indicated that it intends to bring forth new legislation and regulations to accomplish these goals, but little specific information is yet available. We expect to see a series of measures announced over the next year that will incorporate a blend of new legislation and regulations, tax incentives and similar inducements, and the occasional commitment to new targeted investments and funding. 
Tomorrow's provincial budget offers the government its first opportunity to begin rolling out its implementation strategy, and it has another opportunity this spring with the scheduled release of its new energy policy. However, the government pledged in the Throne Speech to establish a Climate Action Team to formulate targets and measures for achieving the government's central commitments, and it may choose to wait until after that committee has reported back before unveiling its core implementation measures. 
The Throne Speech text is available at http://www.leg.bc.ca/38th3rd/Throne_Speech_2007.pdf .
Stay tuned to this blog for reporting and analysis as more information becomes available and draft legislation and regulations are released.