Lawyers in Canada: Davis LLP - Legal Advisors Since 1892

Alberta Leads the Way on Climate Change Technology

We blogged last week that the CCEMC had announced that it had selected projects in which it would be investing a total of $71 million.

Davis LLP attended the press conference yesterday morning in which CCEMC Chair, Eric Newell, announced some of the projects which would be receiving funding.

1. ECB Enviro North America Inc. was awarded $8.2 Million for a biogas co-generation project in Lethbridge, Alberta. Thane Hurlbert, the company's president, indicated that the project will employ approximately 15 people in green jobs and that the plant will be ready to go in 2011.

2. Plasco Alberta and its partner, Red Deer County, were awarded $8 million to builld a plant to convert solid waste into clean fuel gas that can be burned in a combustible engine. A pilot project is already under way in Ottawa, and the first commercial scale project will be built and operated in Red Deer. Plasco Executive Vice-President, Corporate Development, Lynde Coit thanked Red Deer County for their decision to implement this new technology over the establishment of a new landfill.

3. Enmax Corporation was awarded $14.5 million to instal solar or wind power home generation kits to 9,000 homes across Alberta over the next five years. ENMAX Executive Vice President for Smart Grid Technologies, Helen Bremner, indicated that the project will extend benefits of greenhouse gas reductions to the consumer level. The first installation is expected in the spring of 2011 and then will move across Alberta region by region. Green jobs will be created by the ENMAX program.

4. City of Medicine Hat was awarded $3 million for the Medicine Hat Concentrating Solar Thermal Power Project. Concentrating solar thermal technology can produce heat, power, and chemicals, using energy from the sun while avoiding burning fossil fuel and its cost and air emissions. This hybrid energy system will be installed and will evaluate the technology's potential Alberta-wide.

5. Enerkem Inc. was awarded $1.8 million to develop a pilot plant to produce biofuel and utilize CO2. Enerkem's technology converts residual materials, such as non-recyclable municipal solid waste, into transportation fuels and advanced chemicals. Through this project, Enerkem and its partners will use waste, such wood and straw, to produce clean biofuels, and will also incorporate carbon dioxide directly in the process, demonstrating the potential for greenhouse gas reductions in biofuels production.

The projects announced yesterday represent a total of $37 of the $71 million in funding announced by the CCEMC. Chairman Newell indicated that another 11 projects in the energy-efficiency and the carbon capture and storage sectors will be announced in the next two weeks.

These announcements mark a significant step in Alberta's fight against climate change. Both the Alberta provincial government and federal government have indicated that technology and innovation are the pathway to significant emissions reductions.

Since 2007 the Canadian Government has invested in a range of ecoAction programs, many of which promote the use of new technologies. In 2009, Canada's Economic Action Plan included billions of dollars in spending on initiatives like the Clean Energy Fund and the Green Infrastructure Fund. They provide close to $2 billion for the development of promising clean energy technologies and green infrastructure projects.

Alberta's 2010 Speech from the Throne makes direct reference to innovation and technology and the federal dollars are in addition to the clean energy technology initiatives that Alberta has undertaken provincially - the $2 billion Alberta CCS spend is one example. The funding outlined in the CCEMC's announcements are another.

With the 5 annoucements yesterday and more to come, it's clear that Alberta is leading the way on climate change technology.

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.

First Power Solar Project: Clean Energy for First Nations Communities

Today at the 2009 Solar Conference, the Government of Canada announced an investment of up to $1 million in the First Power solar project through its ecoENERGY for Renewable Heat program. In addition to the federal government's commitment, First Power is also being supported by Solar BC and several financial institutions, including the All Nations Trust Company.

The First Power project will support the installation of domestic solar water heating systems in up to 900 homes, with a focus on remote First Nations communities.

First Power, which will leverage millions of dollars in additional funding to complete its projects, is a partnership between Taylor Munro Energy Systems and the Centre for Integral Economics. This unique hybrid business is designed to support First Nations communities to gain access to and ownership of renewable energy and clean technologies. The project intends to replace diesel power generation by energy systems that deliver all the heat, light and power a community requires through renewables.

Making the announcement on behalf of Minister Lisa Raitt was Senator Linda Frum, who declared: "This investment will generate new economic activity in First Nations communities, while reducing energy costs and greenhouse gas emissions [...] Investing in projects like this will stimulate the growth of a domestic clean energy industry, create high-quality jobs for Canadians and help protect our environment."

Donna Morton, President of the Centre for Integral Economics added: "We believe that First Nations can take ownership of renewable energy and clean technology systems through orally taught training [...] Autonomous energy can give First Nations in Canada both a leading role in building green collar jobs and economic development that respects ancestors, elders and the future."

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.

Self-Sustaining, Zero CO2 Emissions EcoPlus Home Project Breaks Ground in New Brunswick

Can a family of six live their everyday life without using fossil fuels for a whole year? That is the question that the Eco Plus Home project in Bathurst, New Brunswick, Canada, seeks to answer. The project intendeds to demonstrate how a family can live self sustained in a fully fitted showcase house for one year starting this September. The energy balances of the household consumptions will regularly be published on the EcoPlusHome website, which will also allow the family to share their experience with the public.

Commercially available building technology and household appliances for the showcase house are provided by the Bosch Group. These consist of an electric heat pump, a solar thermal system, a photovoltaic system as well as energy-efficient home appliances including an oven, a refrigerator, a dishwasher, a coffee maker, a washing machine and a dryer. The solar thermal system will generate heat and hot water from free solar radiation, while the heat pump uses geothermal energy. Although the heat pump needs electricity to run, the photovoltaic system will generate much more CO2-free electricity in the course of the year than the heat pump will consume. It is even planned to operate an electric car. Excess electricity will be fed into the public grid and withdrawn when needed. According to the project sponsors, it will be possible for the family to live comfortably in the house even through the harsh Canadian winter, when temperatures drop to minus 30 degrees, all the while still achieving a positive energy balance. CO2 emissions from the Eco Plus Home will be close to zero, whereas a conventional home produces an average of 8 tons of CO2 per year.

The home itself is being provided by Maple Leaf Homes, a Canadian manufacturer of prefabricated homes. When planning the showcase house, emphasis was placed on sustainability without loss of comfort and on the price-performance ratio. Once the experiment is over, similar houses will be offered in the U.S. and Canadian markets.

Sun set to shine on Kingston: Everbrite announces plans for $500 million facility

After months of negotiation, Everbrite Solar announced that it will build a $500 million ultra-high efficiency thin-film photovoltaic (PV) manufacturing facility in Kingston, Ontario. According to its press release, Everbrite Solar forecasts that the facility's annual production of thin-film modules will be capable of produce 150 MW of clean power. The plant could generate up to 1,200 direct and indirect jobs in a community whose manufacturing sector has contracted significantly in recent years.

The announcement has attracted significant media coverage, including articles in the Kingston Whig Standard, the Toronto Star, and the Globe and Mail. It is the latest in a series of proposed solar investments in Ontario, as discussed in a recent posting.

Everbrite Solar chose Kingston in part because of the potential for extensive research collaboration with Queen's University, particularly the Department of Mechanical and Materials Engineering. The Department has several professors working on solar technologies, including Joshua Pearce and Steve Harrison. As part of its overall investment, EverBrite Solar is prepared to build a $25 million experimental thin-film manufacturing facility for use by Queen's researchers, provided that a collaboration agreement can be reached. EverBrite Solar CEO Karl Scherre expects that "Queen's participation in Everbrite Solar's Kingston research and development community will ensure that the ultra-high efficiency thin-film modules produced by Everbrite will continue to improve and be best in class for quality, efficiency and production costs." According to the Toronto Star, Dr. Pearce describes the plan as "a dream come true."

Some commentators are drawing parallels with the relationship between ARISE Technologies Corporation and the University of Waterloo, although ARISE established its principal manufacturing facilities in Germany.

Kingston may be well positioned to become a renewable energy centre of excellence. Several green power related initiatives already call Kingston home, including Performance Plants Inc. (which is affiliated with Queen's and has partnered with Lafarge in nearby Bath on a project), Canadian Hydro Developers Wolfe Island Wind Farm, SWITCH's alternative energy cluster, and various participants in Innovation Park. Also PARTEQ Innovations, which helps commercialize Queen's research, was recently awarded $9.1 million from the federal government to establish a National Centre of Excellence for the development and commercialization of Green Chemistry technologies. A company like EverBright Solar could be Kingston's Research in Motion.

EverBrite Solar is a subsidiary of EverBrite Industries Ltd., a full service industrial and commercial electrical contractor located in Toronto, Canada. EverBrite Solar continues to work with several investment advisors to raise the capital required for the proposed plant.

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.

Carbon Tax - "Ouch - my gas tank" OR "Yeah my wallet"

The 2008 BC Budget was released yesterday, and yes it was green. It was even released on green paper (or at least the pdf copy was).

The papers are all carrying a similar headline this morning "Carbon Crunch" or "Budget hits gas tanks" but really, the BC carbon tax will be a moot point for most of us. At $10 per tonne of carbon in 2008 (gradually increasing to $30 by 2012) it amounts to 2.41 cents per litre of gas. But this is all offset by tax rebates to both individuals and businesses. Low income families get an extra top up, and each resident of BC will get a $100 in the pocket this year as a one time 'dividend' for making the polluter pay. Add in the tax rebates on certain green techs (i.e. EnergyStar appliances) and it is easy for this to be a windfall for most British Columbians.

What is much more interesting is the impacts this will have on BC businesses. Here are a few highlights:

• Truckers - take a tip from the street racers and get yourself a new spoiler. A whole slew of add-ons for the trucking industry aimed at making the transportation sector more fuel efficient are now PST exempt. Labour for installation is also exempt.
• Builders - as announced in last years budget, a new building code is coming to BC. Aimed at greening building practices and increasing the efficiency of our building stock in BC, this years budget has added funds to program to ensure it meets the rigid timelines set for reform.
• BC Coal - a strong message in this budget - don't burn coal in BC. If you weren't convinced after the 2007 Energy Plan when new coal plants were limited to those with no carbon emissions, the carbon tax adds over $20.79 per tonne to Canadian bitumous coal consumed in BC. By 2012, this will be $62.73 a tonne. Query, will this impact our imports of energy from coal fired plants in Alberta? Probably not as the BC government has specifically said the goal is to only target BC sourced emissions.
• Other Energy - all energy producers using fossil fuel, be it diesel in remote communities, or natural gas in large thermal plants, will feel the squeeze of the carbon tax. On the other hand, renewables such as run-of-the-river, wind, ocean and solar, are all a bit more competitive as they do not have to pay tax on their fuel source.
• Biomass - biomass and biofuels are specifically exempted from the fuel tax on the basis that the carbon released represents carbon previously sequestered as the plant matter grew. Of course this only holds true as long as we plant as much as we cut...
• Small Business Venture Capital Act - this great piece of BC legislation offers enhanced investment tax credits for investors in start ups. Clean tech companies get an extra boost of 'tax credit budget' under this budget.
• International Financing Activity Act - another piece of legislation for encouraging investment, the patents that can now be invested in now include wind, solar and tidal power.

Incremental change, but it is a nice start for greening BC's economy, and I suspect we will see even more when the BC Climate Action Plan is announced, and then again as legislation begins to rollout throughout 2008.

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.

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.