Thursday, March 31, 2011

California utilities must purchase 1/3 of electricity from renewable sources within 10 years

California lawmakers have approved a bill that would create the most ambitious renewable energy standards in the United States, giving utilities less than 10 years to receive one-third (1/3) of their power from wind, solar and other renewable sources. California is a leader in enacting progressive renewable energy legislation in North America and it is anticipated that other leading Canadian jurisdictions, such as Ontario and British Columbia, will consider similar standards in the future.

It is highly unlikely California can construct sufficient generation to come close to meeting demand and it is widely expected this new standard and those states and provinces that follow suit will drive renewable energy development throughout the Western half of North America in the coming years.

The State of California already purchases considerable renewable energy from hydro sources in British Columbia and demand is expected to continue to increase quickly. Progressive developers and utilities in California are now turning their attention to the vast and largely untapped wind resources of the prairies of Western Canada and the mid-western United States to help fill this demand in the future.

Wednesday, March 30, 2011

First Nations Power Authority & SaskPower sign MOU on power generation in Saskatchewan

The Government of Saskatchewan, SaskPower (the Crown utility) and the newly established First Nations Power Authority (FNPA) announced yesterday that they have signed a Memorandum of Understanding (MOU) that will help the province’s First Nations advance their power generation projects.

The MOU sets out a partnership framework for a more streamlined process to help First Nations move their projects forward for consideration.

The provincial government was looking for opportunities to engage First Nations in developing power generation projects, which led to the formation of the First Nations Power Authority. Supported by various First Nations with existing or imminent power projects, the FNPA will be a non-profit, membership-based corporation. It is expected the FNPA will provide the framework for the first utility-scale community projects in the province.

Each of the 74 Saskatchewan First Nations will have the opportunity to hold membership in the First Nations Power Authority and participate in the governance of the organization through its board of directors.

“This MOU opens the door to significant opportunities for Saskatchewan First Nations to partner in the development of power generation projects,” FNPA Board Chair Ben Voss said. “This will result in a higher probability of viable, long-term sustainable First Nation economic development opportunities while helping SaskPower meet the province’s electricity supply needs.”

SaskPower is making a multi-year, multi-billion dollar investment to renew the province’s electricity system. The demand for electricity in the province is expected to increase by about 2.4 per cent annually over the next decade.

This is another clear indication that SaskPower does not intend on owning and operating all generation in the province in the future and continues to provide opportunities for independent power producers.

I expect that the signing of this MOU will further escalate activities of developers in the province in forming partnerships with First Nations for specific projects.

Additional information about the FNPA:

Tuesday, March 29, 2011

Macquarie Capital and Femsa buy 396 MW wind farm in Mexico

Fomento Economico Mexicano SAB (Femsa), a beverage company in Latin America and Macquarie Capital agreed to buy a 396 MW wind farm in the Mexican state of Oaxaca from units of Preneal SA for 1.06 billion pesos ($89 million CAD).

Femsa will own a 45 percent stake in the project, while Macquarie will own 22.5 percent and the remainder will be held by two Mexican infrastructure funds managed by Macquarie. Power from the project will be sold to Femsa and project partner Heineken NV through a 20-year power purchase agreement.

The wind farm will use 132 Vestas wind turbines.

Monday, March 28, 2011

Anti-wind activists to appeal Ontario court decision on setbacks

Wind Concerns Ontario, an anti-wind activist organization, says it will appeal an Ontario Superior Court decision released earlier this month that ruled against the challenge to the province’s Green Energy Act regulations.

The anti-wind activists say Ontario’s environment ministry failed to properly assess the human health risks of turbines, which they believe emit low-frequency noise that causes sleeplessness and an array of other effects, ranging from psychiatric conditions to cardiovascular disease.

Ian Hanna, a Picton, Ontario resident, launched the court challenge after a number of wind farms were proposed near his home in Prince Edward County. His case was backed by the testimony of Dr. Bob McMurtry, a former medical school dean and special health advisor to the federal government. Dr. McMurtry also owns property in Prince Edward County.

The court ultimately decided that the ministry held “a full public consultation and a consideration of the views of interested parties.”

In a statement, the Ontario environment minister John Wilkinson said the rules for wind turbine siting “are based on peer-reviewed science.”

“While I can’t comment on the appeal, I can tell you that science-based evidence was and will be used to develop our regulations,” the statement read. “(The court) confirmed that developing the regulation included full public consultation, consideration of the views of interested parties, health reports, science-based evidence and expert opinions.”

It is unclear when the appeal on the case will be heard.

Friday, March 25, 2011

SaskPower announces 2011 Green Options Partners Program

In 2011 SaskPower will purchase up to 50 MW from medium-sized independent power producers. Up to 25 megawatts will be purchased from medium-scale wind generation projects and the remaining megawatts will be purchased from other environmentally preferred power production facilities.

$26 million CAD biodiesel incentive program introduced in Saskatchewan

A 5 year $26 million CAD provincial incentive program for renewable diesel production in Saskatchewan will commence in April 1, 2011. Biodiesel developers should take note that a mandatory minimum renewable fuel requirement for diesel fuel in Saskatchewan will follow 15 months later.

The program will provide a grant of 13 cents CAD per litre to eligible producers of renewable diesel. The renewable diesel must be manufactured from renewable materials such as off-grade canola and farm and forest biomass.

The program is to begin April 1, 2011 and will wind up in 2016. Saskatchewan's 2 percent renewable diesel mandate is scheduled to commence on July 1, 2012.

SaskCanola, the province's farmer-led canola development commission, hailed the grant program and mandate as recognizing "the significant importance of a growing Saskatchewan biofuel industry in which canola can be the leader," chairman Brett Halstead said in a separate release.

The federal Canadian government's 2 percent renewable content mandate for diesel and heating oil is expected to take effect July 1, 2011 as well.

Given the considerable incentives for biodiesel production and the mandatory minimum renewable fuel requirements to come into effect in the future, biodiesel project developers will be keen to move existing projects forward and develop greenfield projects in the province.

SaskPower to build $130 million CAD switiching and transmission projects in Saskatchewan

SaskPower, the provincial utility in the province of Saskatchewan is proposing $130 million CAD worth of electricity construction projects in the Saskatoon area to fill part of the growing demand for electricity from the booming potash industry.

The proposed projects include a switching station north of Saskatoon, another switching station near the bedroom community of the town of Aberdeen and a transmission line connecting the two new stations to each other, to Saskatoon and to the existing Wolverine switching station.

Monday, March 21, 2011

Algonquin Power to buy Kineticor wind farms in Saskatchewan

Algonquin Power & Utilities Corp. ("APUC") just announced this morning that it has executed an asset purchase agreement (the "Agreement") with Kineticor Renewables Inc. ("Kineticor"), to acquire all of the assets related to two proposed adjacent 10 MW wind energy development projects (the "Projects") in Saskatchewan.

Upon SaskPower's approval and execution of the PPAs, Kineticor will assign the PPAs to Algonquin Power Co. ("APCo"), APUC's electric generation subsidiary. The Projects will be developed with support from Kineticor during the development phase, which is expected to be completed in late 2013.

While equipment selection and construction details remain to be finalized, it is expected that the capital cost to construct the Projects will be approximately $55-$60 million, inclusive of acquisition costs. The first year PPA rate is set at $101.98 per MW-hr for the first full year of operations, which APCo expects to occur in 2014, with an annual escalation provision of 2% over the expected 20 year term.

The Projects are to be constructed near Morse, Saskatchewan, approximately 180 km west of Regina and 400 km west of the Phase I Red Lily Wind Project already owned by APUC. It is contemplated that the Projects will be situated on 1,120 acres of private lands, with additional land under lease or option in order to facilitate future expansion of the Projects.

"We are very pleased that we are able to continue to grow our wind energy footprint in the province of Saskatchewan with this latest acquisition", commented Ian Robertson, Chief Executive Officer of APUC. "Saskatchewan has one of the best wind regimes in Canada which will once again contribute to our growing portfolio of successful wind energy projects and reinforce our strategic focus on renewable energy investment."

Source: Algonquin Power & Utilities Corp. Press Release dated March 21, 2011

Thursday, March 17, 2011

South Africa plans large expansion of renewable energy

South Africa's government has approved a sweeping plan to increase renewable energy generation. The plan lowers South Africa's overwhelming reliance on coal, calling for renewable energy for an astounding 42 percent of new power projects. The government also approved draft legislation to buy energy from private power producers, which the state wants to supply nearly a third of new electricity generation.

"It is intended to make sure that we allow for participation by the independent power producers," said Energy Minister Dipuo Peters.

"We have a policy that says 30 percent of new power generation in the country must be generated by independent power producers. We need a structure or an institution that can facilitate that."

Having worked on development of wind sites in Namibia, I expect that NamPower (the state utility in Namibia) will follow suit with a similar plan. Eskom (the state utility in South Africa) has said in the past that they would purchase energy, if available, from bordering Namibia so I expect that there will be worldwide interest from renewable energy developers in both South Africa and Namibia.

Wednesday, March 16, 2011

The future of nuclear

Stocks for wind and solar energy producers jump as investors speculate that demand for renewable power will surge in response to the unfolding Japanese nuclear situation. The German solar-panel maker, Solarworld, leads the way advancing 32 percent.

The “nuclear renaissance” may taper off as a result of events in Japan but it is clear that nuclear energy will continue to be an extremely important energy source for baseload generation. Wind and solar are intermittent technologies and require continuous generation to fill gaps in supply when wind or sun is not available. The current options for baseload generation are coal, natural gas or nuclear and nuclear is the only source which does not generate greenhouse gas emissions and has a relatively abundant fuel source, uranium.

The Olkiluoto nuclear project in Finland had numerous problems most of which were related to alleged unreasonable and overly onerous safety requirements. The Finnish regulators insisted that Areva and its construction subcontractors meet (and in some cases exceed) Finnish safety standards. This caused problems because Olkiluoto was a turnkey contract with rigid payment provisions and project milestones. In hindsight, the hard-nosed and uncompromising approach of the Finnish regulator was the right approach even if the project ended up in arbitration over payments.

I anticipate that the situation in Japan will stabilize and countries like China, India and South Korea will quietly continue with their planned nuclear expansions albeit with an increased emphasis on safety. Developers of nuclear projects will have to adjust to an environment where the regulator exercises complete and unchallenged authority in all matters, including safety, throughout the project and developers will have no other option than to comply with whatever the demands of the regulator may be. This will be a change from the past few years where demand for nuclear energy was so great, developers had some scope to negotiate prices, timelines and other project details. In any case, I cannot envision a situation in the near future, particularly in countries like China and India, where nuclear was not a critical pillar of development of the country even in light of the safety risks and the unfolding situation in Japan.

Tuesday, March 15, 2011

144 MW Dokie wind project comes online in British Columbia

Plutonic Power Corporation and GE Energy Financial Services have achieved commercial operations at the 144 MW Dokie Wind project in the northeast Peace River region of the Canadian province. "By combining GE's experience as an energy investor and Plutonic's development skills, and by consistently reaching out to impacted stakeholders, we were able to turn a once-challenged project into what is now British Columbia's largest operating wind farm," says GE's Mark Tonner.

Renewable developers in British Columbia continue to escalate site acquisition and development activities in reaction to BC Hydro's increase in rates in their standing offer program and anticipated feed-in-tariff.

Monday, March 14, 2011

Saskatchewan signs MoU on energy with Gujarat

The Indian state of Gujarat signed four memorandums of understanding (MoUs) with the province of Saskatchewan on March 14, 2011 in Mumbai. One of the MoUs was signed between Saskatchewan and Gujarat Mineral Development Corporation (GMDC) for the exchange of scientific, technical and regulatory information in the field of energy. Possible areas of cooperation include wind farm development, solar/PV development as well as ethanol and canola biodiesel production.

Monday, March 7, 2011

Utility-scale biomass project in Saskatchewan announced

Multinational paper giant, Paper Excellence, will purchase the Prince Albert, Saskatchewan pulp mill from Domtar and invest $200 million CAD to re-open the facility. As part of the agreement SaskPower (the electrical utility in the Canadian province of Saskatchewan) will purchase surplus electricity from a biomass power facility to be incorporated into the mill. That agreement calls for the purchase of biomass power at a price consistent with rates charged for this kind of project. Additional details are not available about the biomass project but it is certain to be an exciting project as it will be one of the first large utility-scale biomass projects in Western Canada. The deal was just announced this morning and is expected to close in the second quarter of 2011.

Single energy market in EU

It has been almost 15 years in the making but it looks as if the European Union (EU)EU will establish a single energy market. The EU is the world's largest and most developed regional energy market with 500 million people and 20 million companies. The goal of the third EU energy package is to set up a single energy market and separate the operation of gas pipelines and electricity networks from the business of providing gas or generating power.

On Thursday the EU inaugurated its new energy regulators' office, the Agency for the Cooperation of Energy Regulators (ACER) in Slovenia as new legislation for liberalising the EU's internal energy market came into force. ACER's main tasks will be to develop guidelines for harmonising national grid codes, solving conflicts between regulators, supervising the work of the European Networks of Transmission System Operators and advising the EU's executive Commission on energy market issues.

Last month European leaders launched a trillion-euro bid to slash dependency on Middle East oil and Russian gas, clearing the way to place renewable energy and nuclear power at the centre of the EU's energy requirements.

Thursday, March 3, 2011

Court upholds wind turbine setbacks - anti-wind activists lose court challenge

The Ontario Superior Court of Justice ruled that the province of Ontario acted properly in setting regulations for the placement of wind turbines and rejected the application from anti-wind activists which sought to strike down regulations governing how close turbines can be erected to dwellings.

Turbines must be located at least 550 meters from dwellings in Ontario but the anti-wind activists had argued that the province had no "scientific basis" for setting that standard.

The court ruled that the province’s environment department had followed due process in creating the setback, that there was public consultation, and that the government considered “science-based evidence” in making its decision.

This court ruling is good news for all developers in Canada who now have binding judicial precedent that a 550 meter setback is adequate.

Wednesday, March 2, 2011

Algonquin announces commercial operation of Red Lily Wind Project in Saskatchewan

Renewable energy development continues to power forward in wind-resource rich Saskatchewan with Canadian developer, Algonquin Power & Utilities Corp. ("Algonquin") announcing the achievement of commercial operation ("Commercial Operation") of the 26.4 MW Phase I Red Lily Wind Project ("Red Lily I") in south-eastern Saskatchewan pursuant to the Power Purchase Agreement ("PPA") with SaskPower. The project was completed ahead of schedule and is now successfully generating renewable power.

Red Lily I consists of 16 Vestas V82 wind turbine generators. The total capital cost of the facility was approximately $69 million CAD. Red Lily I enjoys an excellent wind resource, which under the power purchase agreement with SaskPower is expected to generate 2011 revenues of $7.5 million CAD and full year 2012 revenues of $8 million CAD. The power purchase agreement with SaskPower is for a 25 year term, with an annual inflation adjustment applied throughout the term.

Algonquin's commitment in Red Lily I has been structured initially as a debt investment with total returns to Algonquin being a combination of interest payments and fees. Algonquin retains an option to formally exchange its debt investment for a 75% equity interest in the entity which owns the facility in 2016.

In addition to Red Lily I, additional land rights have been secured for a second phase of the project, which, should it proceed, would provide an additional 106 MW of generating capacity in Saskatchewan.

The full Press Release is available on Algonquin's website:

In addition to potash, uranium, oil, gas, coal, diamonds and gold I think it's time to add wind to the growing list of world-class natural resources in Saskatchewan.

I wonder which major PV developer will be the first to realize that Saskatchewan also has the richest PV resource in Canada? The PV potential in Saskatchewan far exceeds that in Ontario where 400 MW of PV has been already awarded contracts under the Ontario FIT.