Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 10 - Evidence - October 27, 2009
OTTAWA, Tuesday, October 27, 2009
The Standing Committee on Energy, the Environment and Natural Resources met this day at 5:12 p.m. to consider and report on the current and future state of Canada's energy sector (including alternative energy).
Senator W. David Angus (Chair) in the chair.
[Translation]
The Chair: Good afternoon and welcome to this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources. My name is David Angus. I represent the beautiful province of Quebec in the Senate and I am also the Chair of the committee.
[English]
Welcome to all of you from the public who may be in the audience. I remind everyone we are being televised on the CPAC network, and also, we are available on the World Wide Web. To all our listeners and viewers, welcome. I think you will find this session of our committee most interesting.
With me tonight is Senator Grant Mitchell from Alberta, who is deputy chair of the committee. We also have two wonderful researchers from the Library of Parliament, without whom we cannot function, Marc Leblanc and Sam Banks — not to be confused with her grandfather, Tommy, whom you will see in a moment.
Senator Judith Seidman from Quebec is a recently appointed senator. She is here with Senator Hector Daniel Lang, Senator Tommy Banks and Senator Bert Brown, two of whom are from Alberta. Our clerk is Lynn Gordon. Then we have Senator Richard Neufeld, a former minister in the cabinet in British Columbia in the field of natural resources and Senator Pana Merchant from Saskatchewan.
[Translation]
We are honoured today to welcome six witnesses who will speak to a subject that is very dear to our hearts.
[English]
We are in the start-up of the massive study on developing an energy strategy for Canada in the context of not only energy security but sustainability — the issues raised by climate change and clean energy.
Without further ado, I welcome our guests. I believe our guests have come to Ottawa not only for the special privilege of being with us, but more importantly, they are a panel of experts assembled by the Ocean Renewable Energy Group.
Our committee is pleased that we are able to take advantage of the concentration of the world's leading ocean energy proponents, who are in Ottawa this week for the Ocean Renewable Energy Group Fall 2009 Symposium. We look forward to hearing their perspectives on the energy opportunities afforded by Canada's three oceans and our great rivers.
[Translation]
I would like to start by introducing the six witnesses.
[English]
It looks like a lot of witnesses. They have done a fair rehearsal, I might say, to keep their remarks short and bright in each case. They will all speak for five or six minutes and then we will have an open discussion. I am excited about what we will hear.
I want to introduce Chris Campbell, Executive Director of the Ocean Renewable Energy Group, the gentleman who made this all possible for us. He was proactive and approached our committee. Other panellists are Erin Harlos, Renewables Development Manager, Natural Power Consultants; Michael Tarbotton, President, Triton Consultants Ltd.; Alex Tu, Senior Strategic Technology Specialist, Office of the Chief Technology Officer, BC Hydro; James Taylor, General Manager, Carbon Management, Nova Scotia Power Inc.; and last but not least, the first presenter, Marcel Boridy, Director General, Centre Hydrolien Industriel Québecois. It sounds like it has to do with wind and water hydroelectric power, but probably it is something quite different.
Two other senators have arrived, Senator Elaine McCoy from Alberta and Senator Nick Sibbeston from the Northwest Territories. We now have a full complement.
[Translation]
Marcel Boridy, Director General, Centre Hydrolien Industriel Québécois (CHIQ): Mr. Chair, I am the Director General of CHIQ, the Centre Hydrolien Industriel Québécois which, as you will see later, is focused exclusively on ocean energy. I am also the Chair of OREG, and a member of the Standards Council of Canada for matters related to ocean energy.
I would first like to thank you for this opportunity to meet with you to share our ideas and medium- and long-term vision for this emerging energy sector.
As Chair of the OREG Board of Directors, I am especially honoured and delighted to see that your committee has decided to hear from a number of individuals representing our association that, if you will recall, brings together all Canadian as well as some international stakeholders working in the field of ocean energy. This opportunity stems from our mandate which, as I understand it, is to develop a national vision on ocean energy, with a long-term goal of positioning Canada on the world scene in this emerging, highly competitive energy sector, while preserving Canada's interests and ensuring its energy security.
Ocean energy, whether from waves, tides or currents, clearly provides one of the most abundant and reliable renewable green energy resources around. Wind energy has paved the way for new green technologies, which have just as much, if not more, potential.
OREG fully supports — and I can vouch for that — the forecast issued by the National Round Table on the Environment and the Economy, namely that 20 per cent of renewable energy developed in Canada over the next four decades could come from these resources.
As a comparison, Denmark, a country with only five million people, has set a goal of producing at least 40 per cent of its electricity from renewable energy in 2013.
Over the next few years, we expect production costs to drop significantly and for ocean energy to become one of the least expensive forms of renewable energy.
As you may know, Canada currently ranks third in the world in developing ocean energy technologies. It is extremely well positioned to become a leader as these technologies develop.
Armed with our resources and with the interest shown by companies that produce, transport and distribute electricity and that are internationally known for their knowledge, know-how and ability to innovate both in the energy sector and the marine industry, we are confident and remain convinced that the development of ocean energy will be a part of the new carbon reduction economy and allow Canada to carve out a role as world leader.
To give you a clearer picture of the situation, consider the following example: 1 hydraulic kWh generates 4 grams of CO2, whereas 1 nuclear kWh generates 6 grams, 1 wind kWh between 3 and 22, and 1 coal kWh, 978.
Each of the members of our ocean energy group will in turn briefly demonstrate what we are advocating.
Before turning the floor over to James Taylor, I would like to talk a bit about the Quebec situation.
First of all, CHIQ, the Centre Hydrolien Industriel Québécois which is under my direction, reflects Quebec's political will in establishing this industrial cluster in the province. Another Quebec group was formed to this end, and like CHIQ, it is aiming to be a pioneer in the development of instream energy generation technology.
Rather than trying to overcome a major technological lag that is almost insurmountable, extremely expensive and financially risky, CHIQ prefers to work together with other countries around the world on the most promising technologies, while preserving its interests. These interests include making a significant contribution to the design and development of technologies, preserving Canadian intellectual property, and generating energy exclusively in Canada with exclusive marketing in much of the world.
Since February 2007, I have been raising awareness in the Quebec government on this new industry sector. The government members have been extremely attentive, and I would like to take this opportunity to thank them.
Today, not only are the design, development, production, marketing and maintenance of instream energy generators an integral part of the Quebec government's energy strategy, but they are also part and parcel of Hydro- Quebec's Strategic Plan 2009-2013 and Premier Jean Charest's Plan Nord.
Quebec Premier Jean Charest stated the following in his inaugural speech to the National Assembly on March 10, 2009, the theme of his speech being "An Opportunity to Make Our Mark":
To benefit from the growing demand for renewable energy, we have instructed Hydro-Quebec to speed up the development of Quebec power.
Hydro-Quebec's Strategic Plan 2009-2013 has a horizon extending to 2035. It has integrated 300MW of wind energy and 200MW of emerging renewable energy into the Plan Nord program. Specifically, and I quote:
. . . we will develop a new research avenue involving renewables based on water power, such as hydrokinetic energy.
Hydro-Quebec will thus evaluate the possibility of using this means of producing electricity to supply clean renewable energy to some grids that are not connected to the main grid. As a source of investment in remote communities, such projects will have the advantage of exploiting a readily available resource to meet local electricity needs.
All of the details can be found on page 72 of Hydro-Quebec's Strategic Plan.
This will, however, continue to entail a lot of hard work. The road to industrialization of instream energy generators and international recognition of our expertise and technology is full of stumbling blocks. We will get past them through our will and determination.
I have only touched on some of the benchmarks for you to realize the critical role Canada's provinces and territories can play, with their potential of approximately 15,000 MW of energy from their rivers. You have to realize that we cannot sit back and ultimately be reduced to having to import these technologies. We have paid the price when it comes to wind power. Let us not miss this unique opportunity to stand up and be noticed.
[English]
James Taylor, General Manager, Carbon Management, Nova Scotia Power Inc.: Thank you, chair and senators. I am the general manager of carbon management for Nova Scotia Power. In that role, I am charged with the transformation of Nova Scotia Power from a carbon-intensive generation portfolio to one that is much more balanced. In addition, I chair the committee that Mr. Boridy referred to that works through the Standards Council of Canada on standards for marine energy. I also chair the air issues of the Canadian Electricity Association, which has been — it seems like — in decades of discussions with the federal government on greenhouse gas regulations and air pollutant regulations.
Nova Scotia Power is the vertically integrated electric utility providing transmission distribution, generation and customer service to over 480,000 Nova Scotia customers. The company has been investor-owned since 1992.
The main fuel sources for electricity production in Nova Scotia — coal and petroleum coke — are carbon intensive. These fuel sources are a holdover of federal and provincial economic policy in the 1970s and 1980s. At the time, these fuels were chosen because Nova Scotia had abundant coal reserves, and the use of that fuel led to significant local spin-off benefits in the 1970s, 1980s and 1990s. Our last coal-fired unit was commissioned in 1994.
The transformation of Nova Scotia Power from a carbon-intensive generation to a more balanced energy portfolio has been under way since that time, but much more needs to be done. The company's strategy is focused squarely on increasing the amount of renewable energy within our generation fleet while working with our customers to manage their energy consumption through aggressive energy efficiency and conservation programs.
The Bay of Fundy boasts the highest tides in the world and the bay also has some of the swiftest currents created by those incoming and outgoing tides. In the Minas Passage, a part of the Bay of Fundy, the current regularly reaches 5 metres a second — that is 10 knots. The potential exists to supply a significant amount of Nova Scotia's electricity needs from that single location.
Nova Scotia Power commissioned its first tidal power plant at Annapolis Royal in 1984. This 20-megawatt tidal power plant has produced electricity reliably for over 20 years. Annapolis uses a barrage, a dam, to create energy from the tides. While the technology at Annapolis has been demonstrated successfully, it is the belief of Nova Scotia Power that large commercial-scale barrage plants would be difficult to permit due to environmental considerations. Further, these barrage-type projects would be true megaprojects requiring a budget of billions of dollars to complete at a commercial scale. Instead, we see the future of tidal energy in Nova Scotia being achieved through new "in-stream" tidal technology.
The single-unit demonstration that Nova Scotia Power currently has under way features energy from OpenHydro's facility in Ireland. The turbine and generator were built in Ireland while the gravity base and the venturi were manufactured at Cherubini Metal Works in Dartmouth, Nova Scotia. Deployment preparations and environmental work for the project has been carried out also by the local contractors, universities and scientists.
The total cost of that one-megawatt demonstration unit is approximately $11 million, $4.65 million of which has come from Sustainable Development Technology Canada. Without it, this project would not have happened.
The majority of the investment has been spent in Nova Scotia. Initial testing is expected to go on for two years. If testing proves successful and a decision is made to deploy multiple units, Nova Scotia Power will look to procure a deployment vessel built in Nova Scotia — we have had to use the one that has come from OpenHydro — and have more turbine generator components manufactured in Nova Scotia. Commercial development could involve tens and then hundreds of units, decreasing the unit cost due to the economies of scale and making in-stream tidal energy competitive with other forms of energy in Nova Scotia.
To maintain these units, which have a planned four-year maintenance cycle, facilities are required, tradespeople need to be trained and supply chains need to be established.
Canada has the opportunity to be at the forefront of this industry in the world. We have tremendous natural resources here, but we need the cooperation from all levels of government along with industry and technology providers to move this industry forward.
The Chair: Thank you very much, Mr. Taylor. It is interesting, indeed. Colleagues, some of the documents we received at the end are not in both official languages. However, I am sure you will be happy with the documents we have.
Alex Tu, Senior Strategic Technology Specialist, Office of the Chief Technology Officer, BC Hydro: Good evening, everyone. I want to give a special hello to Senator Neufeld, who was my minister when I first joined the company a few years ago. I believe you will hear from my colleagues about the ocean energy resource in Canada and the technology promises and challenges.
I will describe briefly how a utility can help to facilitate the development of the ocean energy resource and capture some of the economic opportunity.
I will say a short word about BC Hydro. BC Hydro is the largest electric utility in British Columbia with a mandate to generate, purchase, distribute and sell power to meet the need in B.C. in a cost-effective and reliable manner. Early clean energy leadership in B.C. has created a heritage of hydroelectric assets that provide 90 per cent of the electricity we generate today; around 50,000 gigawatts per year. To meet the growing demand for electricity in B.C., we contract with independent power producers to buy electricity on a long-term basis. BC Hydro is in an enviable position today in terms of clean energy, owing to investments in the previous decades. Now, we are looking to other emerging clean energy technologies to leave a similar legacy for future generations.
As a Crown corporation, we are responsible to the B.C. government, our shareholder. Value for the shareholder extends beyond meeting short-term financial returns to include the ability to provide and maintain an acceptable standard of living for British Columbians over the long term. We ensure stakeholder value by seeking to act in the best interest of British Columbians for generations to come, and by facilitating the progress towards the vision of clean energy leadership expressed in the BC Energy Plan, which was introduced by Senator Neufeld.
The energy plan released in 2007 provides clarity on what long-term stakeholder value looks like. The BC Energy Plan looks to all forms of clean, alternative energy, as well as energy conservation and efficiency, in meeting future energy needs of British Columbians. The plan requires that, among other things, all new electricity projects developed in B.C. will have zero net greenhouse gas emissions; clean or renewable electricity generation will continue to account for at least 90 per cent of the total provincial generation; and the province will be electricity self-sufficient by 2016. These goals are ambitious.
Creating value for us means looking for opportunities to extend B.C.'s enviable positions in low-cost energy to future generations. Ocean energy is interesting in this regard, of course, because of the scale of the resource and its potential to help BC Hydro meet the clean energy targets in the energy plan. These resources in the ocean offer diversity from our dominantly hydroelectric energy portfolio and may reduce our risk from changes in precipitation or snowmelt patterns owing to climate change. One can envision a potential future where the next generation's heritage assets are found in ocean energy farms, producing an abundance of clean energy for British Columbians. Of no less importance than the resource potential, there is the potential for growth of the local ocean energy industry in B.C. to contribute to the standard of living for British Columbians over the long term, through jobs and export opportunities.
I believe others on this panel have described some of the technical challenges of launching the first ocean energy devices. These are enormous devices in some of the harshest environments in the world. Utilities have a role in commercializing technology, for example, in the safe interconnection, grid integration and performance validation of the demonstration devices. Governments also have a role to play in this conventional technology push. I suggest there is also a significant challenge in continuing from that first push of the device into the water, to sustained growth of an ocean energy market.
BC Hydro has put forward an application to the Clean Energy Fund that is hosted by Natural Resources Canada. That application outlines our approach to launching both the devices and the growth of the ocean energy industry. We recognize that BC Hydro alone cannot commercialize these technologies, owing to the diverse risks and barriers. Our approach, as outlined in our application, is to bring together the key institutions that have a role in ocean energy — financial institutions, consenting authorities, engineering expertise and utilities — to dissolve the institutional barriers to ocean energy as part of these technology demonstrations.
We have assembled what we think is an excellent team. Our partners include MacDonald, Dettwiler and Associates, who will leverage their expertise in robotics, information technologies and managing complex deployments in harsh environments into the ocean energy sector. We have brought together Vancity Capital, who will engage this emerging sector and provide financial and risk management services. Our BC Ministry of Energy, Mines and Petroleum Resources will provide guidance and policy support.
For BC Hydro's part, we will explore a power acquisition program targeting ocean energy and create an opportunity for early technology leaders to connect and sell power to the BC Hydro system at a price appropriate to encourage market growth. We do not know what that price is, but that is something we will find out as part of our proposed program.
Our Clean Energy Fund project will target 6 megawatts of ocean energy demonstrations under way by 2014, followed by the launch of a broader ocean energy acquisition program to require an additional 10 megawatts of ocean energy thereafter.
Speaking personally, I think we may create a compelling case for global technology leaders and entrepreneurs to commercialize their technology in B.C.: strong local engineering expertise, a knowledgeable financial services sector and a supportive policy environment and utility with appropriate power acquisition processes to support the growth of the ocean energy sector over the long term.
There is a role for the federal government in creating an attractive market environment for ocean energy deployments. Capital support for technology demonstrations, such as the Clean Energy Fund, is important. I also encourage engagement and coordination with provincial counterparts to streamline the permitting and consenting processes for offshore devices.
Michael Tarbotton, President, Triton Consultants Ltd.: This evening, I want to give you some idea of the wave and tidal energy potential in Canada. My firm has produced these numbers over the last few years and they should be useful in your deliberations. Hopefully, you have some coloured maps in front of you; they need to be coloured and I hope they are.
I will give you a bit of my background. I am an engineer and oceanographer with about 40 years of experience. I made the calculation before I came; I did not realize I had been working for 40 years. I set up Triton Consultants 25 years ago. We prepare port selection analysis for mining companies and that sort of thing. We have had a focus on ocean renewables for the last 20 years.
We started our detail work in ocean renewables with a study for BC Hydro in 2002, which was the first resource analysis of its kind in the world at the time. That work went on to a Canada atlas in 2005-06. My firm has provided resource analysis in Korea at the end of last year and the beginning of this year for a tidal project there, and we are also working on the Minas Passage tidal project in Nova Scotia in the Bay of Fundy. We are preparing tidal models and things like that.
We were also involved with the Race Rocks tidal demonstration project near Victoria, which is the first tidal turbine in Canada. I believe I am correct on that one. We were involved in the citing studies for that project.
Let us go on to how much ocean energy we have in Canada. That is the leading question. The first page of the slides in front of you shows contours. You can see the red contour is wave power on the East Coast of the country. You can see a little box that says wave power in kilowatts per metre, meaning how much energy is coming in on every metre of coastline on our shores. You see the energy becomes less and less as we near to shore. The reason for that decline on the East Coast is that the winds tend to go the opposite direction.
The second slide is much the same story so I will not go into that one. For the slide of the West Coast, the interesting thing about the West Coast is that the wave energies near shore are considerably larger than they are on the East Coast, so to start with wave energy, if you go anywhere, you go to the West Coast.
How much wave energy do we have? The potential for the West Coast is something in the order of 55,000 megawatts. If I have done my arithmetic right — Canada's electricity consumption is about 70,000 megawatts — and if those numbers are the potential, we then have to ask what we can produce from this resource. If we take 10 per cent to 20 per cent as the number, then we are talking about 40 terawatt hours to 80 terawatt hours per year. I am talking in the way utilities talk in terms of kilowatt hours and terawatt hours. Measurement goes in thousands — kilo, mega, giga, tera — so a terawatt is ten to the ninth. It is a lot. I did some arithmetic on the basis of 5 cents per kilowatt per hour, which is low for Canada but those are the numbers in B.C., and that energy is worth between $2 billion and $4 billion per year.
Next, let us go into tides. The tides are roughly in the same order of size. You have a map of Canada in the slides. For the coloured circles, the bigger and redder they are means the bigger the resource. There are three concentrations of resource in Canada. One is on the West Coast, which is a large number of moderate-sized tidal current sites. The East Coast has one particularly big site at Minas Passage, which is being developed now, and a number of smaller ones. The biggest resource in Canada is in Northern Quebec and Nunavut, and that is the flow-out of Hudson's Bay. That area may be the most powerful tidal flow in the world. I cannot say that for sure. There is a large resource in Ungava Bay, which is in Northern Quebec. Ungava has high tides, and some people argue the tides there are higher than the Bay of Fundy. It does not matter; the tides there are in the same order as those in the Bay of Fundy. A couple of sites in Northern Quebec, in Nunavik, are the same order of size as Minas in the Bay of Fundy.
The net numbers by province — there is a table in front of you — totals a potential of 42,240 megawatts. If you assume 10 per cent to 20 per cent utilization or realizable energy, then that potential is between 40 terawatt hours and 75 terawatt hours per year. That energy has a current value in the order of $2 billion to $4 billion per year.
If senators from various provinces want to look at where the big sites are, the table shows Canada's largest energy sites. The biggest ones are in Nunavut. There is a snag, of course, in Nunavut — it is under ice for four or six months of the year. If you ask my opinion, I would say, in the long term we ought to be looking here. This part of Canada is the Middle East of our country.
The Chair: In Nunavut?
Mr. Tarbotton: In Nunavut, yes. Also, in Quebec, the hydro lines that go to the big hydro projects in the centre of the province are long. We need to build them only twice as long to reach Nunavik.
There are two more slides, and they show in detail tidal resources on the West Coast and East Coast. On the East Coast, the site between Newfoundland and Labrador is Strait of Belle Isle, for those interested. The other map shows Hudson Strait.
That concludes my remarks. I look forward to any questions you might have.
The Chair: Sir, that was interesting. Thank you so much.
Erin Harlos, Renewables Development Manager, Natural Power Consultants: Good evening. Thank you very much for the opportunity to speak today. I have been asked to provide an update on two topics: first the West Coast Wave Collaboration and, second, Natural Power Consultants' experience working on behalf of international clients in this sector. Hopefully you have a sheet that looks something like this one in your package.
The West Coast Wave Collaboration is an excellent example of the joint efforts being made to help progress the wave energy sector in Canada. The collaboration was started formally in February of 2009 and is a two-year program. It will collect wave, wind and current data to produce accurate statistics on the wave climate on the West Coast. The project also has a modelling element that feeds into Mr. Tarbotton's work.
Data collection will be accomplished with the deployment of a wave monitoring buoy with many additional sensors off the West Coast of Vancouver Island near Ucluelet, approximately eight kilometres offshore in 40 metres of water.
Currently, 11 project partners are working closely on this program. The federal government's Natural Resources Canada CanmetENERGY is the lead agency; BC Hydro is involved from the utilities perspective; the University of Victoria is the academic partner; Fred Olsen Renewables is the private developer involved; the Ocean Renewable Energy Group, OREG, is playing the facilitating role; Triton is involved in modelling; my company, Natural Power Consultants, is involved in development; and the local community, the district of Ucluelet, is a partner as well as the local First Nation.
The Chair: Is your company based in B.C.?
Ms. Harlos: We have an office in B.C. Our headquarters are in Scotland and we are active across Europe and North America.
The Chair: Do you have other offices in Canada besides British Columbia?
Ms. Harlos: Yes, we have an office in Alberta focused on wind. We also have offices in New York and Chile for the Americas.
All of the 11 partners have contributed to the project either financially or with valuable in-kind contributions.
The objectives of the West Coast Wave Collaboration project are to collect data. The primary focus is to gather baseline information needed by project developers and device developers to understand the wave climate, to provide project development and, ultimately, to gain financing. The other key objective is on the modelling side to develop wave "hindcasting" and forecasting model frameworks to help inform project development. Through communication and engagement, we also provide accurate information rather than broad estimates to the public, regulators and industry. All these activities are combining to help stimulate the industry.
We have the buoy ready. We are waiting with fingers crossed for a weather window to deploy it. Within about four hours of deployment, we will gain information online on the resource.
I wanted to speak more from the perspective of Natural Power Consultants. Natural Power Consultants is an international renewable energy consultancy that grew with the growth of the wind industry onshore and offshore. It is now growing with the emergence of the wave and tidal industry. The key point is that international clients prior to investing, look at six key factors: the first is resources; second is a streamlined permitting approach that is stable and fair; third is support mechanisms that are not always financial in the emerging area — financial is important in this project, but other supports from government are also key elements; the fourth is grid, which others have spoken about, or proactive transmission planning; fifth is supply chain — skilled labour, ports, vessels and manufacturing; sixth, and possibly most important, investors look at the signals from government departments and politicians on support for renewables as well as cross-department consistency on meeting those mandates.
No country or project site has high marks on all six of those factors. Investors are looking for the best possible location to manage risk.
We see the development and implementation of a Canadian ocean energy strategy as being critical to coordinating efforts in creating the certainty that the industry needs to attract investment and foster growth in Canada. We look forward to participating and helping in any way we can.
The Chair: Thank you. It is amazing. We are into a whole new area here.
Next is Chris Campbell, Executive Director of OREG. You were responsible in large measure for bringing this fine group together for us. You have interesting things to tell us. At the same time, I hope in your wrap-up you will more or less point to the key message you want to leave with this committee in terms of ocean renewable energy. We already have a sense of the order of magnitude of the potential. It is a wonderful thing.
Chris Campbell, Executive Director, Ocean Renewable Energy Group (OREG): I will try to do that and wrap up quickly. No matter how often I beat these people up and tell them they have three minutes to present, they take a little longer to deliver the message.
The Chair: It was time well spent. You told me it would take 20 minutes. We are into the thirty-seventh minute and we love every minute of it.
Mr. Campbell: We have a member who is missing, unfortunately. His son was quarantined because he was on a trip with other children of whom at least one has H1N1. We made the decision last night that he would not come.
The Chair: We are sorry to hear that. It was Clayton Bear.
Mr. Campbell: Yes; you have pictures from Mr. Bear that were distributed.
I want to emphasize that this activity has moved from being a science project to being a reality that has a marketplace. New Energy Corporation discovered that there was a market for commercial versions of the prototypes they had made. Currently, projects are being put together in Alaska, the Northwest Territories, British Columbia, Colombia in South America, and, most recently, there is a contract with an organization in India. The contract is for production versions of the prototypes they are building on the path to building much larger generator systems. We are not talking about a science experiment. Already, we are seeing the start of business opportunities. We are seeing what happens.
In my discussion with Mr. Bear on whether he should come, we talked about how he would cope, if he became sick, with the fact that the company currently is the flavour of the month. The phone is ringing the whole time because no one is at the stage to be able to supply this technology. This is where we want to be for the entire wave, tidal and in- stream sector.
I will wrap up and, perhaps, pull back towards the task that you have. You all have a document that talks about a federal and provincial energy strategy. We provided that document to a number of parliamentarians earlier this year. We tried to distil the information into a more recent document aimed at our intervention here today.
In the panel today, we tried to demonstrate a broad provincial and utility interest across the country in clean energy generation from all three resources — wave, tidal and in-stream river resources — and to demonstrate that we believe these resources are an opportunity to help Canada in its 2020 goal and beyond for 90 per cent non-emitting electricity. We have demonstrated the unique richness in resource that we believe supports the target of the National Round Table on the Environment and the Economy inasmuch as 20 per cent of renewable electricity developed over the next 40 years could come from marine energy.
When you look at the maps, you will realize that we are talking about resources that fall under federal or provincial jurisdiction entirely or some limbo land. The reality is that we do not expect any significant marine projects to move ahead without triggering a federal environmental assessment. The federal government will be engaged in this industry even if it goes forward on provincial lands.
Ms. Harlos talked about bringing the research infrastructure into the real world. Together with our marine and power industry strengths, we believe that this infrastructure is what the Government of Canada is looking for when they talk about an innovation advantage. I talked about Mr. Bear going for first mover advantage in sales. We have implied throughout this meeting that there is world interest in Canada's resources and technologies, and in working here. Twenty per cent of our members are foreign organizations. Alstom Power, the French giant industrial, has just taken over Clean Current's generator to take it commercial.
Our views on the future of the sector are sought out internationally, and I will blatantly name-drop here. I was in England in September, and I was on a panel at a wave energy conference along with the U.K. Minister of Energy and Climate Change. These are the circles we move in. I was in Oregon in September, and James Taylor, Clayton Bear and others will be at the Massachusetts governor's clean technology conference in November. People are interested in what is going on here.
With respect to your June 4 order of reference, we believe that ocean energy represents a significant emerging resource opportunity. It is particularly interesting because it brings with it the potential for economic and regional development activities associated with some of our existing industries.
We believe that the federal and provincial responsibilities will intersect in almost all, if not all, of these projects. The history with other industries suggests that it is far better for us to solve the way the federal and provincial interests intersect.
The market will emerge. Domestic and international switching to low carbon electricity will create a demand for this kind of energy. As Alex Tu said, mitigation of the risk of climate change impacts means that utilities will want to have a basket of resources that they are harvesting so that literally all of their eggs are not in one basket.
We believe that part of a national vision, which hopefully you will help create, should include an integration of national and regional interests, regulatory responsibilities and, critically, I think, fiscal resources, nationally and regionally. That integration is what we need to meet the energy, environmental and economic opportunities offered by wave, tidal and in-stream energy.
Specifically, we think the Government of Canada must come forward actively in two areas. Ms. Harlos talked about the regulatory area, but one area is an adaptive management framework. This industry will be a phased and progressive slow build of a modular industry. It is a perfect candidate to start work and learn as we go along. To build this industry will take innovation in working together between the provinces, territories and federal responsibilities.
The second part is that we are trying to launch an entirely new industry. Initially, the costs of that electricity will be higher than typical commercial approaches. We need an integrated approach to develop a market that drives the development of that economic opportunity while we go after the interesting energy opportunity.
Thank you very much for patiently listening to all of us.
The Chair: Mr. Campbell, you succeeded in keeping us quiet for forty-six minutes and four seconds. That is an accomplishment.
I have a list of my colleagues who have indicated they have questions, but I will use the prerogative of the chair to ask you to set more of the stage. I understand OREG is a Canadian, not-for-profit organization.
Mr. Campbell: It is a national sector development association. I use the words "sector development" as opposed to "industry" because we have had government members in the organization from the beginning. We have federal agencies, provincial agencies, municipalities, and then of course we have the researchers, the people trying to develop the technology, the people who are power project developers, the utilities, and a significant number of people in the marine industry who see this industry as an opportunity to deploy skills they have been using somewhere else or who see an opportunity that they might build these things in the long term. With 110 members, I brag that we are the largest dedicated ocean energy association in the world. As I said, 20 per cent of those in the industry have always been outsiders because of the opportunities in Canada and, to some extent, the role that the association has taken internationally.
The Chair: We have a fact sheet prepared by the Library of Parliament that gives some of the background. Does the expression "think tank" apply in your case? Your organization is not an industry association, as you have made clear. I am trying to get a handle on the organization, because I see all these Crown corporations, consultants and others, and I think you all are a tremendous resource for this committee.
Mr. Campbell: I think we can call some of these people a think tank. I have another phrase I use for myself.
The Chair: What is that?
Mr. Campbell: Since this is being recorded, I will not use it in public.
The Chair: I see.
Mr. Campbell: We do not have a functioning industry at this point. We have collectively built, over the last few years, an image of what this industry can start to look like, and what the wins associated with development of this industry can be for the country. We are in the business of trying to recruit other believers, particularly those who might be able to craft some of the policy directions that we cannot make but that we need, to deliver what is required.
The Chair: To complete my thinking, you mentioned in your remarks that earlier this year you had interventions with other parliamentarians. Can you elaborate on that intervention? Was it at one of the committees of the House of Commons?
Mr. Campbell: Not recently; I testified before a House committee about two years ago when everyone looked at me and said, what on earth are you talking about?
The Chair: The mad professor?
Mr. Campbell: That is right. I probably had not cut my hair then too. We interact and try to inform discussions essentially in Natural Resources Canada, Fisheries and Oceans Canada, Industry Canada and Environment Canada. We attempt to draw these people into a discussion about the potential of this sector.
The Chair: At your initiative.
Mr. Campbell: Yes.
Senator Banks: Thank you, gentlemen and madam. This question does not relate strictly to the subject, and I do not know whether Senator Neufeld was in office at the time, but I want you and Alex Tu to know that, a few years ago, this committee held BC Hydro up as a sterling example of the fact that there is more than one way to find new energy sources. A plan was afoot by the previous management of BC Hydro at one time to build a bunch of new dams. Someone came along, and it might have been Senator Neufeld, and said, Wait a minute; is there not another way to meet this need? The way that was found was to convince the consumers of electricity to use less of it and to use it more efficiently, and that initiative created the most efficiently found, cheapest form of new electricity to continue to serve the market.
Senator Neufeld: That sounds right.
Senator Banks: We referred to it over and over again because it was one of the first places that used that approach.
Mr. Campbell, can you deflect the question to who might best answer it. The chair mentioned at the beginning that there are at least two aspects to what you are talking about. You are talking not only about oceans, but also rivers, and there are two aspects to that energy. You have vertically integrated companies that generate, process, sell and distribute. The chair also referred to the technology. You said, "Let us not lose this opportunity." I gather from the pictures and from Mr. Bear's point of view that there is technology, and that I hope that technology is Canadian technology.
Where are we in developing the technology to accomplish what you are talking about? How much of the technology is Canadian, and how well can we follow the chair's admonition not to lose this opportunity to go to the front of the line rather than using someone else's technology?
Mr. Boridy: I will start by talking about Canadian technologies. After that, I will talk about the situation in Quebec and give you some hints about the vision on the international scene — what are the challenges and obstacles, and what might the future look like in the years to come? I will ask Mr. Campbell to talk first.
Mr. Campbell: I will not take long because you have heard lots from me. I only emphasize that we have a number of companies that are developing technologies. New Energy Corporation has been able to produce a commercial product rapidly because the product is small; the machines are relatively small.
The biggest thing that has happened in ocean energy worldwide in the last year is the fact that Alstom Power, after looking around, decided that Clean Current, Vancouver's generator approach, was the technology they wanted to pick up and take commercial.
There is a nascent technology-building industry within Canada. They are the same on wave, so there is an opportunity to be a supplier, not only a consumer, of devices. Before we leave this question, after Mr. Boridy, Mr. Taylor should talk about the fact that Nova Scotia Power is in the technology game as well as the power production game.
Mr. Boridy: I will answer some of the questions you raised in a logical order. First, on the situation in Quebec, there are two initiatives right now. There are two consortia; one is the Centre Hydrolien Industriel Québecois, CHIQ, and the other one is led by RSW. RSW really came alive about a year ago, after the OREG spring symposium held in Quebec City in April 2008.
There are a few articles on what RSW intends to do, and I will not make any comment on that. Both consortia have the same objective: to put a prototype in the water as soon as possible. The particularity of Quebec is that we are looking at in-stream rivers. I will give you a quick background on this energy.
When I started to look at this business sector as a diversification development sector for Quebec, exactly three years ago in October 2006, I did not know much about ocean energy. I started to attend conferences and symposia, especially in Canada and in Europe, and I quickly came to the conclusion that ocean energy, defined as wave and tidal, is a costly and risky sector. Rivers might present a good opportunity to start, especially because in Canada, in North America and even in the three Americas — never mind some eastern European countries or Africa — there are a lot of big rivers.
Coming from the space sector, where I spent something like 15 years and where risk is a key concern, I thought it could be less risky to get our hands on — and most likely less costly to start with — in-stream rivers. That is a strategy we have now in Quebec.
In Quebec, we are not looking at wave or tidal energy, we are looking at in-stream rivers. Obviously, the technologies that are developed worldwide are geared toward wave and tidal resources because the potential in terms of business — in terms of dollars and profit for the industry — is much higher than in-stream rivers.
However, I shared this discussion with some of the large organizations. What I mean by large organizations is industries; I am talking about organizations such as Électricité de France, EDF, which is five or six times the size of Hydro Quebec. It employs 170,000 or 180,000 people and generates something like 70 billion euros in terms of revenue per year. The company will be one of our partners in building the technology here in Canada. I can develop that picture later on if you want.
What I want to share with you is what I have heard in Europe. I was there three weeks ago, and organizations are saying right now there are about 30 technologies worldwide that look promising. In the next two years, we will see more and more prototypes tested. Let us not kid ourselves; there is no technology on the market today. It is either at the stage of development or at the stage of testing — that is it; that is all.
What they are saying is there are about 30 serious technologies right now worldwide. After those two years when all those technologies are tested, most likely only ten technologies will remain worldwide. When industrialization starts, which is about four or five years from now because it has been accelerated, most likely there will be only half a dozen technologies that will dominate and capture the world market.
We want Canada to develop some of these technologies. That is guaranteed; that is for sure. In any case, that is the objective of CHIQ.
This being said on technology, I want to bring you another thought. Today, I am convinced that the technology itself is not the key issue. You will see comparisons between different types of technologies. Take, for example, in- stream technologies. Engineers and universities et cetera are battling to see if vertical axis is better than horizontal axis and so on.
At CHIQ, we solved that problem. We will develop, with our French partners, which are different organizations, the two technologies — a vertical one and a horizontal one.
To me, the number-one issue is, what is the price per kilowatt hour produced? The technologies that win will be the technologies with the lowest price per kilowatt hour. If I had to write a business plan, it would include only one sentence: This price must be equivalent, in the worst case, to the price of wind energy. If not, we better do something.
That issue is key. Unfortunately, when they develop some of the technologies, they do not take into account the maintenance cost. This maintenance must be conceived as the technology is conceived, because it will be a big factor in the price of the kilowatt per hour produced.
That is what I wanted to say.
The Chair: Thank you. You are saying it on Senator Banks' nickel here and I think Mr. Taylor was identified, as having part of the answer. I will let Senator Banks decide.
Mr. Taylor: Quickly, I have three points. First, Nova Scotia Power believes that there are different solutions for different resources and locations. However, there is not any one solution. For example, in the application such as the Minas Passage, the turbine generator cost is only a small portion of the overall development. The scientific and engineering work was all done in Nova Scotia. The turbine generator was bought in Ireland, but that generator represents only a portion of the overall costs.
To Mr. Campbell's point, Nova Scotia Power's parent, the Halifax-based Emera, believes in ocean energy to the point of buying into a marine energy company, OpenHydro. At least one energy company in Canada believes strongly in ocean energy.
Senator Banks: Are Canadian developers of the technology receiving the kind of assistance they need so they can be competitive in the world to the point of developing patents and manufacturing on an economy of scale so that the technology is saleable? Are we moving there, are we close, are we behind, are we on the bus?
Mr. Campbell: I will try to keep the answer brief. Our competitors have specific development strategies that are being worked out between their industries and their governments.
Senator Banks: And we do not?
Mr. Campbell: We do not. We are making a good job of using existing programs like Natural Resources Canada and the scientific research and experimental development tax credits. The Clean Energy Fund was the first identification of a focus on marine energy that had any significant number of zeros attached to it. The next month or two will tell whether things happen. There are at least two critically enabling projects in the Clean Energy Fund in marine energy, but this is the first time we have had an opening.
When I was with the minister in the U.K., in the middle of his speech he announced another £40 million for marine energy in the U.K. These other countries have a strategy and we do not have one.
Senator Banks: We probably will talk about that subject. Mr. Boridy, we understand cogently the importance that you talked about, regarding internalizing all the costs when calculating the costs of generating a kilowatt hour.
Senator Mitchell: I am interested in capacity. I am a believer in this stuff. First, what portion of the 17 points that we have to increase from 73 to 90 to reach the target of non-emitting electrical production do you think can be fulfilled reasonably by 2020 by the energy you are talking about? Second, at what point in that process do you reach the price that is commensurate? That is always the hang-up — that is, unless we subsidize. Will we have to subsidize? Third, what do you need to arrive there?
Mr. Campbell, you talked about the need for a market. Would you conclude that that market must be created by specifying that this much power will be produced in this way?
Mr. Campbell: Unfortunately, I do not think that by 2020 the contribution will be huge. However, we have to recognize that the 2020 target is the beginning of a continuum. The need in 2030 or in 2040 will not be met unless we start doing something now.
All the road-mapping exercises that I have been involved with suggest that by about 2020 we are looking at trying to drive this price down to being at least a competitive renewable source. The issue of reaching the goal is that we do have to support — and I hate using the word "subsidy" because I think it is an investment rather than a subsidy — a marketplace that will build an industry that makes the same decisions in 2015 as it will in 2025. However, the industry makes the decisions in 2015 with a bunch of partners in that marketplace to make the price up. Nevertheless, we have built an industry.
Senator Mitchell: Would anyone else like to contribute?
Mr. Boridy: Talking about the price issue that you raised, when we tackle this issue about the price per kilowatt hour, we automatically tackle the issue of the market. What is the market? For organizations that intend to go some day to marine technologies but want to demonstrate that in-stream river technology can be developed successfully and can contribute to clean renewable energy, the market is what we call the far regions. Those regions are areas where the population obtains their electricity from dirty oil or diesel that is produced at a high price. For example, Quebec must buy oil and diesel at a high price and sell it at the regular price. The gap is large.
If I look at prototypes today and the anticipated cost of the produced kilowatt per hour from those prototypes, from a business point of view, according to those figures, they are still a benefit.
Mr. Tarbotton: The problem with the whole concept of the market is that we do not know how much electricity or energy will cost in 20 years' time. The real issue is this: How well can we make our predictions and how do we then compare them with the ocean energy cost?
My suspicion is that we all know that a barrel of oil went up to $150 a barrel last year. It is now about $80 or something like that. At one point, it went down to $40. That is the first question to ask. We should not compare the cost per kilowatt hour to our current generation but to what we will experience in the future. If Ontario goes to nuclear power, for example, who knows how much that electricity will cost. From past experience, however, it will be through the roof.
Senator Mitchell: I have other questions but there are many senators who have questions also.
The Chair: I have a long list. Perhaps we can have another round.
Senator Merchant: Thank you for your presentations. They were interesting. I do not want to sound frivolous because there are many economic questions and technical questions, but you talked about risks. Is there an aesthetic component? I do not understand what these machines and these stations will look like. There is great concern about our oceans, our waters and our marine life. With wind energy, for example, there has been a push-back because of the aesthetic side to it. I do not understand where wind energy is going exactly, because we are at the beginning. With nuclear power, there is a big push-back. Do you see an area where you might have an engagement by people who live in these areas?
Your sites are on some beautiful areas in our country. Can you tell me what reaction you are receiving from environmentalists and from people concerned about the waters, the oceans and the fish life?
Ms. Harlos: I will take a first stab, and ask others to jump in. The West Coast Wave Collaboration is a good example of how we are trying to use a step-by-step approach.
The ability of Ucluelet has been identified for some time as the potential wave energy capital of North America. For a long time, they have been approached by different developers about this opportunity. This project has brought them in to be part of that program. They are interested and excited about it, but they do have questions.
The program takes a step-by-step approach in trying to communicate along the way what the real potential is. Some device developers are looking further out; the eight-kilometre range that is out of visual sight. Others are looking closer in at areas that not used by the public. Many stakeholders use the ocean, so working closely with those stakeholders will be key.
In Europe, we are a bit further ahead in that there has been more public engagement and more of the environmental studies have been done. We are watching what is happening in Europe and the U.S. with some of their studies and we are looking to apply that research here.
Nova Scotia might want to jump in on some of their engagements. They have done a great deal.
Mr. Taylor: The Province of Nova Scotia undertook a strategic environmental assessment, first, for the province on marine energy and, as part of that, they engaged all the stakeholders that could be identified in their interests around the Bay of Fundy and the Minas Passage. For our particular deployment, our commitment is that, if there is any difficulty with the environment, we will simply pull the machine out and there will be nothing left. If there is any difficulty, it will be gone.
From an aesthetic point of view, it is under the water. There is nothing above the water; it is totally invisible to anyone on the shore. The fishers will be concerned, of course. We are working closely with the fishing community to ensure that all the monitoring takes place, and all the reports are transparent to the fishing community. We think fishing will be fine. The experience with the OpenHydro machine in Orkney at the European Marine Energy Centre is that the fish do not come towards the machine. They simply avoid the machine.
As far as a demonstration unit goes, we do not think there will be any problem. There is much to learn for commercial development.
Senator McCoy: This subject is fascinating and I am listening with all ears. I cannot visualize this technology, so I wonder whether you have any schematic that we can access to explain how it works. I do not mean so much for the run of river, which is somewhat commonplace, but the ocean technologies and the various types of ocean technologies.
Mr. Taylor: I have a photo of our device above water.
Senator McCoy: Excellent; I logged onto the Irish one, which I liked. If we can have some sort of explanation of how it works, it would be helpful for the overall energy study that we are conducting, as well.
In particular, I cannot understand where the tide comes in and out twice a day.
The Chair: Senator McCoy is leading our task force to Nunavut.
Senator McCoy: What I cannot get through my mind is how they make that turbine turn over on a continuous basis. I wonder whether there is something like the wind turbines and an intermittent production issue. That is my first question. However, there must be others but I do not know enough to ask the right questions, so you might answer that question. However, in the meantime, if you can share these schematic descriptions of the technology, I think that will be helpful for my education.
Mr. Campbell: Mr. Taylor, do you want to talk about the intermittency and I will talk about sources of information?
Mr. Taylor: Your observation or your expectation is correct. The energy is generated on a cycle. In the Minas Passage, it is a short still tide. It is only about 20 minutes in the Minas Passage. There would be approximately six hours of generation. The tides slow and stop, then start to ebb. There is six hours of generation. The tides come back in, et cetera, on the 24-hour and 20-minute cycle.
Senator McCoy: That is the profile at that particular location, is it?
Mr. Taylor: It reaches peak generation at the peak flow, which comes shortly after it changes direction. It stays at that peak and then starts to drop off as the tides start to slow and go in reverse. It is different from wind in that it is totally predictable. We know when it will come 100 years from now.
Senator Banks: It is a propeller?
Mr. Taylor: Yes, that is a good analogy, senator.
Mr. Campbell: Tide will not be affected by global warming, but wave might be. Wave is also interesting compared to wind because the wind event that creates the wave is generally considerably shorter than the wave event. We might have six hours of wind and have four days of waves out of it. Waves are much more predictable.
The library staff can feel free to dig into our website. Some of our presentations have collages of images of the technical approaches, and we have put literally dozens of reports and links on the website. I think they can easily develop some additional resource material for you. We can help.
Senator McCoy: Do you have visuals; those lovely "Technology For Dummies" slides would be much appreciated.
Mr. Campbell: My associate in the Ocean Renewable Energy Group, OREG, has stopped posting computer animations because she feels they detract from the reality of what is happening. There are gorgeous computer animations of some of these technologies out there.
Senator McCoy: My second curiosity so far is how you move the electricity from the generator to the customer. I am assuming we have generators 200 miles out where the waves are biggest, or even in the Bay of Fundy. We are dying to cross-examine you about how you are progressing with New Brunswick, but that is probably not your area.
With that point aside, how will the power be transmitted? Then once you have transmission, you are plugging into the distribution system. How do you move the power to shore?
Mr. Tu: It is a real challenge and it is a challenge faced by the offshore wind as well as the ocean wave. The challenge is similar. The resources are far away from the shore. In B.C.'s case, often they are far from where BC Hydro currently has an electricity grid.
Ms. Harlos has mentioned that Ucluelet is looked at as possibly the powerhouse as far as wave energy is concerned for much of North America. The primary reason for that is, yes it has a good wave resource but, more importantly, it is the only place on Vancouver Island where BC Hydro's transmission backbone reaches the West Coast. Transmission is expensive to build. It costs a million dollars a kilometre to build an off-shore line. Locating systems near existing transmission infrastructure is obviously the best bet.
When it comes to going deeper offshore where we need to build new transmission structures, those costs can quickly sink a project. The challenge is universal.
Senator McCoy: What do you do? Do you bury a cable?
Mr. Tu: Yes, subsea cables are certainly a developed technology. The issue is cost. One would use specialized boats to dig a trench, then lay a thick cable sometimes 20 centimetres across that would carry the power from the generator, usually located deep at sea, onto a station on land where it transforms the power so that it is suitable for the grid.
The Chair: Is this the problem of the remote regions that you spoke of?
Mr. Boridy: No.
The Chair: Is there a different element?
Mr. Boridy: With respect to the question you raise, I asked myself this question three years ago. Although your questions were directed at ocean energy and not in-stream river energy, the answer to those questions are the reasons why we chose, in Quebec, to develop in-stream river technologies before going to the ocean.
Connectivity is a key issue. When we look at in-stream river power, the connectivity issue, technologically speaking, is the same then for ocean, but we can connect much faster, which means the cost is much lower.
Senator Brown: This technology you talk about is fascinating.
The Chair: By the way, to our guests, Senator Brown is part of another pilot here: He is an elected senator; the only one.
Senator Brown: Mr. Tarbotton, you gave us an estimate of 2 billion to 4 billion watts of power per year, but I do not think you have given us any costing to reach that level of generation and in what time frame. I think those two factors might be important.
Mr. Tarbotton: The number was $2 billion to $4 billion of value per year.
Senator Brown: That is what I meant to say.
Mr. Tarbotton: You have given me the most difficult question of the evening. I am trying to think of cost per kilometre and how many kilowatts.
Mr. Tu: Before Mr. Tarbotton gets himself into trouble.
Mr. Tarbotton: Thank you. I want to answer the question. Help me out here.
Mr. Tu: A number of studies have been conducted to look at cost per megawatt. I have forgotten the exact numbers that Mr. Tarbotton used. In the example for tidal power in B.C., Mr. Tarbotton has indicated British Columbia has 4,000 megawatts of developable capacity.
Speaking about tides for a moment, there have been cost estimates that each megawatt, once we reach a commercial time frame, which is probably 2020, where we have figured out how to develop these assets, the cost per megawatt could range anywhere from $2 per watt to $5 per watt or $2 million to $5 million per megawatt. You can multiply that number by 4,000 to arrive at a scale of what that number is. Those numbers are, frankly, guesses.
We do not know what the costs will be. One discovery we have made is that we can have some sense of certainty over the cost of the devices themselves; these blades that will spin in the water. We have less understanding of what it costs to deploy, maintain and connect those devices, and ensure they survive. Those costs form a much higher proportion of the total costs of energy than do the devices themselves. There is a great deal of uncertainty there.
Also, there are jurisdictional differences between regions that have it easier for permitting and deployment, and that have a greater degree of competition locally to reduce marketing costs. In solar photovoltaics, for example, even though the solar panels are a commodity, we can buy them at the same price whether in Vancouver or Tokyo. However, the installed price of a solar panel in Tokyo is about 25 per cent less than in Vancouver because Tokyo has a mature sector there. They have installers who know what they are doing and they have a permitting regime that has it figured out.
No matter what, a jurisdiction will have to gain that experience. Until they do, they face a significant cost premium. We do not know what the base costs or what the cost premiums look like. As I mentioned, studies say they are reasonably expensive in the near term.
Mr. Tarbotton: I think you are asking how big the industry is that we are trying to create, perhaps.
Senator Brown: I am asking for the per unit at least.
Mr. Tarbotton: I will take the B.C. example of a multi-billion-dollar investment to develop 4,000 megawatts. That is the scale of industry. It will generate a significant amount of revenue once it is operating. Exactly what the cost will be and when, we have not reached the top of the cost curve yet. We are still on the development curve, and we will start to come down the cost curve as more and more units are in place.
Mr. Campbell: To meet that 2050 target, by the time we are in 2024 or 2050 we will have to install five of these machines every day. That is probably $5 million to $10 million of capital expenditures every day of the year. That expenditure is what a mature or maturing industry might look like.
Senator Brown: I assumed it would be billions of dollars. In Alberta, a couple of weeks ago, we invested $2 billion for capture and storage of carbon. People told us three years ago it would cost $30 or $50 a tonne. An auditor with a PhD from the University of Manitoba conducted an audit and projected the cost to be $786 a tonne. Jeffrey Simpson on October 20 put the number at $761 a tonne. The cost is now considerably greater than it was. Are you interested in having an auditor prepare an audit of what you are projecting for costs? I think that audit would probably give you and us a lot of information.
The Chair: They have already done that.
Mr. Campbell: No, we have not. We have a hard time dealing with this question because the topic is difficult. We know no matter what numbers we come up with —
The Chair: Nothing is final or definite.
Mr. Campbell: — they will also be seen as "our" estimates, and hence somewhat tainted. We would welcome third- party help in trying to develop a better picture of costs.
The measure I use when people ask what this industry will cost, in 2010 terms, to start producing, is from the U.K. The U.K. government has tried over the last four years to put the policies and enabling mechanisms in place to kick- start this industry. The U.K. has offered prices for electricity now at least three times. The amounts of money are different each time, and they have gone up. The last one is the first one that has had uptake from the industry to put projects forward.
Over the last few years, the U.K. has been measuring what it takes to start this process.
Senator McCoy: What was it?
Mr. Campbell: It is something like 350 a megawatt hour for tidal and about 450 a megawatt for wave.
The Chair: Is that dollars or pounds?
Mr. Campbell: Dollars.
Senator McCoy: That is 35 cents a kilowatt hour.
Mr. Campbell: It is 35 cents and 45 cents. That is now. We find ourselves apologizing for the price of this emerging energy, but the former chair of BC Hydro cut me off in the middle of an apology and said, "How the hell are you cheaper than solar?"
The reality is that these start-up prices for wave, tidal and in-stream are cheaper than solar. The energy density is so much higher than the renewable energy resources; the physics tells us our prices will be lower ultimately than all those other opportunities.
Senator Brown: The only reason I suggested the auditor is because it would be a third voice; not yours.
Senator Lang: A lot of the questions, I think, have been asked already. My first question deals with technology, and I think Mr. Boridy and one or two of the other witnesses, said that the technology was being developed. The statement was made that 30 different technologies were developed, or being developed, across the world and that number will go down to 10 eventually.
With respect to the initial statements from Mr. Taylor, you talked about us moving ahead of the pack and the world for purposes of science and developing the technology. What do you want the Government of Canada to do in that respect? Do you want funding for universities, or what are we talking about here to advance that technology over and above what it already is?
Mr. Taylor: Many countries have had success in creating both a push and a pull. The push comes from regulations requiring certain amounts of renewable energy or certain reductions in carbon, et cetera, such that prime energy sources such as marine energy can play a role. Many companies like ours believe that the broadest portfolio as possible of low carbon or no carbon sources serves our customers well because we never know what will happen to regulatory requirements on nuclear energy or the price of natural gas, et cetera, and whether it will rain this year or next if you have hydro. This push of creating regulations is one necessary component.
The other component where we see success is where there is not only a push but a pull. With respect to creating a market, the market can come in with advanced feed-in tariffs to encourage emergent industry, and allow factories to be built and service networks to be created. After that initial extra cost, the cost comes down, and the need for the advanced feed-in tariff goes away. There are other market solutions that, more or less, can serve the same purpose.
With respect to this push and pull, it is difficult in Canada because of the constitutional jurisdiction among the provinces on electricity. You have to work with the provinces often to create this push and pull. That is my observation in countries where this market creation has had early success, whether for marine energy or wind energy in looking at Germany, Denmark, et cetera.
Senator Lang: I want to go further with the development of the technology and obviously refining the technology that is already there. Do you see the provincial government, the Government of Canada or a combination thereof financing universities that take this technology as a priority to find the innovation and the technology that will make this development perhaps more economical?
Mr. Campbell: I think the urgency and the opportunity here is one that cannot wait for a push through the university research world. We reach into the university research world to draw out experience and expertise to solve issues around marine energy. However, the critical element here is to create the opportunities to take real-world attempts to gain the experience, and break, modify and redeploy the technologies that are required. This issue is not a question of starting a new research initiative; it is a question of trying to work out how these technologies can be made to demonstrate reliability, affordability and a contribution of clean energy.
I would cautiously focus on driving this development through research. With respect to the experience in the U.K., they did a fantastic job of driving things through research, and then they hit a brick wall because innovation needs the pull that Mr. Taylor talked about. The application opportunities are critical to innovation.
Senator Lang: I have one more question dealing with the environmental assessments that will be required. Mr. Tu, what do you recommend must be done to change the premise and to accommodate this type of technology?
Mr. Tu: Maybe it is instructive to think of a direction in which we should not go, and that is one lesson we have learned from the United States where their permitting structure for devices is extremely onerous. Permits require a level of data that makes it difficult for projects to launch. The reason is because permitting requires a certain level of certainty of a device that has yet to go into the water. When we cannot convince a regulator about the environmental impact of a device that we have not been able to monitor, we enter a Catch-22; how can we monitor the impacts of a device until we put it out there in the first place?
That framework has stymied a lot of development where the environmental impacts need to be demonstrated in the absence of a framework where they can demonstrate in the first place. I think the approach that Mr. Campbell mentioned is an approach towards adaptive management.
Of course, we need to identify those areas of critical habitat and of migratory routes where it would never make sense to locate a device. That strategic environmental work is taking place in Nova Scotia by Mr. Taylor. We need to identify those areas where there are non-starters and begin to take an approach of adaptive management. We need to take it step-by-step by looking at a device and monitoring it vigorously to identify the real environmental risks around the technology — as opposed to only discussing environmental uncertainties — and then develop a monitoring program to address those real risks that is commensurate with the scale of the risk. Then we move forward from there.
That sort of framework is starting to come about on both the East Coast and West Coast, which is the range of permitting authorities who are coming together into the same room for a round table. I think Mr. Taylor can speak to some of his experience there, about bringing all the consenting authorities together to discuss the real issues they face and creating that forum as an important first step.
Mr. Taylor: If I can finish Mr. Tu's lead-in there, in Nova Scotia, somewhat revolutionary for our province, a great deal of effort went into bringing together all the consenting bodies to come up with a one-stop shop for the permitting. That effort served the process, at least for this demonstration phase, very well.
Senator Lang: There is no requirement, then, to change federal legislation to accommodate that process?
Mr. Taylor: No, there is no requirement. There was no requirement for the demonstration. We obtained a navigable waters permit from Transport Canada. We also obtained a full federal environmental assessment as well as the provincial permits. It is not that we did not obtain separate permits; it is that the permits were coordinated under one process.
Senator Neufeld: Thank you for appearing. It is always interesting to listen to new ideas. I wanted to mention a couple of points.
Mr. Campbell mentioned Clean Current a number of times. I do not think anyone other than me probably knows what Clean Current is. Clean Current is a company that was formed by the EnCana Corporation and a retired oil executive from Calgary to build a tidal project at Race Rocks, which is south of Pearson college. A lighthouse there was turned over to the college, and they observe marine life there. They partnered with Clean Current to generate all their electricity and quit generating by diesel on this tiny island. I have been out to the island myself. The British Columbia government, when I was there, invested a bit of money in that project. I provide that clarification about Clean Current because it was one of the first companies involved, and it is a successful project.
Second, Senator Banks talked about BC Hydro, and I think he was referring to the Power Smart program, which was developed in the 1980s. The program dropped off in the 1990s because it was not in vogue to save.
After we became government and I became minister, we changed that situation and had BC Hydro beef up Power Smart and require BC Hydro, through the energy plan, to acquire 50 per cent of their new incremental supply from conservation. In addition, 90 per cent of that new supply had to come from clean sources, so we gave BC Hydro relatively stiff objectives to accomplish. They proved that they can do that.
When we talk about strategy, which is basically what we are trying to work on and acquire knowledge of, one of you mentioned that because the provinces are responsible for delivering energy, it is difficult for the federal government to step in. Heaven forbid that I ever encourage the federal government to take over that whole process, because I do not think it would be good for the provinces.
Provinces have developed strategies, and every province has developed a little differently. Quebec has developed a strategy. Nova Scotia has developed a strategy. British Columbia has developed a number of strategies relating to electricity. In 2002 and 2007, two energy plants sent hydro on a whole different course in British Columbia. We asked in 2002 for the private sector to come in with the entrepreneurship, just as Nova Scotia did. Hydro is good at running large operations and runs them well. However, we need the entrepreneurship that you see at the table here to develop these new things — wind, tidal, wave, run of river and all those things.
Then we found out that there were lots of ideas there. Mr. Campbell will attest to this situation, because he and I have spent time talking about it. The requirement for money comes because there are all kinds of ideas, but how do we commercialize it, especially at $300 a megawatt. It is expensive. We created an Innovative Clean Energy, ICE, Fund, through a levy on all utility bills for everyone in British Columbia. A panel was set aside to decide how to disperse that money. A panel decided; not me. Mr. Campbell will remember that he was upset in the first one that OREG did not receive anything, but I understand that recently, three projects, $6 million came out of that fund to look at different projects in British Columbia.
Strategies in different provinces are working right. I do not believe there is a silver bullet. We need to use all the resources — wind energy, wave energy, tidal, run of river and all those things — because I do not think the silver bullet will be found in one delivery. I think Mr. Boridy hit on the issue when he talked about cost. Think about the cost. Mr. Campbell talked about those numbers, and they are huge.
I used to hear constantly about how Norway was developing all the wind energy, how great they were and that they were planning to obtain 20 per cent of their electricity from clean sources. I undertook some research and found out that about 58 per cent or so of Norway's hydro is generated by coal. Their rates for residential electricity are somewhere in the 40-cent neighbourhood. Do you know what our rate is, on average? We have low hydro costs. That is why we have trouble developing these technologies. In Canada, we have cheap energy. The rate is about seven cents for residential. Can they develop these technologies in other countries easier than we can? Probably, they can because they have the market, if you want to call it the market, and they also have the cost structure to develop some of those things.
However, if you blend some of these costs into the seven-cent rate, into Quebec Hydro, Manitoba and all of those provinces, it raises the rates a bit, but it is easier to accept those higher costs. Over time, those technologies will develop and we will see a lot more wave and tidal and some of those renewable technologies. At the same time, we have to think about sequestration with coal.
The U.S. is our major trading partner. Quebec has lots of extra electricity. We are net importers, to a certain degree. We have to think what we are building the technology for, for whom, where it will go, and about transmitting it a long ways. All these things must be taken into account. The last time we built transmission in British Columbia, it was, not in my backyard: I want cheap electricity, but do not build that tower any place where I can see it; build it way out there someplace, but not close to me.
When we talk about building in densely populated areas, it might be easier to go to Nunavut. I do not think so, because of the country there, but then we start talking about some of those things, conservation, and a lot of these things mixed.
That was kind of a statement.
The Chair: I understood there was not a question.
Senator Neufeld: There was a question at the end.
The Chair: I thought you were the seventh panellist, replacing Mr. Bear. Now I know why they say you were the best Minister of Natural Resources B.C. has ever had, sir.
Senator Neufeld: I think you said that Nunavut is under ice for three or four months?
Mr. Tarbotton: Yes.
Senator Neufeld: Where I live in Fort St. John, we have ice longer than four months. Nunavut has it longer than that. The last time I was there, the ice went out in July. Explain that to me.
Mr. Tarbotton: In twenty years time, there may not be any ice there.
Senator Neufeld: All right, that is the answer. Twenty years from now, there will not be any ice.
The Chair: There will not be any carbon emissions either.
Mr. Boridy: I want to say a few things. I will give you one figure, because this question was raised indirectly. It is a comparison between in-stream and the wave and tidal. When we look at in-stream rivers, we have about 8,000 hours of production a year, because production is continuous and mono-directional. When we look at wave and tidal, we are looking at about 3,500 to 4,000 hours, maximum. For rivers, the number of hours of production is double. That comparison must be taken into consideration. That reality contributes also to the price or the cost of the kilowatt per hour.
Senator McCoy: There are 8,760 hours in a year. Is that not the number of hours used by all electric utilities around the world?
Mr. Boridy: That is if they are running all the time.
Senator McCoy: Where do the other 760 hours go in run of river production?
Mr. Tarbotton: The river is under ice at that time.
Senator McCoy: Production is down too for routine maintenance, I should think. You figure on 8,000 hours a year.
Mr. Boridy: I want to address two other issues, but maintenance is a key factor. We do not want those machines to be removed every second week. We are thinking about what we call diverless technologies. We are looking for rivers at speeds that are high, something like three metres a second, and we will not find any diver, especially in November, April or May, trying to fix something where currents are three metres per second. In Quebec, it is forbidden by law.
Senator Banks addressed the issue of who should be involved, federal and provincial, to support those organizations and the involvement of the industries. I will give you my feeling as an industrial partner who is also working with universities. To give you one example, one technology we will be working on is called harvest, which is developed by the Institut Nationale Polytechnique, INPG, of Grenoble. It is four labs — one university — which means 24 people at the doctorate level who have been working, and are still working, on development of this technology since 2001, financed by the equivalent of National Research Council Canada, which is the Centre national de la recherché scientifique, CNRS, in France, and Électricité de France, EDF.
Eight years later, we do not have any technology in use because EDF is not industrial and INPG is not an industry. You need an industry to tell the researchers to stop conceiving; not to try to reinvent the wheel; to put this technology to the test and see if their ideas are right; and then continue to develop it, to adapt it, to the site and to the markets.
I am against giving money to universities directly. I have a lot of respect for universities. Most of those technologies started in universities. That is where they started, but at some point in time we have to say, stop; in real life and the real world, industries must make money off this, and that is the name of the game. If no money is to be made, you will not find any industry.
To the question of who should finance the technology, and I am talking as an industry, we need initial help from government because the technology is risky and emerging. We do not want to be financed forever, but we need help because at the beginning, not only do we have to develop the technology but, when we want to put it to the test, we must conduct environmental studies and site studies. We have to put the thing in the water; and we have to extract it from the water probably every month or so because we have to take measurements. This phase of testing and measuring, which is the pre-commercial phase, is critical, and that is where we need government help.
When I say government help, I do not mean only federal help but federal and provincial help. I will go further and say the market for us, as an industry, is Hydro-Québec first. If Hydro-Québec does not buy the technology, forget it. After that, the market is international. As an industry looking at the market, even if Hydro-Québec can be a buyer and an important buyer for Quebec, for its own needs, Hydro-Québec has the rule of no more than 4,000 megawatts, because after that they have problems stabilizing the network. Hydro-Québec has implemented the same rule for wind energy — 4,000 megawatts. For Quebec, that is it; that is all.
For the industry, the market is the world. For us, the CHIQ, we have negotiated on both technologies with all the partners, and believe me there are big partners. When I talked about EDF on the harvest technology, the other technology we are contemplating is Sabella, and behind Sabella there are four organizations, and the largest is Saipem. Saipem is one of the world leaders, if not the world leader, in gas and oil platforms. They have extensive knowledge, which is of prime interest to us, in these far regions.
The money must come from the provincial and federal governments, but also from organizations such as Hydro- Québec in the provinces. Another province might be B.C. or whatever, but the provinces must be involved because they will be the first users. They will choose the best technology, and they must help the small organizations with that technology
Senator Banks: There is a precise analogy up to a point with the development of the oil sands and the government involvement, which literally enabled the development of the oil sands in Alberta at the level it is now. That is the precise analogy.
Senator McCoy: Mr. Boridy, you said Hydro-Québec has placed a limit of four gigawatts on purchases. How big is the overall system? What proportion —
Mr. Boridy: Ten per cent: Hydro-Québec is between 45,000 megawatts and 40,000 megawatts, so something like that, closer to 45,000 megawatts.
Senator Seidman: Thank you for appearing before us to discuss an obviously cutting-edge technology, albeit yet not an industry, if I understand correctly.
Each question asked has stimulated and generated several more. We have touched on cost and potential environmental impacts — two key major issues. We were starting to touch on my next question, Mr. Boridy.
Should this technology be seen as a regional power source or as one capable of delivering reliable power across a long grid to Central Canada? If Central Canada is seen as a potential customer, what is the level of interest from Ontario Hydro and Hydro-Québec?
I will follow up with one last issue. Can this technology be used on an economical scale in an off-grid coastal community to replace or supplement diesel generators?
Mr. Boridy: I will give you my viewpoint, and again it is restricted to in-stream rivers. I am not talking about wave and tidal power because those technologies are a different world. The market is different, the technologies are different and the challenges are different.
For wave and tidal power, definitely the region is a key market, and should be the primary market to provide power to those people who are far away that have access to electricity generated from dirty diesel, and where Hydro-Québec is losing money. That market is a prime one.
That is enough, in my mind, to justify the existence of the industry and also the market because Quebec is not the only case. There are situations like those in Quebec in the rest of Canada and in the world. For this reason, we have secured in our agreements with the French on both technologies the exclusive rights of commercialization for the three Americas, because there are countries in South America that are important for us. To mention one, Brazil's potential for in-stream river is 25,000 megawatts, which is even more than Canada's.
This energy is one of many green renewable energies. This technology does not pretend to be the only one. It does not pretend to replace, and for sure it will not replace, the traditional sources of energy production. It will not replace the dams; it will not replace nuclear. It is a complementary energy specific to certain markets and certain sites, but the potential is huge.
Again, what I said is valid only for in-stream rivers. I am not talking about ocean energy, waves and tides, where the potential, but also the challenges, the risks, the costs, are different as well.
Senator Seidman: I am not sure that I heard a response to whether it can be used in an economical scale in the off- grid communities to replace diesel generators, for example.
Mr. Tu: I will take a stab at that question although I will ask Mr. Campbell to address the regional versus pan- national and even international market. That issue is a question of electricity trading and grid inter-ties. As far as the remote communities go, British Columbia has a number of remote communities.
BC Hydro provides service to about 11 of what we call non-integrated areas. One example is Haida Gwaii, or the Queen Charlotte Islands, which are served predominantly by diesel. We have some resources there, but diesel energy is predominantly the source of supply.
One rule of thumb for cost is, a diesel generator will usually produce about three and a half kilowatt hours per litre. How much are they paying for the fuel? At the lowest, they will pay the same amount that we pay at the pump, so a dollar a litre or so. That is less than 30 cents a kilowatt hour, in the best-case remote communities. In the most remote communities, that is, the highest cost, where we use an airplane to fly the diesel in, it could be much more expensive than that, up to a dollar per kilowatt hour. That is the benchmark price of when something is economic.
Mr. Campbell mentioned the ballpark prices per kilowatt hour for tidal and wave today. At its largest scale, he mentioned tidal in the ballpark of 35 cents per kilowatt hour, and wave somewhat more than that.
There are additional costs to deploying in remote communities. Of course, there is the distance, and they also lack the economies of scale. Those small communities are without a large requirement for power, so they are smaller projects and we lose the economies of scale.
BC Hydro, with Natural Resources Canada, the B.C. Minister of Energy, Mines and Petroleum Resources and Western Economic Diversification Canada, conducted a study of tidal energy in the Queen Charlotte Islands. The islands have a fair tidal resource and they consume a fair bit of diesel, so we thought there was potential to have a larger project.
The costs were in that ballpark, even for our first demonstration project. I believe our project reported a life-cycle cost of about 65 cents per kilowatt hour. That cost is only for the demonstration project.
The interesting finding there was the nature of tidal energy. As has been pointed out, it rises to peak and then drops to zero on a cyclical basis, up to four times a day. One of the real barriers to using these devices on a large scale in remote communities is the ability of our diesel generators to accommodate that fluctuating power. Diesel generators have to function in a way that they effectively balance both the community needs and the supply. They are the buffer.
Diesels are flexible, but there are limits to their flexibility. They cannot run them at less than half their capacity, for example. As well, turning them off and on increases their maintenance cycle significantly.
Our existing communities have only a limited capacity, until we break the diesels, essentially, to incorporate a significant amount of tidal or wave energy, by virtue of intermittency.
The short answer is that, yes, tidal and wave technologies can be economic, certainly in the more remote communities. In the near term, they look promising, but the amount of tidal or wave energy we can put in remote communities is limited to some extent by the ability of the diesels to accommodate them.
Mr. Tarbotton: The big issue Mr. Tu is talking about is that currently, there is no economic way of storing the energy. There are possible ways of storing it, like pump storage, but then they have to create a dam. However, I think that is coming. There are large-capacity batteries on stream at the moment, and I believe their costs will come down significantly.
The other possibility, which one should always keep in the back of one's mind, is that a lot of the wave energy, for example, is a long way offshore and cannot be obtained. There is no way we will build a cable to take energy the 200 miles, 50 miles or whatever.
It may become economic to use hydrogen generation, in which case they could have an offshore wave system that would do its thing, produce hydrogen, and they would bring a tanker in to bring it to shore. Those systems are not around yet, but they could be in the future.
Mr. Boridy: If I can say something here, I will change — and that is a word I use often — the base of reference. We can talk about cost, about different technologies and about the environment. We can talk about markets and provincial and federal politics. What we have to remember is that ocean energy is here to stay. It will happen, just as wind energy happened 10 or 15 years ago, and we missed the boat. We missed the boat, to the benefit of Germany and India, and now we are buying foreign technologies.
Technologies will be overcome, just as man has overcome technologies to take men to the moon. Ocean energy will happen, and you must support the industries, the labs and the universities. Do not forget. Do not miss that objective. If I have one key message, that is it.
The Chair: It is well delivered, too, I might say.
Mr. Campbell: Hopefully, this meeting has been an interesting opening discussion, and I hope we can work with you more.
Two axes of the discussion have evolved. One is building knowledge and an understanding of what the opportunities may be, and the other is the beginnings of a consideration of the role of the federal government in dealing with these opportunities.
Senator Neufeld has pointed out eloquently the provincial and federal interests in this industry. I think there is a huge risk if we stop at that point, because what tends to happen is the federal government will say: We will engage in energy research and development, and we will leave it to the provinces to deliver the clean electricity future for Canada.
We are watching the tendency for the thought process to evolve along those directions in Canada, and it clearly is going in that direction in the U.S. The U.S. Department of Energy, DOE, is starting to spend money in research labs and in universities because that is what they can do within their jurisdictional mandate.
Oregon State is committed to developing a wave industry, but it cannot afford to do it by itself, so in the gap between the federal initiative and the state initiative, the industry has basically lost five years already. There is a severe risk that the dreams of the state will never be realized.
There is a big risk in Canada that we will approach the industry in the same way. The federal government invests in R & D and the province is out there setting targets and being encouraged federally to achieve high targets, but there is a gap between the two processes.
One key message is in the document that I gave you, but maybe it was a little too subtle. One key issue I ask this committee to look at seriously is how we galvanize a federal, provincial and territorial initiative to each of the regions to ensure that we achieve the economic opportunity here, while delivering the clean energy that we all need for the future.
Senator McCoy: That is our goal.
The Chair: That summary is an excellent one. This subject is a challenge to us, which I am sure has not fallen on deaf ears around the table. You have provided us with a thought-provoking entree into our study, which is at the inception stage.
We thank you all very much for coming this evening and sharing your time. I know you are here for the 2009 symposium of OREG, and we can only wish you the best in your deliberations. We wish you fruitful and stimulating meetings.
We hope we can draw on your expertise again.
(The committee adjourned.)