Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 14 - Evidence - November 23, 2010
OTTAWA, Tuesday, November 23, 2010
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 5:17 p.m. to study the current state and future of Canada's energy sector (including alternative energy).
Senator W. David Angus (Chair) in the chair.
[English]
The Chair: I call to order this regular meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources as we continue our study on the Canada's energy sector, including alternative energy. Of course, tonight alternative energy is very topical.
We welcome the people in the room here, and our witness, Sean Whittaker, but also our viewers on the CPAC network, on the World Wide Web webcast, and on our own dedicated website that has been established in the last month to deal specifically with this study on energy. I remind everybody viewing that the website is www.canadianenergyfuture.ca.
My name is David Angus. I am a senator from Montreal, Quebec, and I chair this committee. Senator Mitchell, deputy chair, is a senator from Edmonton, Alberta. To his right is Marc LeBlanc and Sam Banks, our analysts from the parliamentary library. Senator Robert Peterson is from Saskatchewan. Senator Tommy Banks is from Alberta. Senator Judith Seidman is from Montreal, Quebec, and Senator Linda Frum is from Toronto, Ontario. To my left is our wonderful clerk, Lynn Gordon, from Ottawa, and Senator Richard Neufeld from British Columbia, the former minister of energy and all matters related to resources in B.C. To his left are Senator Paul Massicotte from Quebec and Senator Bert Brown from Alberta.
Sir, we have had people here marginally in tidal energy, but, other than that, I think we have heard evidence largely from the traditional energy sources. We have had nuclear energy. I think that energy now is almost traditional in as much as 15 per cent of Canada's electricity is generated by nuclear power, and 55.7 per cent in Ontario. It is a big number. We have had hydro, oil and gas, coal and all of the above.
We are pleased, sir, that you could join us this evening. I want to tell everybody that Sean Whittaker is a professional engineer and the vice-president of policy for the Canadian Wind Energy Association, CanWEA, a not-for-profit industry association that supports the appropriate development of wind energy in Canada and whose goal is to see 20 per cent of Canada's electricity demand supplied by energy wind by 2025.
I had a little chat with Mr. Whittaker before, and he is well aware of what evidence we have heard to date. I believe he has seen our preliminary report called Attention Canada! Preparing for our Energy Future. We are trying to start the dialogue. We are trying to encourage Canadians to talk to each other and become more familiar and comfortable with the fact that we have a problem with the population explosion, and going forward.
Canadians are big energy consumers, and so are many other people in the world. We have to resolve the issues, and we have to keep an eye open toward the effects of climate change and global warming, and also the counterbalancing needs of maintaining a good economy for Canada.
We have heard, with Canada being so big and having such wonderful natural resources — not that wind is not a natural resource — that wind is too expensive to even contemplate. I have shown the witness an article I saw this morning and I asked him to comment on it, in that he perhaps does not necessarily agree with some of those things. I know he has a presentation, and I thank him for supplying us with a copy. Please proceed.
Sean Whittaker, Vice-President, Policy, Canadian Wind Energy Association (CanWEA): Thank you very much. I thank you for the opportunity to come and present a perspective on the evolution of the wind industry up to now and perspectives on where it is going. I have a slide deck that I believe most of you have in front of you. While I am going through the slide deck, if you want to ask any questions of clarification, please do so. We can also wait to the end and then have an open round of questions.
[Translation]
If you would like to put your questions in French, I will happy to answer them in that language as well.
[English]
I expect we are looking at about 20 minutes to go through the slide deck, and afterwards we can go to questions.
I want to present a little bit about what our association is and who we represent. Through the talk, I will start with the big picture level and bring it down and talk about global trends in wind energy, trends we have been seeing in wind in Canada up to today. Then, I will look to the future, first, in the next five years and then longer-term past 2015, and some of the key challenges we are looking at going forward.
In there are some of the solutions and some of the areas where we want to see assistance or support from the Senate on key elements or key challenges that face us going forward.
Looking at the page on CanWEA, we are a not-for-profit association based in Ottawa. We represent anyone and anything having anything to do with wind in Canada. Our membership is large. Ten years ago, the wind industry was a few developers and a few manufacturers, and now it is a diversified group. We represent all of them — the manufacturers, people in the supply chain and value chain, developers, consultants, research and development groups, universities, et cetera. The association is a big umbrella.
The Chair: How did you come to represent them? Did you form the association, or did someone form it? Do they pay dues? Is that how you are financed?
Mr. Whittaker: We are entirely financed by our members. All our support comes from conference and membership. The association itself is about 26 years old. It was small until about 10 years ago, and then it became big quickly. Now we have over 450 members. We built it up like this, but largely it shows the incredible boom we have seen and the great interest in wind energy in recent years.
Simply put, our mission is to promote the responsible and sustainable growth of the wind industry in Canada. That distinction is an important one. We recognize, as wind is booming the way that it is, that the best way to ensure projects for tomorrow is to ensure good projects today. A lot of what we do is centred around best practices and making sure that turbines go in the right places and that they follow best practices in their installation and in their community engagement, to pave a path for a sustainable industry going forward.
Our website is on the slide as well, and you are welcome to visit it. If you have a question about wind that is not answered on this website, then I will congratulate you personally and give you a prize. It is a comprehensive website, and any questions you may have will be answered there.
Turning to the next slide, we will start out with a view of where wind is today globally. I am sure that most of you have heard, seen or read issues about wind. It is something that has gathered a lot of attention. The main thing that has driven this attention is the fact that the industry has been growing like wildfire over the last 10 years. This graph provides an indication of what that growth looks like. The industry has grown an average of 29 per cent per year. Wind now has almost 160,000 megawatts of installed capacity worldwide.
In terms of where most of that growth is happening right now, last year was the first year that China saw the most growth in the world in installed wind capacity. China is installing a lot of wind quickly, and they recently overtook the U.S. in terms of annual installations.
Turning to the next slide, 2009 was a record year for wind. We had 38,000 megawatts of new capacity installed in that year alone, and that capacity represents about $63 billion worth of investment. Last year, 2009, was also a remarkable year in that it was the first year that wind energy represented the largest single source of new generation in both the European Union and the United States. More wind capacity was installed than anything else in Europe and the United States — more than natural gas, nuclear, hydro and other conventional generation.
Even though wind is relatively new to the landscape in Canada, there are many countries where it has been around for a long time. Many countries are well ahead of us. Right now, in Denmark, wind provides 20 per cent of all their electricity on an annual basis. In Spain, it is 13 per cent, and Portugal is 12 per cent, followed by Ireland, Germany and Greece. Canada is somewhere down the list.
There are times in Denmark where wind satisfies 100 per cent of their electricity requirements. We saw recently, in October, that there was a record wind date in Ontario. The Independent Electricity System Operator reported that wind had provided a good portion of the province's electricity for that day. Even though the installed capacity was small, a windstorm came through, and they were all producing at maximum capacity. It was a great day for wind, so it can happen here as well.
The Chair: Mr. Whittaker, you mentioned how active China has been in wind energy. In this list of countries, where you give the percentages, you do not have China.
Mr. Whittaker: Represented here is the percentage of wind energy in total electricity generation. China is new to the game, but they are installing many units quickly. As a portion of their total electricity pie, wind is not that big. It is expected to become big because electricity demand in China is so great. Wind is creeping up slowly, but as a percentage, it is still relatively low.
Mr. Whittaker: The next slide is a view of where we are now in Canada. In 2009 we had a record 950 megawatts of new installations, and 2009 was also the first year that we had wind spinning in every province of Canada with the paramount project in Senator Neufeld's home. We had the first wind installation in B.C. Currently, the leader is Ontario, closely followed by Alberta and Quebec, who both seem to vie for second place in terms of total installed capacity.
Canada is at 3,549 megawatts and it is projected that by the end of year, we will hit just over 4,000 megawatts. To put that number in perspective, those turbines provide enough electricity to satisfy the needs of 1.4 million homes in Canada, which represents about 1.7 per cent of Canada's total electricity demand. It is no longer a marginal resource.
The next slide looks at the trends in terms of wind growth in Canada. Wind energy has grown basically by an average of 46 per cent annually between 2005 and 2010. We see that those same trends we see globally in terms of installed wind capacity are also seen here in Canada.
That is the situation today. We have good momentum and over the next five years it is clear that the momentum will continue. We expect that between now and 2015, we will continue to have good solid growth of wind generation across the country; and 2011 will be a record year for the industry when we are looking at the installation of more than 1,000 megawatts.
To provide a little context, one typical wind turbine produces about 2 megawatts. That turbine will cost generally about $5 million to $6 million and will produce enough electricity for 600 homes.
Of all the contracts signed in the various provinces for new wind, about 5,000 megawatts is on the books now and will be built by 2015. It is also likely that we will see new contracts announced in Saskatchewan, Ontario, Quebec, Nova Scotia and Prince Edward Island.
Those contracts mean that if we stop all wind procurements today and let the existing contracts be built, we will increase to about 12,000 megawatts of wind by 2015. At that time, wind will represent approximately 5 per cent of Canada's electricity demand. To put that figure into perspective, conventional natural gas and electricity generation represents 5 per cent. In five years' time, wind will be where natural gas is today.
The Chair: You talked about 3,549 megawatts produced up to the end of this year, and you anticipate another 1,000 megawatts of installed capacity in 2011. Does "installed capacity" mean that the wind has to be blowing and every one of those blades has to be turning at full capacity?
Mr. Whittaker: That is a good question. Generally, when 1,000 megawatts of installed wind capacity are cranking out at 100 per cent, 1,000 megawatts are produced. However, installations do not always produce that much. For example, a car can go 150 kilometres per hour but we do not always drive at that rate. The average rate is called the "capacity factor." We take the average output over the course of a year, which is approximately 35 per cent for wind. The highest is approximately 42 per cent. Some wind farms in Prince Edward Island have that capacity factor. Generally, the assumption is a 35-per-cent average. It is the same with all technologies. A hydro facility does not produce at 100 per cent all the time. It will produce at less than that, and production will vary. In the case of hydro, the capacity factor is around 80 per cent. The total amount of electricity that the system generates is what there is at the end.
Senator Massicotte: To recap, 1,000 megawatts has a capacity factor of 35 per cent. How many homes does that supply?
Mr. Whittaker: One megawatt is about 300 homes.
Senator Massicotte: How much does that cost?
Mr. Whittaker: One-megawatt turbines are hard to find. The cost is about $2.8 million per megawatt for the turbine that produces power for 300 homes.
Senator Massicotte: Is that for one megawatt?
Mr. Whittaker: Yes.
Senator Banks: What is the difference with respect to delivery on capacity? I ask because it seems so obvious but it may not be. With hydro, when it operates at 80 per cent capacity, it is because someone has decided it will operate at 80 per cent capacity.
Mr. Whittaker: No, everything is taken down for maintenance. There are times when hydro facilities will have drought situations or low water situations so they ramp down the capacity factor. They also ramp down if there is an oversupply. There can be a number of reasons but generally a rate of 80 per cent provides a ballpark figure to translate installed capacity to electricity produced.
Senator Banks: I hope that you can prove me wrong. In the case of hydro, whether it is shut down or there is an oversupply, a person has decided to reduce the capacity from 100 per cent to 80 per cent.
Mr. Whittaker: A number of things might have occurred. They might have decided to shut down for maintenance but there are also times when they have no water. During drought periods, they are not able to run at full capacity.
Senator Neufeld: Also, that happens with wind power because they have to maintain the wind. They are not able to run wind 100 per cent all the time either, so that capacity reduces too. The difference is that hydro is base load — if they need it, they can have it. The same is true of nuclear, coal or natural gas, unless someone turns off the tap somewhere upstream.
Senator Banks: That is the point I was trying to make.
The Chair: I do not mind a point of clarification as we go along, but let us have Mr. Whittaker finish his presentation.
Mr. Whittaker: The next slide entitled "Looking Beyond 2015" shows the situation leading up to 2015. We have a lot of contracts in place. We are going up to 12,000 megawatts even if nothing new is announced. What happens after 2015 is kind of scary, to be honest. There is a ton of uncertainty as to what will happen. The only province that has a plan to go beyond 2015 is Nova Scotia. I should correct that slightly because a few hours ago Ontario also entered the fray because it released its long-term energy plan that provides an indication of where wind will go beyond 2015. It is only the second province to release a plan. This uncertainty presents a huge challenge.
Things might change for the developers of wind in these provinces. After 2015, if we look at the various provinces, there are no new indications of their interest to build anything new. Developers say that is uncertain for them, so when they are looking to invest, that makes them a bit nervous. The same thing is true for manufacturers. Manufacturers are starting to come into the country, and they have to make big investment decisions for a plant to make blades, nacelles, towers or power electronics. That decision has to be based on their confidence that there will be a long-term demand for wind, and right now that confidence is not there. There is some uncertainty.
It is predicted that between now and 2020, about $1 trillion globally will be invested in wind. The question is, what part of that $1 trillion pie do we get. Look at the places that have sent that long-term signal. The United States has, and most countries in the European Union have also set targets. This issue is serious for us. I know that the interest of the committee is a laudable one, looking at long-term energy plans and how wind and other energy sources fit into that plan. I will return to this issue later on, but that long-term signal is desperately needed if we are to attract long-term investment in jobs, employment and infrastructure in Canada.
Turning to the next slide, two years ago, as an industry, we sat back and asked where we thought wind energy will go; why bother pursuing wind in the long-term? We developed something called WindVision 2025. It is a vision whereby wind satisfies 20 per cent of all Canada's electricity demands by the year 2025.
We think there are many compelling reasons for us to pursue this vision. We have an unbelievable wind resource. If we look at a wind map of Canada, it is clear we have what many consider to be one of the world's best wind resources. We have a large hydroelectric base. If ever a marriage was made in heaven, it is wind and hydro. They love each other. They work well together. Many leading jurisdictions in the world have been able to work on that synergy. We have fantastic green energy export potential. To the south, our neighbours have an incredible appetite for electricity, and for green electricity. We have a huge resource, so it is a matter of connecting one to the other. We have a solid manufacturing base on which to build this industry.
In terms of impacts, what would the wind industry look like if we satisfied 20 per cent of electricity with wind? We are looking at about 55,000 megawatts of installed wind capacity. We are looking at a minimum of $80 billion of direct investment in Canada. We are looking at about 52,000 new direct jobs created by wind. We are looking at greenhouse gas reductions of 17 megatons of CO2 annually.
To give an idea of what this look like, if we took 55,000 megawatts of turbines with good spacing between the turbines to ensure they did not block each other, all those turbines together, providing one-fifth of Canada's electricity, would occupy one five-thousandth of our land mass. That is about the size of Prince Edward Island, and it would provide one-fifth of all of Canada's electricity. We do not need a lot of these turbines to get a big bang.
We think there is a compelling reason to go forward, but we obviously have a lot of challenges to deal with between now and then. The next slide is key industry challenges, and I will highlight four of them.
The first is an issue of leadership challenge. There is a challenge with respect to a need to think big about wind. At a federal level, this leadership involves serious work towards a federal energy strategy and renewed federal support for wind to enhance our ability to compete for this investment. As I said, $1 trillion will be invested over the next ten years. How much of that pie will we have? In Germany now, 64,000 people are at work in wind manufacturing.
The Chair: How does that number compare to here?
Mr. Whittaker: Just over 7,000 people work in the wind industry now in Canada. In Germany, the wind industry is the second largest consumer of steel, next to automotive. It has become a big industry over there. Germany was able to attract that industry because it sent that long-term signal.
That is something Ontario has been doing with the Green Energy Act, and it is a matter of thinking big about where wind can go. When investors are looking at Canada, they are not looking at a collection of 10 provinces. They are looking at the country as a country, and that is why it is important for federal leadership to say, this is what we want to do. Right now, estimates are that oil represents about $60 billion in exports, natural gas represents about $30 billion in exports annually, and all electricity represents about $3 billion. We have a tremendous resource, and we think we can build on that resource.
The second challenge is in terms of financial challenges. I will talk about the cost of wind. The general feeling is that if we had an accurate price for carbon, then that price alone would close the price gap between wind and other technologies. The need to establish clarity on what a carbon market looks like is huge.
The Chair: If there were a price on carbon, by one or another mode, would it reduce the price of wind to something comparable?
Mr. Whittaker: It would increase the price of everything else. Right now, there is no real freely functioning carbon market in North America.
Senator Massicotte: Five dollars does not work.
Mr. Whittaker: Fifteen dollars does not work either.
Senator Massicotte: One hundred dollars must work well? What is the number?
Mr. Whittaker: To cover the ecoENERGY for Renewable Power program that existed and was put in place by the government, for which all new funding will cease in 2011, it was one cent per kilowatt hour. It is equivalent, in terms of a carbon price, to between $40 and $50 per tonne. Right now, in places like Alberta, which has a functioning carbon market, the prices are capped at, I believe, $15 per tonne, and that price does not cover the gap sufficiently. The price has been capped. It has not been allowed to float freely as much as it should. Does that answer the question?
The Chair: Thank you very much.
Mr. Whittaker: The Conservative government was clear last year when ecoENERGY was not renewed. Minister Prentice said establishment of a carbon market will cover the gap that ecoENERGY used to provide. At the same time, the minister also said that Canada would follow the U.S. lead in terms of development of a carbon market. There is uncertainty in the United States right now with respect to establishment of a carbon market.
We feel that the time to provide that kind of certainty in Canada is now. We recognize that there is uncertainty in the United States, and we recognize at the same time that a carbon market is coming. It is coming in two years, three years or five years, but it will come. The earlier we can provide a signal about what that carbon market will look like, the better off investors are, and the more certainty we provide them with.
The third area is grid challenges. Many of the things I am talking about are not unique to wind. Wind is growing faster than other generation sources, so the industry is running into these challenges faster than many of the other generation technologies. There is one issue we all share. If I were sitting here with the nuclear industry, hydro industry or natural gas, we would all say the same thing. We need new investment in the grid. We have not spent any appreciable amount of money on grid infrastructure in the last 20 to 30 years, and we simply cannot continue with the current grid. We have to build it up.
The fourth issue relates to social acceptability, and this has been an issue as wind has come into the mainstream. It has received a lot of attention, and, frankly, it has been the subject of certain opposition.
The Chair: Two weeks ago, I clipped out a long article in one of the national newspapers stating that wind is the new nuclear. Is there a NIMBY factor — not in my back yard — in that context? Is that what you refer to?
Mr. Whittaker: Wind has gained a lot of attention. With anything that steps out of the shadows, it will receive a lot of attention, both positive and negative. We and independent groups have polled people to determine how they feel about wind, and the data is extremely positive. A recent poll in Ontario indicated that 87 per cent of Ontarians want to see the province develop more wind.
The Chair: That is provided they do not have huge turbines on their front lawns.
Mr. Whittaker: One interesting thing we have found in our poll is that acceptance of wind increases the closer one is to a turbine. In the Municipal District of Pincher Creek, it is estimated that residents' tax bills would be double what they are today if it were not for the wind farms in their jurisdiction. Places like Wolfe Island are earning revenue from wind. In some cases, annual revenues have doubled. That money has helped some municipalities to build community centres, hockey rinks, clinics, and other things they did not have before.
To be honest, we find that the greatest allies are the communities that already have wind. Many rural areas are huge supporters of wind. In many cases, rural areas are experiencing downturns from declines in the resource sector, and wind provides all kinds of benefits to them in terms of property taxes and direct royalties. Ironically enough, the best acceptance of wind is where wind already generates power.
From the wind industry's perspective, we have a real responsibility. I said at the outset that our responsibility is to develop wind sustainably. A big part of that development is proper engagement with communities. There is a saying among many developers that there are the five Cs of project development: communication, communication, communication, construction and communication. If they omit any of those Cs, they can be dead in the water. If a community does not accept a wind project, a developer will have a hard time. It is a matter of answering questions openly, understanding a community's concerns and being a good neighbour in that community. In projects where developers go about their business in that way, they are welcomed with open arms.
In Baie-des-Sables on the Gaspé Peninsula, one will find a group of people who are incredibly happy with the wind farm up the road in Matane. They have a tower manufacturer and a cell assembly plant. We have seen young people returning to the Gaspé who were not able to find good work there for many years but can find work now because of the wind industry. Property values and house prices have gone up on the Gaspé Peninsula and in other areas where wind is developed.
There are many good stories to be told, but they are all contingent on good relations. That can never be taken for granted. We cannot walk into a community, set up the turbines and expect everyone to be happy. We have to answer questions, which we try to do.
That is a big challenge.
The Chair: CanWEA plays a big role in the area of communications.
Mr. Whittaker: Absolutely: In the next few weeks, we will release a best practice on community engagement. The document is huge and establishes best practices and what to do to properly engage with a community and understand the sensitivities of the community. The document provides guidance from our own developers.
As I said before, the best way to guarantee projects for tomorrow is to make good projects today. We are pushing actively for good projects today and they all start with good engagement. We see ourselves almost as stewards of the industry, to a degree, more than anything else.
The Chair: To complete the part about who you are, how many are at the office in Ottawa? What is your annual budget?
Mr. Whittaker: We have 24 staff spread across the country. In Ottawa, we number about 15 or 16. Our association is forged by the Constitution, which enshrines energy as primarily the jurisdiction of the provinces. Therefore, we tend to be decentralized and have offices in various provinces to promote wind within each province. Our annual budget is about $5.5 million.
The Chair: Thank you.
Mr. Whittaker: The next slide addresses some myths surrounding wind. I will address two of those myths. I read your report Attention Canada! Preparing for our Energy Future, which is fantastic. I enjoyed it because it is rare to find one document that takes such a comprehensive look at energy issues. I commend the committee for putting it together and for bringing it to the public because it serves as useful input to the debate. I spotted one line that I will quote:
At times, power output can be highly variable and difficult to predict causing challenges in maintaining stability within the electricity grid.
This line goes to one of the main myths about wind: that it is unreliable and intermittent. We have seen from experience, not from wind industry proponents but from utilities with a lot of wind energy on their grids that they find this is not true. They find that any variability in wind is greatly reduced by geographic diversity in forecasting. What does that mean? We may have one turbine in Ottawa that is spinning away and cranking out lots of power because we have lots of wind, while in Thunder Bay there might not be much wind to spin the turbine. However, the wind does not stop blowing everywhere at once and the turbine in Thunder Bay might crank up when the one in Ottawa goes down. If we spread enough turbines over a large enough area, we find that they balance each other out very well. Utilities and system operators, the soberest of people whose responsibilities are to keep the lights on, have found that the variability of the output from a bunch of turbines over a wide area can be less than the variability derived in load as we all turn our appliances on and off.
Another art that has come along well in the last few years is forecasting. Our ability to forecast wind has increased remarkably. The science of forecasting is something. We have forecasting companies with super computers providing services to utilities with wind to tell them how much wind they will see on their grid at any particular time. The companies have become good at the forecast within a 24-hour period.
The variability is mitigated to a large degree by the fact that they can predict several hours in advance what that variability will be. System operators live in a world of variability. All humans are as variable as possible in that we are always switching things on and off, and systems operators have to follow that load. They are also used to following the supply, which is not a big challenge. We found that utilities with a lot of wind on their grids can take up to about 20 per cent of their energy from wind without substantially affecting how they operate the grid. That is a remarkable thing. A few years ago, it was thought that if they brought on a little bit of wind, the lights would go out and everything would fall apart. The utilities that have had lots of experience have found that is not true.
I brought a publication today. If you are an engineer like I am and you are keen on these things, you will find it interesting. It was put out by the Institute of Electrical and Electronics Engineers, IEEE, professional association, which is a sober group.
The Chair: What is the title?
Mr. Whittaker: It is the IEEE Power & Energy Magazine. They had a special issue on wind integration in December 2009, talking about utility experience with integrating wind. This group has nothing to do with us, but they find that it is easier to integrate than they originally thought. They also found that the cost of integrating it is less than they thought. If wind generation costs ten cents per kilowatt hour, the amount that it costs to balance that variability is less than one cent per kilowatt hour.
Sometimes in papers they will say wind is great but we need 100 per cent back up: For every one megawatt of wind, we need one megawatt of natural gas behind it to back it up. That is absolutely not true. There is not a shred of evidence to indicate that is the fact. It is important to put out that myth.
The second myth we deal is that wind is expensive. I know that previous witnesses have talked about the need to reinvest in energy infrastructure. The last serious generation build in Canada was in 1993 in Ontario. The last time we built any appreciable amount of transmission was even longer ago than that. We have to invest in new generation. Everyone will tell you, from all sorts of different sectors and not only wind, that new generation costs a lot more than old generation did. They cannot build hydro for what they were once able to build it for. They are not able to build nuclear for what they were able to build it for before. With respect to fossil fuel generation, certain fluctuations in price have to be accounted for. Any new generation will cost more than it did before. We have to build new infrastructure, new wires, distribution and transmission. These things push up the cost of electricity. We have seen price hikes recently in Ontario, and these hikes are due largely to anticipated investments in infrastructure. These investments have to happen whether it is wind or something else.
Wind is being built now, and there is a lot being built. Wind has what we call 100-per-cent price transparency. In Ontario right now, wind projects are being built under the Green Energy Act for 13.5 cents a kilowatt hour for 20 years. That cost does not change. After that, there is no decommissioning cost or costs for toxic waste disposal. There is no cost that is not in that 13.5 cents. We have seen wind contracts signed in the last few years. In Quebec, there was one a number of years ago for 6.5 cents a kilowatt hour, and recently, 8.6 cents a kilowatt hour. There is a wide range, but there are no hidden costs, and that point is an important one to make.
Look at the cost for new generation builds. Look at Quebec and British Columbia, which have built wonderful hydro reserves, and they were able to build them at low cost. In Quebec, there is a block of energy, the heritage block, that I believe is priced at around three cents a kilowatt hour. They were able to build at that cost back then. If we look at recent estimates of costs for new build, costs are much greater than that.
In many cases, wind is almost cost competitive with many of those sources. As I said, we feel that the cost gap that exists between wind and conventional generation would be closed if we had a price on carbon. Is wind expensive relative to sources of other new generation? No: It is cost competitive. There is still a cost gap, but we need to cover that gap with carbon.
To conclude, I want to make two main points. The first is that we cannot call wind "alternative" any more. We could five years ago, but now it is up there playing with the heavy hitters. We have seen extremely rapid growth of wind development in Canada. We think we have only scratched the surface. Wind has an infinite capacity in Canada. Over the next five years, there will be an average of 1,600 megawatts of new installs, and that will drive incredible job creation and economic investments across Canada. That point is important. Wind equals jobs.
However, this growth will not happen on its own, and we have to act now to reap the full opportunities that wind represents. That investment, those jobs and that economic stimulus will not happen by accident. We have to be proactive. We can learn things from other countries. Spain started out in 2000 with about as much as wind as we have, and it is now over 10 per cent penetration. Spain has some of the biggest wind turbine manufacturers in the world. The largest wind developer in the world is in Spain, and that is because they thought big and decided it was something to go after. They provided that long-term signal.
We believe that to create that sustainable and stable market, we have to think big. That thinking starts within the provinces, but it also needs to happen at the federal level. Previous witnesses talked about the role of the federal government in this development. We think that role is to provide that big picture view, and that view is an energy strategy. Right now, we do not have a wind strategy or an energy strategy, period. When we look for a roadmap, that is the first place to look. Without that roadmap, as the saying goes, if we do not know where we are going, then we do not know where to put our next foot. We think wind can play a critical role through an energy strategy.
Two other important elements are renewed direct support for wind and clarity on carbon market development. At the same time, a foundation has to be built up through increased social engagement and increased investments in research and development and education, and increased investments in the grid. There is no silver bullet to making wind grow to where we think it can grow in Canada. Growth will require a multipronged effort, but we feel strongly that the federal government has a huge role to play. We welcome any support this committee can provide in terms of giving the long-term signal.
Thank you for the opportunity to present, and I am happy to answer any more questions you might have.
The Chair: Thank you for a thoughtful and excellent presentation. Its simplicity and yet its comprehensive treatment of the subject is remarkable. I can feel my colleague to my right here, the deputy chair, salivating at some of the language here.
Before we ask him to go to the first question, I want you to answer one from me. You touched on this subject when you said that wind and hydro together is a marriage made in heaven, and they are synergistic together. Can you elaborate on that synergy?
Mr. Whittaker: One of the great things with hydro is that they can squeeze it down and squeeze it back up, and it does not mind that. They open the gates or close them. The power they take out of the hydro site can vary. It is not a step type of function. It is not here or here, but rather anywhere in between.
Wind does have short term variability, and it changes from hour to hour. We can match it with hydro and move the hydro up and down to match the wind. What happens in many cases is that they will use that hydro to firm up wind and have these nice solid blocks of energy that they can send out, part wind and part hydro. It has the benefits of both.
The Chair: Do the wind sites need to be in close proximity to the generating stations and so on?
Mr. Whittaker: No: Quebec has been a testing ground. The sites in James Bay are a long distance from the turbines that are installed primarily in the Gaspé Peninsula now, but they are able to balance them well. That is in the short term.
It is interesting that they found, over the long time, that the variability of wind is less than the variability of hydro. Over a longer period of 10 or 20 years, with hydro, they always hit one or two periods of drought. Over a 30- to 40-year period, they hit fairly serious periods of drought. They do not hit those drought periods with wind. The wind is consistent from one year to another.
By having wind on the system, they allow wind to back up hydro over a longer time period. That is why I said it is a match made in heaven. Wind and hydro work well together. Hydro complements wind in the short term, and wind complements hydro in the long term.
Senator Mitchell: Thank you, Mr. Whittaker. The chair was right; I am excited about this subject. It was an excellent presentation. We talk often about "not in my backyard," and wind energy is a visual phenomenon because we can see it.
What people do not realize is that every single day, no matter where they have been built, virtually, electrical fired coal plants are in everybody's backyard, front yard and in our lungs because they produce emissions that create smog. If you do not know about them, look in your backyard on a hot day. It is true: It is a question of how we perceive these things, and that is a lot of what you are fighting — how people perceive.
I am interested in your long-term signal issue, which is something that is acceptable to federal and provincial initiatives. When you say long-term signal, are you saying specifically that someone has to make a commitment to subsidizing a price?
Mr. Whittaker: In 2001, the then-Liberal government put in place something called the Wind Power Production Incentive program of one cent per kilowatt hour. The Conservative government not only continued the incentive in the form of the ecoENERGY Program but also increased the incentive to the development of 4,000 megawatts. The program was fantastically successful. In fact, it was so successful that all the money was spent before predicted. It did not last as long as the government thought it would. That signal was incredibly important. The initiatives under the Liberal and Conservative governments can be credited with spawning wind across the country because it said to investors that this place is serious about wind. That program is proof positive of what can be done. Now the provinces are running with it and establishing targets of their own. There is no doubt that program can take many different forms.
A national wind strategy is another way for the country to say it believes in this investment that represents a huge opportunity. The outside world sees not 10 provinces and the territories but Canada as a whole. That message provides the world with the confidence to invest heavily in Canada. Yes, there is a huge role to play.
Senator Mitchell: I agree with half the price of carbon. Would you price it with a tax, a cap or do you care?
Mr. Whittaker: I have seen this question presented to other witnesses, and it is a difficult one. In the end, it is whatever provides a better signal.
Current trends are toward cap and trade. Carbon taxes are an alternative mechanism essentially of addressing the same issue. The ends justify the means, in a way. It is a matter of the most effective way of addressing the price issue.
Senator Mitchell: The argument is that wind energy is too expensive. You have made compelling arguments to counter that argument. I ask the question slightly rhetorically. Real companies put $63 billion into it last year, and the U.S. is doing so much of it. In fact, they are stealing some of our manufacturing companies away, if not more than some. There must be some economics to it.
Is the weakness in that argument that somehow we can produce power so inexpensively here that wind is not competitive, or is your argument that new build costs pretty much waive that difference?
Mr. Whittaker: There is no doubt that Canada's resource is unbelievable. The energy we can produce from a wind farm in Prince Edward Island or Nova Scotia will far outstrip what they can produce from a wind farm in Massachusetts.
We have a better resource. Our costs are recovered, but investment will go where there is certainty. Wind is still competing with other conventional sources. In the States, they can invest in a wind farm and have a good portion of that investment returned through an investment tax credit. That improves their bottom line, and it may give them a couple of extra percentage points on their return on investment. That is enough to encourage them to invest in the U.S.
In 2009, 41 new wind manufacturing facilities started up in the United States. That growth was basically the industry responding to a signal saying that the U.S. was serious about wind. This is the kind of global competitive environment that we are looking for.
Senator Mitchell: Maybe you can even send us an answer to this question. If you were to write a wind strategy for the Government of Alberta, what would the elements of the strategy be?
Targets would be a percentage of production of energy presented as a total; another might be some kind of pricing mechanism for carbon; and another might be some kind of program for tax credits to make the industry slightly more competitive.
Are training and education programs needed to develop the workforce required to support that kind of industry and construction in short order?
Mr. Whittaker: Alberta is special place because it is a fully deregulated market. Wind competes head to head against every other technology. The province is famously agnostic about generation technology, and in that environment, wind has been able to perform extremely well. That is where the ecoENERGY Program made a difference.
A number of proposals are on the table. One discussion has been the idea of a resource intensity factor that will apply across the province to help give wind a leg up. Again, the ends justify the means, in a way, but there is an interest in providing an improved fiscal environmental for wind in Alberta in the absence of ecoENERGY because wind is having a hard time competing against conventional energy, which does not have to pay the external costs associated with the generation.
The Chair: I want to introduce Senator Dickson, from Halifax, Nova Scotia. Senator Dickson will be happy to know that nice things were said about his native province becoming involved in wind as a key source of energy.
Senator Banks: Mr. Whittaker, I hope that wind will be what you hope it will be so I want you to correct me if I have misgivings about it.
You said that by 2025 wind will be able to supply 20 per cent of the electricity that Canada needs. You have quantified what Canada will need. What is that number, give or take a nickel?
Mr. Whittaker: I do not have the number off the top of my head.
Senator Banks: Let us say it is 100.
Mr. Whittaker: About 55,000 megawatts of wind will produce enough electricity to satisfy one fifth of the needs.
Senator Banks: The total need would be 5 times 55,000, which equals 275,000 megawatts.
Mr. Whittaker: It is not quite that because it is on an energy basis rather than on a capacity basis.
Senator Banks: Let us treat it as 100. Canada's requirements are 100 per cent in 2025, and electricity will be able to supply one fifth of it. Electricity is reliable to the extent of 38 per cent, and we will make it 40 per cent by then because efficiency will improve. Therefore, to supply 20 per cent of what we use, we will require the capacity to generate 50 per cent of what we use. Do I have that right or wrong?
Mr. Whittaker: All generating sources produce electricity in terms of kilowatt hours. An electron does not care where it has been generated, be it from a turbine or a hydro facility. It all goes into the mix. It means that wind will provide one fifth of all electrons going into the system.
Senator Banks: Right: My point is that there is a difference in certainty of supply with hydro. You said that it is about 80 per cent. I presume with gas it is at least 80 per cent. With nuclear, it has to be 85 per cent or so. With wind it is about 40 per cent. It is half as reliable in terms of the certainty of supply and the assurance that when I flip the switch, the lights will come on.
To supply one fifth or 20 per cent of our needs, and we are reliable to the extent of 40 per cent, we need a capacity of 50 per cent, do we not? For the sake of my question, is 55,000 megawatts 50 per cent?
Mr. Whittaker: In terms of total installed capacity, relatively speaking it will represent about 50 per cent, yes. It will probably be 40 per cent or 50 per cent. It would have to because wind is producing electricity on average 30 per cent over the course of the year, and then hydro and everything else is producing on average 80 per cent.
It is important to note that how a wind fleet acts as a whole and how a single wind turbine acts are not the same. That single wind turbine sometimes produces at 100 per cent, sometimes 0 percent, sometimes 50 per cent, 60 per cent or 20 per cent. Production bounces around, but if we match it with another turbine that is 100 kilometres away, that one is producing at 0 per cent, 20 per cent, 50 per cent or 60 per cent. It is bouncing around at the same time, and then another one 200 kilometres away is behaving differently.
All together, they tend to flatten each other out. Even though the total is 30 per cent, as a fleet 30 per cent is pretty much constant. For a large wind fleet spread with good geographic diversity, they can tell you with accuracy when it will produce electricity. At that point, the system operator is able to match it with all the other sources coming on. Reliability is not really the issue. Wind is able to produce electricity along with all the other sources at a satisfactory rate to the system operator where they can keep the lights on.
Senator Banks: It must be because reliable, as you say, there are many more of them, and one can see that diversity you speak of as one drives by any large wind farm because one mill is going crazy and another 500 feet away is not moving much.
You attached a great deal of importance to carbon. Were you disappointed then in the collapse of the Chicago carbon trading market?
Mr. Whittaker: One of the most successful markets for externalities, be it carbon or air pollutants, was the sulphur dioxide program in the U.S. run in the 1990s. That program was considered to be an incredible success not only in terms of how quickly they were able to bring sulphur dioxide emissions down, but they were able to do so at a fraction of the price they thought. That kind of free functioning market must be allowed to exist.
Now for the Chicago market, for whatever reason, it was not allowed to be a market in the traditional sense of a commodity market.
Senator Banks: Is that because of overregulation or what?
Mr. Whittaker: Yes, it is overregulation. In any market where we do not have a sufficient and clear signal between demand and supply, then the market signals become skewed, the product's value changes and then we do not have a viable market any more. Yes, it is due to a series of factors, but the whole supply and demand was not allowed to float as it should have.
Senator Banks: Do you have in your mind a clear distinction, if there is a difference, between the kind of public monies that were used to subsidize, let us say, the oil sands on the one hand and wind energy particularly on the other — separating out from renewable energy writ large, wind energy versus oil sands development? The comparison is not a good one, but do you have information in that respect?
Mr. Whittaker: No: It is extremely difficult to have an apples-to-apples comparison. The support that has been provided for wind has been largely through a direct program, the Wind Power Production Incentive and then ecoENERGY, but often other sectors receive support through the tax system. Trying to compare a dollar spent on the tax system and a dollar spent on a direct program is difficult, so that comparison is hard.
We do know that GE Energy Financial prepared an analysis on the ecoENERGY program and asked what would happen if the federal government put $1 billion into the ecoENERGY program. What does that mean in terms of returns to federal coffers? GE Energy Financial found a net positive result. For every dollar they put into ecoENERGY, the returns through tax payments, income tax, property tax, et cetera, works out to about $1.30, so they found the investment has a net benefit.
Senator Banks: Is that direct or is some multiplier effect applied to it?
Mr. Whittaker: For every $1 spent on ecoENERGY, $8 comes in from the private sector because the private sector has to build the project, and the $9 together creates a certain number of jobs and payments that comes back through the tax system into the federal coffers. The net effect is $1 in and $1.20 coming back.
Senator Frum: In terms of piercing myths, and so I understand, on your website you talk about how Quebec has 663 megawatts of installed wind energy capacity generating enough electricity to satisfy the needs of approximately 230,000 homes. However, the wind alone cannot satisfy 230,000 homes. The idea of wind power satisfying even one home is a myth, right?
Mr. Whittaker: No: An average home over the course of a year will consume about 10 megawatt hours of electricity and it does not really care where it comes from. When we try to figure out how much wind is satisfying, we look at how many electrons wind put into the grid and how many electrons everything else put into the grid — in Quebec, it is hydro — and we add up all those electrons, and they add up to "X" megawatt hours of electricity. Then we divide that number by 10 megawatt hours, which is what the house has consumed on average.
Senator Frum: I appreciate that, but I am saying in terms of the communications message, I think there is something misleading about suggesting that wind power can satisfy — using the word "satisfy" — any quantity of home usage. It can satisfy a percentage of home usage but never 230,000 homes on its own?
Mr. Whittaker: In theory, it could. It is used as an illustration only because it is hard for people to figure out what a kilowatt hour or a megawatt hour is, and so providing the number as an illustration in terms of equivalent number of homes powered is, yes, for pure illustration.
Senator Frum: On the issue, you talked about the municipalities that see the increase in income from wind generation. Critics argue that the loss to the tax base is greater than the gain because of the offsets from the loss of open land, the loss of tourism, the stagnation or decrease in property values through the wider area, the tax credits that are typically put into wind, and the taxes and fees that consumers pay to subsidize wind. Can you elaborate more on that cost benefit analysis?
Mr. Whittaker: In terms of the land that a turbine occupies, it will generally occupy 2 per cent to 3 per cent of the land on which it sits. An average turbine requires 80 acres of lands and occupies 2 per cent of that land. The reason farmers like turbines so much is that they can stick a turbine in the middle of a field and use the land around it, as they used it before. The turbine occupies little space. Cows graze right up to it, or if landowners have crops, they can continue using the land for its original purpose, except the difference is they receive a whole whack of money from this turbine that is in the middle of their property.
You asked about property value. There have been a number of studies. A huge one was conducted by Lawrence Berkeley National Laboratory in the United States looking at property value across every wind farm they could find. We conducted a property value study. We took an independent group and asked them if wind affected property value. We looked in the area of Chatham-Kent. Both the Lawrence Berkeley study and ours, and every other study that has happened, found that if anything wind turbines have a net positive effect.
The reason is that having the turbines in that area provides a net benefit to the municipalities. If anything, turbines tend to have a neutral or positive effect on property value. That study had nothing to do with us but is an independent analysis that has been conducted.
A landowner will receive $5,000 or $10,000 for a single turbine. We have many cases of landowners who have said, "If I did not have this turbine, I would have to sell my farm." Two turbines, $20,000, can make the difference between a viable operation and not, and that is particularly important in rural areas that have been hard hit.
In terms of tourism, one thing that happens with turbines, one of the problems that developers run into, is they do not adequately account for tourism, but it is a tourism increase. You will find that if they install turbines, there are long line-ups on the side of the road to look at these things. They forget to put in interpretive centres. They start putting in interpretive centres, and people go through them. North Cape in Prince Edward Island is an incredibly beautiful place, but it is remote. It is two hours outside of Charlottetown. There is a wind interpretive centre up there with the North Cape wind farm, and 60,000 people each year go through the town of Tignish, which does not have a population anywhere close to 60,000. The net impact on tourism has increased. Weddings happen at the base of the turbine in Toronto all the time. In St. Leon, Manitoba, they have an interpretive centre, and they have created videos and testimonials, and St. Leon does not have a lot other than their turbines. Their tourism numbers have gone through the roof.
Do not take my word for it. Visit these places and talk to the people that have nothing to do with us, and they will tell you and express their strong support for it. Largely, the support comes from an economic perspective. It helps their municipalities. Yes, I think the good stories are easy to find.
Senator Frum: I appreciate how enamoured you are with the beauty of these wind turbines. Last month, when 230 ducks were killed by landing on tailings ponds, that story was a top story in the national news. A Spanish study says 3 million birds are killed a year on wind turbines or the power lines related to them. Bats and all kinds of birds become caught up in these turbines and power lines. Maybe Ducks Unlimited already has a position, I do not know. What is your response to that issue?
Mr. Whittaker: They do have a position. One of the strongest supporters of wind in North America is the National Audubon Society. The way they look at it, an average turbine kills one to two birds a year.
Senator Frum: I thought it was one to two a week.
Mr. Whittaker: No, no, that is not the industry average. Again, this information is from conservation groups that have nothing to do with us. It is, on average, one to two birds killed per turbine per year. It is unfortunate. We wish it were zero. Much has been done over the last 20 years in terms of where to put a turbine and where not to put a turbine. I will be honest. Some installations 20 years ago were not in the right place. They did not understand migratory bird paths, and they did not understand certain bird behaviours, but they have come a long way. To obtain the approval for a turbine, they have to have a full study of its impact. Groups like the National Audubon Society, which are pure birders, have come out to say they are in support of well-sited wind turbines, because they feel that global warming represents a greater threat to bird habitats and that, on aggregate, it is better to have wind than to continue on the current path where they see destruction of large amounts of bird habitat.
Senator Frum: I want to correct this information for the record. The number I have here is from the U.S. Fish and Wildlife Service. It says a single turbine killed up to 37 birds per year.
Mr. Whittaker: There may be a single turbine that has done that. On average, it is one to two per year. A poorly sited turbine will —
Senator Frum: They say an average turbine.
Mr. Whittaker: That figure surprises me. I will have to verify.
The Chair: Where are those turbines, Senator Frum? Are those turbines in Rosedale?
Senator Frum: They are American birds, because it is the U.S. Fish and Wildlife Service that is measuring it.
Senator Brown: You are optimistic about wind turbines. Do you have any figures on the relative life of a wind turbine without maintenance?
Mr. Whittaker: How long would a wind turbine last if it was not maintained?
Senator Brown: Without maintenance.
Mr. Whittaker: Probably about as long as your car would last. The average lifespan of a turbine is about 20 years, but if you do not maintain it, it will shut down. There is an automatic control system. If no one touches it and something happens, if the turbine senses there is a problem, it will shut down. It will stop.
Senator Brown: I am asking for the figure of how many hours or days it will run before maintenance.
Mr. Whittaker: That is a good question. I do not know. There is a lot of maintenance on the machine; on its mechanical systems, on its gearbox and on the tower electronics. The maintenance will be different for each one of those components.
Senator Brown: Is your wind-turbine thinking dependent on carbon pricing? Do you believe that carbon pricing is key to maintaining the growth of wind turbines?
Mr. Whittaker: No: The main competitor for wind right now on a price basis is natural gas. Natural gas prices are at a low level right now, extremely low, and it is difficult for wind to compete against them. If natural gas prices were to increase, then wind would be in a better position.
Carbon pricing is not the be-all and end-all to wind. We know that carbon markets are coming and that they will favour wind. One of the nice things with wind is that what operators pay now is what they will always pay. If they have a contract for 13.5 cents in Ontario, or more or less elsewhere, that amount stays the same for 20 years. It does not change depending on the price of their input, be it fossil fuel or otherwise.
Senator Brown: I was interested in that question, because a week ago, on a scroll on the bottom of a television screen, it said that the new Republican Congress has said that they would not vote for cap-and-trade or a carbon market. I thought I would throw in that information.
How many turbines do we have in Canada now to produce 1 per cent?
Mr. Whittaker: It is around about 1,700 turbines.
Senator Brown: We need about 6,000 or a little better for 5 per cent.
Mr. Whittaker: For 5 per cent, we need three times what we have now. Turbines are also becoming bigger. The turbines installed five years ago were, on average, 1.5 megawatts individual capacity. The ones that are installed now are 2.8 and 3 megawatts, and they will probably go up to 5 and 7 megawatts. The number of turbines will drop as time goes on. I expect we will see, for that quantity, maybe 2,500 or 3,000 turbines.
Senator Seidman: I want to look at your leadership challenge, to think big. I want to look at your numbers. You said that, in 2010, we have about 1.7 per cent wind power. If I move along to your projection to 2015, you add another 8,000 megawatts, up to 5 per cent. If I look at your vision for 2025, which is 15 years down the road, you have us up to 20 per cent. From 2010 to 2015, that is five years, and we have added 8,000 megawatts. I want to try to understand how we can go from 1.7 per cent to 20 per cent with the vision you have put in front of us. I am not clear on that. Can you please elaborate?
Mr. Whittaker: It is a good question. It is not a linear function between 2005 and 2025. It is one of these famous hockey sticks. According to our projections, if we hit 12,000 megawatts by 2015, that number will put us on target because it is expected that each year, the amount will be greater. Between now and 2015, we will add about 8,000 megawatts, so we will average about 1,600 megawatts per year. It is expected that between 2015 and 2025, it will increase first to 2,500, then to 3,000, and then to 4,000 megawatts per year. Growth will not be linear; it will be exponential.
Senator Seidman: I understand; but how do you see that development playing out to achieve that growth? When I look at what you have achieved in 2009 and 2010 and the projections to 2015, I want to know how you see that growth playing out in that hockey stick fashion?
Mr. Whittaker: There is no doubt that the wind industry is capable of installing many turbines quickly. One nice thing about wind is that we can build many facilities quickly. It is a matter of having the capacity to do it. Installing 1,000 megawatts and 5,000 megawatts is not that different. We only need five times more turbines, five times more developers and five times more communities. Does that answer your question?
Senator Seidman: Is that vision and plan realistic?
Mr. Whittaker: We think so. As I mentioned, Spain started at about the same place we started in 2000. In 2010, wind is well over 10 per cent of their electricity generation. They were able to install several thousand megawatts per year.
In the United States, it is generally anticipated that they will install about 5,000 megawatts per year. They can install that capacity fairly easily. It is doable, but it is a matter of momentum begets momentum. With every year that they install a certain amount, it puts in place a capacity that lets them install even more the next year; so it is a matter of gaining momentum.
Senator Seidman: I look across the country at the projects in each province. I believe there are 8 in British Columbia, 11 in Alberta, 2 in Saskatchewan, 1 in Manitoba, 15 in Ontario, 19 in Quebec, 3 in New Brunswick, 11 in Nova Scotia, and 1 in Prince Edward Island. Perhaps you might elaborate on what areas have the greatest potential.
Mr. Whittaker: As I said, 55,000 megawatts provides one fifth of Canada's electricity and is the target. That capacity would occupy an area the size of Prince Edward Island. We do not need a ton of turbines. The potential in each province is off the scale. A study in Quebec talked about how much potential there is within 25 kilometres of existing transmission lines in an area that also has wind considered to be in a class that is good. It was found that the potential was over 100,000 megawatts. That area was within 25 kilometres of existing transmission lines only that had good wind potential. Each province has that potential. Recently, Newfoundland and Labrador indicated that there is up to 5,000 megawatts of potential to develop along with the Lower Churchill project. Each province has an embarrassment of riches with respect to potential. It is a matter of setting the target and going through the process to seek those contracts.
The Chair: Senator Banks, is it a clarification?
Senator Banks: My question pertains to Senator Seidman's question. Is it instructive to us that the increase in capacity is 26 times what it was ten years ago?
Mr. Whittaker: Sorry; it is a 26-per-cent average growth rate.
Senator Banks: No: In 2000, according to your chart, we generated 137 megawatts. We now generate 3,549 megawatts as of October 2010. In less than ten years, the increase has been in the order of 26 times. We have increased the wind capacity by a factor of 26 in ten years. If we increased it by 26 in the next ten years, et cetera, until 2025, will it meet the objective you have in mind?
Mr. Whittaker: Yes: In fact, it will exceed the objective. Wind people are a bit like I am — optimistic. They feel positively about it. When we look back over the last 10 years at any projection by an international agency with respect to potential growth of wind, we find that it always exceeds expectations by a huge margin. They were optimistic to start out with, so it continues to grow more quickly than anyone had guessed.
Senator Seidman: I will finish with one last question.
The Chair: Yes; you were interrupted.
Senator Seidman: I want to review which regions have potential. You said they all have potential. As you so wisely said, communication and public relations are critical. You cannot do much without the cooperation and engagement of the communities and the people who live there.
In Quebec, there has been a lot of controversy despite the fact that we have 19 projects, as I see here but did not know before. Can you tell us a bit about the controversy and the kinds of complaints that arise?
Mr. Whittaker: It differs from one community to the next. All development is local. In the end, it depends on a series of variables in terms of how the project is brought in or introduced, and how it is received. There is no one-size-fits-all approach to good community engagement.
If turbines are planned for a community, there will be questions. There have to be questions. It is natural that people will have all sorts of questions. The number of questions about wind is staggering, including the diversity of questions and the concerns people have that stem from a variety of issues. The job of a developer is to be as open as possible, and to answer every single question to the best of his or her ability.
In some cases, they cannot convince everyone. Some people will not be convinced, and that can be reflected in any type of development. Projects that have good support have been through frequent early engagement and a great deal of transparency. However, we will always find individuals who are not supporters of the project, which is unfortunate. It depends on the community and can differ from one to the next.
Senator Seidman: What are the biggest fears of people as you confront these communities? You have an honest stake in trying to move wind power? What are the biggest fears that you confront when you go to a community and talk to them?
Mr. Whittaker: Much of it comes down to economics. Property value is a big concern that people have. Sometimes people will say they do not like the way turbines look. There are concerns about whether this turbine affects the value of their property. That is a concern.
There are concerns over environmental impacts. There are concerns around economics in terms of what this installation will bring to the community and an understanding of what the impacts are for them. Will it affect their tax bill? Will it affect their property? Will it bring jobs into the region, or will it not?
It really depends. There are other concerns around environmental issues, social issues and economics. There is never a one-size-fits-all concern. That is why developers have to answer every question that is out there, but there is no such thing as a typical wind project.
Senator Seidman: You are saying there is no commonality of concerns. If you listed all concerns and made a distribution of them, you would not find commonalities?
Mr. Whittaker: Visual comes up a lot. One thing in dealing with concerns is whether it is a quantitative thing. If someone is concerned about birds, there are many studies out there that indicate what the impacts are or are not for birds. Bats are the same thing. Property values and emission reductions are the same thing. There are numbers and science behind them.
Visual impact is a hard one because developers cannot tell someone how they feel. If someone does not like the look of a turbine, there is not that much we can do.
For developers, seeing is believing. They will rent a bus. They will go to a community and say, "Anyone who wants to see a wind farm, get in the bus and we will drive you to one."
I am not sure if any of you have visited a wind farm but they are incredible things. This is not only me — I like wind turbines, obviously — but if developers take people to a wind farm, they find it amazing. There could be a turbine in the middle of this table — it would be bigger than this table — but we would be talking as we are now, and we look around and talk to the people who live near them and they feel positive about them.
Often taking people with concerns to visit a site with wind turbines does a world to allay their fears. Then, it is something that is known. That speaks to what I mentioned earlier about how acceptability of turbines increases the closer one goes to a community that has them.
Senator Seidman: I want to be clear on the distribution of concerns and fears, because there are commonalities, from what I have read. For example, you have not mentioned noise. I presume that is a big concern.
Mr. Whittaker: Yes.
Senator Seidman: What does the science tell us about noise?
Mr. Whittaker: That is a good question. I neglected to mention that noise is a concern that is cited frequently. The guidelines that exist to tell people where they can and cannot put a turbine are well defined. In Ontario, the guideline is strict. Sound emanating from a turbine can never surpass 40 decibels at the wall of any residence around the property. It then increases with wind speed because as soon as the wind goes up, the sound of leaves masks the sound of the turbine. Ontario also has a minimum. The minimum is 550 metres. Even if the sound is 40 decibels at 300 metres, which it often is, the guideline says they cannot build there; it has to be 550 metres. Forty decibels is basically a library. The sound of the turbine is often less than the sound of the surrounding environment.
Those guidelines exist in every jurisdiction in Canada. Developers have to adhere strictly to them. There are other issues with respect to setbacks between turbines and property lines, and turbines and roads. Public safety is a big issue.
When developers try to figure out where to put turbines, they start with a big patch of land, and then cut out where they are not allowed to put turbines. They figure out where they are not allowed to put them because of noise, proximity to roads, or in places that have a sharp slope. They cannot put them anywhere near any area where there is an endangered species or anywhere where there are potential risks for migratory birds. There are issues around protected areas.
All these considerations come up. Developers start putting all these layers on their map and they end up with a small bit of land that they can still put turbines on.
Without that screening process, they cannot have their project approved. The process is long and extensive, and it requires a lot of analysis.
Senator Neufeld: Thank you for your excellent presentation. I have no problem with wind energy. It is not the silver bullet but it is part of the mix across our energy sources that will help us in the future to generate electricity.
I want to clarify a few points. Remember that we generate 75 per cent to 80 per cent of our electricity in Canada from clean sources today, and we have for a number of years. We are pretty darn good.
What is the mix for electricity in Denmark? You say 20 per cent is generated by wind now. I am always interested when I see Denmark, because I know the number. If we compare Spain, Portugal, Ireland, Germany and Greece, Canada, with 1 per cent, looks bad.
I would rather we think from the positive side. Wind is great, but Denmark charged 36 cents or 38 cents a kilowatt hour to households last year. Denmark generates about 40 per cent of its electricity with coal today. Most of those countries are probably in that same vein. They have an absolute need for wind. I understand why they need clean sources.
Do you agree that we should maybe build Canada up a little bit more instead of putting wind energy at 1 per cent and comparing it to these other places? Maybe you should have a comparison of the costs for each one of those countries and what the energy mix is. Do you agree?
Mr. Whittaker: I certainly agree that wind is not the solution; it is part of the solution. It is part of a balanced energy mix. Denmark used to be heavily coal-fired. Denmark can do what it does because it is linked strongly with all the grids around it; with Germany to the south and Norway and other Scandinavian countries to the north. Denmark has strong interconnections. With wind, size matters. With good geographic diversity, we are able to integrate more. As long as we balance it with other sources, then we are able to integrate it well.
As I indicated, in 2009, wind was the single largest source of new generation, not only in the European Union but also in the United States.
Senator Neufeld: The U.S. is 60 per cent coal.
Mr. Whittaker: In the U.S., much of it has been developed purely on an economic basis, because it makes sense. One of the biggest supporters right now of wind is T. Boone Pickens.
Senator Neufeld: There is natural gas as well.
Mr. Whittaker: Natural gas; there is a place for all of them. We would never say that wind is everything to all people. It is part of a balance, but there is safety and security in diversity.
Senator Neufeld: I am not arguing that point. I am saying that it makes us look lousy when we are not. We are pretty good. When you compare us to other places that generate a lot of energy by coal, and say only 1 per cent is generated by wind in Canada, that comparison says Canada is bad.
I had lots of that pressure so I understand it: We are bad in B.C. because we have no wind. We had 95 per cent clean energy generation in British Columbia.
I want to make that point and see if you agree with me that maybe more information about those countries that you compare us to, and the reasons, would make better sense. I do not like to put Canada down. Canada does a great job. All the provinces and territories should be commended for generating almost 75 per cent to 80 per cent from clean sources.
Europe, other than France, would love that situation; Denmark, Spain and Germany would all love to generate with clean sources. That is what I am getting at.
The Chair: Do you have a question?
Senator Neufeld: Yes, I asked him if he would think about that and he said he would, so it is great.
The other thing is about my friend from Alberta talking about carbon markets. Again, remember that 75 per cent to 80 per cent of our electricity is generated from clean sources at present. What we need is that the U.S. and Canada, at least, to adopt carbon markets, whatever they happen to be, whether it is a carbon tax or cap and trade. If we adopt one only in Canada, that will put us at a disadvantage because there is not a lot more room to grow. There is only 20 per cent more energy that would come from clean sources, even if we generated all of it from wind.
Do you agree that the U.S., with 60 per cent coal — really 55 per cent or 60 per cent, somewhere in that neighbourhood — that we need to work in concert with the U.S. in a North American standard so we can do the things you say? Because there are great wind resources in Canada, we can generate that wind and send that green energy south to the U.S. Do you agree that we need to work toward that standard to grow your industry in Canada also?
Mr. Whittaker: I think you would be hard pressed to find someone who will not agree with two things: One, there will be a carbon market; and two, that carbon market will be a North American carbon market eventually. However, will that be in 5 years or 15 years? That is the big question.
The question is: Do we want to be caught flat-footed when that market comes in? When the U.S. brings in its legislation it will not wait for us. If we are caught flat-footed at that moment and have not ramped up, then we could be at a disadvantage.
As long as you say that a carbon market is coming, then let us do some thinking about what that carbon market will look like. Alberta is progressive and they said, let us try this out and see what it looks like. By starting out early, you are mobilizing industry to respond to certain signals that you know are coming. Then they can make the investments that they need and then the moment when the U.S. steps up and says, yes, we are putting in place a carbon market, then we are ahead of the curve and we have the industry we need to be able to compete.
One thing that all generation sources are united by is a need for long-term certainty, and that is where the interest lies in being ahead of the curve with respect to carbon markets.
Senator Neufeld: I do not disagree and the federal government is saying now, they are working in concert with the U.S. to develop those things. When it will come I do not know. I do not think anybody knows. There might be someone who has a good idea, but who knows; it depends on a whole bunch of things. Canada is not standing flat-footed. Alberta has a carbon market, British Columbia is in a western one, so is Quebec and so is Ontario. There is headway being made in Canada in working closely with the U.S. I am glad that you agree that we need that North American standard, as you said, so that then we can adapt to it and that standard does not come by Canada developing it totally on its own because I think we would disadvantage Canadians.
When you talk about the need to think big about wind at a federal level, I am a great proponent. I do not need any more federal government in my backyard in British Columbia. I think provinces and territories manage their own processes and do it well. We have to be careful when we start thinking about the federal government laying out standards.
In your presentation, in a couple of places, you say we need to promote wind. Why would we pick only wind? Why would we not say alternative energy of all sources? I say that from a British Columbia perspective because you know as well as I do that is the approach of the energy plan that I put in place. It did not pick wind, it did not pick run-of-the-river and it did not pick solar; it said all sources. Is that a fair comment, or do you have to think big about wind to build the industry and you are talking only about your own industry and not thinking in the broader picture? Are you telling us we should think in the broader picture with a federal standard?
Mr. Whittaker: In thinking big, when you look at some of the sectors that represent big investment in Canada, like the oil sands and the automotive sector, these things did not happen on their own. They happened with big thinking. Like the development of hydroelectric in Quebec, these are cases of thinking big and saying we have an opportunity and we will be proactive about acting on that opportunity to make sure we receive the best benefit from it. We have seen the results.
The call for an energy strategy in thinking big does not come only from us. As I mentioned before, with $60 billion a year in exports in oil, $20 billion or $30 billion a year in natural gas, $3 billion in electricity, we have crazy resources in Canada. Why are we not exporting more of this energy? There is a huge appetite for energy in the United States. When you think big about wind, you are thinking about what can be done with clean electricity and it is not only us.
Run-of-the-river hydroelectricity in your home province is an incredible resource. Wind, biomass and tidal all have a role to play. By establishing a vision, you are not picking winners but saying we recognize what potential this source has and we will act on it.
Wind is in an unusual position in Canada mainly thanks to hydro. Hydro right now represents just over 60 per cent of generation in Canada and, as I said, hydro and wind are unusually well matched. They like each other. That combination represents a tremendous opportunity for us. If others can exploit that opportunity that is great, but no, when you think big it is about wind but also about thinking big about what we can do with all sources. We think wind is particularly well positioned.
Senator Neufeld: I have one more question.
When I can build hydro at $80 or somewhere in that neighbourhood today, and wind at $110, $130 or somewhere in that neighbourhood — which is pretty standard — wind lasts 25 years and hydro is estimated to be about 100 years; why would I pick wind?
Mr. Whittaker: When you compare electricity sources or talk about megawatts, different technology, et cetera, the final apples-to-apples comparison is cents per kilowatt hour, or dollars per megawatt hour.
Right now there is no doubt that run-of-the-river energy in British Columbia has been competitive, but sometimes you can achieve benefits with wind that you cannot necessarily achieve with hydro and vice versa. Again, the issue goes back to safety and diversity. In other areas of the provinces in Canada, to be honest, wind produces at a lower cost per kilowatt hour than other technologies like run-of-the-river hydro, but that does not mean you should not develop them as well.
I think you have to be proactive about establishing a balanced portfolio. In B.C. right now the cost advantage is with run-of-the-river, but that does not mean you should not exploit other sources as well.
In Ontario, there is an advantage of wind over certain other technologies but that does not mean you should not develop them as well. That balance again comes back to thinking big. You have to think about where you want to go and what opportunity you have for this diversity, and then point the ship in that direction and do what you have to. It is all about thinking big and then making sure it is a big tent.
Senator Peterson: Are any developers building these wind farms without a power purchase contract?
Mr. Whittaker: Alberta.
Senator Peterson: Is that the only one?
Mr. Whittaker: I think the only other place is in Ontario, where you have some developers that develop for the voluntary market for groups like Bullfrog Power, but they still have a contract with them to produce. It is really only in Alberta where you have merchant plants generating and competing on the spot market.
Senator Peterson: Your group does not have transmission lines, so you have to sell to the people who own the lines who are competing with you.
Mr. Whittaker: It depends on the market. In places like Quebec, producers have to sell to Hydro-Québec. They are required to. In most regulated provinces, they are required to sell into the Crown utility. Most jurisdictions in Canada are compliant with Federal Energy Regulatory Commission, FERC, regulations in the States, and one of the basic principles of FERC, which applies in the States and applies by proxy to most of Canada, is open access to transmission lines. They have to provide open access to anyone who comes in. To be compliant with FERC, if they have the space on their line, they have to provide it.
Senator Peterson: Do we manufacture any turbines in Canada?
Mr. Whittaker: Right now, we have tower manufacturers in Matane, Quebec; Saskatchewan; and Fort Erie, Ontario. We have a blade manufacturer in Gaspé and a nacelle manufacturer in Matane. Various other components within the supply chain are manufactured across the country.
People focus on the big turbines, but there are mid-size turbines that are good for communities, and particularly remote communities, and commercial applications. In that band of 20-kilowatt to 100-kilowatt, we have half the world's manufacturers.
Senator Peterson: We do not have the big ones. Is there any chance of attracting them?
Mr. Whittaker: Siemens is starting to invest strongly in Ontario. We know that other manufacturers are interested in coming in. Enercon is now building new plants in Quebec, as is Repower. In the case of Ontario and Quebec, they have domestic content requirements, so manufacturers have to build most of the project in the province to be eligible, but yes, the investment is definitely coming. Manufacturers are responding to markets that have given them the long-term signal, like Quebec, Ontario and other provinces. They definitely respond to demand.
The Chair: We have Senator Massicotte, and then two names for a second round. We are well over time, but sir, you are holding up well and doing a great job. I have let people ask their questions. We have had a record here tonight of two questions over 17 minutes.
Senator Massicotte: All my questions have been answered.
Senator Banks: When I came down the Gardiner Expressway in Toronto, I noticed a number of smaller mid-sized turbines, some on buildings, warehouses or factories, and around those buildings. Is that production significant? Will that production ever be a significant factor? I am talking about the economy of scale. When Texas Instruments came out with a pocket computer, they cost $900, and now we get one free with a fill-up at the pump. I presume that the cost of the technology that develops mid-sized electrical generation probably will go down. In the west, every farm had windmills. The idea of using wind power is not new, even in Western Canada. Will that production become a significant factor? Will people start using that source to develop any significant part of their energy consumption? I presume they are, because the turbines are there.
Mr. Whittaker: Yes: There is no doubt, and it is a matter of pure cost. Right now, for the small wind turbines, and again, going back to the great equalizing factor of cents per kilowatt hour of generation, the smaller turbines cannot produce power at anywhere near the cost that the big ones can. The big ones are anywhere from 8 cents to 14 cents a kilowatt hour. For one of the mid-sized systems, for 20 kilowatts to 100 kilowatts, the cost is anywhere from 20 cents to 30 cents a kilowatt hour, and for the small ones, the backyard turbines, the cost is 40 cents to 50 cents a kilowatt hour. The original price set for solar in Ontario is 80 cents, and it has since been revised down.
They are dealing with economies of scale. A large wind turbine is a refined machine, and the technology is close to what goes into an airplane. Those turbines produce enough to bring the costs down, and that is why it is cost-competitive with conventional technology.
They do not produce enough of the smaller ones. The sense is that if they start producing enough of them, their costs are already coming down but they will come down farther.
As I said, there are 10 worldwide manufacturers of those mid-size systems, and we have half of them. Twenty years ago, in Denmark, a little tiny company called Vestas started making wind turbines for the domestic market, and we know where that company has gone. It is one of the world's leading manufacturers. We think the same thing can happen in Canada if we act on the opportunity to give them a domestic market.
Right now 1.5 billion people in the world do not have access to electricity. They will need systems of that size for their communities, and we think there is a huge opportunity as the prices come down, as they develop the economies of scale, and as we start to export more of these systems.
We have Canadian technology now that is working in communities all around Alaska, wind diesel systems. In isolated, remote communities, these systems provide 80 per cent of the power needs of various communities. That is Canadian technology that we are exporting mainly. If we can develop it here and we can drive the price down, yes, it will definitely increase its market share. For the smaller household turbines, again, the same thing can happen, but it is hard for them to compete on a pure price basis with electricity from the grid.
In August 2007 when we had the famous power blackout, we had farmers who lost $50,000 worth of stock because they did not have power for three days. As a group, they are keen group to have some energy independence. If they can have a turbine that provides them with that kind of energy independence, then that turbine, on an economic basis alone, starts to make sense. Even though the cost of electricity is higher, it is consistent; 20 cents per kilowatt hour instead of what they buy from the grid at 12 cents, but it will be 20 cents for the life of that turbine, for 20 years. Also, if they have a power failure, they have backup so they save that $50,000 they lost in the blackout. For many farmers, that cost starts to make sense.
Senator Mitchell: It struck me, as a result of the discussion around not-in-my-backyard and economic development, and $10,000 or $20,000 a turbine for the farmer on whose land it is located, we are talking here about a different economic investment model in some ways, with great implications for rural development. Right now, a coal-fired electric plant is often close to a city, so whatever economic benefits accrue, they accrue to a city that already has lots of economic benefits. However, this model means that the power production and those benefits can be spread out all across the country. Many rural communities, even Alberta, where everybody thinks everybody is rich and they are not, can benefit because they can increase their tax base when they had no tax base from power at all, and now they do. It is not reducing the tax base but shifting it, building it and offering economic development opportunities for many of those smaller isolated communities. Is that true?
Mr. Whittaker: Yes: Wind has always been seen primarily as a rural economic development driver, and that is where its strongest support base has always been. Yes, that benefit is borne out by the fact that the places where money is distributed are primarily in rural communities. There is no doubt.
Senator Neufeld: Senator Mitchell alluded to my question: Did you say some companies are paying $10,000 a turbine to landowners, and if so, where?
Mr. Whittaker: There are cases of projects in Ontario where landowners are receiving up to $8,000 and $10,000 per turbine.
Senator Neufeld: Is that in a city? Where is it?
Mr. Whittaker: It is out in the country. Generally, turbines are not sited in the city. There is not enough space for them.
It depends on the kind of contract they have. It varies, but for a single turbine, it is anywhere between $5,000 and $6,000, up to $10,000.
Senator Neufeld: Alberta is a lot less. It struck me as a large number, compared to the number I was given for Pincher Creek.
Mr. Whittaker: It depends largely on the value of that land. In Ontario, it tends to be higher because the land is of a high agricultural value, so then the payments can be higher. It is also higher if they are on a site that has an incredible wind resource; that plot of land on which the turbine is sitting is much more valuable. It depends; it changes from one place to the next.
The Chair: Is that it, colleagues?
Senator Dickson: I have one short question; what is the future so far as offshore wind farms are concerned in Canada, particularly on the Atlantic coast?
Mr. Whittaker: That is a good question. I am surprised I have not heard that one.
Right now, in Europe we are seeing a ton of movement toward offshore, mainly because they are starting to run out of onshore. They have onshore, but their resource is not that great. When they go offshore, all of a sudden they have these crazy capacity factors or really good wind.
In Canada, with our onshore resources we have amazing resources and capacity factors. Europeans are always stunned when they come over and see the amount of electricity that Canadian wind farms produce.
There is tons of interest in going offshore because the resource is good, but there is a lot of resource to exploit on the land as well. We will likely see a lot of development, particularly in Europe now, on the eastern coast of the U.S.
Google announced a plan to build this huge offshore transmission line, which is fantastic. It is because the issue in the United States is different. Their best resource is in the Midwest and their loads are on the West and East Coasts, so they need huge transmission lines to send out to either side; whereas if they build offshore, like in Massachusetts, they can have a fantastic wind resource and be fairly close to where their demand is.
In Canada, it is different because we are spread out and our wind resources are distributed better relatively, so it is easier to have it close to where the demand is.
Particularly on the Great Lakes now, there is a huge resource. Nova Scotia, particularly Cape Breton Island, is covered in red in terms of resource. There is a lot there. It comes down to economics. It costs more to develop an offshore wind farm than it does an onshore one. They have better wind, but it costs more to put it out there. It is a matter of balancing the economics.
The Chair: Thank you very much indeed, you have been extremely helpful. We appreciate the nice things you said about our interim report, and the fact that you support what we are trying to do here.
You made reference to an issue of a magazine that had a specially committed article on wind. If you can make a copy of that article available to our researchers, that will be helpful, along with other materials. You can deal with our clerk here and we will be glad to receive them.
If we can provide you with further opportunities to deliver this message, which you do so articulately, we will glad to do it. We will go out, as we said before, to communicate with the people in Quebec and in Atlantic Canada early in the new year. We will want to have the wind story, certainly in Nova Scotia, in Quebec and in Prince Edward Island, so we may call on you to help us set up the appropriate presentations when we go to the communities. I do not know if you want to say anything on that now.
Mr. Whittaker: We are at your beck and call with respect to giving you any information we can. Our website pretty much has every question one can possibly imagine. I am serious about the challenge. If you can find a question that is not answered on our website, I will send you a model wind turbine.
The Chair: You mean you did not hear one tonight? I counted seven times when you said that is a good question, so I thought we were doing okay here.
Mr. Whittaker: You did very well.
The Chair: No prize, though.
Mr. Whittaker: We will be happy to provide any information and any answers to frequently asked questions. I want to thank you very much for this opportunity. It is rare that we have a rare chance to talk about wind in this larger context.
The dialogue and discussion that all of you are putting forward is a welcome one. We will support it in any way we can, because it is an absolutely necessary conversation.
On behalf of the association and the wind industry, I want to thank you for this opportunity and I look forward to any further questions you may have.
The Chair: Thank you, sir. We will declare the meeting terminated.
(The committee adjourned.)