Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 17 - Evidence - October 30, 2014
OTTAWA, Thursday, October 30, 2014
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 8:02 a.m. to study non-renewable and renewable energy development including energy storage, distribution, transmission, consumption and other emerging technologies in Canada's three northern territories.
Senator Richard Neufeld (Chair) in the chair.
[English]
The Chair: Welcome to meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources. I am Richard Neufeld. I represent the province of B.C. in the Senate and I am chair of this committee. I would like to welcome honourable senators, any members of the public with us in the room and viewers all across the country, who are watching on television. These committee hearings are open to the public and also available via web cast on the sen.parl.gc.ca website. You may also find more information on the website, under Senate Committees, on the schedule of witnesses.
I would now ask senators around the table to introduce themselves. I will begin by introducing the deputy chair, Senator Paul Massicotte from Quebec.
Senator Massicotte: Thank you.
Senator McIntyre: Senator Paul McIntyre, New Brunswick.
Senator Mitchell: Grant Mitchell, Alberta.
Senator MacDonald: Michael MacDonald, Nova Scotia.
Senator Black: Doug Black from Alberta
Senator Seidman: Judith Seidman from Montreal, Quebec.
Senator Wallace: John Wallace from New Brunswick
The Chair: Thank you. I would also like to introduce our staff. To my left is the clerk Lynn Gordon and our two Library of Parliament analysts, Sam Banks and Marc LeBlanc.
On March 4, 2014, the Senate authorized our committee to undertake a study on non-renewable and renewable energy development, including energy storage, distribution, transmission and consumption and other emerging technologies in Canada's three northern territories. In Ottawa, the committee held numerous meetings with witnesses on this subject. Last May, we travelled to all three of Canada's northern territories, holding private meetings and visiting sites.
In the first portion of our meeting today, it gives me great pleasure to welcome Tim Weis, Alberta Regional Director for Canadian Wind Energy Association. Dr. Weis, thank you for being here with us today and for altering your travel schedule to accommodate an appearance in person. We appreciate that very much. I understand that you have some opening remarks. Afterwards, we will go to some questions and answers. The floor is yours, sir.
[Translation]
Tim Weis, Alberta Regional Director, Canadian Wind Energy Association: I am pleased to appear before the committee today to talk about wind turbines in the north. I will make my presentation in English.
[English]
Thank you very much for having me here. I appreciate the opportunity to discuss wind energy, in particular, in northern and remote communities. I have a slide deck, which I presume you all have.
I work with the Canadian Wind Energy Association, which is the industrial association that represents the wind energy industry across Canada. We have 280 members that work in development, manufacturing, service and operations.
On slide 3, you can see how quickly the industry has grown in the last 10 years. The industry has gone from about 300 megawatts, and this year it will surpass 10,000 megawatts of installed capacity in the country. This is how quickly the industry has grown.
Last night we had our annual conference, and I spent the week in Montreal. It was our thirtieth anniversary as an association. It was great to look back and see how quickly the industry has grown and to see the real amount of energy that comes from wind. We're closing on 5 per cent of Canada's electricity supply coming only from the wind. I've been attending these conferences for the last 15 years. Even though the industry has advanced significantly in the large-scale and utility-scale stuff, we're still talking about some of the same things I was talking about 15 years ago, about remote and off-grid communities. We're still lagging significantly on the small side of things.
I studied mechanical engineering. I moved to Alberta to look at ice issues on wind turbine blades, and then I moved to Rimouski to do a PhD in off-grid communities. I like to tell this story because my interest was in technical issues and mechanical engineering. This was the area I wanted to work in. I was halfway through my PhD when I realized that technology wasn't the problem. Policy was lacking. We have the technology and the technology background, but we don't have the right policies or the right economics to make these projects work. I tell the story about myself to give a little background but also to emphasize the point that we have the technologies in place to make a difference, if we have the right policies.
I don't need to tell you we have many remote communities in Canada and in the North. Many of them depend on diesel fuel, which is expensive and becoming increasingly challenging. In my work, I've been to at least 20 of these remote communities. I know some of them, particularly in northern Manitoba, were struggling with ice road failures. With warmer temperatures, risks are imposed on the community in terms of cost and reliable supply.
I want to highlight, on the right-hand side of the map, where NRCan has done great work in helping to make a database of all the remote communities and to keep track of the energy supply in those communities. NRCan has done a pretty important foundational piece of work.
I've travelled to a lot of these communities and spent time in at least 20 of them. I always feel sheepish speaking on behalf of these communities, and particularly on behalf of First Nations. On slide 6, the reasons are listed for why they were looking for alternatives and why they brought me in to talk about these issues. Costs are a long-term concern. I don't think that should be a surprise. There is the cost of diesel and importing diesel. Spills were an ongoing concern, whether it was off-loading spills, or tank cracks, and the damage that can do to the water, buildings or soil.
Supply shortage was a particular issue in many of the communities, when they'd have ice road failures and would have to fly in their fuel for the year. Then, obviously, there is self-sufficiency and the need to be, or the interest in being, energy-independent or, at least, less dependent on importing fuel from other parts of the country.
There's one point I want to make on the next slide, slide 7. I'm obviously here representing the wind energy industry, but there are all sorts of solution out there that can help. There are, obviously, appropriate solutions in different communities, ranging from solar to hydro to wind or to biomass. Obviously, energy efficiency makes sense in every single community across Canada, not just the North.
On to slide 8, I have a couple of things I want to highlight. This research has been going on for a long time. We've been talking about wind-diesel remote communities, and the literature dates back to the 1980s. Hydro-QuØbec and NRCan were some of the early leaders in developing this technology. Unfortunately, we've fallen behind and have never really been able to deploy this technology in Canada. Alaska, in particular, has reverse-engineered a lot of the work that we have done and now has 25 wind hybrid systems operating in remote communities. That started from Canadian technology. Canadians were going to Alaska and building these projects, and now they're doing it and exporting that technology and that know-how that originally was Canadian.
Remote communities, and wind-hybrid communities in particular, are all over the place now, and there is a huge market for wind-hybrid systems, not just in Canada. This is a technology that we can foster locally in our remote communities, but there are markets for this around the world. Australia, for example, has many off-grid communities in similar situations to ours. There are projects up and running in the Koreas, the Caribbean and Africa. Antarctica has two wind-diesel hybrid systems that have been running. For this one on the right, you can see that it's on line. You can see that that project has been running for 10 years. When I clicked on this slide to make this presentation, it was running at 86 per cent wind at the time. We don't need to think about these things on small scales. We can do this on a pretty significant scale. If we can do it in Antarctica, we certainly can do it in Canada.
The next slide, slide 9, is just to illustrate that point. These are all of the communities that are up and running already in Alaska. There were 25 communities, at least, the last time I checked that have wind-diesel hybrid systems already running. They have at least another 10 in the pipeline.
You have obviously been to Canada's North. We don't have many of these projects up and running, but many jurisdictions around the world do. If you do have a chance to go to the North, I would encourage you, next time, to go to Alaska and see what they've done and the progress they've made in wind and diesel in particular.
For the next slide, I won't dwell on the technical details there, but the point is the blue line with the dots showing diesel fuel use. In the bottom, the black, thin line illustrates wind energy into those systems. The point of all of this is that you can actually get wind energy at very high levels.
The trick is — and this is the area that my research was originally interested in — how do you get wind at really, really high levels? Obviously, there will be times when there is too much wind. How do you deal with that? That's a challenge, but it's a challenge we can manage. It's a challenge that, as I said, we're managing already in Alaska and Antarctica. You can make significant gains. This isn't something in which we need to be thinking about 5 per cent and 10 per cent savings. You can be thinking about easily offsetting 50 per cent of diesel fuel consumption with wind energy alone. If you start adding solar and high energy efficiency, you can make really big gains in this area.
The barriers are unique to remote communities. They have unique challenges. Obviously, the financial capacity is challenging in remote communities, not only in terms of paying for the system over the long term but also, in particular, accessing the upfront capital to be able to finance the projects. That's an ongoing challenge. I think that opportunities to own the projects, to be brought into the project so that it's not just someone coming from another part of the country, the opportunity to be a part of it being available to them are areas that communities are interested in.
The human capacity can be a challenge in terms of being able to maintain and service the equipment once it's up and running. One of the areas that are particularly interesting in Alaska and in which Alaska has done well is that because they have so many different communities up there now, if one or two guys move communities or technicians leave town, there is a fleet of people now. So we need to be thinking about that on a large scale. We don't need to be doing one project here, one project there because that can often depend on one technician or one person. We need to be thinking about this on a large scale so that we can have North North learning and North North expertise so that we're not always flying people in from other parts of the country.
The logistics are a challenge, particularly in the territories where you're barging in equipment. That's important, but it's a surmountable challenge. Again, I will point to an interesting case in Alaska. One of the big challenges in certain types of wind turbines is getting a crane to those communities, but Alaska has done so many now that they've bought the cranes and don't need to barge them in. They keep them there year-round and can move them from community to community. If you do this on a significant scale or think about it in the right way, you can overcome some of those logistical challenges, and, again, there is the economies-of-scale point that I was highlighting.
I will move on to slide 12 and some of the research that I have done in the past, including a paper written for Agriculture Canada a few years ago. We looked at some of the other jurisdictions around the world that have been successful in deploying alternative energy in remote communities, and some of the key learning that I took away is what I have highlighted here.
If we want alternatives in remote communities, we need to target those communities. Expecting policies that work in the South to be taken up in the North is unlikely. A few years ago we put together an idea with the Canadian Wind Energy Association called the Northern Wind Incentive Program. That's one idea that's on the table but it's certainly not the only one.
It's also important to have funds available for feasibility studies. Remote communities have financial constraints and other concerns they have to deal with, so getting early-stage capital is important. The one point I really want to emphasize is that we need to be thinking beyond pilot projects. We have a handful of pilot projects in Canada, and I think one of the reasons we've seen countries like Australia and jurisdictions like Alaska be successful is that they've thought bigger. With one project here and one project there, the economics can be really challenging because, if something goes wrong, you need to bring in someone in from the South to service it. The economics of that can be challenging. If we're serious about doing this, we need to be thinking about doing it on a larger scale, beyond the one-off projects, and about what the path to economic sustainability for these types of projects is.
Access to capital I think I emphasized already. Then, we need a policy that is going to move at scale and will be predictable for remote communities. These projects take time, and having some sort of policy window that's open for a year or two or three years is not going to be an easy way for communities that often take longer to build projects. They need something that will be predictable over the long term.
Again, just to re-emphasize some of those points, the stability is important in policy development in this area, something that's transparent and easy for communities and developers to access.
The only other point that's on slide 13 that I did not emphasize already is that it really needs to be part of an overall goal. Moving one community here and one community there is probably not the path to success for us, but we want to be thinking about how we move the North, as a whole, toward a more sustainable or lower-cost future. Thinking about that is an important thing to keep in mind when we're doing policy development.
The last thing I want to highlight is on slide 14. This is a conference that I helped to organize, a year or so ago, in Toronto. I brought advertisements for it. They're doing a new one, so that webpage is out of date now. Take that webpage and add 2015 to the end. They are organizing another remote-community conference in Yellowknife this year, so, if you're interested in seeing the latest cutting-edge technology, that's where it will be showcased. The reason I'm highlighting this particular conference is that the proceedings of that conference are all online. People from Alaska and around the world came and talked about what's going on. It's a good resource for actual projects and some of the challenges being faced by the communities.
Hopefully, that gives you a quick overview of where I'm coming from, my perspective on this issue. The point I want to highlight is we have technology that works. We have projects that have been up and running in Alaska or Antarctica for 10 years now, so we're beyond pilot projects. There is nothing wrong with getting a few demonstration projects in place and getting the cost down, but we need to think about how to use a demonstration project to move this toward a larger-scale deployment. We need to think beyond one-offs and pilot projects. It is time for Canada to catch up. This is an area where we were experts at one point in time, but frankly we've fallen behind. This is an opportunity for us and for remote communities to help bring the cost down and help reduce pollution in the long term.
Thank you again for the invitation to be here. I am happy to answer any questions you have.
Senator Massicotte: Thank you, Mr. Weis, for being with us. It was very instructive, and we could learn from your presentation.
In summary, you're saying technology is not the issue; it's something else. I suspect the something else is predominantly money, and I think you're talking about that. If it is money, what you're really saying is that the cost of wind power as it is, without subsidy, is too expensive to be of use and therefore you need to be subsidized to make it more practical to have it implemented into communities. Is that a good summary?
Mr. Weis: No, sorry. Maybe I left the wrong impression. First of all, I want to make clear that remote communities and on-grid large-scale stuff are entirely different things. The points I'm making here about remote communities are not about large-scale wind, which is arguably one of the economic sources of new technology, just to make that point clear.
In terms of the policies I'm talking about and the support that's needed, what we found when we did some of these studies is that communities will save money long-term, and the projects can be economic. The problem is you can't get money up front to build them. It's year-to-year budgeting, and you're talking about 10- and 20-year pieces of infrastructure you need to buy. The support that's needed is to help with the capital costs and financing costs, but over the long term we have the technology that should be saving money in the long term. The potential of the financial support I'm talking about is not going to be a cost in the long term. It should help save the federal government money.
Senator Massicotte: But it's always money, I guess. You say one can forget the capital costs, but if you forget the capital costs you can forget about what the whole thing is about, infrastructure costs.
Mr. Weis: I'm talking about the financing costs.
Senator Massicotte: Is it not the same thing? When you are talking about the use of a car, it includes capital, financial and operating costs. Technically it's a subsidy. If it's not feasible for the user to pay for it, why would it be feasible for Canadian taxpayers to pay for it?
Mr. Weis: I'm saying it's the ability for the communities to get their hands on the capital. It is not the capital costs themselves. It's really difficult for remote communities, First Nations in many cases, that don't have equity to leverage against — you can't mortgage the band office — or they have other priorities they need to spend capital on. It's not that you need the subsidy so much as you need to able to access the capital. That's the point.
I should be clear in the Canadian context, because we are starting from close to zero, that a handful of first few projects may need some extra support until we're up and running. There is probably a difference between the first few projects and the longer-term ones, but as we see in other jurisdictions, these projects over the long term save money.
Senator Massicotte: If you look at all costs included, without any form of subsidy, what would the costs be in the remote communities up North for wind versus diesel?
Mr. Weis: It's hard to give an answer because a remote community in northern Ontario is different a remote community in Labrador or —
Senator Massicotte: Say Nunavut or Northwest Territories.
Mr. Weis: Even then, with Tuktoyaktuk compared to Paulatuk, for example, one has a road and one doesn't.
Senator Massicotte: Choose a large community. Choose one that has a population; there are only a couple.
Mr. Weis: That's the other trick. It depends on the size of the community and wind resource. I can't give a great answer. I feel like I'm dodging the answer. It matters on which community, the logistics if you have a barge or ice road, and the size of the community. Frankly, in my case the wind speed matters. I don't have a great answer for you, and obviously you need a certain amount of wind to make it work.
Senator Black: Mr. Weis, thank you very much for being here. This is helpful. I need some assistance from you in understanding because I like what you're saying and the direction that you're going in. Help me and the committee understand exactly what is involved in what you are proposing. Take a community, it doesn't matter which one. What are you proposing? What does the Government of Canada need to do to make it happen?
Mr. Weis: From a policy point of view, the program we laid out, the idea we developed was called the Remote Community Wind Incentive Program —
Senator Black: Doesn't matter.
Mr. Weis: What we're asking for ultimately is a policy that's going to have some access to upfront capital, because that's one of the main challenges, but then is going to be available over the long term to help communities finance the projects and make sure that once you built a project you have it up and running. There are all sorts of different ways to do this. The way we proposed originally was access to capital to help buy down the project initially and then the production incentive over the long term. There are other ways, with revolving loans or access to capital.
We need to think about this, and not necessarily the details of that policy in particular, but how we get a policy that's a path to long-term sustainability for these types of projects. That probably involves getting three or four communities up and running. That will probably cost a little more than future communities will. Let's get a few demonstration projects up and running, get the bugs worked out and think about a pool of capital to be able to move the next community forward, and having that capital forward so those communities know they can depend on it.
Senator Black: As Senator Massicotte has indicated — and I'm not arguing or challenging you at any level — it's all about money. It's about money for startup, financing and ongoing operations. Correct?
Mr. Weis: Yes, having that money available. But as I said, in the long run ultimately, because in many cases the diesel fuel is subsidized or paid for by the federal government, there is a money savings as well. That's what it comes down to.
Senator Black: Why has Alaska worked in your view?
Mr. Weis: There are a couple of reasons. One is they have put money into it, but they have a few early projects up and running and those cost more money. Some were not terribly successful, and some of them over the long term have not been totally successful or economic, but they have the bugs worked out.
Senator Black: I presume both the State of Alaska and the U.S. government have heavily funded that initiative in Alaska.
Mr. Weis: That is true. Yes.
Senator Seidman: You talked about the challenges and barriers, and we talked a lot about money around the table. I would like to ask you about something else that could potentially be a challenge.
I'll read you a quote from Health Canada's website:
The continued success and viability of wind turbine energy in Canada, and around the world, will rely upon a thorough understanding of the potential health impacts and community concerns.
So there is no question. There is not a lot of science on this, but there are many studies ongoing to look at the health impacts associated with the sound of the wind turbines. It is a significant issue, especially given that we're talking about using wind turbines in the North, where the background sound in communities is almost non-existent. When you add something like a wind turbine, it's much more evident there than it might be in an urban population.
How are your member associations dealing with the issues that have been raised around the health impacts? Have you explored ways to work with stakeholders and communities to secure a greater acceptance, such as in the whole area of social license?
You mentioned Australia, where there is an ongoing study, a very large project, on social license and wind turbines. Does it contribute to their success because they have recognized the importance of that aspect?
Mr. Weis: It's difficult to answer in some ways because the large-scale, more southern-based machines we see are in quite a different context than what we're talking about here in the rural communities. They're really in some ways different technologies, and in some ways they're really different issues that we're looking at. In the communities in Alaska that I've dealt with, I've never heard any of these concerns, frankly. In the northern context, it's potentially a different issue.
In Australia, I'm talking about off-grid communities in the outback. This was about remote communities and not the larger-scale development.
This is an issue we're well aware of that we take seriously. I would argue that there is a lot of science on the issue. At least 17 or 18, maybe 19 now, different studies have been done on the health impacts. I don't have that information with me today, but I'm happy to provide it. Health Canada's is one study amongst almost 20 that have already looked at this issue and come to the same conclusion: You can be annoyed by wind turbines, but there's no direct health link.
Senator Seidman: Okay. I must admit I'm a little concerned by your response in the sense that it's a serious issue. It must be serious enough that Australia, where there's much success, has undertaken a major project on social license. It seeks to provide wind developers, wind farm industry and local stakeholders with greater clarity regarding securing and maintaining a social license for their operation. Social license to operate is the level of acceptance that a community and other stakeholders provide for a particular development. You don't mention this in your presentation to us at all and then say all the science is out there that's proven there is no impact. Even if that were true, the fact is it's important for communities to understand the issues and to be engaged and part of this kind of process.
I would like to hear that your association is concerned about social license, interested in what Australia is doing, and recognizes that you may have to do that kind of work as well in order to make a success of this kind of project.
Mr. Weis: Yes, absolutely, sorry. Perhaps I misunderstood where you were going with the question. The issue I was specifically trying to address was whether health impacts have been well studied. I think there is a fair bit of literature and science out there. It doesn't mean to say we're not interested in continuing that work. Science is never 100 per cent settled on anything, so we're definitely interested in that.
The question of social license is different. They are related, obviously, and I didn't mean to suggest that we're not interested in it. We are well aware of some of the concerns out there and that wind turbines obviously don't belong everywhere. You need to find the right place and the right community. Sorry, I didn't mean to imply that was not the case. I was specifically talking more about the science on the health issue.
The remote community context is different than the broader, larger-scale development we're seeing in the South; but at the same time, I appreciate your point. This is an issue where there are lots of unknowns about a new technology. Frankly, we all know that you can see wind turbines. They're big machines, so there need to be proper opportunities to engage, understand and have the issues addressed in community consultation. Particularly for remote communities, one of the interesting options is the opportunity to own and buy into the project. Often it helps significantly, and we've seen it in Europe, with social acceptance and social license when communities have an opportunity to be an owner and a part of the projects.
Senator Mitchell: Mr. Weis, on the question of subsidies, are you not essentially saying that government subsidizes diesel now in many of these communities almost exclusively? It takes huge costs. Implicit in building a diesel plant, and many of them are old now, is not maybe as much upfront costs but the amortization of the cost intrinsic to the nature of the project because you have to buy the fuel as you go. I guess my question is, is it not the case that diesel is being subsidized now and wind isn't?
Mr. Weis: Again, it's tough to give an answer to this question because it varies from province to province and territory, so I can't be specific on the dollars around subsidies, for example. For many First Nations, in particular, a lot of the money ultimately comes from the federal government for energy costs and ongoing operation and maintenance costs. I would argue it's more than just subsidies as it's the actual costs. When we've done the analysis on policy options for remote communities, ultimately there will be savings. Yes, there's probably some money up front or some money we need to help with accessing financing, but ultimately the goal is to actually save the federal government money in the long term.
Senator Mitchell: If you had to pick a community right now, one that had the wind, needed the power and had the roads to get the equipment there and so on, do you have one in mind that it would be worth our looking at specifically?
Mr. Weis: I need to be a little careful here because I haven't been involved in the most recent ongoing happenings in individual communities. I don't want to mention a community that may be further ahead. We had looked at two communities, which are somewhat advanced, I guess, in this area. One is Tuktoyaktuk. In 2007, I helped to organize a conference there, and the Beaufort communities got together and recognized that Tuktoyaktuk probably has not got the best wind regime of the individual communities in that area. However, they have road access and they also have access to technical support from the ongoing work in Tuktoyaktuk for a long time. As well, it's a much larger community than the other Inuvialuit communities.
The thinking was, and the communities agree, that we'd start in Tuktoyaktuk to see if we could make a project work there. We know it's probably not the most economical of the areas, but we probably have the most human and technical capacity there to get a project there. Once that's up and running, we work some of the bugs out and move to Sachs Harbour and Little Tuktut and Paulatuk. That was the thinking at the time. I can't speak for the communities anymore if the thinking has changed, but at the time that agreement was made when the work was done in 2007.
The project in that community might be one to think about, although it never went forward, unfortunately. There were wind studies and feasibility studies, and even some geotechnical work was done to look at that as an early-stage project. We knew that it probably wasn't going to be the most economic project, but it was a way to get the human capacity and technical bugs worked out.
The other community is Destruction Bay, which I think is southwest of Whitehorse. It's a remote community, but it's on the highway, and so it's potentially a good place to start. You have easier access to people and getting technology in to service the equipment. It's worth thinking about getting the lower-hanging fruit, or get some of the technical challenges out, in communities that you're able to service and maintain better. Those would be two communities I would consider looking at. As I said, I don't have a full spectrum. There may be others as well.
Senator Mitchell: That's helpful. What about Diavik? It looks to me like the cold weather technology issue that was raised has been solved in Alaska and in the Antarctic. These things work in cold weather. What's going on in Diavik, and is it economical?
Mr. Weis: Diavik is a bit of a special case in a sense. Obviously, it's a diamond mine with a huge diesel system. They have a lot of technical expertise and capacity, but they looked at this project as a way to save money and diesel costs in the long term. One of the other really important things for them was how to reduce risk in the long term. Often you get one fuel shipment per year, whether via barge or ice road. In this case it comes by barge. If you have one year when you can't get that in for whatever reason or if there's an overrun in costs, there is the risk of having to fly fuel in. The cost can double, triple or quadruple, so it's as much an insurance policy as it is an ongoing energy savings.
I just met with the manufacturer of the machines, Enercon, at our conference this week. They are also the company that has the machines in Antarctica. They are happy with the performance and are looking at doing more mining operations as well. I can't remember the name of it right now, but another mining operation system, which just opened up this year, presented at our conference. I can't remember the name, but it will be in the proceedings of our conference. It's an area where I think there was enough success in the first project that other mining companies are looking to replicate it.
Senator Wallace: Mr. Weis, to state the obvious, all communities, whether they're in the North or otherwise, need a reliable, consistent and uninterrupted supply of power. Senator Mitchell touched on the issue of the reliability of wind power in the North in terms of the turbines in severe northern climates.
Could you just expand a bit on that? What has been the reliability performance of turbines in climates with severe snow and freezing conditions?
Mr. Weis: That's a good question. In this case, we're talking about wind-diesel hybrid systems, so you're looking to offset the fuel cost and consumption as much as you can. Obviously, there's a diesel system for backup and for firming that power. The economics of this only work and what we're talking about only makes sense if you can get the turbines up and running consistently enough to make the savings.
Probably one of the best places to look at is Alaska. A recent paper, which I'd be happy to provide to the committee afterwards, sort of shows the success. They plotted the improvements in reliability and availability of their turbines since they started doing these projects. The first few were not great, some of them were done in the early 1990s, but by and large they have been able to understand a lot of the challenges in terms of cold weather and ice, in some cases. Interestingly, that doesn't happen often in the Far North as it's cold and dry in the winter. With ice and cold weather, it's a case of figuring out which machines are appropriate to use.
I don't have that paper with me, unfortunately. The best way I can answer that question is to provide you with the work that's been studied by the University of Alaska Fairbanks that plots the incremental successes of the projects that are up and running.
Senator Wallace: It would be great if you could do that.
Thinking of the suitability of wind turbines for smaller northern communities, you mentioned that it's almost always used on a cogeneration basis with some other source. I guess diesel would be the primary source. Is that the case? Would you ever look at wind turbines being used as the sole supply of power to certain northern communities, or would there always be cogeneration?
Mr. Weis: At some point you could think about in theory. This is when you kind of get into the economic question. If you wanted to build a lot of wind turbines with a big enough battery bank and add some solar panels to it, you could realistically think about 100 per cent renewable systems. In the Australian outback, for example, a company called Powercorp has recently been bought out by ABB. They were designing systems to run on 80 per cent to 90 per cent wind. Obviously, you have to have a good wind machine to do that and some sort of storage system, but you can be thinking about pretty big levels. It kind of comes down to the economic cost and whether you really want to narrow that gap to zero.
Senator Wallace: Coming back to the issue of reliability, I'm thinking about when we actually conclude with recommendations on this work we're doing, is it possible or do we even think that we could recommend wind power alone for certain northern communities. I'm getting the feeling that no, it's probably not realistic. It would always be in conjunction with diesel. Even where wind would be appropriate, we would still have to look at those communities having capital cost invested in diesel-driven, diesel-supplied energy, as well as solar. I realize there're benefits of augmenting one with the other, but it's not an either-or; it's still both.
Mr. Weis: You're still certainly looking at both. In most cases, you are looking at fossil fuel as you're running heating systems on diesel, whether furnaces or other systems; so there's probably a need to bring some level of fossil fuel in. When I was first doing this work, 10 per cent to 20 per cent wind was kind of the threshold. Now, we have communities that are talking about 60 per cent to 70 per cent. I wouldn't recommend overnight going to 100 per cent wind somewhere. It's a question of moving that needle and sort of seeing how we can progress. Hopefully, the point I'm emphasizing is that we can be thinking a lot bigger, and you would be surprised by what's already out there and running.
Senator Wallace: Most northern communities are small. Would there be a minimum critical mass that you would require to even consider implementing a wind turbine?
Mr. Weis: I feel a bit sheepish giving you this answer, but it's difficult to kind of generalize in remote communities.
Senator Wallace: That's fine.
Mr. Weis: I apologize for continuing to say that, but it does kind of emphasize the point that it's a tricky challenge.
Senator Wallace: You know more than we do.
Mr. Weis: There's probably a minimum level. You want to get into the machines that are probably in the order of 50 kilowatts to 100 kilowatts, which would be robust enough, or even 300 kilowatts as they have in Antarctica. That's kind of the range that probably makes sense to be reliable. That seems to be the sweet spot for success in remote communities. In the mines, we're talking about the larger-scale machines.
Senator Wallace: Thank you very much.
[Translation]
Senator McIntyre: Mr. Weis, you speak French well. I assume you mastered it a few years ago, when you were in Rimouski earning your PhD.
[English]
I have two quick questions. As you rightfully pointed out, wind technology in the North faces several challenges, in particular for remote communities, including resistant residents who have wind turbines near their homes.
Could you elaborate on that a bit, please?
Mr. Weis: I'm not sure I'm following the question.
Senator McIntyre: Well, wind technology in the North faces several challenges, and as I understand, a lot of people don't want wind turbines near their communities, especially in remote communities. Is this a fact?
Mr. Weis: In remote communities it's not something that I've typically come across, frankly. Again, remote and larger-scale stuff are two different animals, in some sense.
It varies from community to community, but what's often the case is that you see the diesel generating plant located outside the community, and then there are often power lines that bring power into the community. In almost all cases, it wouldn't make sense to be putting wind turbines directly in the community, but you would need to have them a certain distance out. I haven't run across this as an issue in the remote communities that I've dealt with, and I haven't come across it in Alaska as an issue.
Senator McIntyre: I understand that money and subsidies are an issue, and you've touched briefly on technology, but are there new wind technologies and research currently being developed that hold promise for future wind power generation? I stress research.
Mr. Weis: Right. I think in many cases the technology, at least on the wind side, is already operational. I point you again to Alaska to look at some of the turbines they have up and running there, and the success they've had.
An area where research is of the most interest is how you integrate and get the wind operating efficiently and integrated with the diesel systems. That's probably one of the key areas of research, especially when you get into the high levels of integration.
Senator MacDonald: Dr. Weis, thank you for being here this morning. You're a mechanical engineer and have a doctorate in this, and I know you are obviously well schooled and educated in this.
We've got a wind turbine producer in Nova Scotia now. I think we'd all like to see wind turbines succeed economically and environmentally. The reports coming out of Europe in the last year or so aren't very encouraging in terms of some problems they've had with cost and the reliability of these systems. Britain has just put out a scathing report on the problems they had with their wind turbine systems.
I'm looking at the North and the environment up there. There was a pilot project in Nunavut where the federal government put some money into establishing a wind turbine project, and all those wind turbines are dormant now. What went wrong there? What happened with that project?
Mr. Weis: I'd be curious to know what report you're talking about in the U.K. Maybe we can follow up on that afterwards.
Senator MacDonald: Yes, we can. It was out this week.
Mr. Weis: By and large, Europe is continuing to move ahead with deploying wind at a pretty big scale. Denmark is at 40 per cent wind already. But again, large-scale and small-scale stuff are two different animals.
With the projects, I'm not sure which one you're specifically talking about, but it may have been in Rankin Inlet in Nunavut and another project in Sachs Harbour, which were federally supported and didn't work out. I think the problem we've had in Canada in the past is that we put one 50-kilowatt wind turbine in Rankin Inlet and one in Sachs Harbour. Something goes wrong, and the economics are pretty challenging to bring in someone. Our real experts in this are in Prince Edward Island at WEICan. You have to bring someone from Prince Edward Island and get them up to Rankin Inlet to service this machine. If you have one turbine, the economics go south pretty fast.
The problem we've had in the past is we've gone at this small-scale pilot project thinking let's put one here, one here and see what it does, and in some ways that's a recipe for disaster. It's not surprising it didn't work out. That's why I would argue the case in Alaska has been successful because they've gone at a bigger scale. They have been able to train people locally. They have the expertise and know-how locally, so you're not bringing in someone from the South to service the individual machine you have up there. Those are some of the lessons we can learn in Canada from the projects that didn't work out.
Senator MacDonald: You say Alaska is successful, but what criteria do you use to measure success? What is the cost of the power they produce?
Mr. Weis: There are two different areas. Obviously there are a lot of communities that are continuing to build these projects, and I think they've had pretty significant success from a technological point of view, but then also communities that have the projects and want to add more and more to those projects, going further.
There is Alaska an interesting case study where, since the 1990s, they have been continuing to add to their wind farms. Once they realized that this was a good first step for them, they implemented district heating in the community, so when they have excess wind, they can pipe the electricity or use the excess electricity to heat a flu that they can then pump around the community. It's that incremental evolution. From a technological point of view, that's potentially one of the measures of success.
Again, it's hard to give you an answer in terms of what it costs in any individual community because it varies for wind resources and size. Ultimately in the long run the goal is to save money, and a net savings. You need the money up front. Sometimes you need the capital up front, but the overwhelming cost when it comes to diesel generation is importing and burning the fuel indefinitely, and that outweighs heavily the capital cost.
Senator MacDonald: You can measure the cost.
Mr. Weis: Absolutely.
Senator MacDonald: But you haven't given me the cost of producing power, like from the Alaska grid. How much does it cost to produce that power? It's going into the grid. You must be able to measure it.
Mr. Weis: Again, every community is different. Now the cost of diesel is different in every community. Unfortunately I can't give you an answer on the cost because it varies from community to community. I'll make sure I follow up on some of the summary reports. University of Alaska Fairbanks has studied this significantly, and data is available. I can't give you the number offhand because arguably it doesn't exist as there isn't an individual cost, but I'll make sure I follow up with the data that has been compiled by the University of Alaska.
The Chair: Thank you, Mr. Weis. We won't have time to go to second round because I believe you have an engagement relatively soon, and we have another witness, but I have a couple of quick questions around the incentives part of it.
You mentioned it in your brief, so you must have some sense of what incentives you need to actually go into the North. When I looked at what it costs for the federal government to generate electricity in some of those northern communities — I don't have it with me — some places were a dollar a kilowatt, $1,000 a megawatt. Your organization, according to your own paper, says that you have 8,500 megawatts across Canada. I know lots of private companies have installed wind turbines all across the country. There are over 10,000. Where are those investors?
Nothing could be more sure, which I can think of, than the federal government paying the bill because they subsidize it and they pay most of the bills. That's what we found out. What could be more sure? And if you're looking at those kind of dollars, there must be a way someone could find their way clear to invest the money to do it instead of saying, ''Government, you come with all the money and then we'll go there and do it.''
Mr. Weis: Right.
The Chair: Secondly, I'm glad Senator Wallace brought it forward, but I want to emphasize, even if you put wind energy — I don't have any problem with it — it's good for maybe 35 per cent of the time. You still have to haul in diesel fuel, likely, because that's obviously one of the easiest things to take in. You're still going to have roads to do that. You're still going to have roads to take the cranes in to repair these turbines, because they don't last forever. They are just like everything else. They wear out. That's understandable.
Maybe you could give us some sense. I'm not asking for you to do it now, but when you put in ''incentives,'' I would think you should be able to tell us what kind of incentives you need, and you should have probably; I would have looked at one community in the North and said I'm going to take that community and compare the cost of diesel generation, and I'm going to show them we can do it with wind, or some company can do it with wind. I'd really like to see something like that if you could provide that to the clerk.
Mr. Weis: I'd be more than happy to.
The Chair: Also, I'd like to know a little bit more about the technology of keeping ice off of the blades and how much of the power generated by a turbine goes to that in the winter.
Mr. Weis: A lot in there.
The Chair: I know there is a lot in there, but I'm sure you'll get it. We don't have time because we have another witness, but if you would get that information back to the clerk, she'll distribute it to all of us so that we could have a look at it. That would be great. We'd like to know what the incentives are. You mentioned it. We're just asking what it is.
Mr. Weis: Happy to provide that information.
The Chair: Thank you very much. I appreciate your coming and altering your schedule to be here. It was very interesting.
We are continuing our study on non-renewable and renewable energy development, including energy storage, distribution, transmission and consumption and other emerging technologies in Canada's three northern territories. The committee has held numerous meetings with witnesses on the subject in Ottawa, and, last May, we travelled to all three of Canada's northern territories, holding private meetings and visiting sites.
Now I'm pleased to welcome, from the Canadian Solar Industries Association, John Gorman, President and CEO. Thank you for being with us today. I believe you have some opening remarks, and then we'll go to questions. Just so everyone knows, we have to be out of here at 10 o'clock sharp because another committee comes in right behind us.
[Translation]
John Gorman, President and CEO, Canadian Solar Industries Association: Good morning, my name is John Gorman. I am the President of the Canadian Solar Industries Association.
[English]
I feel very privileged to be here today to talk about solar and its application to the northern communities. On behalf of the solar industry and the Canadian Solar Industries Association, I thank you for the opportunity to be here this morning. If I could ask you to turn to slide 1, I'd like to say a couple of words here about CanSIA. CanSIA is a national association that represents not only solar electricity, which is solar PV, or photovoltaics, but also solar thermal, which is the heating of air and water by solar electricity. We're a truly national organization, representing the full cycle of companies and professionals involved in developing solar projects. So that would include not only panel and equipment manufacturers but also developers, constructors, lawyers, financiers, the entire gamut. Our mission is to develop the Canadian market as a sustainable place for solar electricity.
On the next slide, and in the subsequent four or five slides, I would like to take a couple of quick moments to help orient the senators around the table to the very dramatic changes that have been happening in the solar industries around the world. I emphasize this because the change, over the last five years, has been so dramatic in terms of both pricing and adoption, in almost every region around the world, that one of the biggest obstacles the industry faces is having to educate people about the very sharp declines in cost, the rises in efficiency and the great level of adoption.
On that left-hand side, on slide 2, with that blue bar chart showing a very steep decline, that is called the Swanson effect. That is showing the price of a watt per panel, which is how we price a solar panel for electricity, going from about $77 in the 1970s to about 70 cents by 2013. I would like to draw your attention to the picture right beside it. Solar equipment began to get competitive with other sources of electricity in about 2008 in various jurisdictions around the world. That coincided with when Ontario, for example, started to introduce its Green Energy Act. What has happened between 2008 and 2013 is another 83 per cent decline in the cost of solar equipment. What you see is that between the period when solar began to get economic in certain jurisdictions around the world to today, which is a five-year period, very short in any technology time, there has been another 83 per cent drop in cost.
On the next slide, I talk here just very quickly about some of the other benefits of solar, which really have to do with the fact that it creates more local jobs — more jobs, period — than any other type of energy technology by far, and it is also the most environmentally friendly technology from every measure, from manufacturing to actual production and the lack of CO2 emissions.
If you would kindly turn to the next slide, slide 4, you see that this combination of very steep decline in cost, the environmental properties of it and the high number of jobs it creates has spurred an absolutely outstanding amount of global adoption over the last decade.
I'm going to talk a little bit about just what this curve means in a moment, by looking at the Canadian market and the U.S. market. On slide 5, you will see that this rate of adoption has taken all of the industry observers by surprise, including the International Energy Agency, which is, as you know, a conservative international think tank that deals with all forms of energy. It has been constantly revising its projections, over these last five years, as to what solar's role in the electricity scene globally will be. Most recently, two reports that came out in the fall of this year have projected that solar electricity will likely be the dominant source of electricity globally by 2050. As you know, 35 years is not a great deal of time to replace electricity infrastructure, so to go from a standing start to the dominant source of electricity in a period of 40 years or so is really quite remarkable. On the next page, I show you, as an example, what our neighbours to the North have been doing in terms of the installation of solar PV. You may have heard President Obama say, in his recent remarks, that there is a new rooftop installation connected every four minutes in the United States.
In 2013, in the United States, one third of all new electricity generation that was installed was solar electricity. It was just behind gas as a source of electricity generation. In the United States, in the first two quarters of this year, solar electricity has outstripped gas and all other technologies as the number one installed electricity source at 51 percent.
On the next page, I'd like to talk about a couple of the things that make solar unique, disruptive and empowering. I think the empowerment part is something I will talk about later on, when it comes to First Nations and northern communities. If the standing committee would keep in mind that solar technology is unique, in the sense that it is highly scalable. Unlike other forms of electricity generation, not only can you produce massive quantities of electricity through fields of solar panels, but you see it being deployed on people's businesses, on their homes, or you see it powering a calculator. The scalable nature of solar — this very distributed generation quality — makes it a very adaptable source of electricity.
Sunshine is available almost everywhere on Earth. In combination with these price declines, it's what is driving the adoption of solar. Around the world, we're seeing this distributed generation quality of solar. The fact that people and businesses are putting it on their roofs and producing their own electricity, as well as consuming it, is having a fundamentally disruptive impact on the traditional electricity model round the world. In fact, utilities around the word are having to change their business model to move away from being owners of highly centralized fossil fuel plants that produce vast amounts of electrons and shove them down smaller and smaller pipes into people's businesses and homes, to providing services that allow people to generate and manage their own electricity. There is an empowering quality to it.
It's turning the traditional consumer of electricity, who just receives electrons and uses their appliances, into people who produce and consume. They are becoming ''prosumers.'' This impact is more dramatic than you would expect. In Europe and the United States, it's causing disruption in the utility models. It's causing utilities to offer services that allow people to control their appliances and things from their iPads, store energy in their garages, and use smart meters on their homes. It's changing the face of electricity. This empowering quality of solar electricity is something that we may want to discuss later when it comes to First Nations people, and their ability to generate and participate in their own energy needs.
On the next page, I look at the Canadian solar resource. I would like to address a couple of common misperceptions. First of all, Canada is a world-class solar resource. Cold weather and wintertime conditions don't impact the production of solar electricity, except by virtue of the shorter days. I realize that's quite a significant factor in many parts of Canada's Far North. At some points of the year, you get very short days. But in the winter months it is more efficient as skies are clear and the conditions for generating electricity are cooler. Often we see the best producing days in the winter months.
Look at this solar resource map, which shows the fuel that's available to Canada. Alberta and Saskatchewan have the best solar resource of any province, better than many of the southern places in the United States. But as we move up North and even to the Far North, you see that the available annual fuel is very strong. It's stronger than in most places in Germany, if not in all places in Germany, which is the world leader in the production of solar electricity. I would underscore that by saying that in Germany, there are consecutive days of the year that during the daylight hours they are producing 50 per cent of their electricity needs from solar electricity. The penetration of solar electricity in Germany, the world leader, is enormous, and they're working with a fuel source that is less than what is available to us, even in the northern parts of Canada.
On the next page, we have a look at how much solar is actually connected. I'll pause here for a moment just to tell that we have a relationship with Natural Resources Canada, and in particular with Canmet. They are responsible for much of the benchmarking and innovative work that's done in studying in-storage solar technology. That is useful to our industry. They're also our partner in doing market studies and producing information that we give to the International Energy Agency on behalf of Canada. That's an important relationship to us and one that's valued by the industry, and I just wanted to make a note of that.
The lesson is that while solar is beginning in every region across Canada, it is being largely driven at this point by Ontario and the Green Energy Act and the program they introduced about five years ago to phase out coal-fired electricity and bring in renewables. The result is that by the end of the next construction season, we will have two gigawatts — 2,000 megawatts — of solar installed in Ontario. By any measure, 2,000 megawatts is a sizeable and attractive market. By virtue of that program, and in particular, because of the level of activity in this province, Canada has attracted international businesses and grown businesses here that have become internationally competitive. We're seeing that they're competing very well on the international scale right now.
In this industry, it's a significant start for Canada. In a very short period of time, it has created a very robust industry that employs 8,000 people and is each year responsible for $2-billion worth of private sector revenues. It is a sizable industry. In terms of producing panels, our manufacturing industry is larger than Germany's. In Ontario, we have the most automated equipment in the world, producing the highest-quality panels. I point this out for two reasons. First, from a cost point of view and a quality point of view, a region's and a nation's ability to install solar electricity effectively from a cost point of view and a quality point of view has a lot to do with experience in the market. We have a lot of experienced people by virtue of to our five-year track record of installing two gigawatts. This is an asset to Canada. It's an asset to the other regions, like Alberta, who in December is likely going to be introducing an alternative and renewable energy framework to incent solar. It means they can put in a made-in-Alberta solution, but they can call on the expertise and lessons learned in Ontario for help. When we look to the northern regions of Canada, we can call on the tremendous wealth of experience to install solar properly. We have a resource to keep us globally competitive and also help our other regions.
The next slide shows you that we are making some progress in Canada in terms of gearing up for meeting the needs of northern communities with microgrids and solar installations. I would like to point out one recent announcement that was in April or May of this year. This is a company called Canadian Solar Inc., which is now one of the world's largest solar companies. It got its start here in Canada through some federal government funding. It's traded on the NASDAQ. It has collaborated with NCC Development, which is a First Nations renewable energy company.
They have done two things. First, they have announced they are building a testing facility for microgrids. This will integrate solar, diesel and other technologies to look at self-contained systems for applications like mining in northern communities. They have announced the completion of their rooftop project - their first diesel solar hybrid that sits on the top of the First Nations' Deer Lake School, which is in northern Ontario.
On the next page, for your reference, I've pulled out a 2012 IEEE report looking at renewable energies for Canada's North. Perhaps it has already been brought to your attention. The significant thing about this study is they looked at combinations of solar and wind, solar diesel, wind diesel, solar storage diesel, wind and a number of combinations, and found the introduction of solar into those scenarios produced not only reductions in fuel consumption operating costs and CO2 emissions, but also gave a return on investment of about 6 per cent in these remote regions. These are not scenarios where solar electricity is completely replacing diesel generation. Solar electricity it not something that, in the near future, will be a stand-alone solution for northern communities without being coupled with other things like diesel or battery storage.
But the significance of this study shows that the introduction of solar, even at 2012 prices, brought the cost of operating those assets and bringing electricity to those communities down while having other benefits, which I talk about in my concluding slide.
Some of the other benefits of solar electricity, in addition to saving money by introducing solar into remote communities, has to do with the energy self-sufficiency and the empowering nature of solar for First Nations communities, with the jobs that are created.
When I showed this standing committee the slide on the number of jobs created by solar, I should have pointed out those jobs are local high-quality jobs — electricians, constructers, designers and engineers putting those panels in place and maintaining them. They are important skills.
I should have mentioned when I was talking about Ontario that in the last round of contracts by the Ontario government for solar electricity, it was 120 megawatts of community-based projects. Fully one half of those projects had First Nations involvement. In addition to the industry we created here for Canada, which can be a promising start, we have started to develop some significant expertise in the involvement of First Nations in solar projects.
With that, I would open myself up for questions.
Senator Massicotte: I want to make sure I understand the economic picture. You basically say the cost of diesel unsubsidized is $1.30 per kilowatt per hour. Am I reading that correctly?
Mr. Gorman: Yes, and if I could provide additional information, these are numbers from AAND, 2012. Across Ontario only they found prices ranging from 40 cents to $1.20, but when they looked at all northern communities they found an average unsubsidized cost of $1.30.
Senator Massicotte: What would it be for wind and solar, unsubsidized, including capital costs?
Mr. Gorman: I run into the same type of issue that the previous speaker does, which is that certain things will change depending on the type of community.
Senator Massicotte: Choose one community.
Mr. Gorman: If I could choose Ontario prices for you, fully loaded in Ontario for utility-scale solar would be about 20 cents.
Senator Massicotte: Toronto or up North?
Mr. Gorman: Northern, but not some of the Far North territories. Rooftop might be 30 cents for the smaller installations, which I think is a more applicable number to the communities you're speaking about.
Senator Massicotte: For the 30 cents, do you double it if you go up North? Triple it?
Mr. Gorman: I would like the opportunity to get back to you with some solid information on that. It would certainly be higher than 30 cents, but far below the average cost for diesel electricity.
Senator Massicotte: You're using a 6 per cent cost of capital. If you made that 10 per cent or 15 per cent, which is probably more what the market would request, I would presume that goes up dramatically.
Mr. Gorman: No, I would say that when we're talking about the prices I just cited — the 20 cents and 30 cents — we're already looking at rates of return somewhere in the neighbourhood of 8 per cent or so. I wouldn't see that as being a factor.
Senator Massicotte: Going to Ontario, when you look at the chart you see what is happening there. It's phenomenal. I look at Quebec, where I come from, and it's minor. Why so little in Quebec and so much in Ontario? Why is Ontario producing so much solar?
Mr. Gorman: As you know, each province and territory is responsible for their own electricity policy. As a result, in the absence of federal direction and policy around renewables and around solar electricity — and there is an absence of it — we see that each region is dealing with this question separately. Ontario chose to phase out coal and bring in renewables, and they treated this as an economic jobs development initiative. In Quebec, where you enjoy 99 per cent of your electricity from hydroelectricity, so abundant and clean, there hasn't been a political and policy discussion about introducing solar into the mix.
Senator Massicotte: What's the cost of solar in Ontario versus the cost of hydro in Quebec? Unsubsidized?
Mr. Gorman: I believe the cost of hydro in Quebec is somewhere in the neighbourhood of 4 cents or 5 cents compared to 20 cents for solar.
Senator Massicotte: So Quebec is richer because our cost is much lower?
Mr. Gorman: Quebec is simply blessed with abundant clean and cheap energy. But on a region-by-region basis, Alberta, which has the highest cost of electricity in the country, still produces 66 per cent of their electricity from coal.
Senator Massicotte: At a cost of?
Mr. Gorman: I'm not sure what the cost is because they don't have hydro and they're using coal, but it's the highest in the country. I think the average daytime pricing was about 13 cents, I believe.
Senator Massicotte: Still cheaper than solar, I gather.
Mr. Gorman: If you put it on that comparative basis, yes, it would be.
Senator Massicotte: You list the electricity generation capacity comparing 2013 and 2012. I understand why coal is down given the U.S. policy, but why is wind down from 41 per cent to 7 per cent?
Mr. Gorman: I'm not in a position to answer that question. I think it has to do with their own federal government policies around wind.
Senator Black: Your evidence to us is that solar in the North would be part of the equation.
Mr. Gorman: Correct.
Senator Black: I have three specific questions: Given that you have suggested there is limited sunlight in the North for a number of months of the year, do I assume that for those months of the year a solar installation would be inactive?
Mr. Gorman: It wouldn't be inactive, but the amount of electricity it would produce, as a proportion of the other things they have there, primarily diesel, would be less. However, when you look at that chart of the solar fuel available and you see that it's superior to Germany, for example, it's looking at the full year-round picture. So during the longer days in the summer months, you're producing far more electricity than would be shown, but there would be seasonal variation, a relatively large amount of electricity during some months and smaller during the others.
Senator Black: But simply put, if the sun doesn't shine you don't produce electricity.
Mr. Gorman: That's correct.
Senator Black: Do I also understand that energy generated from solar cannot be stored?
Mr. Gorman: No, that is not correct. One of the most active areas in the energy field right now is storage, at all scales, to store hydroelectricity, massive amounts of hydro, wind, right down to smaller distributed sources, like solar on a First Nations school or on a rooftop at home. There are many technologies out there, and a lot of technology that goes with this storage capacity to make the two talk together.
The question is, when will storage become economically viable? Right now, we're seeing that the price of battery storage for electricity is coming down dramatically. There's a race to the finish, and people say it's four or five years out. When we reach that point, when storage becomes economical, we will see that the last barrier for renewable or intermittent sources of electricity has been erased.
As a final comment, I would just say that it's why things like this CSI and First Nations collaboration on the microgrid test centres are important. What they're really doing is combining diesel, PV and storage right now to look at the impacts.
Senator Black: In conclusion, you're saying that there's obviously an economic imperative for somebody somewhere to figure out how to store solar energy and that the race is on.
Mr. Gorman: The race is on, and not just for solar but for all types of intermittent.
Senator Black: That absolutely makes sense.
I'm from Alberta, so you have to excuse my complete lack of knowledge about Ontario's energy strategy. I understand that solar energy in Ontario, which has been successful, has only been successful because it's been extraordinarily heavily subsidized by the people of Ontario. Is that accurate?
Mr. Gorman: Yes, but perhaps I could just respond.
Senator Black: I'm not judging it.
Mr. Gorman: Let me react to that. In my position as President and CEO of the Canadian Solar Industries Association, I have been at times the biggest critic of elements of the program that they introduced in Ontario. Could they have done things differently and in a way that was more cost-effective initially? Absolutely. However, it's undeniable that the investment made in bringing solar into Ontario has resulted in the establishment of a world-competitive industry that has succeeded in installing 2,000 megawatts of solar — from having no industry here to what it has today. In the process, it has gone from being highly subsidized to prices that are one third what they were when it was introduced.
Were there some growing pains initially in the establishment of this program? Absolutely. Has the program been streamlined and have the prices come down very dramatically? Yes. Are we, as Canadians, now in possession of an industry that could enable us to expand with other types of programs to places like Alberta and around the world and into northern communities? Yes. It behooves this committee and your counterparts to look at how we're going to take advantage of this industry and serve the needs of First Nations and other regions across Canada, starting with Alberta.
Senator Black: That's very helpful. Let's turn our attention to the North. Is it fair to conclude that solar energy could be part of the equation only with financial support from government?
Mr. Gorman: Yes, that is absolutely fair to say; but I bring you back to the remarks of the last speaker. Solar electricity in northern communities currently powered by diesel is not only economically viable but also has been demonstrated to save money. Introducing solar into the mix will save money from the current operations. As well, it has all of the other benefits discussed here today around self-empowerment, jobs, et cetera.
The point around the economics is not the cost of the cost savings but comes down to getting the capital up front to build the project; and this is the issue. It's not the economics but the actual issue of getting the capital up front. Right now the federal government has a program in place, ecoENERGY for Aboriginal and Northern Communities, for up to $250,000. However, it doesn't cover capital costs. Therefore, we recommend in the last slide that this committee recommend to the government that they introduce a loan program for First Nations communities so that they can handle the upfront costs of building infrastructure.
Senator Black: That's very helpful. Thanks, Mr. Gorman.
Senator Mitchell: Mr. Gorman, this has been really interesting.
Could you comment on two things with respect to the Ontario program? I understand that industry, as a result of the Ontario subsidy, has put up as much as $42 billion in private sector industrial development. How much did the Ontario government put up to encourage the industry to put up $42 billion? It was at least one a year ago that I heard that figure; so maybe it's more now.
Mr. Gorman: It certainly wasn't anywhere near that much, but I would have to get back to you with an actual number as I don't have it with me.
Senator Mitchell: How much did the provincial government put into subsidies?
Mr. Gorman: Again, I don't have that number with me.
Senator Mitchell: Can you get that for us?
Mr. Gorman: Yes.
Senator Mitchell: That's great. Maybe you alluded to it earlier and maybe I just missed it, but on the progress being made with storage battery technology, where are we and what's the prospect for that? That solves a lot of the problems of intermittency.
Mr. Gorman: It does. Interestingly, I have been attending a number of conferences and trade shows on storage. If I may, I'll tell you anecdotally. When I went to the largest trade show in the world last year, there were about 20 companies exhibiting storage technologies. I went this year, and there were about 400 companies exhibiting their storage technologies.
Elon Musk, whom you will have heard of from Tesla Motors, the electric car, has announced they will be building this gigawatt storage factory — a gigawatt of batteries will come out per year. He is the most aggressive in saying when storage will be cost-effective with solar; but most industry observers are projecting about four to five years. At that time, it will become more economical to use batteries, along with an intermittent source, than to use generally available electricity.
Senator Mitchell: The argument has often been made here that this kind of technology requires government subsidies and wouldn't exist without it, perhaps. The argument could be made that the oil sands wouldn't exist without government subsidies either, or they wouldn't have started 35 or 40 years ago without government subsidies — a huge government equity investment in the initial stages and all kinds of other subsidies. Concrete money was paid in.
In the context of your point about the Ontario program not being set up as well as it might have been, how would you set it up better for solar?
Mr. Gorman: In my view, two central things should have been done differently at the beginning. The first was having better control over the volume of solar that would be deployed. They introduced the program with a relatively high subsidy, and it was immediately oversubscribed with a flood of international and homegrown companies that wanted to participate. Having had no experience in the rest of Canada with this type of program, it caused delays, and that was troublesome. I would have put in a more progressive approach to the targets.
Second, I would have put in at the beginning a much more predictable decline in the subsidy granted. The government in Ontario has since introduced both of those things, so now there is a regular procurement, and the price is digressing on a regular basis. This may surprise the standing committee, but there is no bigger proponent of getting off subsidies than the solar industry. We want to hit the point where no subsidies are required for solar to be deployed. As we continue down this path with declining costs, we see that we're going to hit that in the very near future, perhaps four to five years from now.
Those are the two things that I think other jurisdictions will learn about. As I mentioned, Alberta is considering a program now. We hope to see that in December. Certainly, they will be doing it very differently from Ontario, but they will also be able to capitalize on the industry that's been considered made here.
Senator MacDonald: I'm wondering if he read my question. I'm not sure.
Senator Mitchell: You'll ask it way better than I did.
Senator MacDonald: I was going to ask you what exactly Ontario didn't do that they should have done, but he went down that road. That's fine. I was struck by the cost differential between Ontario and Quebec hydro, 20 cents. It's huge. Ontario is no longer a have province, and there are certain reasons why. The cost of generating power in Ontario is one of them.
I'm increasingly a fan of solar power. When it comes to the panels that are used, what's the carbon footprint in producing these panels?
Mr. Gorman: It is the lowest carbon footprint of any technology to produce. It's 99 per cent made up of silicon, which is the most abundant material on Earth, an inert material, sand, basically. It's the most abundant material on Earth next to oxygen. There are no CO2 emissions created by the production of electricity, and the fuel, of course, is free.
Senator MacDonald: We're here talking about the North, and I was curious to hear and pleased to hear that you would love to see this get to the point where it gets out of the subsidy game. I think that's very important. I think it's key.
We look at the North here, but I see the application across the country where there are large volumes of people.
Mr. Gorman: Yes.
Senator MacDonald: And where there can be a real return on investment. What should be done nationally with this? What sort of program would we have to implement nationally where you'd get the volumes up to such an extent that you wouldn't need the subsidies?
Mr. Gorman: The struggle, from our perspective, for solar electricity, and something that I wish we, the industry, had done differently, was to set the context for the discussion about cost at the beginning rather than to have to go back and try to change perceptions. When you look at the cost of producing electricity in Alberta from coal, for example, the coal industry will present that number in a certain way: ''This is how much it costs to run our generators.'' There are many other costs associated with running a large, centralized coal plant. There's been a lot of news coverage recently on the health impacts and the cost to the health care system. There's been a lot of study recently on how much it costs to build new transmission in the province of Alberta to support these very large, centralized plants. When you build a solar installation, you build it in the size you need it, where you need it, and it's producing when you need it. So you are avoiding all sorts of costs. I think that is important to look at.
However, when it comes to your question, senator, about what the federal government can do, our recommendation is that the government look at bringing in tax incentives that treat the solar industry the same way as the conventional energy industries are treated, with rapid amortization of costs, for example, and other development tax credits that are given to the oil sector, the gas sector and the conventional electricity sectors. That sort of support nationally from the federal government is going to provide, as it has in the United States, the ability of each province to bring a program under that tax regime, the same regime that's being used for the other energy sectors, and to introduce effective programs to bring in and accommodate solar electricity on the grid.
So our ask to your colleagues in the House of Commons about four months ago — we had a Hill Day — was specifically around three measures. One of them was a tax-related measure that I've just talked about, and the other was on the First Nations issues and the need to provide government-backed loans to First Nations people and to continue the ecoENERGY program that is already in place.
Senator MacDonald: Just one more question, chair.
The Chair: Okay.
Senator MacDonald: Senator Mitchell said — and he's accurate to say it — that the federal government subsidizes more when it comes to the energy sector than perhaps we really appreciate in the country. You go back to the early 1970s when Lougheed became premier of Alberta. He established Suncor, and he established — What's the other one?
Senator Mitchell: Petro-Canada.
Senator MacDonald: He established so many things out there where the government had to get involved. Back in 1992, when Hibernia was trying to get off the ground, Gulf pulled out. The project was going to collapse, but the federal government stepped up with $250 million. Today they own 8.5 per cent of Hibernia, which is probably worth about $2.3 billion or $2.4 billion. This certainly has been done before.
The amount of power we produce by solar is infinitesimal in the country. What sort of level do you think we have to reach before we get to the economies of scale?
Mr. Gorman: To get to the economies of scale that make it competitive with other electricity sources around it requires a remarkably small amount. You're looking at 1 per cent to 2 per cent of whatever electricity is consumed in that particular region to make it economical. We're approaching that in Ontario. We're at about 1.5 per cent. I think, by the end of next year, we'll be approaching 2 per cent, and our studies show that we're going to be in cost parity, here in Ontario, in about four years.
That being said, it's important to understand that while the cost of the equipment continues to come down and that's helpful, it's the ability to actually finance these things, to be knowledgeable from an engineering, construction perspective and to have practice in an industry that does this that brings the other half of those costs down. That includes the government programs, making sure there's no red tape in them. You have to deal with all of those things to hit cost parity, but it's a very small percentage. One or two per cent allows you to be cost competitive.
If I could just add to that, there is this attitude of, ''Why don't we just wait until it hits cost parity then, five years from now,'' but, if you consider the bigger picture that we know through fact now, solar electricity is the fastest-growing electricity source on Earth. As I said, in the United States, it has now surpassed all other types. It's the greenest. It empowers consumers. It enables First Nation off-grid communities to thrive. If we want to participate in this huge future in industry, then, as I said, it behooves us to take advantage of what we have created here in Ontario and grow that base across Canada and be competitive.
Senator MacDonald: I wanted to add that the other Lougheed initiative I was thinking of was Syncrude.
The Chair: Okay. Senator Massicotte?
Senator Massicotte: I have a quick supplementary. You say 1.5 per cent to get to cost parity. What would the cost of solar be when you get the 1.5 or 2 per cent?
Mr. Gorman: That would depend on the region you're in. In Alberta, for example, the daytime cost of electricity is approximately 13 cents.
Senator Massicotte: Solar?
Mr. Gorman: For the electricity from the existing grid.
Senator Massicotte: Yes.
Mr. Gorman: So we're at about 20 cents right now.
Senator Massicotte: But if you got the 1.5 per cent or 2 per cent density, what would that —
Mr. Gorman: Absolutely, you would be below that cost.
Senator Massicotte: Would it be 19 cents or 9 cents?
Mr. Gorman: Probably closer to 9 cents.
Senator Massicotte: Thank you.
Senator Seidman: It's really striking listening to your presentation, and it leads me to wonder why all new housing developments, for example, aren't built with solar panels on the roofs so that they can take advantage of collection of solar energy and use it at peak hours, or something like that, when the costs are much higher to use energy from the grid.
Mr. Gorman: Are you referring specifically to off-grid communities or to houses in general?
Senator Seidman: In general. I guess it sort of follows from the questions you were just answering. Yes, we're looking at sustainable energy in the North, of course, but, on a larger scale as well, it leads one to wonder why there isn't more of a buy-in to this approach.
Mr. Gorman: I think there are a number of factors that result in the adoption not being there right now. One of them certainly continues to be cost, and while we see the price of the solar panels and the equipment coming down — and, very soon, it will be even cheaper — we still deal with a whole bunch of entrenched infrastructure. We deal with utilities that have a business model that they've been using for 132 years and that they're happy with. We're dealing with governments that have got full agendas and other things on their mind, and we're dealing with a lower level of education and awareness about solar electricity. When you combine all of those things together, you run into barriers to getting these things done.
After five years now, Ontario has finally reached the point, from the solar industry's perspective, where utilities are seeing the benefits of having solar installed on the grid. When the program first came in, it was a very reticent community; utilities did not want to change the way they do business. You'll have that same issue when you're dealing with the northern communities, and it was a big learning experience for everyone.
That can't be underestimated either. You need that lead time. Now utilities are not only realizing the benefits that come from having these distributed solar, but seeing there are opportunities to offer new services to their members. The agencies are seeing that it's providing a more stable grid, but it's an entire process that has to be gone through.
The Chair: We have no more questions, other than a few I have.
Canada already generates 75 per cent of its electricity from clean sources. That's one of the things that you —
Mr. Gorman: It's terrific, yes.
The Chair: In fact, we should be very proud of it.
Mr. Gorman: Yes, we should.
The Chair: We're one of the best in the world. There are only a couple in the world I know of that beat us, so I always try to remind everyone that we have a very clean system. There are a number of provinces, and the North, which have difficulty because they don't have access to cheap hydroelectricity, although coal is cheap too. There are a whole bunch of other reasons in Alberta for why the prices are a little bit higher.
Can you give me an idea, if you were to build a 100-megawatt solar farm — I look on page 2 where you have a bunch of solar panels there on the ground — how much space would that take? How many hectares for a 100 megawatt solar farm?
Mr. Gorman: It would be approximately 100 acres for a 10-megawatt solar farm.
The Chair: Okay. So I think the committee can put that into perspective when you're starting to talk about thousands of megawatts of electricity. You're going to cover a lot of ground someplace. I don't know where, but you're going to.
That helps me.
I'm going to page 4, where you talk about solar PV total global capacity, and you put world total at 139 gigawatts. Now to me, capacity is megawatts; gigawatts are energy. When you started talking about it, the world generation must be more than 139 gigawatts.
Mr. Gorman: No, that is where it's at right now globally: 139 gigawatts.
The Chair: So globally, everyone?
Mr. Gorman: Globally, everyone.
The Chair: Generate 139 gigawatts?
Mr. Gorman: Yes. However, if I could put that into the context of the chart, which is, first of all, the growth trajectory that we're on, the fact that that's growing 50 per cent year over year —
The Chair: I appreciate that, yes.
Mr. Gorman: We know what that means, and also the International Energy Agency's projection that by 2035 renewables will be one third of all electricity and by 2050 the number one technology will be solar. It's a new technology in the sense that perhaps it's only been going through growth for 10 years, but it's the growth that's astounding.
The Chair: It is, and I appreciate that. That is astounding, 50 per cent growth, but do you know what the world energy consumption is in terawatt hours?
Mr. Gorman: No, I don't.
The Chair: I don't know either, but it's huge.
Mr. Gorman: Yes, it is.
The Chair: It's absolutely massive when I look at 139 gigawatts, which is really not that much, to 50 per cent of the world's supply in 20 years. I don't know where the IEA came up with those numbers, but it would be interesting for me to look at it because I'm having difficulty comprehending that.
Mr. Gorman: I think the actual number, for clarity, is that solar electricity will represent about 13 per cent by 2050, but that makes it the largest technology producer of electricity of all technologies. So it would be producing more than gas, coal, et cetera, individually.
The Chair: Okay, so you have to extrapolate out a few more things there.
Mr. Gorman: That's right.
The Chair: Okay, that helps me a little bit.
The other thing is that I was astounded at this number too. Maybe I misunderstood you, but you said that solar power in Germany at times provides 50 per cent of Germany's total consumption.
Mr. Gorman: That's correct.
The Chair: So Germany's total consumption is massive.
Mr. Gorman: Yes.
The Chair: It's massive. I look back at your other chart, and 139 gigawatts doesn't go very far when you're talking worldwide.
Mr. Gorman: That's right.
The Chair: You sink 139 gigawatts, all of the world's supply in solar, into Germany and it's only going to light a few homes. I'm just having trouble with some of the numbers.
Mr. Gorman: Right. In Germany, which got a head start on the rest of the world, about 33 of those 139 gigawatts are installed in Germany, and there has been massive participation by businesses and homes that have put it on their roofs and buildings, as well as the utility-scale ones that you talk about.
Yes, during sunny days, at certain times, 50 per cent of all the electricity that's being consumed is coming from the solar panels.
What's happened over the last three years is that other countries are vastly accelerating past Germany. I don't mean in total number of megawatts, but in terms of how quickly they're adopting it. The United States, Japan, some of the European countries, and China of course are now becoming massive solar deployment.
The Chair: For the committee's information, 139 gigawatts will supply about 13,900 average homes.
Mr. Gorman: No. Sorry, if you look at the entire province of Ontario, our system right now hits about 23 or 24 gigawatts at peak, so Canada's entire electricity system is perhaps 60 or 70 gigawatts.
The Chair: Okay. I know what the average is that you multiply by. I appreciate your information very much and I do think that there is a great space for solar in the coming time, obviously from the charts you show us. And maybe in the North it will be a significant part of their energy integration, understanding that they use most of their electricity in the wintertime. Even where I live — I don't live North of 60, but I live close to it — it's dark at four o'clock in the afternoon. It's dark and it doesn't get daylight until about nine o'clock in the morning, so something has to be there to generate the electricity to keep the lights on in the meantime.
Mr. Gorman: Absolutely.
The Chair: So it's not replacing it. It's just augmenting it, right?
Mr. Gorman: Right, and thank you again. If there is any additional information that our association or industry can provide, we'd be very happy to do that, and I'll leave my cards with you.
The Chair: Thank you.
(The committee adjourned.)