While only about 4 percent of Canada’s electricity now comes from these new renewable resource technologies, their market shares are expected to increase significantly over the next decade. This increase is due, in part, to an influx of new projects and businesses responding to government initiatives. To help develop the markets, Canadian federal programs now provide incentives of $10 per megawatt-hour (all dollar figures are in Canadian dollars) for up to 10 years to eligible renewable energy projects powered by biomass, wind, solar, geothermal, small hydro, and wave energy. Canadian provincial governments also are providing support for the development of renewable resource energy production. Provinces are developing their own energy resource plans — for example, Ontario intends to have 10 percent of its generating capacity provided from renewable resources during the next decade.
Provincial governments are now playing an additional critical role — they are guaranteeing demand for the power generated from the renewable resource generation capacity in their provinces. Alternative energy production is much easier to finance, particularly in today’s tight credit markets, if the developer has a long-term contract for the project’s generation, and provincial governments have been quick to step up to the plate. One province doing so is Ontario, which recently contracted with six wind farms for 500 megawatts of capacity.
There are many alternative power technologies using renewable resources in development today, but based on cost and technological maturity, four are especially hot right now — geothermal, solar, biomass, and wind.
Geothermal: Not Just Heat Pumps
Geothermal energy — energy from the natural heat of the earth — is the only alternative energy source that can be used without a storage device to meet baseload electricity demand. Most alternative energy sources are considered “intermittent” power sources, with availability factors hovering around 40 percent; geothermal resources have availability factors of about 95 percent, on par with fossil fuel plants.
Geothermal applications range from low-temperature heat pump technologies to high-temperature geothermal electricity generation. The newest are the high-temperature electric generation technologies that are beginning to be implemented worldwide, mostly around the Pacific rim, known as the “ring of fire,” an area of high geothermal energy. No geothermal generation is operating yet on Canada’s Pacific coast, but Western Geo Power Corporation is in the final stage of evaluation of its South Meager geothermal project to generate electricity and two companies, Yukon Energy Corp. and the Yukon Cold Climate Innovation Centre, will soon be using infrared thermal sensors to help locate potential geothermal sites in their territory. While most geothermal resources are located away from population centers, new technologies are being developed that can expand the reach of high-heat geothermal to communities located away from areas with a geothermal reservoir. Alison Thompson, vice president of the Canadian Geothermal Energy Association (CanGEA), says, “It can be confidently said that we have yet to even begin to tap our nation’s economic and environmental potential of geothermal energy.”
There are appealing aspects to geothermal energy production that interest potential investors. Plant development takes about three years compared to five or more for a large coal plant; and the free fuel source, if managed properly, never degrades, enhancing the projected net income stream.
At the other end of the market are the low-temperature heat pumps, a mature technology with a market that has expanded about 40 percent per year over the past three years in Canada. Low-temperature geothermal systems utilize heat from the sun that has warmed the ground. They are far more efficient than conventional heating technologies because they do no have to convert energy; they simply transfer heat. These technologies can be used almost anywhere; however, for the industry to continue its rapid growth, market infrastructure such as standards and training need to be expanded. The various segments of the geothermal markets in Canada have begun programs to exchange information, develop business opportunities, and coordinate research and development.
In downtown Toronto, many buildings use EnWave’s Deep Lake Water Cooling system, which operates on the same principle as geothermal technology. The system, which has been running since 2004, uses cold water from the bottom of Lake Ontario to reduce building temperatures in the summer. This is the world’s largest system of its kind, and it reduces carbon dioxide emissions in the downtown core by 79,000 tons annually, saving enough electricity to power 6,800 homes. In addition to the environmental benefits of the system, the end financial result is that the owners of over 140 buildings — including the Royal Bank Plaza and TD Bank Tower, the Air Canada Centre, and City Hall — save hundreds of thousands of dollars annually.
Solar: a Surprising Resource
Given Canada’s northern location, it is surprising how much potential for solar power exits exists — especially in Saskatchewan, Manitoba, Alberta, and southern Ontario. While most solar energy is used for non-electricity needs such as solar water heating, because of Canada’s size and many remote areas away from a power grid, it has a thriving photovoltaic (PV) cell market. PV cells convert visible light to direct current electricity and are used for off-grid power generation, especially in industrial installations, minimizing the need for expensive transmission facilities in remote areas. PV technology, however, can be used more broadly; according to the Canadian Solar Industries Association, Canada could meet about 10 percent of its total energy requirement with PV cell technology by 2025.
The market for PV in Canada, while still small, has grown at the rate of 25 percent per year during this decade. This growth in PV coupled with growth in passive technologies has enabled the Canadian solar products industry to grow. Canadian companies now make solar panels, water pumps, solar lighting systems, and other necessary equipment for the industry. Jobs in the industry have increased, too — up 38 percent during the past five years — and total industry revenues are now over $200 million.
Biomass Fuels: Expanding as an Energy Resource
Biomass is already an important part of Canada’s energy portfolio, supplying about 6 percent of primary energy demand. Much of the energy, about 1,500 megawatts, is produced and used by the pulp and paper industry; however, some production from independent power sources is sold to the electric grid. About 1.5 million Canadians, mostly in the Atlantic provinces, use wood for heating, and some district heating systems have been modified to burn wood waste. Landfill methane from decomposing waste is captured and converted to energy at 13 sites in Ontario, British Columbia, and Québec.
Most of Canada’s forests are owned by the government, usually provincial. Québec, Alberta, Ontario, and British Columbia lead the nation in forested land and harvest volume. Private companies purchase licenses to harvest the timber and manage the forests. The provinces are modifying existing legislation to provide guidance on forest management and resource development, and to increase the percentage of forest byproduct used for energy production. Ontario, for example, has changed its legislation to allow some harvest residue to be collected at no charge with the stipulation that the biomass project it is used to employ residents from local communities.
There is a robust market for another biomass energy source, Canadian corn and wheat ethanol, used primarily as an additive in gasoline. New ethanol plants are currently under construction and production could triple in the next five years.
Canadian companies have also been successful in developing, demonstrating, and commercializing innovative second-generation bioenergy technologies such as cellulosic technology to produce ethanol from agricultural residues, including straw and corn stalks, dedicated grass crops, and forest products like wood residue or crop chips.
Wind and Hydroelectric: Natural Partners
The topography of Canada is ideally suited to developing wind-powered generation and its large hydroelectric facilities can be used to store wind-generated energy increasing its practicality and usefulness. During the first half of this decade, Canada’s wind energy capacity has been growing at a rapid rate of 51 percent per year, reaching 1,846 megawatts by the end of 2007. An additional 2,912 megawatts are currently under construction and the industry installed capacity is expected to grow to 8,953 megawatts by 2013.
Wind farms come in all sizes. Large projects of 100 megawatts capture production economies of scale and are the projects of choice for Québec, Ontario, Alberta, and British Columbia. For example, Cartier Wind Energy recently began full commercial operation of the 110-megawatt Carleton Wind farm in Québec. The farm is expected to generate about 350,000 megawatt-hours of electricity each year from its 73 turbines. This project is already eclipsed by a new 300-megawatt project in Manitoba that will be the largest wind farm in the country. Due to grid limitations and the desire to keep some projects closer to major population areas, small and medium-sized projects are also being developed. For example, Ontario is building up to 100 10-megawatt wind farms, and the Atlantic provinces are building some medium-sized projects.
Since Canada’s wind industry has grown rapidly during the past decade, it has become cost-effective for wind turbine manufacturers to set up shop in Canada. The Montréal–Québec City corridor is now home to several manufacturers, and southwestern Ontario and Toronto have also seen new and existing companies manufacture wind energy components. Another potential area for manufacturing growth is Saskatoon, Saskatchewan, where three major wind projects have already been constructed. Long a mining and heavy industry town, it has the industrial infrastructure to handle large-scale manufacturing projects.
Good for Business, Good for Canada
