An ill wind blowing; Limited power grid, high transmission tariffs and an abundance of natural gas handicapping regional wind plans

Wind energy developers in the Maritimes eager to export to New England are bumping into barriers, including a limited power grid, high transmission tariffs and the abundance of cheap natural gas, a new study says.

Despite the growing appetite for clean energy in the northeastern United States, the study commissioned by the Canadian Wind Energy Association found the road to the lucrative market littered with obstacles.

“We have the resources to generate wind energy in the Maritimes but the problem is moving it to the market,” said Jean-Francois Nolet, the non-profit industry association’s Atlantic Canada policy manager. “The reality right now is that our transmission lines cannot handle the increasing demands.”

The study estimates New England will require about 4,200 megawatts of renewable energy capacity over the next 11 years, with about 60 per cent from wind. While the region may not be able to produce the required amounts of green energy, the provinces of New Brunswick, Nova Scotia, and Prince Edward Island could develop between 5,500 and 7,500 megawatts.

“There is a premium market for green energy, which has huge potential for economic development in the Maritimes,” Nolet said. “We have to overcome the transmission challenges.”

But it’s not only the grid’s limitations putting a damper on wind exports to New England. Because wind power from the Maritime provinces must go through New Brunswick before reaching the U.S., the study found that power not originating in New Brunswick faces two transmission tariffs, one in the province of origin and one in New Brunswick.

“We call this rate pancaking,” said John Dalton, the report’s author and president of Massachusetts-based Power Advisory LLC, an advisory firm specializing in electricity market analysis. “It makes sense to look at better integrating these markets so you only pay one transmission tariff.

“At first blush New Brunswick would seem to be the loser here,” he added. “But by allocating the costs of more transmission lines fairly the provinces could easily equalize things. And even if the fees are lower a greater volume of wind passing over the lines would benefit New Brunswick.”

Another hurdle facing wind exports to the northeastern U.S. is the cheap and plentiful supply of natural gas, which is dragging down the price of wind power. Despite renewable energy mandates in the six New England states, Dalton said the low price of natural gas and uncertainty in the market has discounted the value of renewable energy.

“Today the economics are not as compelling as they were as recently as 18 months ago,” he said. “But our expectation is that these conditions will return because the market and demand in New England is so large.”

The study also said because Canadian wind energy projects do not have access to the same incentives as those in the U.S., wind project developers may overlook the Maritimes.

But Dalton said Atlantic Canada has better wind resources with lower project construction costs.

“In New England the most promising sites are on ridge tops and remote locations — areas that are more costly to erect wind turbines,” he said. “So the Maritimes can still compete and have a cost savings.”

Brett Bundale
Telegraph-Journal

nbbusinessjournal.canadaeast.com

10 July 2009

Tags: Wind power, Wind energy

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