Prince Edward Island’s government has raised $5-million for a wind-power project at the eastern tip of the province by issuing a novel series of “energy savings bonds” to the public.
The bonds, which pay a healthy 5-per-cent annual interest rate, have been a hot seller since they were first issued late last year to help pay the costs of the 10-turbine Eastern Kings wind farm, a government project that began pumping power into the provincial grid in January.
More than $1-million worth of the provincial-guaranteed bonds were sold in the first month; sales are now at the $5-million mark. The bond issue has been capped at $20-million. Only islanders can buy the five-year bonds, which are sold through credit unions or at the provincial treasury. Each can buy up to $10,000 of bonds in a calendar year.
The idea behind the bonds was to “make this wind development one that islanders really own,” said Jamie Ballem, PEI’s Minister of Environment, Energy and Forestry. While other wind projects have been developed by private investors from outside the province, “we wanted this one to be ours,” he said.
The project was initially financed through the provincial treasury, so the money gleaned from the bond issue is actually being used to pay down that debt, Mr. Ballem said.
He said the success of the bond issue is partly because of public concerns over the environment, but it also reflects the thirst of islanders to invest in local public projects. “There’s a pride in ownership. For once, we’re doing it ourselves. We’re not getting an investment firm or a big pension fund coming in.”
PEI is emerging as one of Canada’s leading wind-power players, at least in the proportion of electricity generated by wind. With the 30 megawatt Eastern Kings project plus 10.5 MW from wind turbines at North Cape at the northwestern tip of the province, about 12.5 per cent of PEI’s power comes from wind. That will rise to 15 per cent by the spring, when other projects come on stream.
Some other provinces foresee problems when wind reaches about 10 per cent of power generation, because wind’s variability can destabilize a power grid, but that’s not as big an issue in PEI, Mr. Bellam said. The province, with regions known for strong, consistent winds, could likely generate as much as 20 per cent of its power from wind, he said, because it can balance variability by drawing on the large power grid of the Maritime provinces.
Mr. Bellam said there is little public opposition to wind farm construction in PEI, partly because of the way the province pays the 2.5-per-cent royalty to local landowners. Seventy per cent of the money goes to those who have the turbines on their properties, but 30 per cent is paid to adjacent landowners who would otherwise get nothing.
The 5-per-cent yield on PEI’s energy bond issue is considerably higher than the interest paid on Canada Savings bonds – currently slightly more than 3 per cent. But the PEI bonds can be cashed in only at the end of the five-year term, while CSBs are more liquid.
While the $10,000 maximum purchase appears to be plenty for individuals, Mr. Ballem said, some non-profit groups want to buy more, so the province is looking at moving the limit higher in some cases.
It is also considering public bond issues to pay for other renewable energy projects, such as the creation of biofuel or biomass plants. “The more that we can own and be in charge of our own destiny, the better off we’re going to be,” he said.
By Richard Blackwell
13 March 2007
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