Plans to harness wind as a source of electricity are surging across Canada as policymakers, power utilities and developers rush to support the growth of green alternatives to carbon-based fossil fuels such as oil and gas.
That spells big business for law firms, which are busy advising clients on climate-change strategies and helping them identify and pursue opportuniites in the “clean-power” sector.
In May, Hydro-Quebec, the government-owned electricity utility, awarded $5.5-billion worth of wind farm projects to be built over the next seven years, the largest single tender issued so far for wind power production in the world.
If all goes to plan, the addition of 2004 megawatts (MW) of wind generated electrical power to 1,000 MW of wind farm power tenders awarded in 2005 will be about 10% of general electricity output by 2015.
British Columbia also jumped into the push for renewable energy in June, issuing a “clean power call” for registration of proposals by Aug. 12 for the provision of 5,000 gigawatts – or enough to supply about 500,000 homes – from renewable energy sources including (but not exclusively) wind so the province can become electricity self-sufficient by 2016.
In May, Ontario launched the third phase of a renewable energy program it began in 2005 and is seeking to add 4,600 MW of wind energy to its system by 2020. Smaller projects are taking hold in Manitoba, the Maritimes and Saskatchewan. Even oil-rich Alberta has diversified into wind, with 524 MW in installed capacity.
The rule of thumb in the wind farming industry is that one megawatt is enough power to generate electricity for 1,000 families (industrial calculations would be more than that).
Driving the thrust into wind power, say some lawyers busy working on proposals for wind farms across the country, are policy shifts by governments at all levels to lessen greenhouse gas emissions because of climate change and poor air quality in urban centres.
“Wind energy is the fastest-growing renewable energy type in the world,” said Andre Turmel, an energy and climate change law specialist in Montreal with Fasken Martineau, which acts for a German wind turbine manufacturer supplying the Canadian market.
“Up to 10 or more years ago, wind power technology was expensive. But now, with new technology, the price of oil and the search for renewable energy and carbon-free emissions, wind is much more interesting. Other renewable energy sources like biomass are limited [on an industrial level] and solar is expensive.”
Indeed, according to industry statistics, wind power has grown between 21% and 28% a year globally in the past six years. Last year alone, new wind turbines with a capacity of 20,000 MW were installed around the world for projects worth an estimated US$40.6-billion.
Along with the carbon elimination imperative, subsidies, tax credits, and new directives from governments and utilities obliging that a certain percentage of energy needs must come from green sources are underpinning the record growth for wind.
Many U. S. states now have so-called renewable portfolio standards whereby local energy loads have to be served by renewable forms of energy. And last spring, the European Community, a leader in carbon-tough measures, adopted a directive by which they aim to have 20% of industrial output provided by renewable energy by 2020.
“It is a combination of two things – concern for the environment and the willingness of the power authorities to pay premiums in order to get renewable energy,” said Ernie Belyea, an electricity specialist with Bennett Jones in Toronto and the former senior corporate counsel at the Ontario Power Authority who drafted the renewable energy standard-offer contract used in the province.
Financial support from the federal government in the form of a 1¢-per-kilowatt-hour production incentive payment for the first 10 years of operation gave a boost to the Canadian industry and is already fully allocated through to the end of next year.
As well, Ontario recently put on hold a program that paid wind developers 11¢ per kWh for small projects under 10 MW, because it was so successful and there were concerns developers were carving bigger projects up to take advantage of the scheme.
While wind projects are picking up speed, not everything is smooth sailing yet.
Veteran electricity specialist Linda Bertoldi, chairwoman of the electricity markets group and co-chairwoman of the energy markets and infrastructure group at Borden Ladner Gervais in Toronto, said the intermittent quality of wind energy production – power is produced only when the wind blows – is a big challenge for policymakers, who must be able to ensure power grid supply stability.
“They are all trying to optimize wind as a [renewable] component, but the reality is that the transmission system doesn’t work as efficiently as it should because it wasn’t designed for this intermittency and because we do not have the [existing technology] to store the energy that wind can produce,” Ms Bertoldi said.
For now, those limitations mean utilities may have to limit energy provided from wind to roughly a quarter of total energy supply.
Ron Hansford, an energy lawyer with Gowling Lafleur Henderson in Calgary whose practice is now exclusively devoted to wind projects, said transmission capacity is another issue affecting the future of wind power.
“Wind farms are in isolated areas and where the wind blows there may not be a transmission line from that spot to the area where the electricity will be consumed,” Mr Hansford said.
Fasken Martineau’s Mr. Turmel also pointed to the extensiveness of the regulatory approvals process for land use, environmental assessments and consultations with citizens who may be in favour of clean energy but may become opponents when huge wind turbines – quieter now because of new technology – are placed within their view in rural communities or on nearby agricultural land.
Despite the challenges, wind farming is a lucrative activity for developers who get their sites right, said Ilan Dunsky, chairman of the infrastructure group at Heenan Blaikie in Montreal, who represented two successful bidders out of 15 chosen in the Hydro-Quebec round and is also advising Egypt and other governments on wind power projects.
“It is largely a real estate play,” said Mr. Dunsky, adding the average development cost has risen to $2-million per MW because of the high demand for turbines – which are now on backlog for up to three years – and the cost of steel needed to build them. “If you get the right site where the winds are strong and steady you, could have your turbine running 50% of the time and per kilowatt hour make a good return on investment.”
Developers in competitive bids such as those in Quebec assume the risk of building and operating projects, but they receive guarantees that all of their wind power will be purchased through agreements extending over 20 to 25 years.
The return for law firms is also promising.
Said Gowlings’s Mr. Hansford in Calgary:
“It is a new frontier, a whole new era. These are high-capital, intensive projects and it is kind of like the old days in the oil and gas business.
“When you are doing a wind-development project, you are doing everything from land use and financing to the regulatory process and all the parts in between.”
Published: Wednesday, July 23, 2008
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