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Wind power sector eager to deliver on promise  

Credit:  By Scott Simpson, Vancouver Sun, www.vancouversun.com 4 February 2012 ~~

As Christy Clark’s Liberals tie British Columbia’s economic future to an unprecedented natural gas boom, proponents of the province’s renewable energy resources hope for an opportunity to join in.

B.C., predisposed to both massive and small-scale hydro-electric power development, has been one of the world’s laggards in terms of wind energy. Independent power producers say B.C. has tremendous potential for wind power development – but so far, BC Hydro’s preference has been for small-scale hydro projects in the private sector, as well as promotion of its $8-billion Site C hydro megaproject.

A handful of wind projects have come onto the BC Hydro grid since the province began aggressive recruitment of private sector power supply development in 2003 – and it’s not clear when BC Hydro will issue another call for bids to develop additional wind power supply to feed the provincial grid.

On Friday, Clark announced that BC Hydro will lower the electricity supply targets for independent power producers, which apparently means less aggressive expansion of renew-able energy development.

The emergence of technology to exploit vast new natural gas resources in the northeast, lucrative Asian markets for liquefied natural gas (LNG), and a series of large-scale mine development opportunities in the northwest are forcing the province to rethink its strategy of supporting incremental expansion of green electricity supply for industry.

As the Canadian Wind Energy Association (CanWEA) noted in a 2011 report prepared by consultant Steve Davis, B.C. industrial power demand by 2017 could be double what BC Hydro forecast as recently as 2010.

The fastest way to get substantial new power supply onto the market is with gas-fired generation – perhaps in Kiti-mat where two emission-heavy industrial operations, a methanol production facility and a pulp mill, shut their doors for good in the last decade.

You could get a gas generation plant operational in three or four years in a sympathetic regulatory climate, compared to what appears to be a decade-long effort to bring the Site C hydro project on-grid.

One of the drawbacks to adding gas-fired generation, especially on the large scale required to support production of LNG, is that it pushes B.C. out of line with its medium-term CO2 emission reduction targets.

Apparently as a counter-measure, Clark said B.C. will look for green power projects to support demand from as many as three LNG plants.

That could mean a simple rebranding of some wind power projects that were accepted by BC Hydro in 2010 and are awaiting only regulatory approvals in order to proceed, or it could mean targeting new opportunities in the north.

Wind power developers, particularly those with successful projects and leases on Crown land with strong potential for additional energy production, are holding their breath.

Global demand for wind energy, particularly from China, is pushing down the cost of equipment, which means that an unprecedented buyer’s market has emerged for utilities that want an inexhaustible source of green power.

A recent study by Alberta-based electricity developer TransAlta indicated that the levelled cost of adding wind power is dropping even faster than generating power from natural gas – despite crashing natural gas prices in North America.

TransAlta projects the cost of wind will drop in that province from about $80 per megawatt today to less than $65 by 2030, thanks to technology refinements and demand growth

– compared to decline from $73 to $67 for gas-fired generation over the same period of time.

In residential terms, that means the wholesale cost of a kilowatt hour of power from a wind source would drop from eight cents to 6.5 cents in Alberta by 2030. Right now in Alberta, the retail price of electricity for a residential customer is about 10 cents per kilowatt hour Wind, according to Trans-Alta, is “nearing [the] point of being competitive without subsidies.”

ExxonMobil, in an “energy outlook” report, pegs onshore wind power as the world’s cheapest power source by 2030, when carbon taxes are factored in.

“Wind energy is in the pro-cess of becoming the lowest cost source of energy around,” echoes Juergen Puetter, president of Aeolis Wind, an independent power producer based on Vancouver Island.

“It hasn’t been in the past. Early on it was heavily subsidized. But a number of things have converged to make it competitive.

“The technology has got bet-ter. The turbines have got larger. They are able to extract more energy from a given location. The efficiency of the turbines has got higher. But perhaps most importantly is the fact that we now have competition.

“In the beginning of wind turbine development, up until about 2008 before the crash, it was a seller’s market.

“There were no salespeople for wind turbines. There were orders allocators, or people that would be gracious enough to sell you a turbine at some ridiculous price. There was no competition. That has totally changed and prices have come down.”

Aeolis is one of several B.C.-based companies that holds leases for future wind power development on large tracts of Crown land around the province.

Puetter, a pilot, used his own aircraft to sniff out potential wind resources – particularly in northeast British Columbia, on the eastern foothills of the Rocky Mountains.

The company partnered with AltaGas to develop the Bear Mountain wind farm near Daw-son Creek before selling it to the Alberta company.

Aeolis’ signature project, Thunder Mountain, located near Tumbler Ridge, has yet to win a supply contract from BC Hydro, but Puetter believes its time is coming.

“We now are facing a situation where B.C. is looking at unprecedented growth in demand for energy due to mining, shale gas and the LNG facilities.

“We are not only confident. We have done ultra-detailed analysis to know that we can sell power to BC Hydro cheaper than Site C. That puts [Thunder Mountain] well below $90. Site C is closer to $90-$95 and most likely will go up over time.”

It’s also an immense resource, he said, with potential for 1,500 turbines with a total generating capacity of 4,500 megawatts.

“It was a wind developer’s dream come true. There were long ridges, flat on top, devoid of vegetation in many cases, with an occasional tiny tree – and miles and miles and miles of it. I couldn’t believe what I found.

“I felt like the dog that caught a bus. I had way more wind power potential than I could realistically expect BC Hydro to buy.”

Paul Manson of Sea Breeze Power Corp., had a similar “eureka” moment a decade ago when he and business partner Tony Duggleby started looking at wind resource opportunities in B.C.

“We began to realize that British Columbia, being essentially a virgin territory for this technology, and having what appeared to be an excellent resource, would have lots [of wind potential].

“I think when we started the total wind potential estimated for the province was 1,600 megawatts. It was only in the summer of 2002 that an independent study financed by the Tides Foundation and Green-peace came out with estimate of around 7,500 megawatts in three separate regions of the coast.

“About a year later we came across another study by the World Energy Council and the Petroleum Economist which identified the coast of British Columbia as having the most economic wind resource in the world.”

By then, Sea Breeze had identified an area on the northern tip of Vancouver Island on Knob Hill plateau, near Cape Scott Provincial Park.

“In many parts of the world wind farms are sited on ridges and so it’s one single line of turbines. The beauty of the [Knob Hill] plateau is that if the wind resource is sufficient you can end up with a matrix or a grid which can substantially improvement the economics,” Manson said.

Sea Breeze sold the first phase of what it’s calling the Cape Scott wind farm to an Ontario company, International Power Canada, that was subsequently taken over by French multi-national GDF Suez. The local company remains a party to the development.

The project was fully permit-ted, but resubmitted to federal regulators last December after Sea Breeze proposed changes to the transmission route linking the wind farm to the BC Hydro grid on Vancouver Island near Port Hardy.

Pending that approval, construction will commence this year. Sea Breeze retains ownership rights over subsequent phases of the project.

James Griffiths, Sea Breeze wind development manager, believes Cape Scott has been a success because the company “did our homework” in scoping out the scale and cost to produce the resource.

That doesn’t always happen. A few years ago, developers of a northeastern B.C wind farm went broke after overestimating the amount of electricity it was capable of producing.

“Obviously you want to be competitive, going into a call, and an independent power producer wants to come out with a contract – and to do so has to put in a low bid,” Griffiths said. “But if your bid is too low, and the quality of the resource doesn’t bear out, and you can’t get that project financed at the end of the day, that’s a really difficult thing to face.

“I’m proud that with every-thing we learned about the site, we did put together a picture that has borne out. The new owner has been able to finance it and it looks very much like it will be built based on [our] assumptions.

“There is still some prospecting and greenfield activity going on in B.C., bringing projects up from nothing but really … every-one sort of agrees that a lot of the good sites have been identified and the game now is to pick out which are the good ones and which are the ones worth investing into.”

Source:  By Scott Simpson, Vancouver Sun, www.vancouversun.com 4 February 2012

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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