Renewable energy's fortunes in Canada lean heavily on government support, making 2011 a particularly crucial year in places like British Columbia, Alberta, Saskatchewan and Ontario where political leadership changes are underway and elections are scheduled.

As in the United States, renewable energy in Canada depends largely on public policy goals set not at the federal level but at the provincial and territorial levels. And on that score there's a mixed bag of support and initiatives across Canada's 10 provinces and three territories.

"The federal government has an extremely limited role," said Robert Hornung, president of the Canadian Wind Energy Association.

Canada's dominant energy resource (renewable or otherwise) is hydroelectric power, much of it generated in the sparsely populated and water-rich north for transmission to the more urbanized south and, in the case of Quebec especially, exported to the U.S.

Playing a smaller but growing role in the country is wind, solar, biomass and geothermal. By the numbers, Canada's installed generating capacity in 2009 was 125,485 MW with 60 percent derived from renewable resources, most of it hydro. In British Columbia and Quebec, hydro generation meets around 90 percent of electricity demand. But BC is a net importer of electricity while Quebec is a net exporter. Alberta and Saskatchewan are rich in oil and natural gas resources while coal is an abundant natural resource in Manitoba and northern Ontario. Nationally, nuclear generation comprises 20 percent of installed capacity, coal 15 percent and natural gas 5 percent.

Wind and solar are gaining footholds in Ontario, Canada's most populous province, through what may be North America's most aggressive feed-in tariff (FIT). The tariff, enacted in October 2009, has propelled Ontario to trailing only California in North American solar energy market activity.

Investors favor feed-in tariffs because they are sure of the money that will be flowing upfront into a project, said Elizabeth McDonald, president of the Canadian Solar Industries Association. "It's an excellent program."

In 2005, the government said Ontario would stop using coal for electricity in 2007, but later said that target was unrealistic and that some units were needed for grid stability. In 2006, the province pushed back the deadline to close 6,400 MW of coal-fired capacity until 2014. Four units, representing 2,000 MW of capacity, were shut last October.

Across Canada, an estimated 19,000 MW of generating capacity is likely to retire by 2025. Another 45,000 MW of generating capacity is expected to be needed to meet current growth projections. The federal government committed to seeing 90 percent of Canada's electricity generated by non-emitting sources by 2020. It also committed to reducing greenhouse gas emissions to 17 percent below 2005 levels by 2025. That goal grows to 60 to 70 percent below 2006 levels by 2050.

Even so, an uncertain future remains, perhaps no more so than in Ontario where a provincial election is set for Oct. 6. The opposition Conservative Party has used rising electricity costs to campaign against the ruling Liberal Party. Recent polls show the Conservatives leading among likely voters with months remaining before the election. Political watchers note that as little as 35 to 40 percent of the popular vote can elect a majority government, which means renewables must enjoy broad-based popular support.

"Ontario is the largest province and it attracts a lot of attention," said Jon Worren, co-founder of ClearSky Advisors based in Toronto. The province's feed-in tariff aims to build popular support because it contains a local content requirement. For wind projects, 25 percent of total project content must originate in Ontario in 2011; that level rises to 50 percent in 2012. For solar, the domestic content requirement rose from 40 percent in 2010 to 50 percent in 2011 and is to reach 60 percent in 2012.

Designed to promote job creation in an area hard hit by declines in traditional manufacturing such as autos, the local content mandate has led dozens of manufacturers to set up shop in the province. The province now has 18 solar panel and 15 inverter manufacturers. Prior to the FIT the province counted one manufacturer each for solar panels and inverters.

"In terms of manufacturing, the domestic content requirement has been quite successful," Worren said.

Through the province's FIT program, the Ontario Power Authority (OPA) has approved 40 new large-scale renewable energy projects including solar, wind and water that will attract Can$3 billion (US$3.04 billion) in private sector investment, according to the Ontario Ministry of Energy.

These projects represent more than 872 MW of renewable power, including 35 solar projects totaling 357 MW, four wind projects totaling 615 MW and one 500 kW water project. The government said these projects will result in at least 240 more wind turbines and at least one million more solar panels in Ontario.

Canada's wind industry is expected to install 1 GW of generating capacity in 2011, CanWEA's Hornung said. Commitments suggest an additional 4,000 to 12,000 MW could be installed by 2015. What may happen after 2015 is "unclear" because, aside from Nova Scotia, no province has set a formal goal beyond that date. As a result, he said, few signals exist to encourage long-term planning, although developers need to be working now on projects that will sustain growth after mid-decade.

Ontario's photovoltaic market is expected to reach cumulative installations of 2,650 MW by 2015, according to a February report by ClearSky Advisors. In 2011, 455 MW of new PV installations are expected to be added. Delays during the permitting process will push most FIT utility-scale demand back into 2012 and 2013, the report said. An increasing number of suppliers along with reduced global costs and delayed demand have combined to drive down the expected cost of modules in Ontario. By the second half of 2011, module supply constraints likely will be eliminated.

With around 2,450 MW of existing solar contracts, Ontario's PV market will "experience strong growth from 2011-2012," the report said. After 2013, the market will "shrink significantly" in response to ratepayer concerns, transmission constraints and the limited size of Ontario's electricity market (the province's population of 13 million is less than one-third that of California).

Domestic content requirements restrict the amount of equipment available to developers in Ontario. Though there has been concern that development would be limited by supply shortages, sufficient supplies likely will be available to meet demand from 2011 to 2015.

The report said the foremost concerns of Ontario PV market participants are political and regulatory uncertainty due to three main factors: continual changes and delays in Ontario's FIT program, a FIT program review scheduled for 2011 and this autumn's provincial election.

"All of this uncertainty has combined to make Ontario a challenging market in which to operate," the report said. Long-term planning is "exceedingly difficult" for any business participating in Ontario's FIT program. A number of manufacturers have delayed investment in the province either by entering the market cautiously and waiting for more stability before expanding or by avoiding the market altogether.

"Uncertainty means risk," the report said. "This has made project financing more expensive and harder to come by."

As for wind power in the province, the Ontario government announced earlier this year it is not proceeding with proposed offshore wind projects to allow time for further scientific research to determine their impact on the environment. In a statement, the government said no renewable energy approvals for offshore have been issued and no offshore projects will proceed. Furthermore, applications for offshore wind projects in the FIT program will no longer be accepted and current applications will be suspended.

Onshore wind energy produced 1,056 MW of power during the 9:00 P.M. hour on Oct. 26, 2010, an all-time record, according to the Ontario Independent Electricity System Operator. Over the course of the day, wind supplied more than 5 percent of the province's electricity demand.

Canada ended 2010 with 754 MW of new wind energy capacity, representing $1.7 billion in new investment, according to CanWEA. This brings Canada's total installed wind energy capacity to 4,073 MW.

Canada currently has 3,549 MW of installed wind capacity. Ontario represents 1,248 MW, or one-third, of the country's total wind energy development. Another one-third comes from Quebec and Alberta with 663 MW and 656 MW, respectively. The remaining seven provinces account for the final one-third. CanWEA said wind energy has increased tenfold over the last six years.

One renewable technology that has yet to gain any foothold is geothermal energy. The country shares the same continental shelf and geology as the U.S., Mexico and Latin America and counts some 200 hot springs that have yet to be developed. But the federal government and the provinces both have so far failed to put in place policies and regulations to encourage geothermal development, said Alison Thompson, chair of the Canadian Geothermal Energy Association. She acknowledged the group's goal to have 5,000 MW of installed capacity by 2015 is unrealistic and said proponents hope instead that a similar amount of geothermal resource can be defined by that date. "We are quite comfortable with that number given production rates in the U.S. and Mexico," she said.

Educating policymakers remains a priority for Association members, she said. The Ontario FIT program includes every renewable energy resource available in the province but geothermal. And out of the C$1.3 billion allocated at the federal level as a production incentive, none was earmarked for geothermal. Efforts are underway to create permit and lease programs at the provincial levels and to have geothermal included in future feed-in tariff programs. One recent success came last December when the federal government offered tax breaks to resource exploration firms that drill for geothermal.

Unlike other renewable energy resources, Thompson said geothermal energy can be cost-competitive without extensive subsidies, especially in remote parts of the county where communities often rely on diesel for electric power generation. In portions of the Northwest Territories, communities can spend hundreds of dollars per megawatt-hour for electricity. "Geothermal comes in far below that," she said. In Alberta, which offers an incentive of $15 a tonne to reduce carbon dioxide emissions, geothermal could be competitive. And in hydro-rich British Columbia, which offers essentially no incentive, geothermal could be competitive on the grid, however, access to leases and permit remain major barriers.