For Canadian wind, the last few years have been pretty good. Growth has accelerated and by the end of 2011 its generating capacity totalled 5265 MW – of which 1969 MW were in Ontario – accounting for about 2.3% of Canada's total electricity demand.

The next few years are also expected to see rapid growth. On current forecasts of projected plants and those under construction, Canada will top 10 GW of wind energy by 2015. And the Canadian Wind Energy Association (CanWEA) has felt confident enough to outline a strategy in which wind energy hits 55 GW by 2025, meeting 20% of the country’s energy needs.

On current trends, this seems only slightly optimistic. More than 1300 MW of wind will be built this year, a modest rise from 1267 MW in 2011. Three provinces have reached major wind milestones: Ontario has broken 2 GW while Alberta and Quebec have each arrived at 1 GW of installed capacity. In Quebec, in fact, the 80 MW Saint-Robert-Bellarmin wind project means EDF EN Canada, a unit of French renewable energy group EDF Energies Nouvelles, will alone have more than 1 GW installed in the province by 2015.

New onshore projects are also being commissioned in British Columbia, Manitoba, Nova Scotia, Prince Edward Island and the Northwest Territories. In offshore wind, several potential sites have been identified on the north coast of British Columbia. Meanwhile, the boom in mining, gas and oil extraction in British Columbia, Alberta and Saskatchewan is expected to fuel demand for new sources of power generation. On the east coast, community wind programmes in Nova Scotia and New Brunswick are attracting attention.

The town of Pincher Creek, Alberta, known as the wind capital of
Canada due to its Chinook winds, has taken on a key role in the
rapidly growing wind power industry (Vestas Wind Systems A/S)

But the long-term view is less rosy. Several provincial electricity grids are reaching their limits for wind power integration. Low gas prices continue to erode opportunities in Alberta and are making wind less competitive in other markets. In addition, mounting public hostility to wind farms has brought extensive permitting delays and aggravated legal and regulatory challenges.

Ontario’s Backing for Wind

At a federal level, Canada lacks a comprehensive clean energy policy. But provincial support – in Ontario – has driven the country’s wind boom.

Ontario is currently the only province with a fixed feed-in tariff (FiT) for wind, launched in 2009 to encourage the development of renewable energy technology, attract investment and create new jobs as part of a plan to phase out the province’s coal-fired generation by the end of 2014. Ontario’s FiT programme foresees 7 GW of wind power projects by 2018. By most measures the programme has been a great success, exceeding the expectations of its backers. A scheduled two-year review of the FiT programme in October 2011 found that more than 2500 small and large FiT projects had been approved.

By the end of 2011, contracts for over 4750 MW of new renewable power had been offered and another 16 GW of applications were pending. Of the contracts offered, 3165 MW were for wind, with just 1332 MW for solar, 193 MW for hydro, and 63 MW for bioenergy. These contracts leveraged more than $10 billion in private investment and brought significant new wind manufacturing capacity. On the basis of this progress, Ontario expects to hit its target of 10,700 MW of non-hydro renewable energy generation by 2015, with 2900 MW of FiT projects currently moving through the Renewable Energy Approval (REA) process.

Yet the review also brought a 15% reduction in wind FiTs. The guaranteed rate for wind power from any source dropped from 13.5 Canadian cents per kWh to 11.5 cents, while prices for biomass, biogas, water and landfill mass were unchanged. Although the drop was less than some had anticipated, it provoked a mixed reaction from the renewables sector. Robert Hornung, CanWEA president, said the new price would prove ‘extremely challenging for many projects and could prevent a number of them from proceeding’.

‘This is particularly true for smaller projects and new entrants to the industry, reducing the number of communities and the diversity of players able to contribute to and benefit from the government’s ambitious objectives,’ he added.

The review also recommended a further study of Ontario’s supply and demand forecast through to the end of 2013 to determine whether an increase in the state’s renewable energy targets would be justified. ‘We made every effort to develop final recommendations that would balance the interests of all Ontarians, recognising ratepayers, community participants and the renewable energy sector,’ said Ontario’s deputy energy minister, Fareed Amin, who carried out the two-year FiT review.

While the cuts will lower the high returns investors have so far achieved from Ontario renewable energy investment, the government’s action has brought clarity to the sector, unblocking stalled projects, if they can overcome bureaucratic inertia. But regulatory uncertainty has clearly hit renewable energy project financing in Ontario. According to Clean Energy pipeline data, the volume of completed renewable energy project finance raised in the province fell to $1 billion in 2011, down from $1.2 billion in 2010. And while many FiT contracts have been approved, the province’s permitting process forms a bottleneck. The review suggests approval timelines could be cut by up to 25% if regulating ministries ‘better align approvals with the size and characteristics of a project, reduce duplication, improve service standards and streamline the process’.

Despite these niggles, and largely thanks to the FiT programme, Ontario has been able to close eight of its 19 coal-fired plants, and the rest are scheduled to shut by the end of 2014. Renewable technologies will have to make up the difference, throwing the spotlight back on wind, particularly offshore wind.

Ontario could develop 2000 MW of offshore wind power over the next 15 years, according to a report issued in late 2010 by the Conference Board of Canada, a non-profit research group. This would add between $4.8 billion and $5.5 billion to the province’s economy between 2013 and 2026, it concluded.

A Gathering Backlash

Unfortunately, prospects for offshore wind have faded in recent months after Ontario’s McGuinty administration put all plans for offshore wind power on hold in early 2011. The province also cancelled a contract with Windstream Energy for a wind farm on Lake Ontario and said it would not approve the four other projects on deck until it knows more about the impact of wind power within freshwater environments.