For Canadian developers, such arrangements can help hydro projects gain support and also provide an enticing option for American utilities looking to bolster their own renewable portfolios.
"In 2005, we were 5 percent renewable and 95 percent coal," McMillan says. "At the end of last year, we were 20 percent renewable and 80 percent coal. By the end of next year, we'll be at 25 percent and 75 percent and headed for something like one-third, one-third and one-third in coal, renewable and gas in market purchases. That's kind of the game plan, and Manitoba is crucial to that."
The Politics of Hydro
Cross-border relationships between the U.S. and Canada will be thrust onto an even more prominent stage as parties in both countries begin preparing to negotiate the terms of the Columbia River Treaty.
The treaty, established in 1964, affects how groups on both sides of the border develop and manage resources along the 1,200-mile-long river. The document states that either country can cancel most of its provisions after September 2024 with a minimum 10-year notice, meaning treaty talks will likely begin in 2014.
With American negotiations being coordinated by the U.S. Army Corps of Engineers and Bonneville Power Administration, and Canada's coordinated by provincial utility BC Hydro, a number of issues have emerged since the treaty went into effect. Amongst these are ecosystem-based functions, navigation, recreation, irrigation and climate change, in addition to considerations for indigenous groups in both countries that are absent in the original treaty. Both groups collected public comments in fall 2013, with more focused recommendations expected in 2014.
Even though CHA will not have a direct hand in the treaty's negotiations, Irving said the 50-year-old agreement still stands as a model of cooperation. "As it comes open for re-discussion and renegotiation, I think it is a good opportunity for everybody to remember the mutual benefit that has been achieved on that shared waterway," Irving says. "I think most parties will be able to look back on a lot of positive achievements and should be able to build on those going forward."
Hydro policies are also being discussed at Canada's federal level, with the government passing bills C-38 and C-45 to improve environmental regulation. They were "omnibus bills," meaning they were broad in scope and amended or replaced existing laws.
The government stated that it wanted to reduce regulatory duplication within federal jurisdiction and between federal and provincial levels. It also wanted to focus regulation on significant environmental risks, obligate officials to render timely decisions and strengthen enforcement. Officials are completing the regulations and implementation policies needed for the new legislation.
During 2013, there was a cabinet shuffle that saw several Ministers change departments, and a new session of Parliament was initiatied with a new legislative agenda. Despite these interruptions, work on regulatory improvements continued and many of the changes relating to hydropower are now in force, with the remaining regulations anticipated to be implemented by the end of 2013.
Observers believe hydro may see benefits from the regulatory improvements. In the past, hydro projects faced much longer approvals than competing projects.
"The perennial difficulty for hydropower is, of course, its high up-front capital costs," Irving says. "But I think here in Canada, we're getting better at understanding that the renewables could and should complement each other. There's a fairly good understanding that in a place like Canada where you have 60% hydropower, it is a good place to be able to bring on other renewables because you have that reliable baseload backup that hydro gives."
At a more local level, Ontario Minister of Energy Bob Chiarelli recently said, "hydroelectric power is a central pillar of the government's renewable electricity portfolio," while officials in other provinces have also made similar proclamations.
The benefits of hydro's initial costs ultimately pay dividends, Irving said, noting that Manitoba and Quebec — both of which feature about 98 percent hydro in their energy mixes — have some of the lowest power rates in North America. "There is a long-term economic advantage that we offer," Irving says. "It's proven itself and it's undeniable."
Combined with its many other attributes, hydropower's long-term payoff makes the sector's future in Canada bright. "It's a good news story, and it continues to make us one of the cleanest and most renewable generation systems in the world," Irving says.
This article was originally published on HydroWorld and was republished with permission.