Canada Introduces Market Incentive Program

During consultations on climate change, stakeholders suggested that governments can help reduce greenhouse gas emissions from electricity generation by stimulating demand for emerging renewable sources of electricity.

Ottawa, Ontario – October 31, 2002 [SolarAccess.com] The stakeholders proposed that governments show leadership by purchasing more power from sources such as wind, solar, biomass and ultra-low head hydroelectricity, and by providing incentives to electric utilities and customers. The Market Incentive Program (MIP) is a CAN$25 million (US$16 million) Government of Canada initiative through the Action Plan 2000 on Climate Change to stimulate emerging markets for renewable electricity. It aims to establish such emerging Renewable Energy sources as full-fledged competitors in the electricity market by 2010, and to reduce current and future GHG and other air emissions from electricity generation. Funding is available through the MIP until March 31, 2006. Under the program, electric utilities, retailers and marketers submit proposals for consideration by Natural Resources Canada (NRCan) and Environment Canada for projects to develop market-based programs and promote the sale of electricity from emerging renewable sources to residential and small-business customers. The Government of Canada will provide a short-term financial incentive of up to 40 percent of the eligible costs of an approved project, to a maximum contribution of CAN$5 million (US$3 million) per recipient. The program will be administered by NRCan. Projects are selected based on several factors, notably the ability to reduce greenhouse gas emissions and to stimulate “green power” markets. In return, participating distributors establish performance measures and report on these measures to the Government of Canada. The MIP complements another measure, the Procurement of Electricity from Renewable Resources program, that also aims to provide leadership towards the development of consumer markets for electricity from emerging renewable sources. This initiative commits the Government of Canada to purchasing electricity from these sources for federal facilities. The government currently has agreements to purchase wind energy for some of its facilities in Alberta, Saskatchewan and Prince Edward Island. One of the goals of these measures is to create momentum among consumers to choose Renewable Energy. Opinion surveys indicate that a significant proportion of consumers would voluntarily pay a cost premium for “green” power. Some electric utilities in Canada have already developed “green” power programs for their customers. Initial response has been positive and other utilities are planning such programs. In addition, electricity consumers in Alberta and Ontario are now able to decide on their supply based on the attributes of different generation sources. As a result of these measures, and on the continued momentum in the marketplace, 3,000 to 4,000 GWh of new annual production should be generated by 2010, reducing GHG emissions by about two megatonnes annually. Access: http://www.climatechange.gc.ca

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