The cumulative capacity of global offshore wind (OSW) has grown at a dramatic rate in recent years, increasing by 25-40% annually since 2011. Due to increasing industry maturity and the development of a specialized supply chain to support the industry, realization of economies of scale, and other factors, the levelized cost of energy from OSW has decreased significantly, which is an encouraging sign for development of this industry in North America.
This report illustrates how European OSW projects have realized dramatic cost reductions, and how the emerging US OSW industry can benefit from this experience. The European OSW industry started over twenty years ago, and currently has over 12,000 MW in commercial operation, while the US only installed its first 30 MW project late last year. With an installed fleet of 3,589 OSW turbines and larger turbines being offered by OSW turbine manufacturers, European projects are offering prices, before consideration of transmission costs, that are competitive with forecast wholesale market prices, promising a market that is sustainable and not dependent on government policy support.
Power Advisory client Environmental Defence published its backgrounder on Ontario’s electricity prices on February 2, 2017. The report provides evidence that renewable energy – wind, solar and bioenergy – accounts for a relatively small part of provincial electricity bills.
Power Advisory LLC Q4 Ontario Market Report now available.
Over the past few months, there has been much concern (and justifiably so) over rising electricity costs to Ontario’s customers. In part due to this concern, the Ontario Government suspended the Large Renewable Procurement and just announced cancellation of the last round of procurements under the Feed-in Tariff Program. Clearly, there is now heightened awareness to cut costs within Ontario’s electricity sector.
We believe these cost issues are pushing the Ontario Government to find avenues towards potential resolutions, and one of these avenues is the Independent Electricity System Operator’s (IESO’s) Market Renewal Initiative. This is evident based on the Ministry of Energy’s remarks at the Association of Power Producers of Ontario’s annual banquet on November 15, 2016 and then at the November 28, 2016 Empire Club of Canada luncheon.
While Ontario’s wholesale electricity market should evolve through the Market Renewal Initiative, many Ontario-specific conditions and factors must be taken into account. First, Ontario’s Climate Change Action Plan will serve as a foundation within the forthcoming Ontario Government’s revised Long- Term Energy Plan which will set electricity policy. Therefore, evolution of Ontario’s wholesale electricity market must result in outcomes to meet policy objectives. Second, Ontario’s supply mix is heavily ‘baseloaded’ with a very high concentration of non-emitting resources with high fixed costs and low marginal costs. We believe this supply mix will pose unique challenges to evolve Ontario’s wholesale market design, and therefore somewhat limiting application of some components of the U.S. wholesale market designs. Because of these challenges, any wrong turns in the evolution of Ontario’s wholesale market could actually result in higher costs to Ontario’s electricity ratepayers – so let’s take the time to get it right!
On November 23, the Government of Alberta announced its intention to create a capacity market within Alberta’s wholesale electricity market, and released a detailed Alberta Electricity System Operator recommendation paper titled Alberta’s Wholesale Electricity Market Transition Recommendation that provides background and support for the changes being made.
The Electricity Market Transition Report can be found here.
Power Advisory’s summary and commentary on the Government of Alberta announcements is available below.
The following day, the Government announced it had concluded agreements with the coal-fired generation facility owners to cease operation by 2030. These developments are part of fundamentally defining a different path going forward for Alberta’s electricity sector than the one it has been following for almost the past 20 years.
The Coal-Fired Generation Agreement Announcement can be found here.
Power Advisory’s summary and commentary on the Capacity Market Recommendation report is available below.
Transmission developers are moving quickly to prepare to participate in the forthcoming Massachusetts Clean Generation RFP including Anbaric/National Grid (Vermont Green Line) and Emera (Atlantic Link), as the recently released working schedule indicates a proposal submission deadline of June 2, 2017.
For an update on these transmission projects and the full Mass. Clean Energy Generation RFP schedule view the client note here.
The government of Saskatchewan denied a permit for a 177-MW wind power facility proposed by Algonquin Power & Utilities Corp. The project was proposed for the Chaplin area, about 200 km west of Regina in the southwest corner of the province. The key rationale for denying the permit was the danger posed to migratory birds. The Chaplin area is home to a shorebird sanctuary and is a major migratory route. Algonquin was initially awarded a contract in 2012 for the facility under an RFP held by SaskPower, and has stated that it will now be seeking to find an alternative site for the development.
The Chaplin Wind Project was rejected after being the first to undergo a provincial environmental assessment. The provincial government has also released new guidelines for the location of wind power projects. Wind farms will have to be located more than five kilometers from environmentally sensitive areas like parks, ecological reserves and some of the province’s biggest rivers. In effect, the province has developed an exclusion zone that highlights areas wind cannot be developed, but locating outside the exclusion zone does not negate the requirement to undergo site assessments but is intended to streamline the approval process.
The development of clear siting guidelines for Saskatchewan wind projects is of particular importance given the ambitious goals the province has announced. The province is expected to put out an RFP for about 200 MW of wind capacity in early 2017, and by 2030 expects to add about 1,600 MW to 1,800 MW of wind capacity by 2030. These totals are incremental to the Algonquin facility.
Power Advisory would welcome the opportunity to assist clients evaluate opportunities offered by participating in SaskPower’s forthcoming Wind RFP. We offer a broad understanding of Saskatchewan’s electricity sector and critical success factors in power supply RFPs.
Today the Alberta Government announced a firm target of 30% renewable energy by 2030. As part of this firm target, the government will support an additional 5,000 MW of renewable generation by 2030 (see here). The 30% target had not previously been identified as a firm target, and prior indications had been that the support for renewables would be 4,200 MW by 2030. As such, this announcement marks a strengthening of renewable targets for Alberta.
The 30% energy target will be achieved mainly through the Renewable Electricity Program (REP) that targets large-scale grid renewables. The Government’s news release states that “the province will solicit enough investment in Alberta’s electricity system to meet the target, while ensuring projects come online in a way that does not impact grid reliability and is cost-effective”. The government expects that $10.5B of investment in Alberta renewables will be supported through this initiative.
A few high-level details were released, re: the REP:
- Projects to be based in Alberta;
- Only new or expanded projects;
- Projects must be 5 MW or greater;
- Projects must meet the Natural Resources Canada definition of renewable sources.
Further details on how the REP will operate will be released later this year and will be based on recommendations provided by the AESO. The Government is now working with AESO on detailed program design and remains on target to release details of the program in the coming months.
Work is also underway to improve Alberta’s rules around smaller-scale electricity generation, including micro-generation. Government is engaging expert stakeholders on ways to make it easier for individual Albertans and communities to create their own renewable energy. These small-scale generation initiatives along with energy efficiency programs are being developed under the auspices of the newly created Energy Efficiency Alberta organization.
On September 1st, 2016, the Independent Electricity System Operator (IESO) released the Ontario Planning Outlook (OPO) 2016. The OPO serves as the IESO’s technical report on the Ontario Power System, with a planning period of 2016 through to 2035.
Power Advisory’s summary and commentary can be found on our reports page (click here)
Travis Lusney, Director at Power Advisory LLC (Power Advisory), was retained to be the technical lead for a consortium of over 20 potential Large Renewable Procurement (LRP) II participants representing different technology types (e.g., solar generation, on-shore wind generation, hydroelectric generation, and bioenergy).
As the technical lead, Power Advisory developed a new connection assessment process for the LRP II process and presented the proposed process with participating entities, including industry associations (i.e., Canadian Wind Association (CanWEA), Canadian Solar Industries Association (CanSIA), Ontario Waterpower Association (OWA), etc.). Power Advisory built consensus within the consortium by preparing technical briefings, leading group discussions and clearly understanding and incorporating individual entity’s needs. The draft consortium positions were presented to the Independent Electricity System Operator (IESO), who is overseeing the LRP II procurement and is the integrated system planner for Ontario.
Power Advisory was well positioned to be the technical lead for potential LRP II participants. Travis Lusney is a former transmission power system planner and was a lead on the initial development of the Transmission Availability Test (TAT) and Distribution Availability Test (DAT), the connection assessment processes first used in the Feed-In Tariff (FIT) program, and subsequently used in the LRP I process. Since joining Power Advisory, Travis has been an essential resource for a wide variety of clients seeking an understanding of the Ontario power system and developing a strategy for project development. Travis’ deep knowledge of the Ontario power system and extensive understanding of the opportunities and shortcomings of connection capability are valuable resources for leading changes to the LRP II connection assessment process.
Power Advisory has a history of successfully leading and advising consortium of developers on a wide range of electricity sector matters. Power Advisory successfully negotiated changes to the IESO market rules and IESO contracts related to integration of variable transmission connected renewable generation into the IESO electricity market.
For further information, please contact Travis at email@example.com
On June 30, 2016, the Massachusetts Senate passed energy bill S.2372. The energy bill is part of an effort to diversify the state’s energy mix and comply with greenhouse gas emissions reduction requirements. The energy bill is expected to have a significant impact on the long-term energy policy and opportunities for renewable energy development.
Power Advisory Review of Clean Energy Generation Senate Bill