ABEnergyFutures 15

The Role of Renewable Energy in Albertas Energy Future
Paul Kralovic Dinara Mutysheva
Paper No. 15 of the Alberta Energy Futures Project
November, 2006
The Role of Renewable Energy in Albertas Energy Future i
Title: The Role of Renewable Energy in Albertas Energy Future Authors: Paul Kralovic and Dinara Mutysheva Affiliation: Paul Kralovic is Economist, Canadian Energy Research Institute, Calgary. Dinara Mutysheva is Economist, Canadian Energy Research Institute, Calgary. Copyright: Copyright held by Institute for Sustainable Energy, Environment and Economy (ISEEE).
The Institute for Sustainable Energy, Environment and Economy Room 220, CCIT Bldg. University of Calgary 2500 University Drive NW, Calgary, AB T2N 1N4 Ph. 403-220-6100; Fx. 403-210-9770; info@iseee.ca www.iseee.ca
The Role of Renewable Energy in Albertas Energy Future ii ABOUT ISEEE The Institute for Sustainable Energy, Environment and Economy (ISEEE) is a not-forprofit institute at the University of Calgary. It is an initiative of the President of the U of C, formed in 2003 and guided by a Leadership Board consisting of:
Robert Church, Chair Emeritus, Alberta Science and Research Authority (ASRA) Elizabeth Dowdeswell, Chair of Council of Canadian Academies and former
President, Nuclear Waste Management Organization (NWMO) Charlie Fischer, President & CEO, Nexen Inc. James Gray, Chair of Canada West Foundation Robert Mansell, Advisor to the President on E&E and Managing Director of ISEEE Granger Morgan, Head, Dept. of Engineering and Public Policy, Carnegie Mellon University Gwyn Morgan, Vice-Chairman, EnCana Corp. Neil McCrank, Chairman, Alberta Energy and Utilities Board Harvey Weingarten, President and Vice-Provost University of Calgary

ISEEEs Mission: Investing in collaborative, multidisciplinary and mission-oriented research, education and innovation for secure competitive energy, a clean environment and a strong economy. Funding: ISEEE and associated researchers receive funding from the University of Calgary, from a wide range of provincial, national and international granting councils and organizations (including Alberta Ingenuity, the Alberta Energy Research Institute, the Canada Research Chairs program, Canada Foundation for Innovation, the Natural Sciences and Engineering Research Council and the National Science Foundation), from various federal and provincial government departments, and from a wide range of private and corporate donors (the latter include Direct Energy, Enbridge Inc., EnCana Corp., Nexen Inc., Shell International/Shell Canada, TransAlta and TransCanada Corp.). Funding for the Alberta Energy Futures Project through a grant from the Alberta Department of Energy is gratefully acknowledged. The analysis, views and conclusions expressed in this study are those of the authors alone and should not be interpreted as reflecting in any way those of the Alberta Department of Energy or other sponsors of ISEEE.
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PREFACE
The energy sector has been a dominant factor in Albertas development and growth over the last half-century. The large capital investments and operating expenditures associated with finding and producing oil and gas have directly provided a major stimulus to the economy. But the indirect and induced impacts have been equally important. The development of many other industries supplying inputs to the energy sector, the generation of substantial export and government revenues, and the stimulus for large inflows of people have resulted in large multiplier effects. In combination, these have also played a major role in shaping Albertas character which is generally distinguished by its highly educated, adjustable and entrepreneurial labour force, low unemployment and high labour force participation rates, strong work ethic and sense of self reliance, and its optimistic outlook. In recent years the energy sector has become even more dominant and has increasingly made Alberta a key driver of the national economy. In a world with a rapidly growing demand for energy, having one of the largest concentrations of energy resources in the world might seem to translate into an assured, prosperous future. There is clearly huge potential associated with unconventional oil and gas, coal, remaining conventional resources and with alternative and renewable energy. However, translating this potential into reality will be daunting. Increasing constraints related to resource access, environmental impacts, infrastructure requirements, and availability of highly qualified people need to be addressed. Other challenges include the massive long-term investments in developing and implementing new technologies and making the right changes in the policy and regulatory framework. Indeed, the fact that relatively few nations have managed to convert resource wealth into high standards of societal welfare is a useful reminder of the magnitude of the challenges. Alberta is in many respects at a crossroads. On the one hand complacency will almost certainly mean a dimming of the provinces long-term prosperity. Declines in the conventional oil and gas sector will significantly dampen growth and prosperity. There are no other sectors of the provinces economic base that could realistically expand sufficiently to offset significant declines in the dominant energy sector. On the other hand, visionary, strategic investments today can unlock non-conventional and other energy resources critical to securing a strong and prosperous long-term, sustainable future for the province. It is in this context that ISEEE has undertaken a series of papers focused on Albertas energy futures. The intent is to take a longer term look at the challenges, opportunities and choices and what they mean for Albertas future.
The Role of Renewable Energy In Albertas Energy Future TABLE OF CONTENTS LIST OF FIGURES .................................................................................................... LIST OF TABLES ...................................................................................................... CHAPTER 1 1.1 1.2 1.3 CHAPTER 2 2.1 INTRODUCTION ...................................................................................... Background ............................................................................................. Objective ................................................................................................ Outline of the Report ............................................................................... THE RENEWABLE ENERGY TECHNOLOGIES ............................................... Wind ...................................................................................................... 2.1.1 Description .................................................................................. 2.1.2 Wind Turbine Technologies ........................................................... 2.1.3 Costs .......................................................................................... Solar ...................................................................................................... 2.2.1 Description .................................................................................. 2.2.2 Type of Technologies Available ..................................................... 2.2.3 Costs .......................................................................................... Biomass .................................................................................................. 2.3.1 Description .................................................................................. 2.3.2 Type of Technologies Available ..................................................... 2.3.3 Costs .......................................................................................... Small Hydro ............................................................................................ 2.4.1 Description .................................................................................. 2.4.2 Type of Technologies Available ..................................................... 2.4.3 Costs .......................................................................................... Geothermal ............................................................................................. 2.5.1 Description .................................................................................. 2.5.2 Types of Technologies Available .................................................... 2.5.3 Costs .......................................................................................... CURRENT STATUS OF RENEWABLE ENERGY IN ALBERTA ........................... Wind ................................................................................................... 3.1.1 Installed Capacity ........................................................................ 3.1.2 Estimate of Potential Capacity ....................................................... Solar ...................................................................................................... 3.2.1 Installed Capacity ........................................................................ 3.2.2 Estimate of Potential Capacity ....................................................... Biomass .................................................................................................. 3.3.1 Installed Capacity ........................................................................ 3.3.2 Estimate of Potential Capacity ....................................................... Small Hydro ............................................................................................ 3.4.1 Installed Capacity ........................................................................ 3.4.2 Estimate of Potential Capacity ....................................................... Geothermal Energy .................................................................................. 3.5.1 Installed Capacity ........................................................................ 3.5.2 Estimate of Potential Capacity ....................................................... PLANS, POLICIES AND PROGRAMS ........................................................... Barriers for Renewable Energy Development .............................................. 4.1.1 Information Barriers ..................................................................... 4.1.2 Institutional and Policy Barriers .....................................................
vii ix 1 1 1 3 5 5 5 5 7 11 11 11 14 16 16 18 20 22 22 25 27 30 30 31 34 36 36 36 37 38 38 39 39 39 41 43 43 47 48 49 49 52 52 52 53
2.2
2.3
2.4
2.5
CHAPTER 3 3.1 3.2 3.3 3.4 3.5
CHAPTER 4 4.1
Canadian Energy Research Institute
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The Role of Renewable Energy In Albertas Energy Future 4.1.3 Financial Barriers ......................................................................... 4.1.4 Technical Barriers ........................................................................ Current Federal and Provincial Incentives .................................................. 4.2.1 Federal Initiatives ........................................................................ 4.2.2 Provincial Initiatives ..................................................................... CONCLUSIONS ........................................................................................ Concluding Remarks ................................................................................ Future Research Ideas .............................................................................
vi 54 56 59 59 64 68 68 69
4.2
CHAPTER 5 5.1 5.2
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The Role of Renewable Energy In Albertas Energy Future LIST OF FIGURES 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 3.1 5.1 Horizontal and Vertical Wind Turbines ................................................................ Photovoltaic Cell ............................................................................................... Solar Thermal Electric Technology ..................................................................... Synthesis Gases ............................................................................................... Gasifiers and Scale of Operations ....................................................................... Sources of Electricity Generation in Canada ........................................................ Simple Schematic Diagram of Hydro Turbine ...................................................... Fundamentals of Pumped Storage ..................................................................... Dry Steam Power Plant ..................................................................................... Flash Steam Plant ............................................................................................. Binary Cycle Geothermal Power Plant ................................................................. Distribution of Temperatures in the WCSB .......................................................... PEM Fuel Cell ...................................................................................................
vii
5 12 12 17 19 23 25 27 32 33 34 50 71
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The Role of Renewable Energy In Albertas Energy Future
viii
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The Role of Renewable Energy In Albertas Energy Future LIST OF TABLES 1.1 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14 2.15 2.16 2.17 2.18 2.19 3.1 3.2 3.3 3.4 3.5 3.6 4.1 5.1 Alberta Generating Capacity .............................................................................. Levelized Costs of Generating Electricity by Wind Power ...................................... Levelized Costs of Generating Electricity by Wind Power in Europe ....................... Levelized Costs of Generating Electricity by Wind Power in the US ........................ Performance and Costs of Wind Power Generation in Canada by Brascan .............. Performance and Costs of Wind Generation in Canada by CanWEA ....................... Cost and Performance Characteristics of a Wind Plant ......................................... Levelized Cost of Electricity Generation from Solar Energy ................................... Costs and Performance Characteristics of Solar ................................................... Levelized Cost of Electricity Generation from Solar .............................................. Cost of Biomass Integrated Gasification Combined Cycle ...................................... Cost and Performance Characteristics of Biomass IGCC ....................................... International Hydroelectricity Comparison, 2002 ................................................. Classification of Small Hydro .............................................................................. Operating Characteristics of Canadian Hydraulic Plants ........................................ Cost and Performance Characteristics of Hydro Electricity Generation ................... Levelized Generation Costs of Hydro Power in Selected Countries ......................... Levelized Generation Costs of Hydro Power Technology in Selected Countries ....... Levelized Costs of California Hydro Power Electricity Generation ........................... Average Costs of US Hydro Power Electricity Generation ...................................... Current Projects in Alberta ................................................................................ Proposed Future Projects in Alberta ................................................................... Existing and Potential Bioresources in Alberta ..................................................... Classification of Small Hydro .............................................................................. Total Generating Capacity in Canada .................................................................. Small Hydro Plant Generating Capacity in Alberta ................................................ Federal Government Spending on Energy ........................................................... Renewable Energy Installed Capacity in Alberta ..................................................
ix
2 7 8 8 9 10 11 14 15 15 21 22 23 24 26 28 28 29 30 30 36 37 42 43 44 45 57 68
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The Role of Renewable Energy In Albertas Energy Future CHAPTER 1 INTRODUCTION 1.1 Background
As part of an initiative called Albertas Energy Futures, the Institute for Sustainable Energy, Environment and Economy (ISEEE) issued an outline of work and invited recipients to submit a brief proposal for each of a number of tentative topics. The Canadian Energy Research Institute (CERI) submitted proposals for several of the topics and was selected to do three, including one on the role of renewable energy in Albertas energy future. The overall objective of the initiative is to produce a research series that will help focus and inform debate and choices concerning Albertas energy future. The series will address the main challenges, opportunities and options within a longer-term perspective (out to 2020 or further). While there may be attention to some of the more immediate issues, the focus is more on altering and/or accommodating longer-term or secular changes, all with a view to optimizing societal welfare. In spearheading this initiative, ISEEE recognized that despite gradual improvements in energy efficiency, the worldwide demand for energy would continue to grow. A supply response relying largely on Albertas well-developed energy sources-coal, oil, natural gas and oil sands-while by no means to be discounted, would likely entail sharp increases in requirements of capital, infrastructure and qualified manpower and result in rising emissions of greenhouse gases, raising questions of sustainability. Among the possible ways of addressing this dilemma could be a push for swift development of Albertas renewable energy resources. 1.2 Objective
This study explores Albertas endowment of renewable energy resources, analyzes their costcompetitiveness and identifies barriers to their development. It addresses the policy implications of these findings, identifies gaps in data required to judge the potential of renewable resources, and proposes further research to fill those gaps. At present, installed generating capacity is about 11,500 megawatts (MW). As shown in Table 1.1, Alberta currently relies heavily on coal, oil, and natural gas for its energy. Thermal sources account for the majority of Alberta's installed generating capacity: coal-fired plants make up approximately 50 percent of the province's total generating capacity, and natural gas accounts for nearly 40 percent, including efficient cogeneration at industrial operations that produce energy as a by-product of their normal activities. The remainder is hydro (large and small), wind and biomass (energy produced from organic sources such as wood waste, garbage or animal matter). Currently 12 percent of Albertas generating capacity is comprised of renewable energy-this number obviously includes large-scale hydro.
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The Role of Renewable Energy In Albertas Energy Future Table 1.1 Alberta Generating Capacity (MW)
7,000
50.8%
6,000 5,000 4,000 3,000 2,000 1,000 0 Coal Gas Large Hydro Small Hydro Wind Biomass Fuel Oil
5.6% 2.3% 2.4% 2 4% 1.5% 0.1%
37.2%
Source: Alberta Department of Energy (ADOE), Electricity Statistics, available at http://www.energy.gov.ab.ca/537.asp
Alberta's restructured electricity industry has encouraged efficiencies and allowed new generation supply to come on-line to keep pace with one of the fastest growing economies in North America. Investor confidence in Alberta's competitive electricity market has resulted in over 3,200 MW of new electricity generating capacity since 1998. In addition, plans or proposals for 5,000 MW of new additional generation worth more than $5 billion have been proposed. Proposals to add to the province's installed generating capacity also include a number of green power projects such as the addition of up to 800 MW from wind generation. The provincial governments voluntary renewable supply requirement is to have an additional 3.5 percent of energy being generated by renewable and alternative energy by 2008. Helping to achieve this goal, Alberta has developed additional supply that includes wind, biomass and small hydro. This project assesses the state of knowledge in the potential role that renewable energy could play in responding to the energy and environmental issues that are likely to arise as the energy future of Alberta unfolds. While the energy sector is an important engine of growth and job creation in Alberta, declining reserves of conventional crude oil and natural gas raise the questions of sustainability, resource base diversity and energy security. Fossil fuels draw on finite resources that will eventually dwindle, becoming too expensive or too environmentally damaging to retrieve. Renewable energy is infinite. Moreover, concerns over the environment are increasing-nationally and internationally. Global initiatives, such as the ratification of the Kyoto Protocol of which Canada is a part, are putting pressure on fossil fuels. They are also ultimately promoting the development of alternative energy sources and renewable energy technologies.
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This project discusses the renewable energies that are significant to Alberta, in terms of current installed capacity or future potential capacity. Included in our discussion are wind energy, solar photovoltaic, small-scale hydro, biomass and geothermal. This report considers renewable energy and their technologies that are used for power generation or cogeneration. The purpose of this project is to achieve the following: Discuss the renewable energy technologies (RETs) and their respective costs. Provide a summary of information on the mix of renewables (by resource type, capacity and owner), as well as discussing the potential future capacity of the particular renewable. Illustrate some of the barriers to the development of renewable energy and various federal and provincial initiatives to overcome those obstacles. Present potential future research ideas.
Renewable energy heating systems, hydrogen generation and transportation fuels are beyond the scope of this project. As such, it is important to note that this report does not include solar thermal, only solar photovoltaic. As well, biomass includes hog fuel, fuel wood, spent pulping liquor, municipal solid waste and landfill gas. It, however, does not include the discussion of ethanol and biodiesel. While the applications for biomass are plentiful, this study focuses primarily on electricity generation, and, hence, space and water heat, heavy vehicle fuel and automobile fuel are beyond the scope of this study. 1.3 Outline of the Report
This report is organized as follows: Chapter 1 presents background, objectives and organization of the report. Chapter 2 discusses the renewable energy technologies (RETs) and the costs of various renewable energies aforementioned. As such, this chapter is divided into five sections to discuss wind energy, solar photovoltaic, biomass, small-scale hydro and geothermal energy. Each section reviews briefly the renewable energy, the technologies available and their costs. Chapter 3 reviews the current status of renewable energy in Alberta. Similar to Chapter 2, it is divided into five sections to discuss wind energy, solar photovoltaic, biomass, small-scale hydro and geothermal energy. Each section in turn provides a summary of information on the mix of renewables (by resource type, capacity and owner), as well as potential future capacity of that renewable energy source. Chapter 4 illustrates some of the plans, policies and programs to develop renewable energy in Alberta. This chapter is divided into two sections. The first part highlights many barriers to the development of low-impact renewable energy (LIRE) in Canada, namely, informational, institutional and policy, financial and technical barriers. The second part discusses policies and programs that are designed to prevail over the various barriers renewable energy faces. This section is in turn divided into two components: federal and provincial initiatives. Although Canada is not a leader among industrialized countries in the development of renewable energy through government policy, there are several programs in place that are highlighted in this section. Chapter 5 discusses some of the conclusions of the report.
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The Role of Renewable Energy In Albertas Energy Future CHAPTER 2 THE RENEWABLE ENERGY TECHNOLOGIES 2.1 2.1.1 Wind Description
As Alberta is endowed with abundant wind energy resources, wind power has recently become of interest to policy makers. Located in areas with consistent wind on a predictable basis, the ranch land of Alberta provides some of the best wind profiles in Canada. This section will provide a brief description of wind technology, performance and their associated costs. 2.1.2 Wind Turbine Technologies
Electricity is generated by transforming the kinetic energy of the wind using turbines. There are two fundamental styles of electric wind turbines: horizontal or vertical (egg beater style) axis designs as seen in Figure 2.1. The horizontal design has proven to be more efficient on a number of dimensions. Consequently, the global commercial market almost exclusively uses the horizontal style turbines. Figure 2.1 Horizontal and Vertical Wind Turbines
SOURCE: The Most Frequently Asked Questions About Wind Energy by American Wind Energy Association (AWEA), http://www.awea.org/pubs/documents/FAQ2002 percent20- percent20web.PDF
Wind turbines are designed to produce high quality, network frequency electricity whenever enough wind is available. The key components of a wind turbine are comprised of: Blades, or a rotor, which translate the wind's kinetic energy into rotational shaft energy; An enclosed space called a nacelle, that includes a generator, a gearbox1 and a drive train; A tower, to hold up the drive train and rotor; and
1 Some turbines operate without a gearbox
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Electronic equipment such as controls, electrical cables, ground support equipment, and interconnection equipment.
Current generation turbines typically use three blades, with their speed and power controlled by either pitch or stall regulation. The most common regulation is pitch; it entails changing the angle of the blades. In contrast, stall regulation entails controlling the mechanical rotation of the blades. The blades are made from composite materials using fiberglass and epoxy or fiberglass and polyester, at times in a blend with carbon and wood. The kinetic energy for the blade rotation is transmitted to an electrical generator by way of a gearbox and drive train. Otherwise, the generator can be linked directly to the blades using a direct drive configuration. Current technology permits turbines to operate at varying speeds, thereby facilitating integration with the electricity grid. The nacelle encloses the gearbox, generator, and other control equipment. Tubular towers hold up the blades and nacelle. Both the nacelle and rotor are able to shift or yaw; a feature that allows for favorable positioning against the prevailing wind. The current generation of turbines is far superior to their predecessors built in the 1980s when the manufacture of commercial wind turbines began in earnest. Danish technology dominated, producing 20-60 kilowatt (kW) turbines with blade diameters of around 20 meters (m). Since then, wind turbine generators have increased in capacity to 2 megawatts (MW) and above, with blade diameters of 60-90 m. The largest turbine currently in production has a capacity of 4.5 MW and a rotor diameter of 112 m. Therefore a land-based wind plant (farm) rated at 50 MW would be composed of twenty or more turbines. The efficiencies of turbines have increased dramatically through the following improvements: more powerful rotors, larger blades, improved power electronics, better use of composite materials and taller towers. Land use is saved since it now takes fewer turbines to generate electricity at a given rate. The power of wind turbines has increased more than 200-fold since the early 1980s. Recently larger turbines, in the 1.5 to 2.5 MW range, have more than doubled their global market share from 16.9 percent in 2001 to 35.3 percent in 2003. The principal performance drivers of wind power economics are electricity production (dependent on average wind speed) and the turbine lifetime. Site selection is crucial for attaining economic viability, as electricity production is highly dependent on wind conditions. A 1 MW turbine, depending on wind conditions at its site, can produce sufficient electricity for up to 650 households. The fuel for a wind power station is the wind resource available at its location so incremental changes in wind have a significant effect on the commercial value of a farm. The power of wind increases eightfold with a doubling of the average wind speed; therefore small changes in average wind speed can create substantial variation in performance. For example, at a given site a rise in average wind speed from 6 meters per second (m/s) to 10 m/s amplifies the amount of energy generated by a wind farm by over 130 percent. Wind is intermittent by nature and the actual electricity generated by a turbine, measured by the capacity factor, will vary accordingly. The average annual capacity factor of modern land-based wind turbines will vary from 25 to 40 percent.2 A recent study by the Canadian Wind Energy Association (CanWEA) found that in Ontario the capacity factor experiences seasonal variation, as winds are typically stronger in the winter (capacity factor rises to a high of 47 percent) than in the summer (capacity factor drops to a low of 19 percent).3 The intermittent nature of wind creates balancing issues for the system operator; a secondary source of generation is required for those times when the wind is not blowing. The need to balance off electricity is mitigated substantially if wind generation assets are geographically dispersed. The aforementioned
2 The Most Frequently Asked Questions About Wind Energy by American Wind Energy Association (AWEA) http://www.awea.org/pubs/documents/FAQ2002%20-%20web.PDF 3 An Analysis if the Impacts of Large-Scale Wind Generation on the Ontario Electricity System, CanWEA
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CanWEA study suggests that an additional 200 MW of wind would require only 37 MW of balancing generation. Recent improvements in forecasting the energy output from wind farms have also diminished system integration issues. Wind turbines have a design life of 20-30 years; they can run continuously, unattended and with low maintenance with some 120,000 hours of active operation. The operating availabilities of wind turbines, the percentage of the time they are available for operation, is extremely high at 98 percent. Among electricity generating technologies, wind turbines have the highest reliabilities. Once a wind farm is constructed and operational it can be supervised and managed at a distance. A mobile crew performs maintenance; approximately two workers are needed for every 20 to 30 turbines. A current generation wind turbine requires about 40 hours per year of maintenance. 2.1.3 Costs
The principal cost drivers of wind power economics are investment costs and operation and maintenance costs. We summarize, in Table 2.1, cost estimates for wind generation from a report titled Projected Costs of Generating Electricity.4 The report considered 19 wind plants in 10 countries. Only one wind power plant from North America participated in the study a US onshore plant and we have reported its results separately. Of the remaining 18 plants, 16 are onshore and the remaining 2 are offshore. The US plant is assumed to operate at an annual capacity factor of 33 percent. The onshore plants in other countries are assumed to operate at a capacity ranging from 17 percent - 38 percent; whereas the offshore plants operate at a capacity ranging from 35 percent - 45 percent. All numbers are reported in US dollars (USD) as of July 1, 2003. Construction of a plant is expected to take 1 - 2 years. Two sets of levelized costs are reported assuming a 5 percent and 10 percent discount rate respectively. The US plant is assumed to have an economic life of 40 years. The expected economic life ranges from 20-30 years for onshore plants in other countries and 20-25 years for offshore plants. Table 2.1 Levelized Costs of Generating Electricity by Wind Power (2003 USD) US (Onshore) 50 1,024 21.5 9.6 31.1 Other Countries (Onshore) 3-72 976-1,634 27.2-76.8 4.9-26.3 33.5-92.3 Other Countries (Offshore) 120-300 1,637-2,622 33.3-59.2 17.2-35.8 50.5-94.3
Capacity MW Overnight Cost USD/kW Levelized @ 5%Discount Rate USD/MWh: Capital Costs O & M Costs COE
Levelized @10%Discount Rate USD/MWh: Capital Costs 38.1 39.8-128.8 44.8-87.7 O & M Costs 9.6 4.9-26.3 16.9-35.8 COE 47.8 46.1-144.2 66.0-123.4 SOURCE: Projected Costs of Generating Electricity by (OECD, NEA, IEA) 2005.
4 The study was issued, in 2005, jointly by the OECD, the International Energy Agency, and the Nuclear Energy Agency.
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In 2003, the European Wind Energy Association (EWEA) published a report titled Wind EnergyThe Facts. The costs of wind power in Europe are outlined in Volume 2, Costs & Prices. The report estimates costs for a land based wind farm made of medium sized turbines ranging from 850-1,500 kW. Turbines are assumed to have an economic life of 20 years. All costs are in 2001 Euro dollars. The analysis does not consider taxes, depreciation or risk premium. Levelized costs are reported, at discount rates of 5 percent, 7.5 percent and 10 percent, for each area with low, medium and high average wind speeds. The results are summarized in Table 2.2. Table 2.2 Levelized Costs of Generating Electricity by Wind Power in Europe (2001 Euro) Low Avg. Wind Med. Avg. Wind High Avg. Wind Areas Areas Areas (Inland) (Inland) (Costal) Full load hours per year 1,500-1900 1900-2500 2500-2900 Investment Cost /kW 900-1,100 900-1,100 900-1,100 O & M Costs cents/kWh 1.2 1.2 1.2 Average Wind Speed5 Levelized Cost@ 5% Dis. cents/kWh Levelized Cost@ 7.5% Dis. cents/kWh6 Levelized Cost@ 10% Dis. cents/kWh SOURCE: EWEAs Wind Energy-The Facts 5.4-6.2 m/s 6.5 7.7 9 Volume 2, Costs & 6.3-6.8m/s 5 6 6.5 Prices 6.9+ m/s 4 5 5.5
The American Wind Energy Association (AWEA), in a 2005 publication titled The Economics of Wind Energy, outlines the economics of a 50 MW wind farm at a site with average wind speeds between 13-17 mph (5.8-7.5 m/s). The estimates assume the plant operates at a capacity factor of 35 percent, which results in annual power production equal to 150 million kWh. Gross revenues are assumed to be $6 million per annum. Expenses are distributed proportionately as follows: debt (60 percent), distribution (22 percent), operation and maintenance (8 percent), land, property taxes or rent (5 percent), and Mgt. Fees insurance 5 percent. In addition, the following assumptions are made: a power purchase price of $0.04 USD/kWh, equipment is depreciated over five years and a production tax credit (PTC) of 1.5 c/kWh adjusted for inflation accrues to the producer for the first 10 years. The cost of debt is assumed to be 9.5 percent. The results are summarized in Table 2.3. The report suggests that there are significant economies of scale to larger wind farms. Table 2.3 Levelized Costs of Generating Electricity by Wind Power in the US7 Project Size 50 MW Capital Cost $1.3 million per MW Financing 60% debt, 40% equity Average Wind Speed m/s Levelised Costs of Electricity USD/kWh8 7.15 $0.048 8.08 $0.036 9.32 $0.026
SOURCE: AWEAs The Economics of Wind Energy
5 Taken from EWEAs Wind Power Economics. 6 Numbers visually approximated from Figure 4.2 in EWEAs Costs & Prices. 7 The year of prices not stated in the article. 8 Different average wind speeds lead to different capacity factors and different levels of electricity production. Includes PTC.
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As part of our due diligence we contacted Claude Mindorff9, Advisor Wind Sector, at Brascan Power, an Ontario wind power developer in the summer of 2005. Mr. Mindorff provided estimates based on his market research that we share in Table 2.4 below. Turnkey costs have risen dramatically in the past year, ranging from $1,850-$2,300/kW depending on project size. This is up from $1,700-$1,800/kW in 2004. According to Mr. Mindorff, these cost increases are a result of an increase in steel prices and pent up demand from US developers. The production tax credit (PTC), a federal subsidy in the US, expired in 2003 and was not renewed by Congress until November of 2004. As a consequence 2004 saw little wind power development in the US, as developers waited for the PTC to be renewed. The subsequent flurry of US development in 2005 has led to tower/blade shortages and increased project lead times to 18 months, up 9 months from a year ago and as one might expect, turnkey prices have risen with the increase in demand. Mr. Mindorff expects prices will remain elevated for the next few years but hereafter will return to $1,700-$1,800/kW. Table 2.4 Performance and Costs of Wind Power Generation in Canada by Brascan (2005 CDN$) Performance 100 MW 40 years 97+% 90% 1-3%11 Currently 18 months, Average 12 months Financing and Costs $1,845-$2,250/kW Overnight Costs12 $10,000-$40,000 Annual O&M Costs per turbine13 Fixed Cost of Regulatory and PPA Approval 1.5 Million Capital Structure 70%Debt/30%Equity Ongoing Annual Capital Costs14 Years 2-9 $2 Million Years 10-14 $4 Million $12 Million Year 1515 Years 16-23 $2 Million Years 24-40 $4 Million Levelised Costs @ 9% Discount rate 9.5c/kWh16
SOURCE: Discussions and materials provided by Claude Mindorff, Advisor Wind Sector, Brascan (Summer 2005)
Plant Size Economic Life10 Availability Efficiency Forced outage rate Lead time
9 Mr. Mindorf has since changed employment and is now a wind developer at West Windeau. 10 Assumes a major retro fit somewhere in the 15th-20th year, otherwise economic life would only be 20 years. 11 Could be as high as 15 percent in a weak grid where low voltage ride through (LVRT) capabilities are too restrictive. 12 Calculated by deducting $5 Million from total turn-key constructions costs of $200Million. 13 Wide range depends on services contracted. Warranty coverage in the first three years from the manufacturer is tied to both availability and the performance warranty requested by the owner. Turbine manufacturers tie warranties to maintenance contracts and you can easily get 98 percent availability. It costs roughly $10,000 per year per turbine for every point above 95 percent availability. Subsequent to three years the general practice is to bring in a contractor to do the full O&M. 14 Parts required to keep the wind farm functioning; retrofit arbitrarily assumed by CERI to occur in 15th year. See note 1. 15 Retrofit arbitrarily assumed by CERI to occur in 15th year. See note 14. 16 Mr. Mindorff suggests that this cost is based on recent price increases and that in 2004 these prices were 8.0 c/kWh. See text discussion above table.
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10
Much of the manufacturing of wind components is done outside of North America. As wind generation becomes more significant this is likely to change. Mr. Mindorff points to the level of wind support by the province of Quebec that has led to wind manufacturing being established in the province. As a result, Quebec will now have in-province manufacturing for blade manufacturing (LM Glasfiber), nacelle assembly (Marmen), and tower manufacturing (Marmen). According to Mr. Mindorff wind technologies are largely mature, having attained 50 percent of the theoretical maximum of 56 percent maximum energy available. Future gains will be made in energy conversion (direct drive) frame size efficiencies, blade designs for low wind speed. Cost of materials will largely drive design choices and ultimate $/MWh. Cost will be reduced by improvements to component erections that will reduce the required crane sizes even as wind equipment becomes larger. The wind turbine generation industry is developing new blade designs specifically for Canada and northeastern US; these designs should be available within the next 2-3 years. Robert Hornung, President of CanWEA, also sent CERI information on cost and performance data. The data are summarized in Table 2.5. Mr. Hornung makes the following comments on future technology improvements. Cost improvements in wind technology are more likely to be evolutionary than revolutionary. Materials technology is improving, allowing longer blades, and larger swept area per turbine. The new generation blades may utilize carbon fiber. Industry volume is increasing, driving economies of scales down. Learning curves for wind turbines suggest that cost will decrease by about 3 percent/year, however, this will be affected by changes in materials costs (e.g., steel) and market conditions. Turbine prices have increased recently due to market buoyancy, but this is a short term (i.e., several years) situation. Table 2.5 Performance and Costs of Wind Generation in Canada by CanWEA (2005 CDN$) Performance 20-30 years Permitting 2 yrs, Construction 1 yr 90-96+% 25 - 35% Financing and Costs $1,700 - $2,100/kWh 6.0-7.0c/kWh 1.0-2.0c/kWh 8.0c/kWh
Economic Life Lead time Availability Capacity factor Turnkey Construction Costs Levelised Costs of Electricity17 Capital Costs O&M Costs COE
SOURCE: Discussions with Robert Hornung, President CanWEA. According to Mr. Hornung, some of the information supplied is based on input from CanWEA members (Summer 2005).
17 Mr. Hornung suggests that the RFP winners had levelized costs that averaged $80/MWh. No discount rate was provided.
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The Role of Renewable Energy In Albertas Energy Future Table 2.6 is taken from material provided by the Energy Information Association. Table 2.6 Cost and Performance Characteristics of a Wind Plant (2003 US$) Technology Capacity (MW) Heat rate (Btu/kWh) Overnight Cost18 (2003 $/kW) Variable O&M (2003 mills19/kWh) Fixed O&M (2003 $/kW) Lead times (Years) 2.2 2.2.1 Solar Description Wind 50 8,844 1,134 4.06 26.81 3
11
SOURCE: Energy Information Administration, Assumptions to the Annual Energy Outlook 2005, Table 38.
Solar promises both lower emissions and a higher efficiency of conversion to electricity than conventional fossil fuel technologies. As such, solar has recently become of interest to policy makers in the context of rising prices for primary energy. This section will provide a brief description of solar technologies, and discuss their performance and associated costs. As previously mentioned solar thermal is beyond the scope of this study and will only be discussed intermittently in the following section. 2.2.2 Type of Technologies Available
There are two general types of solar technologies used for generating electricity. Photovoltaic (PV), as depicted in Figure 2.2., takes place when sunlight is converted directly into electricity. The second technology is solar thermal electricity conversion (STEC), in which sunlight is converted first into heat and then into electricity. This technology is depicted in Figure 2.3.
18 Overnight capital cost including contingency factors, excluding regional multipliers and learning effects. Interest charges are also excluded. These represent costs of new projects initiated in 2004. 19 mills = 1/10 of one cent.
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The Role of Renewable Energy In Albertas Energy Future Figure 2.2 Photovoltaic Cell
12
SOURCE: Florida Solar Energy Centre, University of Central Florida, available on the Internet at www.fsec.ucf.edu/pvt/pvbasics
Figure 2.3 Solar Thermal Electric Technology
SOURCE: Kearney & Associates, Solar Electric Generating the Internet at www.state.hi.us/dbedt/ert/segs92.pdf.
System (SEGS) Assessment for Hawaii, 1992, available on
Photovoltaic technology uses solid-state semiconductor devices to convert sunlight into directcurrent electricity. Since Becquerel discovered the underlying science in the nineteenth century, significant progress in commercialization occurred with Bell Labs invention of the silicon solar cell in 1954 and its early use in powering earth satellites. In the late 1970s solar thermal electricity production was born in the desert of southern California. Concentrated sunlight heated a fluid creating steam, which in turn drove a turbine generator. Solar technologies have found a niche in locations beyond the reach of electricity transmission and distribution systems, such as space travel and isolated communities; and in applications such as calculators and certain telecommunications equipment that require very modest amounts of power. Penetration of other markets that would appear to offer more potential has been slow. Solar and wind share the property of intermittency. It has to be taken when available and is therefore not dispatchable.
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These solar technologies in some circumstances lend themselves to use by homeowners and by business establishments whose main purpose is something other than the generation of electricity for sale. Such applications, which may produce heat as well as electricity in seasonally varying proportions, are beyond the scope of this report, which concerns itself with facilities built for the purpose of supplying electricity to the Alberta grid. The following considerations, identified by Resource Dynamics Corporation20, give an indication of the possible scope of an investigation into prospects for generation of this sort: Allowing customers to continuously generate their own electricity, with or without grid backup; Permitting customers to generate power while serving their thermal and/or cooling loads; Generating a portion of electricity onsite to reduce the amount of electricity purchased during peak price periods; Licensing customers to sell excess generation back onto the grid when their own demand is low, especially during peak pricing periods; Using standby or emergency power to backup grid based power; Improving customer power quality and reliability; Serving niche applications, such as "green" power or remote power; and Meeting continuous power, premium power, or cogeneration needs of the residential market.
Dallas Burtraw et al.21 found that the cost overruns typical of technologies in their early stages of development have not been characteristic of solar or indeed of renewable technologies in general: Our findings document a significant difference between the success of renewable technologies in penetrating the US electricity generation market and in meeting costrelated goals, when compared with historic projections. In general, renewable technologies have failed to meet expectations with respect to market penetration. They have succeeded, however, in meeting expectations with respect to their cost. For every technology analyzed, successive generations of projections of what they would cost in the future have either agreed with previous projections or been more optimistic (i.e. predicted even lower costs). This success is remarkable, given that renewable technologies have not significantly penetrated the market, nor have they attracted largescale investment and production that can contribute to technological development or economies of scale in production, as many analysts anticipated when forming their cost projections.
20 SOURCE: www.distributed-generation.com/applications.htm, a website maintained by Resource Dynamics Corporation. 21 Burtraw, D. et al, Renewable Energy: Winner, Loser or Innocent Victim? Resources, Spring 1999, pp. 9-13, available on the internet at www.rff.org/Documents/RFF-Resources-135-renewenergy.pdf.
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The Role of Renewable Energy In Albertas Energy Future 2.2.3 Costs
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The Organization for Economic Co-operation and Development (OECD) has recently published the findings of an assessment22 of the levelized cost of electricity generation. The study applied field surveys and covered a multitude of electricity generating technologies in a few countries including Canada and the US. The OECD study applied generic assumptions in order to derive its calculations. Salient assumptions include: economic lifetime of 40 years, average load factor for base-load plants of 85 percent, discount rates of 5 percent and 10 percent, and (July) 2003 base year. The electricity generation costs are busbar costs, and therefore do not include transmission, distribution or environmental costs. Table 2.7 shows the levelized cost of electricity generation by component for solar technologies. The study did not divulge the assumed capacity factor for solar technologies, nor is it entirely clear that a forty-year life was assumed. An operating life of 25 or 30 years is a more common assumption for solar technologies. Table 2.7 Levelized Cost of Electricity Generation from Solar Energy (2003 USD/MWh)
Discount Net Capacity Overnight Const Levelized Rate MW Cost millions Capital of US$ Cost US Solar thermal parabolic US Solar thermal parabolic US Solar Photovoltaic US Solar Photovoltaic 5% 10% 5% 10% 100 100 5 5 277.5 277.5 20.8 20.8 127.4 231.4 115.8 204.4 Levelized O&M Levelized Cost Electricity Cost
38.1 38.1 4.8 4.8
165.5 269.4 120.6 209.1
SOURCE: OECD (NEA/IEA), Projected Cost of Generating Electricity: 2005 Update, Paris, France.
The Electricity Market Module (EMM) of The National Energy Modeling System (NEMS) assesses the most economical way to supply electricity, within environmental and operational constraints. The EMM consists of four sub-models: electricity capacity planning, electricity fuel dispatching, load and demand-side management, and finance and pricing. The costs and performance characteristics of solar according to NEMS23 are summarized in Table 2.8. Note that these costs are about ten percent higher than those reported in the OECD document and that there was no NEMS calculation of levelized costs. In the interests of transparency, CERI has taken these overnight construction costs24 together with fixed annual O&M costs for STEC and PV as reported by NEMS and calculated levelized costs, shown in Table 2.8, at a 5 percent discount rate for 25-year and 30-year economic lives, applying capacity factors of 15 percent and 25 percent. This range for capacity factors can be justified on the following basis.
22 OECD: Projected Costs of Generating Electricity: 2005 Update. 23 Energy Information Administration (EIA), Assumptions to the Annual Energy Outlook 2005 with Projection to 2025. http://www.eia.doe.gov/oiaf/aeo/assumption/pdf/0554(2005).pdf 24 For example overnight cost in table 8.3 = 4,476 * 5,000 = 22.3 millions US$
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The Role of Renewable Energy In Albertas Energy Future Table 2.8 Costs and Performance Characteristics of Solar (2003 USD) Technology Capacity (MW) Heat rate (Btu/kWh) Overnight Cost1 (2003 $/kW) Variable O&M (2003 mills2/kWh) Fixed O&M (2003 $/kW) Lead times (Years) Online3
1
15
Solar Thermal 100 10,280 2,960 0.00 50.23 3 2007
Photovoltaic 5 10,280 4,467 0.00 10.34 2 2006
SOURCE: Energy Information Administration, Assumptions to the Annual Energy Outlook 2005, Table 38 Overnight capital cost including contingency factors, excluding regional multipliers and learning effects. Interest charges are also excluded. These represent costs of new projects initiated in 2004. 2 mills = 1/10 of one cent. 3 Online year represents the first year that a new unit could be completed, given an order date of 2004.
As Sandia National Laboratories25 notes, Without energy storage, the annual capacity factor of any solar technology is generally limited to about 25 percent. The Solar Electric Power Association26 used capacity factors varying from 15 percent for northeastern US states to 20 percent for Arizona in a study of photovoltaic costs by state. For California, it assumed 18 percent. It turns out that levelized costs for solar technologies are highly sensitive to capacity factor and less sensitive to assumed economic life as seen in Table 2.9. It was also found that levelized costs are quite sensitive to discount rates. At a 10 percent discount rate, levelized costs as calculated were about 50 percent higher than the corresponding figures in the final column of Table 2.9. Photovoltaic, being more capital-intensive than STEC, is more sensitive to choice of discount rate. Table 2.9 Levelized Cost of Electricity Generation from Solar (2003 USD/MWh)
Capacity Factor US Solar thermal parabolic US Solar thermal parabolic US Solar Photovoltaic Operating Life Net Capacity Overnight Const Levelized MW Cost millions Capital Cost of US$ Levelized Levelized O&M Cost Electricity Cost
15% 25 years 100 296 92.8 84.6 177.4 25% 25 years 100 296 55.7 50.8 106.5 15% 30 years 100 296 85.1 80.8 165.8 25% 30 years 100 296 51.0 48.5 99.5 15% 25 years 5 22.3 214.1 7.9 222.0 25% 25 years 5 22.3 128.4 4.7 133.2 US Solar Photovoltaic 15% 30 years 5 22.3 196.3 7.9 204.1 25% 30 years 5 22.3 117.8 4.7 122.5 SOURCES: United States Energy Information Administration, Assumptions to the Annual Energy Outlook 2005, Table 38; Canadian Energy Research Institute. NOTE: 5 percent discount rate is applied for estimation of levelized cost.
25 Sandia National Laboratories, National Solar Thermal Test Facility: Desirable Features of Power Towers for Utilities, p. 1, available on the Internet at www.sandia.gov/Renewable_Energy/Solarthermal/NSTTF/feature/htm. 26 Solar Electric Power Association, Projecting the Impact of State Portfolio Standards on Solar Installations, prepared for the California Energy commission, and available on the Internet at www.solarelctricpower.org/ewebeditpro/items/064F5151.pdf.
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The Role of Renewable Energy In Albertas Energy Future 2.3 2.3.1 Biomass Description
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Biomass, or bioenergy, is produced by the release of stored chemical energy contained in fuels made from biological waste. Biomass is actually a product of solar energy that has been stored by the photosynthetic activity of plants. The plants remove CO2 from the atmosphere and combine it with water to produce biomass. Biomass is in many common waste products, such as:
Agricultural waste; Forest waste; Municipal waste; and Food processing waste.
Biomass is one of the oldest of all energy resources, beginning with the controlled use of fire to provide heat, light and cooking for earliest mankind. Ancient civilizations made metal instruments in forges that burned wood in the form of charcoal using the production of prepared biofuels, in the form of animal fats or vegetable oils for their lamps. At one time in Canada, the combustion of biomass, usually wood, was the principal method for heating, cooking and providing hot water. Industry also used the combustion of biomass along with water and wind power as its principal source of energy. Countries that are not heavily industrialized or do not have indigenous fossil fuels still use biomass for a large portion of their energy supply. In Canada, 5.9 percent of our primary energy demand is supplied from the combustion of biomass. Synthesis gas (syngas) is the name given to gases of varying compositions that are generated from thermal conversion of any kind of hydrocarbon, including natural gas, coal, oil, gases from waste-to-energy facilities including biomass, and municipal solid waste (MSW). Synthesis gas is a mixture containing hydrogen (H2) and carbon monoxide (CO) that can be used as a source of energy for internal combustion engines, or as a source of chemical building blocks in petrochemical plants. In addition, the hydrogen of syngas can be extracted and used in fuel cells.
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The Role of Renewable Energy In Albertas Energy Future Figure 2.4 Synthesis Gases
17
W ASTE
T h e rm a l C o n v e r s io n
G a s ific a t io n
I n c in e r a t io n
P y r o ly s is
Figure 2.4 shows three types of thermal conversions27: Incineration: converts the input waste into heat energy and ash. Gasification: breaks down hydrocarbons into the gases by controlling the amount of oxygen present. The results of this process are syngas and solids. Pyrolysis: decomposes or degrades the waste in the absence of air and presence of extreme heat. The results of this process are syngas, liquids, and solids.
The term "co-production" refers to those facilities that produce some combination of electricity, heat, fuels and chemicals. Poly-generation is a similar term used to describe the conversion of low value wastes such as pitch or petroleum coke into synthetic gas (H2 and CO) and other products via gasification. Gasification has been in use for more than half a century and is a proven technology currently in operation all over the world. Gasification involves heating a solid fuel material by partially combusting it with insufficient air for complete combustion. This process is known as partial oxidation of organic material. In this process the majority of carbon (C) is converted into syngas by use of a gasification agent (air, oxygen, and steam). Although often confused with incineration, gasification is significantly different due to partial oxidation, which prevents forming sulphur (S) and nitrogen oxides (NOx). Gasification operates at very high temperatures (900 to 1,1000C) and produces carbon monoxide (CO) and hydrogen (H2). However, incineration produces carbon dioxide and water. Another significant difference is that gasifiers produce syngas that is free of dioxins and furan compounds28. Pyrolysis decomposes waste in the absence of oxygen at temperatures in the range of 400 to 800 C. The products of pyrolysis are syngas (carbon monoxide, hydrogen, and methane), liquids (complex mix of hydrocarbons and tar) and solids (char, inorganic materials, and metals). Thus, pyrolysis produces one additional product compared to gasification, namely, the liquids.
27 State-of-the Art gasification, Peter Heymann Andersen, Head of Department of RAMBOLL. www.iswa.ch/Info/Documents/WasteToEnergy03/Andersen.pdf 28 Dioxins and furans are the by-products of burning municipal and medical waste.
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Gasification and pyrolysis offer more scope for recovering products from waste than incineration. When waste is burned in a modern incinerator the only practical product is heat energy, whereas the gases from gasification and pyrolysis can be used as a fuel and feedstock. Furthermore, from waste gasification it is feasible to produce hydrogen, which is recognized as a valuable resource. The feedstock for syngas production varies from fossil fuel and petroleum by-products to clean biomass and municipal solid wastes. Sources of feedstock for syngas can be summarized as: Fossil fuels (e.g., coal, orimulsion); Residue of petroleum by-products (e.g., petroleum coke, asphalt, tars); Processed agricultural and forestry residues (e.g., biomass and wood); Municipal solid waste (e.g., handling household and commercial wastes); and Residues left from recycling materials (e.g., tires and plastic waste).
Due to the nature of this report we only describe the biomass gasification. 2.3.2 Type of Technologies Available
The objective of this section is to provide background information on the process and technology of integrated gasification combined cycle with fuel choice of biomass. Biomass gasification is a thermal conversion where a solid fuel is converted into a combustible gas. The process of gasification is similar to the coal gasification. A limited supply of oxygen air, steam or a combination serves as the oxidizing agent. The product gas mainly consists of carbon monoxide, carbon dioxide, hydrogen, methane, water, nitrogen and contaminants like small char particles, ash and tars. After cleaning the gas it is suitable for boiler, engine, and turbine use to produce heat and power (CHP). Several different types of gasifiers have been developed with respect to the size and use of the feedstock. Figure 2.5 summarizes the main types of gasifers and their typical operating temperature and scales29.
29 Biomass Technology Group, http://www.btgworld.com/technologies/gasification.html
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The Role of Renewable Energy In Albertas Energy Future Figure 2.5 Gasifiers and Scale of Operations
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When biomass decomposes at elevated temperatures, three primary products are formed: gas, bio-oil and char. At high temperatures the bio-oil vapours are decomposed in secondary products like gas and tar. Therefore, pyrolysis offers a flexible and attractive way of converting solid biomass found in forestry and agricultural residues into an easily stored and transported liquid, which can be successfully used for the production of heat, power and chemicals30. The biomass is thermo-chemically converted to liquid bio-oil by using processes called direct liquefaction or fast pyrolysis. The fast or flash pyrolysis processes for creating bio-oil apply rapid heat to small biomass particles at high temperatures in the absence of added oxygen. This process breaks down the biomass structure instantly to produce a high yield of condensable organic liquids. The liquids are typically 65 percent liquid bio-oil, 15 percent solid char and 20 percent gases. The char and gases are often burned in order to process and pyrolysis the biomass31. Biomass characteristics should not be a technical barrier in pyrolysis and gasification and pyrolysis of most biomass can be successful. Bio-oil can offer major advantages over solid biomass and gasification due to the ease of handling, storage and combustion in an existing power station. Unprocessed biomass fuel has a relatively low heating value due to its high moisture content. The moisture of biomass fuel can be removed at a temperature above 100oC without experiencing any kind of decomposition, but this changes the heat rate. Processing (dry) of biomass fuels would reduce transportation and storage costs and make the fuels easier to feed into a furnace.
30 The future for biomass, pyrolysis and gasification: status, opportunities and policies for Europe Contract No: 4.1030/S/01-009/2001, A V BRIDGWATER, Bio-Energy Research Group, Aston University, Birmingham B4 7ET, UK. November 2002 31 NRC, http://www.canren.gc.ca/tech_appl/index.asp?CaId=2&PgId=183
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The unprocessed green wood at 50 percent moisture has 4,500 Btu/lb, while after processing the heating content of dried wood increases to 9,000 Btu/lb. The price of biomass fuel varies over a wide range, but certainly their prices are competitive with fossil fuels. Biomass, through, pyrolysis can be gasified into synthetic gas or converted to liquids of bio-oils. Both products can be used as fuel for steam and power generation. The high water and oxygen content of bio-oils reduces their heating value to less than half the value of petroleum. However, bio-oils are low in viscosity and have been successfully burned in boilers, turbines and diesel engines. Bio-oil can also substitute for light fuel oil and heavy fuel oil according to specifications. Up to 40 percent bio-oil has been added to standard diesel fuel by using surfactants to create a stable mixture. In the future, this mixture might be used as fuel for standard diesel engines in trucks, tractors, construction equipment and forestry equipment. 2.3.3 Costs
Electric power production from biomass has the potential to make a significant contribution to the power mix and substantially reduces environmental impact. To realize these potential contributions, however, biomass power systems must be competitive on a cost and efficiency basis. One aspect of the biomass operational costs is the price of the feedstock. These can be expensive like short rotation coppice (SRC) or cheap (negative) like waste residues. Transportation, fuel handling and processing adds to the cost of the feedstock. Furthermore, labor costs must be minimized through process control and automation. Practical experience is needed to determine the maintenance costs. Remuneration of electricity and heat can also be decisive in the overall economics. Several economic studies have been made on biomass gasification regarding the feasibility and profitability of this technology. The National Renewable Energy Laboratory32 conducted a comprehensive study on the cost and performance potential of three biomass-based integrated gasification combined cycle systems. The three-gasifier systems chosen for this study were a high pressure air-blown, a low pressure indirectly heated, and a low pressure air-blown. For the above project the operating and maintenance costs for the plant were based on an 80 percent capacity factor, wood costs were assumed to be $46/Mg ($42 per bone dry ton) and the life of the project is assumed to be 30 years. The levelized unit cost of electricity generation in current and 1990 constant dollars for IGCC based generation technologies are presented in Table 2.10.
32 Cost and Performance Analysis of Biomass-based Integrated Gasification Combined Cycle Power System , NREL, 1997, http://www.nrel.gov/docs/legosti/fy97/21657.pdf
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Table 2.10 Cost of Biomass Integrated Gasification Combied Cycle (1996 USD) High Pressure Direct Gasifier, Aero-Derivative Gas Turbine Output (MW) Efficiency (% HHV) Capital Cost (TCR, $/kW) Operating Cost incl. ($1,000/year) COE (/kWh, 1996 $) Fuel 56 36.01 $1,588 3.42 $13,433 7.91 6.10 High Pressure Direct Gasifier, Greenfield Plant High Pressure Direct Gasifier, Advanced Utility Gas Turbine 132 39.70 $1,371 3.10 $28,702 6.99 5.39 Low Pressure Indirectly-heated Gasifier, Advanced Utility Gas Turbine 122 35.40 $1,108 3.27 $27,983 6.55 5.11 Low Pressure Direct Gasifier, Advanced Utility Gas Turbine 105 37.90 $1,350 3.19 $23,442 7.03 5.43
56 36.01 $1,696 3.48 $13,675 8.20 6.31
COE (/kWh Constant 1990 $)
SOURCE: National Renewable Energy Laboratory, 1997, Cost and Performance Analysis of Biomass-based Integrated Gasification Combined Cycle Power System.
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The Electricity Market Module of The National Energy Modeling System determines the most economical way to supply electricity, within environmental and operational constraints. The EMM composed of four sub-models of electricity capacity planning, electricity fuel dispatching, load and demand-side management, and finance and pricing. The cost and performance characteristics of biomass integrated gasification combine cycled that is input to the electricity capacity planning sub-models for biomass gasification technology33 is summarized in Table 2.11. Table 2.11 Cost and Performance Characteristics of Biomass IGCC (2003 USD) Technology Capacity (MW) Heat rate (Btu/kWh) Overnight Cost1 (2003 $/kW) Variable O&M (2003 mills /kWh) Fixed O&M (2003 $/kW) Lead times (Years)
2
IGCC 80 8,911 1,757 2.96 47.18 4
SOURCE: Energy Information Administration, Assumptions to the Annual Energy Outlook 2005, Table 38 1 Overnight capital cost including contingency factors, excluding regional multipliers and learning effects. Interest charges are also excluded. These represent costs of new projects initiated in 2004. 2 mills = 1/10 of one cent.
2.4 2.4.1
Small Hydro Description
Hydroelectric energy is a renewable energy source dependent upon the hydrologic cycle of water, which involves evaporation, precipitation and the flow of water due to gravity. In other words, hydroelectric technologies generate electricity from moving water, either free flowing (run-ofriver hydro) or water stored behind a dam in a reservoir (storage hydro). Canada has abundant water resources and a geography that provide many opportunities to produce low-cost energy. In fact, accessing the energy from flowing waters has played an important role in the economic and social development of Canada for the past three centuries.
33 Energy Information Administration (EIA), Assumptions to the Annual Energy Outlook 2005 with Projection to 2025. http://www.eia.doe.gov/oiaf/aeo/assumption/pdf/0554(2005).pdf
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As shown in Figure 2.6, hydroelectric energy is the main source of electricity in Canada, representing nearly two-thirds of all electricity produced. Most of this hydroelectricity comes from large projects developed by electric utilities. Figure 2.6 Sources of Electricity Generation in Canada
Hydroelectric energy in Canada
As shown in Table 2.12, Canada is the world leader of hydroelectricity production, followed by the United States and Brazil. Installed generating capacity totaled 67,121 megawatts (MW) in 2002. A high electrical energy production rate of 59 percent was achievable due to the use of large reservoirs. Table 2.12 International Hydroelectricity Comparison, 2002 Production GWh Canada United States Brazil China Russia Norway World Total 353,000 300,000 300,000 258,000 174,000 121,000 2,740,000 Capacity MW 67,100 76,000 64,000 82,700 44,700 27,600 729,000
International hydroelectricity data was taken from the World Atlas and Industry Guide, International Journal on Hydropower and Dams, Aqua-Media International, UK, 2003. Hydroelectricity is the most important source of renewable energy in Canada, accounting for about 11 percent of total primary energy and over 60 percent of electricity generation. In 2003, hydroelectricity also contributed approximately 60 percent of Canadas net electricity exports of 6.6 TWh (Manitoba Wildlands, 2004). This report, however, focuses on small-scale hydro, or low-impact hydro. Over time the definition of small-scale hydro has varied. This study defines small-scale hydro as facilities
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(plants) that produce below 50MW34. Small-scale hydro can commonly be further subdivided, as indicated in Table 2.13. Table 2.13 Classification of Small Hydro Size of hydroelectric Power output facility Micro Mini 100 kW or less typical supply for one or two houses 100 kW to 1 MW typical supply for a small factory or isolated community 1 MW to 50 MW typical NUG development and low end of range for supply to a regional or provincial power grid
Small
A small-scale hydroelectric facility requires that a sizable flow of water and an adequate head of water are available without building elaborate and expensive facilities. Small hydroelectric plants can be developed at existing dams and have been constructed in connection with water level control of rivers, lakes and irrigation schemes. By using existing structures, only minor new civil engineering works are required, which reduces the cost of this component of a development. In other, more rugged regions of the country, it is possible to develop relatively higher heads without elaborate or expensive civil engineering works so that relatively smaller flows are required to develop the desired power. In these cases, it may be possible to construct a relatively simple diversion structure and obtain the highest drop by diverting flows at the top of a waterfall or steeply falling watercourse. In large facilities, custom design detailed engineering is required. Small-scale hydroelectric developments have to be approached quite differently to achieve economical feasibility. Over the last twenty-five years, efforts have been made to reduce development costs by improving all phases of project development. Some of the innovations produced by these efforts are: Improved methodologies for hydro resource assessment and project identification Improved methods of hydrologic assessment Standardized designs of turbines and generators Standardized requirements for connection to grid New contracting methods turnkey Improvements in computational technology Standardized civil designs and partial development
34
The definition is widely accepted.
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The Role of Renewable Energy In Albertas Energy Future 2.4.2 Type of Technologies Available
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The force of water generates hydroelectricity as it falls into turbines and rotates the shaft thereby converting the potential energy of the water into kinetic energy (energy in the form of motion). This is depicted in Figure 2.7 below. The amount of energy available depends on the height of the waterfall and the volume of water passing over the fall. Hydroelectric generating plants can "store" energy and then release water to generate electricity when it is needed. This ability to store energy is an asset that can be combined with other renewable technologies like wind energy to enable larger scale use of renewable energy35. Today's hydro power plants range in size from small, local projects producing a few kilowatts to huge dams and reservoirs that generate 10,000 MW. Hydroelectric power plants that generate up to 100 kW of electricity are called "micro hydro. Hydro plants that generate more than 100 kW up to 30 MW are called "small hydro power". Since this project focuses on renewable energy, this section only describes small hydro. Figure 2.7 Simple Schematic Diagram of Hydro Turbine
SOURCE: http://www.uaf.edu/energyin/webpage/pages/renewable_energy_tech/hydro.htm
Hydroelectric plants represent mature technology whose generation efficiency has not changed significantly over time. As a result, hydro power plants built in 2003 may not be much more efficient than one built in 1983. The same cannot be said however for emerging technologies such as solar thermal generation where technological changes have been rapid. The efficiency rate of hydroelectricity plants is generally two times greater than fossil fuel plants. Hydro power stations have a long life and many existing stations have been in operation for more than half a century and are still operating efficiently36. Generating electricity from hydro sources is cheaper than other technologies because fuel costs are minimal. Moreover, hydroelectric plants have low maintenance costs, and do not need many workers to run them. On the downside however, the output of hydro power plants depend on water availability, which implies that during drought periods, less electricity, will be produced.
35 US Department of Energy: http://www.energy.gov/engine/content.do. 36 http:www.canren.gc.ca
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Hydropower is a reliable source for the generation of electricity. It, however, encounters uncertainties that arise from weather, seasonal variations, and contingencies such as outages. Hydro power stations have the ability to respond within short periods to changes in load demand. This flexibility characteristic enhances their value to the supply mix and to the diverse needs of different consumer classes in general. An important advantage of hydropower is that it has essentially no atmospheric emissions, such as greenhouse gases, other than water evaporation. This notwithstanding, hydroelectric power can have other kinds of negative environmental effects. Specifically, hydroelectric power generation may lower the water tables, thereby adversely affecting agriculture. Dams change the stream water quality by altering water temperatures and the level of dissolved gases, thereby interrupting the ecology of the natural river system and damaging vegetation, fish, and other wildlife. The Canadian Electricity Association (CEA) keeps operating statistics on electricity generating units operated in Canada by electric utilities and by Alcan Primary Metal Group37. These statistics permit a comparison of reliability and chosen mode of operation (base load, intermediate, peaking) among the different technologies and fuels. Table 2.14 shows the values of key operating statistics for hydro technology/fuel in 2003, and their average for the period 1999-2003. The values of operating factor (OP FACTOR) and available but not operating factor (ABNOF) reflect the degree of utilization of the units, whereas the values of forced outage rate (FOR) and derating adjusted forced outage probability (DAUFOP) are measures of reliability. Table 2.14 Operating Characteristics of Canadian Hydraulic Plants Period 2003 1999-2003 OP FACTOR 69.82% 72.46% ABNOF 21.62% 18.97% FOR 1.87% 1.93% DAUFOP 1.59% 1.70%
SOURCE: Canadian Electricity Association, 2003 Generation Equipment Status Annual Report, Tables 6.1.1 & .2.
Over the five-year period (1999-2003) hydraulic units in Canada were available but not operating 18.97 percent of the time. The CEA also reports that over the same five-year period the probability that a unit would be unavailable if needed (DAUFOP) was 1.7 percent for all hydraulic units.
Pumped Hydro
Although most hydropower installations utilize conventional storage in upstream reservoirs, there is increased use of pumped storage in order to capture unused electricity during times of low use. In this mode, water is pumped through a reversible turbine, from a lower reservoir to an upper reservoir during off-peak hours when electricity costs are lowest (see Figure 2.8). Then the water flow is reversed during times of high electrical demand to produce electricity. Water is generally pumped back to the upper reservoir at night and on weekends38. While a net energy
37 Canadian Electricity Association, 2003 Annual Report, Equipment Reliability Information System. 38 https://www.dukepower.com/community/learningcenter/generating/pumpedstorage/
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consumer, pumped storage benefits the utility by increasing the load factor and reducing the cycling of its base load units39. Figure 2.8 Fundamentals of Pumped Storage
Fundamentals of Pumped Storage
Source TVA, http://www.tva.gov/power/hydro.htm
Pumped hydro is available at almost any scale with discharge times ranging from several hours to a few days. Their efficiency is in the 70 percent to 85 percent range. Pumped storage plants are characterized by long construction times and high capital expenditure40. The efficiency and cost of a pumped hydro plant depend on a variety of factors including the head of water, the civil costs of excavation, dam building, etc. An average value for the powerrelated part of installations under construction today (2003) is $1,000/kW, while the cost of the storage component is relatively inexpensive, at $10/kWh. The efficiency of large plants is about 75 percent. This technology has been the primary type of energy storage for utilities to date. A 1000-MW plant requires three persons around the clock plus two more for other maintenance. Assuming that 25 full time people are needed at loaded salaries of $100K per year, gives a total of $2.5/kW-yr41. 2.4.3 Costs
Economies of scale favour large power projects over small ones as capital costs per kWh generally decrease with increasing scale. That being said, the combination of a long lead time, uncertain growth in demand for electricity and price, and uncertainty in the total cost of financing construction increase risks for larger projects. Furthermore, very large projects that must effectively be built as a single large plant (e.g., a very large hydro dam) are more vulnerable to this type of risk than projects for which development can be phased in as several smaller power plants in response to market conditions. While this project focuses on small-scale hydro, it is important to discuss, albeit briefly, the costs of large-scale hydro in our cost comparisons.
39 US Department of Energy, Hydropower Program.

40 http://www.electricitystorage.org/tech/technologies_technologies_pumpedhydro.htm
41 Schoenung S. and W. Hassenzahl, Long- vs. Short-term Energy Storage Technologies Analysis: A lifeCycle Cost Study Prepared for the DOE Energy Storage Systems program, Sandia Report No. 2003-2783, 2003.
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In the following section, four comparative cost estimates are discussed. The first is the Electricity Market Model (EMM) of the US Department of Energy. The EMM has cost estimates for building plants in a typical US region. Because hydro cost and performance characteristics are specific for each site, the data represent the cost of the least expensive plant that could be built in the Northwest Power Pool region, where most of the proposed sites are located. Table 2.15 shows the breakdown of the electricity market model. Table 2.15 Cost and Performance Characteristics of Hydro Electricity Generation (2003 USD) Size (MW) 500 Construction time (years) 4 Overnight $/kW 1451 cost Fixed $/kW 12.35 O&M Variable O&M c/kWh 0.46 Heat rate Btu/kWe 10338
SOURCE: United States Department of Energy, (2005) Assumptions to the Annual Energy Outlook: the Electricity Market Model (EMM).
The second set of cost estimates is derived from an IEA study, which compared costs of hydroelectricity generation for small and large dams in six countries42. According to the IEA study, depending on various plant types and capacity levels, overnight hydro construction costs ranged between $1,541 USD/kWh in Germany and $6,985 USD/kWh in Japan. The expense schedules reported for hydro power plants correspond to construction periods ranging from 1 to 5 years but in most cases most of the expenses are incurred in less than 3 years. The hydro power plants considered in the IEA study are small or very small units except the dam in Greece (GRC-H2), which has a total capacity of some 120 MWe. The very high specific construction costs reported for most of the hydro power plants considered in the study likely result from their sizes, although in Austria the specific construction costs reported are lower for the smaller unit. The economic lifetimes of hydro power plants in the study vary from 30 to 60 years. The levelized construction and O&M costs of the IEA study are shown in Table 2.16. Table 2.16 Levelized Generation Costs of Hydro Power in Selected Countries (2003 USD/MWh) Australia ROR * 14 49.9 9.8 59.7 Australia Small 1.5 33.7 6.9 40.5 Czech Small 3 35.9 10.6 46.4 Ger. Small 0.714 70 13.2 83.2 Greece ROR* 4 39.2 20.6 59.8 Greece Dam 123.5 44.1 1.6 45.4 Slovakia ROR* 2.7 31 8.7 39.7 Japan ROR* 19 111.3 31.6 142.9
Plant type Capacity** O&M costs Fixed costs Levelized cost
*ROR = Run of River. ** Capacity is in MWe SOURCE: IEA (2005) Projected Costs of Generating Electricity 2005 Update, OECD. Note: Discount rate is 5 percent.
For levelized cost estimation, the IEA applied two discount rates, 5 and 10 percent, and compared the economics of large and small hydro power plants. At a 5 percent discount rate, hydroelectricity generation costs range between some 40 and 80 USD/MWh for all plants except in Japan where they reach more than 140 USD/MWh. O&M costs account in all cases for less than one third of total levelized generation costs.
42 International Energy Agency, IEA, Projected Costs of Generating Electricity 2005 Update, OECD, Paris, 2005.
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At a 10 percent discount rate, hydroelectricity generation costs range between 65 and 100 USD/MWh for most plants but reach nearly more that 240 USD/MWh for the Japanese plant. The predominant proportion of investment in total levelized generation costs explains the large difference between levelized cost estimates at 5 percent and 10 percent discount rates. The O&M costs, at 10 percent discount rate, are only a marginal component, representing some 10 percent or less of the total except for the run of river hydro plant in Greece. This is seen in Table 2.17. Table 2.17 Levelized Generation Costs of Hydro Power Technology in Selected Countries (2003 USD/MWh) Australia Plant type Capacity** O&M costs Fixed costs Levelized Cost ROR * 14 91.2 9.8 101.0 Australia Small 1.5 56.7 6.9 63.6 Czech Small 3 64.9 10.5 75.4 Ger. Small 0.714 132.9 13.2 146.1 Greece ROR* 4 63.9 20.6 84.5 Greece Dam 123.5 83.4 1.6 84.0 Slovakia ROR* 2.7 56.6 8.7 65.3 Japan ROR* 19 210.3 31.6 241.9
*ROR = Run of River. ** Capacity is in MWe SOURCE: IEA (2005) Projected Costs of Generating Electricity 2005 Update, OECD. Note: Discount rate is 10 percent.
The third set of estimates is based on a study conducted by the California Energy Resources Commission (CEC), which covered comparative costs of hydro power plants along with other electricity generation technologies in the state of California43. The CEC study produced forward estimates of levelized costs of hydroelectricity up to the year 2013, along with other renewable and non-renewable central station electricity generation resources, based on each technologys operating and capital cost. The cost estimates were intended to provide general guides about expected costs of different technologies for policy makers to assist resource planners in screening generation options. The CEC study used constant prices by referencing all costs to the year 2002 (base year=2002), for calculating levelized costs. Table 2.18 shows the salient assumptions and levelized cost of California hydro electricity generation.
43 California Energy Commission CEC, Comparative Cost of California Central Station Electricity Generation Technologies, 2003.
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The Role of Renewable Energy In Albertas Energy Future Table 2.18 Levelized Costs of California Hydro Power Electricity Generation (2002 USD) Gross capacity (MW) Availability/year (%) Availability/year (hours) Equipment life (hours) Equipment life (years) Maintenance outage (days) Forced outage rate (%) Hours per year operation (hour/year) Capacity factor (%) Capital ($/MWh) Levelized costs (cents/kWh) 100 42.5 3,723 262,800 30 10 1.4 120 39.8 60.37 6.04
30
SOURCE: CEC (2003). Comparative Cost of California Central Station Electricity Generation Technologies
The fourth set is derived from the US Department of Energy (DOE)44. The methodology of this study is similar to the EIA and CEC. The DOE based capital cost on estimates available from 21 hydroelectric plants that commenced operating during 1993. The median value is $2,000/kW. The plants range in capacity size from 125/kW installed capacity to 32.4 MW, averaging 4.81 MW of capacity. The capital cost per kW in capacity range is $735 to $4,778. On the other hand, operating costs include supervising, engineering and rent expenses. Maintenance costs include labour, material and other costs for preserving the operating efficiency and/or physical condition of the plant. Utilizing these assumptions, the DOE reports that in the US the costs of generating electricity from hydro sources for an average size hydro plant of 31 MW are in the order of 23.6 million or 2.4 cents per kWh. Table 2.19 displays the breakdown of the DOE cost estimates. Table 2.19 Average Costs of US Hydro Power Electricity Generation (2001 USD) Average size Capacity factor Operating life Capital cost $/kW Operating cost per kWh Levelized cost per kWh 2.5 2.5.1 Geothermal Description 31 MW 40-50% 50+ years $1,700-2,300 0.7 2.4
SOURCE: US DOE (2004): Hydro power Partnership with the Environment.
Enormous amounts of thermal energy are continuously generated by the decay of radioactive isotopes/particles deep beneath the earths crust. Geothermal energy is energy recoverable from heat concentrated near the earth's surface in the form of hot water or steam. This steam or hot water is used in turn to power turbines or to heat
44 DOE, Hydropower: Partnership with the Environment, 2004
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buildings or water. If the local geography has precise features, geothermal facilities can be installed. The facilities capture steam as it escapes from cracks or holes in underground rocks. Geothermal energy requires a source temperature of more than 100C to drive a generating turbine. Hot water from within the earth can heat buildings with no conversion. The hot springs in Banff, Alberta are an example of geothermal direct heat at a resort. This type of geothermal energy is called earth energy. It is energy that uses the earth to directly heat or cool (space heating). This report, however, focuses on geothermal energy that uses steam to power turbines and generate electricity. This type of energy is called geothermal, as aforementioned. Geothermal energy is possible where there is high temperature gradient. In other words, where there is recent volcanic activity. Geothermal energy is used widely in the Philippines, Italy, Indonesia, Mexico, New Zealand, Japan and China. Iceland relies on geysers as its principal source of heat. Several northern communities around the world circulate this type of heated water through pipes under roads to melt ice from the pavement, and the water is also used in aquaculture, car washes and similar applications. Geothermal energy is an enormous, underused heat and power resource that is clean (emits little or no greenhouse gases), reliable (average system availability of 95 percent), and homegrown (making us less dependent on foreign oil). In Canada, there is a test geothermal site in the Meager Mountain Pebble Creek area of British Columbia. A 100 MW electrical facility might be developed at that site after further testing. 2.5.2 Types of Technologies Available
Heat from the Earth or geothermal energy can be accessed by drilling water or steam wells in a process similar to drilling for oil. Geothermal facilities that generate electricity claim an average standby efficiency rate of 97 percent, compared with 65 percent for nuclear reactors and 75 percent for coal plants. Compared to 185 kg of carbon per megawatt-hour for a coal-fired facility45, geothermal facilities utilizing newer technologies emit 0.1 kg of carbon per megawatt-hour of electricity generated. Geothermal resources range from shallow ground to hot water and rock several miles below the Earth's surface to extremely hot molten rock deep below the earths crust. This rock is called magma. Mile-or-more-deep wells can be drilled into underground reservoirs to tap steam and very hot water that drive turbines that drive electricity generators. There are three types of power plants operating today: Dry steam plants; Flash steam plants; and Binary-cycle plants.
The following section discusses briefly the technologies used in the three types of power plants operating today.
45 Natural Resources Canada, The Canadian Renewable Energy Network (CanREN), Generating electricity with geothermal energy, available at http://www.canren.gc.ca/tech_appl/index.asp?CaId=3&PgId=338
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Dry Steam Power Plants

Dry steam power plant systems were the first type of geothermal power generation plants built. They use the steam from the geothermal reservoir as it comes from wells, and route it directly through turbine/generator units to produce electricity. Figure 2.9 Dry Steam Power Plant
Source: US Department of Energy, Energy Efficiency http://www1.eere.energy.gov/geothermal/powerplants.html#drysteam
and
Renewable
Energy,
available
at
Steam plants use hydrothermal fluids that are primarily steam. The steam goes directly to a turbine, which drives a generator that produces electricity. The steam eliminates the need to burn fossil fuels to run the turbine. It also eliminates the need to transport and store fuels, as well. This is the oldest type of geothermal power plant and was first used at Lardarello in Italy in 1904, and is still very effective today. Steam technology is used today at The Geysers in northern California, the world's largest single source of geothermal power. These plants emit only excess steam and very minor amounts of gases.
Flash Steam Power Plants

Flash steam plants are the most common type of geothermal power generation plants in operation today. They use water at temperatures greater than 182C (360F) that is pumped under high pressure to the generation equipment at the surface.
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The Role of Renewable Energy In Albertas Energy Future Figure 2.10 Flash Steam Plant
33
and
Renewable
Energy,
available
at
Hydrothermal fluids above 182C (360F) can be used in flash plants to make electricity. Fluid is sprayed into a tank held at a much lower pressure than the fluid, causing some of the fluid to rapidly vaporize, or "flash." The vapor then drives a turbine, which drives a generator. If any liquid remains in the tank, it can be flashed again in a second tank to extract even more energy.
Binary Cycle Geothermal Power Plant

Binary cycle geothermal power generation plants (as shown in Figure 2.11) differ from Dry Steam and Flash Steam systems in that the water or steam from the geothermal reservoir never comes in contact with the turbine/generator units. Most geothermal areas contain moderate-temperature water below 204.40C (400F). Energy is extracted from these fluids in binary-cycle power plants. Hot geothermal fluid and a secondary, hence, "binary", fluid, pass through a heat exchanger. The secondary fluid has a much lower boiling point than water. Heat from the geothermal fluid causes the secondary fluid to flash to vapor, driving the turbines. As this is a closed-loop system, virtually nothing is emitted to the atmosphere. Moderatetemperature water is by far the more common geothermal resource. As such, most geothermal power plants in the future will be binary-cycle plants.
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The Role of Renewable Energy In Albertas Energy Future Figure 2.11 Binary Cycle Geothermal Power Plant
34
and
Renewable
Energy,
available
at
As previously mentioned, geothermal facilities that generate electricity claim an average standby efficiency rate of 97 percent, compared with 65 percent for nuclear reactors and 75 percent for coal plants. In addition, new facilities emit 0.1 kg of carbon per megawatt-hour of electricity generated, compared with 185 kg of carbon per megawatt-hour for a coal-fired facility46. 2.5.3 Costs
Advances in technology have reduced geothermal electricity generation costs by over 25 percent in recent years. Generation costs are expected to drop a further 20 percent between 2000 and 2020, while operation and maintenance costs are expected to drop by 30 percent by 202047. Geothermal energy is considered to be one of the cheapest forms of large-scale grid-tied energy. The levelized cost of geothermal energy ranges from 3.3-3.9 US cents per kWh, compared to 5.06.4 US cents for wind energy and 7.3-8.7 US cents for biomass48. Levelized cost measures the average cost of power production over the life of a power plant, taking into account all capital expenses and operating and maintenance costs, plus fuel costs for power plants that rely on external fuel sources. For the Meager Creek Geothermal Project in B.C., the estimated long-run marginal cost of geothermal energy is 5.9 CDN cents per kWh, compared to BC Hydros current long-run marginal cost of 5.5 CDN cents49.
46 Natural Resources Canada, Technologies and Applications, available at http://www.canren.gc.ca/tech_appl/index.asp?CaID=3&PgID=338 47 Western GeoPower Corp, 2003 48 US Department of Energy, Office of Utility Technologies 49 BC Sustainable Energy Association, available at http://www.bcsea.org/sustainableenergy/geothermal.asp
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November 2006
The Role of Renewable Energy In Albertas Energy Future CHAPTER 3 CURRENT STATUS OF RENEWABLE ENERGY IN ALBERTA 3.1 3.1.1 Wind Installed Capacity
36
A significant amount of wind power generation has been added over the past several years, with substantial new capacity proposed for development in coming years. In fact, Alberta is the national leader in wind power at this time. Currently, there are fifteen wind farms in Alberta, totaling 275.5 MW of installed capacity (see Table 3.1 for existing wind capacity). Alberta is planning to increase the use of renewables by the amount of 3.5 percent of the energy used on the system relative to 2002. Volunteer Renewable and Alternative Target (VRAT) has been put in place to see 3.5 percent of total electricity coming from new renewable energy sources by 2008, equaling about 560 MW of new capacity, of which 500 MW would be devoted to wind50. Table 3.1 Current Projects in Alberta Wind Farm/Site Date Installed Capacity Owner Installed (kW) 1997/11 Castle Farm River Wind 2000 2001 Cowley Ridge Wind 1993/12 21,400 Farm 2000/09 Cowley Ridge North 2001/10 19,500 Wind Farm Lundbreck McBride Lake McBride Lake East Magrath Sinnot Wind Farm Summerview Summerview Tallon Project Energy 2001/12 600 2003/06 75,240 2001/12 660 2004/09 30,000 2001/11 6,500 2002/04 1,800 2004/09 68,400 2004/01 750 Canadian Developers, Inc Hydro 39,540 Vision Quest Windelectric
Canadian Hydro Developers, Inc Lundbreck Developments Joint Venture A ENMAX/Vision Quest Vision Quest Windelectric Suncor, Enbridge, EHN Canadian Developers, Inc Hydro
Vision Quest Windelectric Vision Quest Windelectric Tallon Energy
50 CANWEA, Federal and Provincial Objectives for Wind Energy, assessed on December 15, 2005 at http://www.canwea.ca/downloads/en/PDFS/Federal_Provincial_Initiatives_-_December_2005.pdf
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The Role of Renewable Energy In Albertas Energy Future Taylor Wind Project 2004/12 3,400 Vestas Prototype 2004/09 3,000 1997/11 1998/11 Waterton Turbines Wind 1998/11 2000/06 2001/12 2002/01 Weather Dancer I 2001/09 900 Epcor/Peigan Reserve Nation 3,780 Vision Quest Windelectric Canadian Developers Visionquest/Vestas Hydro
37
Source: CANWEA, Canadas Wind Farms, available at http://www.canwea.ca/en/CanadianWindFarms.html
3.1.2
Estimate of Potential Capacity
An additional 4,800 MW of new generation (including conventional fossil fuels) has been announced by industry for future development, of which 1,036 MW is planned to be devoted to wind power51. The new proposed generation projects from wind energy are listed in Table 3.2. Table 3.2 Proposed Future Projects in Alberta Developer Canadian Hydro Developers Enmax Purple Springs GW Power/Nexen Kettles Hill PH Wind Energy Suncor Canadian Hydro Developers Canadian Hydro Developers Canadian Hydro Developers TransAlta Seven Persons Vision Quest Vision Quest Vision Quest Blue Trail Wind Power Inc. Location Taylor Taber Soderglen Pincher Creek County of Warner Chin Chute Cyr's Ridge Sennet St Henry Medicine Hat Summerview Waterton Macleod Flats Pincher Creek Proposed Capacity (MW) 3.4 80 70.5 63 12 30 18 35 72 120 60 300 60 112 Type Wind Wind Wind Wind Wind Wind Wind Wind Wind Wind Wind Wind Wind Wind Status Commissioning 4Q 2006 3Q 2006 3Q 2006 2Q 2006 2006 2007+ 2007+ 2007+ 2008+ 2006 2008+ 2007+ 2007+
Source: CANWEA, Canadas Wind Farms, available at http://www.canwea.ca/en/CanadianWindFarms.html
Alberta Department of Energy, Electricity Statistics, available at http://www.energy.gov.ab.ca/537.asp
51
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Albertas southwest cornerparticularly around Pincher Creek, Fort Macleod and the Crowsnest Passis naturally blessed with an abundant amount of free, renewable wind, which has translated into a successful growth industry in wind-powered electrical generation. Alberta currently has 275.4 megawatts of wind generation capacity, which is more than any other province. The estimate of the wind power potential is in the range from the low 570 MW to 1,036 MW. Alberta has restructured its electricity industry, introducing competition in the generation sector in 1996 and retail choice in 2001.52 Since deregulating, the private sector has dramatically increased the wind generation capacity to about 275 MW and there are a number of proposals for a wide range of new wind, hydro and biomass projects.53 However, the Alberta government is committed to the principles of electricity deregulation and the need for a level playing field among all electricity generation sources. It does not, however, believe that it is prudent to directly subsidize the renewable or alternative energy sectors. The governments efforts to support these sectors will instead be focused on removing policy, regulatory or technical barriers; facilitating customer choice and consumer understanding of the emissions intensity of their purchases; and working with stakeholders to identify realistic yet challenging expectations on the appropriate minimum capacity of renewable and alternative energy the province should be moving towards.54 3.2 3.2.1 Solar Installed Capacity
The market for solar energy worldwide is growing rapidly, with global growth exceeding 25 percent per year. Canada, however, is lagging behind. In fact, Canada ranks 14th of 20 reporting International Energy Agency (IEA) countries in deployment of PV and 17th of 22 reporting countries for solar thermal55. Canadian Solar Industries Associations (CanSIA) goal is to see 25 million MWh of solar energy installed by the year 202556. The Canadian PV installed capacity in 2004 was only 13.88 MW with a sustained domestic growth that has averaged 23 percent annually since 199257. While the photovoltaic market is very small in Canada, PV technology could be very useful in meeting the remote power needs of Canadian customers particularly for transport route signalling, navigational aids, remote homes, telecommunications, and remote sensing and monitoring. The installed capacity for solar thermal energy in 2004 was 280 MW. This is according to Canadian Solar Industries Association (CanSIA). The growth has been observed in niche markets such as solar air heating, swimming pool water heating, residential housing heating and cooling. Photovoltaic systems require large capital investment, ranging from $30,000 for a 2.5 kW system to $40,000 for a 4 kW system, and are subsequently lagging behind solar thermal technology. Demand for PV is, however, growing rapidly in recent years. Interestingly, the Alberta Legislature is the first such building in Canada to use solar power. Twenty-four solar modules have been installed on the roof of the buildings power plant to
Transmission and distribution wires remain regulated. Albertans and Climate Change: Taking Action, October 2002 54 Ibid. 55 The Canadian Solar Industries Association (CanSIA), Sunny Days Ahead, November 2004. 56 CanSIA, Sunny Days Ahead, November 2004. 57 Natural Resources Canada (NRCan), Photovoltaic Technology Status and Prospects Canadian Annual Report 2004, 2004
53 52
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provide part of the Legislatures electricity needs. The solar installation can provide enough power to light 70 compact fluorescent light bulbs for approximately 5 hours/day, or almost half the power used by an average household in a year. The Legislature installation is the 14th gridconnected system in the province, and represents 8.5 percent of the total grid-connected solar power in Alberta. Solar PV currently accounts for approximately 28 kilowatts of energy generation capacity, compared to the province's 11,500 megawatts of total available capacity.58 3.2.2 Estimate of Potential Capacity
While the photovoltaic market is small in Canada and the province of Alberta, there is great potential for this renewable energy. As mentioned, solar PV could be useful in meeting the remote power needs of Canadian customers particularly for transport route signalling, navigational aids, remote homes, telecommunications, and remote sensing and monitoring. The Arctic, according to the National Energy Board is an excellent place for solar generation, at least for six months of the year. In addition, fuel and associated transportation costs are high in the region as well. Alberta has excellent potential. According to The Bruderheim REA, who is a member of the Alberta Federation of Rural Electrification Associations (AFREAs), solar radiation received in Alberta ranges from about 1.4 mega joules (MJ) per square meter per year in southern Alberta to about 1.1 MJ per square meter per year in northern Alberta59. In other words, Alberta is a very sunny place. Another source estimates the solar PV technical potential for Canada to be 70,000 MW60. 3.3 3.3.1 Biomass Installed Capacity
At one time in Canada, the combustion of biomass, usually wood, was the principal method for heating, cooking and providing hot water. Presently, 5.9 percent of Canadas primary energy demand is supplied from the combustion of biomass. As previously mentioned biomass is a very diverse resource and is in many common waste products, such as:
Agricultural waste; Forest waste; Municipal waste; and Food processing waste.
Climate Change Central, Alberta Sun-Powered Legislature, available at http://www.climatechangecentral.com/default.asp?V_DOC_ID=1156 59 Bruderheim REA, Cheap Solar Power! Is this it, finally?, October 2003, available at http://www.fathersforlife.org/REA/cheap_solar_power.htm. 60 Pollution Probe, A Green Power Vision & Strategy For Canada, Dalhousie University, May 19, 2005
58
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According to the Alberta Department of Energy61, Alberta has six installed biomass power stations with total electricity generation capacity of 178 MW that are online or close to. Several projects are discussed further in the following sections. Alberta-Pacific Forest Industries Inc. (Al-Pac) located in Boyle, Alberta operates the largest biomass facility in the province and won Canada's Climate Change Voluntary Challenge and Registry Inc.'s (VCR Inc.'s) 2002 Leadership Award for the forest products industry. The company's 80-MW biomass-powered cogeneration unit, which produces enough electricity to light a city of 45,000, fills more than 80 percent of Al-Pac's energy needs. Making use of enormous amounts of wood refuse, the Grande Prairie EcoPower Centre began operation on September 30, 2003 in Grande Prairie62. The facility uses wood waste to generate both electricity and steam for use in the Canfor sawmill in Grande Prairie. Through the retirement of the existing silo burner, the EcoPower Centre will cut particulate emissions from the Canfor mill by over 80 percent. The wholly owned subsidiary of Canadian Hydro Developers will be able to eliminate the combustion of over 300,000 GJ of natural gas when steam from the EcoPower Centre is supplied to the lumber drying kilns, creating a direct reduction of greenhouse gas emissions. In addition, the greenhouse gas emissions from other fossilfueled power resources will be indirectly displaced by the operation of this facility. The Grande Prairie EcoPower Centre adds 25 MW. The EcoPower Centre will generate enough electricity to provide power to approximately 21,000 households. TransCanadas Bear Creek facility is also making use of wood refuse or spent pulping liquor. The 80-MW natural gas-fired cogeneration plant commenced operations in February 2003. Located near Grande Prairie, Alberta, the Bear Creek plant provides electric power and steam services to Weyerhaeuser Company's Grande Prairie Pulp Mill and uses natural gas as well as biomassderived steam from the Mill to provide power to all eight main manufacturing facilities of Weyerhaeuser's Alberta operations63. Drayton Valley Power operates a small research and development program in Dapp, Alberta. The facility uses wood refuse from the Weyerhaeuser sawmill near Drayton Valley. It has a capacity of 17 MW and began operations in 1996. EPCOR operates several biomass facilities that generate electricity64. The Whitecourt Generating Station burns biomass, specifically waste-wood, from nearby sawmills. It is the first facility to contribute to EPCOR's renewable energy portfolio and is the first EcoLogoTM certified generating station in Canada. The 23 MW plant operates year round. EPCOR also operates a landfill gas facility. Landfill gas is another efficient source of energy. It also accounts for approximately 25 percent of human methane emissions. Using landfill gas for electricity, where feasible, exploits a source that would otherwise pollute the atmosphere and transforms it into useful energy. Landfill gas is produced when organic wastes decompose in the absence of oxygen and is primarily carbon dioxide and methane. Most landfill sites are big holes, lined with impermeable material before being filled with waste and capped. The lining and capping prevent the escape of gas, which starts producing in about a year and can continue for decades.
61 62
ADOE. http://www.energy.gov.ab.ba/537.asp The following information was taken from Canadian Hydro Developers. http//www.canhydro.com 63 Information from TransCanadas website; http://www.transcanada.com 64 Information taken from http://www.epcor.ca
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EPCORs Clover Bar Generating Station uses landfill gas from the City of Edmonton's Clover Bar Landfill as a supplement to natural gas. The gas is extracted from the landfill through wells. The gas is purified and piped to the generating station. Other sources of landfill gas and waste include digestion of animal manure and waste water biosolids. Livestock waste biogas is a growing element of biomass, especially with Albertas large agricultural sector. There are several projects that make use of biowaste. For example, pig manure is currently being used in Alberta for biomass power generation at the Iron Creek Hutterite Colony. BioGem Power Systems is an emerging company that designed the biogas facility near Bruce, Alberta. Through the process of anaerobic digestion, electrical and thermal energy, reusable water and a dry nutrient rich organic material is created. In addition, an integrated manure utilization project (IMUS) is also underway in Vegreville, Alberta. The Kotelko farming family built the first biogas plant in the world to use solid organic waste. The $8-million system starts with manure, adds water and heat, and then lets the mixture stew without oxygen. The reaction releases methane, which is run through a generator to produce power with little odour. 3.3.2 Estimate of Potential Capacity
Biomass in Canada has a promising future. While biomass contributes 1,900 GWh/year, estimates for potential capacity in the future are 49,000 GWh/year65. This potential generation is regarded as a minimum amount. Some estimates exceed 150,000 GWh/year. At any rate, Canada has a large, diverse biomass resource that is severely underutilized. With its vibrant agricultural and forestry sectors and competitive and innovative environment, Alberta is among the vanguard to tapping into this vast potential. Biomass uses these industries waste as feedstock. Significant wood residues are produced at a number of mills in Albertas boreal forest. With the old-style beehive burners, used to burn wood wastes, made obsolete, mill residues simply stockpiled. Forest residuals, wood-processing waste and substandard timber can also be used as feedstock. Agricultural feedstock includes grain, straw, chaff, animal manure and vegetable fats. According to Edwards and OConnor, these bioresources have a potential of 585 PJ, or approximately 30 percent of the energy used by end-use sectors66. Existing bioresources in Alberta are approximately 200 PJ, or 10 percent of the energy used by end-use sectors. Currently, as illustrated in Table 3.3, the largest potential stems from agricultural biomass, forest biomass and forest and mill residues.
Vision for a Low-Impact Renewable Energy Future for Canada Clean Air Renewable Coalition, November 2003. Which Bioenergy Opportunities Offer the Most Potential for Alberta?, Edwards and OConnor, Levelton Consultants and (S&T)2 Consultants 2004.
66
65
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The Role of Renewable Energy In Albertas Energy Future Table 3.3 Existing and Potential Bioresources in Alberta
42
Source: Levelton Consultants and (S&T)2 Consultants
It is clear that biomass forms an important part of Albertas plans for a long-term sustainable energy plan for the province. Like biomass, Alberta has resource potential for landfill gas. While the largest landfill sites are located in Quebec, Ontario and British Columbia, Alberta could capitalize more due to its large agricultural sector and growing population. According to Environment Canada, forty-one landfills in Canada (2001) capture the harmful emissions from decomposing waste. The decomposition of waste in landfills produces a gas, which is composed primarily of methane 21 times more potent than CO2 as a contribution to global warming. Estimates from Environment Canada show that over 25 megatonnes (Mt) of CO2 equivalent are being generated annually from Canadian landfills - the equivalent to approximately 5.5 million cars on the road. According to the National Office of Pollution Prevention, more than 7 Mt/year of CO2 equivalent annually were captured in 1999, which is the equivalent to removing approximately 1.5 million cars from the road.
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Estimates are between 900 GWh/year and 2,700 GWh/year67. While not as large as agricultural and forest biomass, municipal solid waste and food processing waste are important components in Albertas bioenergy future. 3.4 3.4.1 Small Hydro Installed Capacity
Over time the definition of small-scale hydro has varied. This study defines small-scale hydro as facilities (plants) that produce below 50 MW. Small-scale hydro can commonly be further subdivided, as indicated in Table 3.4. Table 3.4 Classification of Small Hydro Size of hydroelectric Power output facility Micro Mini 100 kW or less typical supply for one or two houses 100 kW to 1 MW typical supply for a small factory or isolated community 1 MW to 50 MW typical NUG development and low end of range for supply to a regional or provincial power grid
Small
Table 3.5 illustrates the number of facilities with certain ranges of generating capacities in Canada. The information is based on Statistics Canada Catalogue No. 57-206-XIB, Electric Power Generating Stations 2000. In addition, the survey coverage is limited to those utilities and companies that have at least one plant with a total generating capacity of over 400 kW and is exclusive of auxiliary equipment installed only for generating station service.
67
Vision for a Low-Impact Renewable Energy Future for Canada Clean Air Renewable Coalition, November 2003.
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The Role of Renewable Energy In Albertas Energy Future Table 3.5 Total Generating Capacity in Canada
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Range of Generating Capacity Number of Facilities Total Generating Capacity (MW) 500 kW to 1 MW 500 kW to 10 MW 500 kW to 30 MW 500 kW to 50 MW All ranges 45 242 316 341 475 25 885 2 090 3 160 67 300
Source: Statistics Canada, Electric Power Generating Stations 2000
It is important to note that nearly 60 percent of the current generating capacity of all small hydro projects in Canada is located in Quebec and Ontario. Alberta accounts for only 6 percent. That being said, Alberta has installed twenty-one small-scale hydro plants with total electricity generation capacity of 303 MW (see Table 3.6). Albertas total generating capacity, including large-scale hydro, according to Statistics Canada (2003) and the Alberta Department of Energy is 909 MW.
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The Role of Renewable Energy In Albertas Energy Future Table 3.6 Small Hydro Plant Generating Capacity in Alberta Site Dickson Dam Jasper Oldman River Belly River St. Mary River Waterton River 1 1 1 1991 1992 1992 Units 3 2 Date Installed Capacity Installed (kW) 1992 1949-56 15,000 1,400 32,000 3,000 2,300 2,800 Owner Algonquin Power Corp., Inc. ATCO Electric Ltd. ATCO Power Ltd. Canadian Hydro Developers Canadian Hydro Developers Canadian Hydro Developers Canadian Hydro Developers/Epcor Utilities Inc. Epcor Utilities Inc. Epcor Utilities Inc. Irrican TransAlta Energy Corp. TransAlta Utilities Corp. TransAlta Utilities Corp. TransAlta Utilities Corp. TransAlta Utilities Corp. TransAlta Utilities Corp. TransAlta Utilities Corp. TransAlta Utilities Corp. TransAlta Utilities Corp. TransAlta Utilities Corp. TransAlta Utilities Corp.
45
Taylor Chute Hydro Brown Lake Miller Creek St. Mary River Mildred Lake (recycled water) Barrier Bearspaw Cascade Horseshoe Interlakes Kananaskis Outlet Works Pocaterra Rundle Three Sisters
1 1 2
2000 1996 2003
12,700 7,000 35,000 7,000
1 1 1 2 4 1 3 2 1 2 1
1998 1947 1954 1942-57 1911 1955 1913-51 1965-67 1955 1951-60 1951
1,450 9,560 15,300 34,000 18,000 5,040 16,800 20,520 13,500 47,250 3,400
Source: Statistics Canada, Electric Power Generating Stations 2003 and Alberta Department of Energy
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The Role of Renewable Energy In Albertas Energy Future Several of these projects will be reviewed briefly.
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TransAlta-owned total generation-including large-scale projects-accounts for approximately 829.4 MW. TransAlta Utilities and TransAlta Energy Corporation own 14 plants in Alberta, 11 of which are characterized as small-hydro projects. While TransAlta Utilities newest small-scale hydro plant dates back to 1967 at Outlet Works located on the Brazeau River, TransAlta Energy Corporation owns and operates one of the provinces most recent facilities at Mildred Lake. Its water source is tailings, a combination of coarse sand and a liquid component, made of water and fine sand. It is the only hydro facility in Alberta to use recycled water. It has a generating capacity of 1.4 MW, making it TransAltas smallest hydro facility. Mildred Lake is better known for Syncrudes 265 MW cogeneration facility, which provides electric and thermal energy to the Syncrude Project near Fort McMurray. TransAlta owns Albertas oldest small hydro project. Horseshoe began operating before the First World War. The four unit facility, located along the Bow River, was commissioned in 1911 and has a generating capacity of 18 MW. In terms of number of projects, however, Canadian Hydro Development is the second largest player in Alberta. They own four small-scale hydro projects. Canadian Hydro Development generating capacity is nearly 20 MW and is planning additional generation, which will be discussed further in Section 3.4.2. The Taylor Coulee Chute is a joint effort between EPCOR and Canadian Hydro Developers. Both own 50 percent of the project that is located near Lethbridge Alberta. Commercial operation commenced in May 2000. Taylor Coulee is a run-of-the-river facility, which means no damming or diversion of the waterway is required. The "river" is an artificial stream that runs through an irrigation canal. Taylor uses diversion flow from the Taylor Coulee Chute irrigation canal to generate during the six-month irrigation season from May to October. Canadian Hydros remaining three projects are Belly River, Waterton and St. Mary. They all produce less than 3 MW. Commissioned in April 1991, the Belly River Hydroelectric Plant was Canadian Hydro's first hydro project. The plant generates electricity by diverting a portion of the flow from the Waterton-Belly Diversion Canal to a turbine. It is located near Glenwood, Alberta, adjacent to the Belly River Inlet Chute Commissioned in 1992, the Waterton facility has a generating capacity of 2.3 MW. It is the smallest project owned by Canadian Hydro Developers. The Alberta Government constructed the Waterton Reservoir in the early 1960s to meet the growing irrigation demands in Southern Alberta. In 1992, Canadian Hydro built the Waterton Hydroelectric Plant as a run-of-the-river facility that produces electricity from the Waterton River as it flows from the Waterton Reservoir. The St. Mary Hydroelectric Plant is located at the base of the St. Mary Dam. The facility withdraws water from the dams reservoir and reroutes the water into a diversion tunnel that flows into the St. Mary River. The St. Mary plant produces electricity by tapping into water flowing from within the diversion tunnel. ATCO Power owns the 32-megawatt Oldman River hydro project in southern Alberta. ATCO Power was selected in January 1999 by Alberta Environment to develop the project at the existing dam site near Pincher Creek, Alberta. Generation will be provided predominantly between May to September when water flow is greatest. This run-of-the-river project consists of two 16-MW turbines located at the outlet of the existing east water diversion tunnel. The west water diversion tunnel will be unaffected.
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A 6.6-kilometre, 138-kV transmission line will be built from the project to the Pincher Creek substation. A step-up substation will be built at the power plant to increase the voltage from 13.8-kV to 138-kV. The average annual generation is expected to be approximately 114 gigawatt hours per year plus adjustments for line losses. Construction of the project was largely an addition to the existing dam and reservoir, built between 1989 and 1992. Fisheries and Oceans Canada as well as Alberta Environment have confirmed that the project will have no significant environmental effects. When operational, there will be zero carbon dioxide emissions relative to 1 kg of CO2/kWh for coal and .49 kg for CO2/kWh for natural gas fueled electricity generation. ATCO Power signed a long-term Use of Works Agreement with Alberta Environment. Power supplied by the Oldman River project will meet the needs of up to 25,000 households. Power will be sold into the Power Pool of Alberta. ATCO Power completed a 15-year, $150 million nonrecourse financing through the Royal Bank of Scotland of its ownership interests in six independent Alberta power projects. The financing covers power plants totaling almost 300 megawatts of capacity at Primrose, Poplar Hill, Valleyview, two at Rainbow Lake and the Oldman River hydroelectric project. ATCO Electric owns the Jasper facility, located on the Astoria River. The first unit was commissioned after the Second World War, in 1949 and the second unit in 1956. The facility, however, received a Notice of Commencement of an environmental assessment on December 6, 2005. Parks Canada Agency conducted a screening which commenced on December 6, 2005 of the project: ATCO Electric - Rebuild Astoria Substation. The existing Astoria substation is being demolished and is being rebuilt. The new substation project, under section 5 of the Canadian Environmental Assessment Act, requires an EA because Parks Canada Agency may issue a permit or license under subsection 5(1) of the National Parks Building Regulations. Algonquin Power Corporation owns one facility, located on the Red Deer River, 20 km west of Innisfail, Alberta. The Dickson Dam Generating Station is a 15.0 MW facility located on the Red Deer River 20 km west of Innisfail in west central Alberta. The site consists of three 5-MW Barber turbines with Ideal Generators. The facility has been in commercial operation since January 16, 1992. The Alberta Minister of Energy controls the water management of the sites upper reservoir. All water control structures at the site (i.e. dam, intake, headgates, and spillway) are owned by the Province of Alberta and administered by the Alberta Minister of Energy. All power generated at the facility is sold to TransAlta Utilities Corporation under the Dickson Power Purchase Agreement, which was entered into on December 7, 1990 and was approved by the Alberta Public Utilities Board on January 16, 1991. It has a term of 20 years ending on January 16, 2012. TransAlta is obligated to accept delivery of all electricity delivered up to 115 percent of the Dickson Allocated Capacity and to purchase that electricity for the prices stipulated by the Small Power Act. 3.4.2 Estimate of Potential Capacity
The current capacity of all small-scale hydroelectric facilities in Canada is about 2,000 MW. Natural Resources Canada has completed an inventory of Canadian small hydroelectric sites. It identified over 5,500 sites with a technically feasible potential of about 11,000 MW. However, only about 2,000 MW would be economically feasible with current socioeconomic conditions and technologies. If capital costs can be reduced by 10 to 15 percent, which should be achievable with future technological improvements, an additional 2,000 MW of economically exploitable capacity would be available.
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According to the Canadian Hydropower Association (CHA), it is estimated that Alberta has approximately 60 TWh of total electricity that can be produced from the hydro potential capacities. This number, however, includes both small-scale and large-scale hydro projects in the province. It is difficult to locate estimates of only small-scale hydro. Quebec has the largest potential followed by British Columbia and the Yukon Territory. The Independent Power Producers of British Columbia have listed a large number of creeks, with a combined small hydro generation potential of 1,000 MW. Alberta, with its mountainous terrain, also has significant small hydro potential. Canadian Hydro Developers are proposing a small-scale hydro project in Dunvegan, Alberta68. The Dunvegan Hydroelectric Plant project is a run-of-river hydro plant that produces power from the flow of the river without storing water. It entails construction of a weir and powerhouse across the Peace River about two kilometers upstream of the Highway #2 bridge crossing at Dunvegan. The Dunvegan Hydro Project is a low-head hydroelectric generating facility that adds 100 MW of consistent, reliable, low-impact renewable green energy to the local supply system. Small-scale hydroelectric systems are becoming more popular, especially over the past two decades as it provides inexpensive, clean, reliable electricity, often without elaborate or expensive civil engineering works. While large hydro projects can create adverse environmental impacts, small-scale hydro is rarely associated with negative environmental issues. Small hydroelectric plants can be developed at existing dams and have been constructed in connection with water level control of rivers, lakes and irrigation schemes. By using existing structures, only minor new civil engineering works are required, which reduces the cost of this component of a development. 3.5 Geothermal Energy
On the temperature scale, geothermal resources are classified into: High-temperature (higher than 150C) Medium-temperature (lower than 150 C but higher than 90C) Low-temperature (less than 90C)
High-grade resources are commonly associated with recent volcanic areas (such as the west coast of British Columbia). This type of resource can be commercially tapped for electric power generation (e.g. proposals for Mount Meager, B.C.). Low- and medium-grade resources can be used most economically in direct use of heat or in combination with underground thermal energy storage (UTES) systems that provide seasonal energy for heating and cooling (e.g. Aquifer Thermal Energy Transfer Storage (ATES) systems at Pacific Agricultural Research Centre (PARC) in Agassiz, B.C.; Carleton University, Ont.). Hot springs, although not directly associated with geothermal energy, are a low-temperature resource that can be accessed for recreational use.
68
The following information was taken from Canadian Hydro Developers website: http://www.canhydro.com
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The Role of Renewable Energy In Albertas Energy Future 3.5.1 Installed Capacity
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To date, there is no major geothermal capacity installed in Alberta. The installed geothermal capacity is mainly off-grid residential and commercial. However, in southern Alberta and especially in the Province of British Columbia, high- to medium- temperature geothermal resources are abundant and can contribute significantly to energy security and recreational use. Geothermal energy can take part in the energy market both in the form of electric power generation or direct use of heat. Low-temperature resources in a variety of different forms are generally available across the country, but their attractiveness from an economic point of view is dependent upon the scale of the project (e.g., building load requirements for heating and cooling). Similarly, the development of low temperature geothermal energy systems may be limited according to such factors as the depth of seasonal freezing and the suitability of aquifers for groundwater extraction. 3.5.2 Estimate of Potential Capacity
It has been demonstrated from research undertaken since 1974 that Canada has plentiful and widespread geothermal potential. The abundance of hydroelectric resources and inexpensive fossil fuels has, however, proved disincentives to large-scale development. Resources of hightemperature geothermal energy have been established but to date none have been utilized. Rather it has been applications utilizing the low-temperature resources that have come to fruition. Direct utilization of geothermal energy has followed four routes (geothermal heat pumps, aquifer thermal energy storage, energy from mine waters and hot spring resorts) and provides an estimated total installed capacity of 377.6 MWt. It has been estimated that 30,000 heat pump units (with a total capacity of 360 MWt) have been installed to provide heat and/or cooling to commercial buildings and larger private homes. In some large-scale buildings the units have combined heat exchangers and aquifer thermal storage technologies whereby recycled geothermal energy is able to provide both heating and cooling. A low-temperature resource at a disused coal mine in Nova Scotia provides an estimated 11 MWt of direct-use geothermal energy for space heating at a local industrial site. Western Canada is known to possess numerous medium and high-temperature hot springs and an estimated 6.6 MWt capacity is utilized for recreational purposes at 11 commercial hot pools and 8 resorts in British Columbia and Alberta. Geothermal waters found in the Western Canada Sedimentary Basin (WCSB) represent a new form of abundant and cheap energy that's sequestered in underground aquifers. The renewable energy stored in these subsurface aquifers is sufficient to power geothermal heat pumps and heat exchangers to generate electricity.69 The Alberta Geological Survey (AGS) and the Alberta Research Council (ARC) have teamed up to study the technical and economic feasibility of harnessing Alberta's low temperature (10 to 40 degrees Celsius) to medium temperature (40 to 140C) geothermal resources found in WCSB. Preliminary estimates suggest that given current technologies the potential energy locked in Alberta's geothermal waters is in the order of 2 to 5 trillion barrels of oil equivalent.70 Figure 3.1 shows the approximate temperature distribution beneath the basin. From this figure, it is apparent that industrial process applications demanding heating temperatures approaching 100C would be restricted to a relatively small portion of northwestern B.C. and southwestern
Assessment of the Potential for Low Temperature Geothermal Energy and Aquifer Thermal Energy Storage (ATES) Systems in the Western Canadian Sedimentary Basin, Simon Fraser University 70 Eaton, Susan, Canada Looks to Tap Aqua Power, Explorer, December 2005.
69
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Alberta. However, the majority of the basin offers temperatures that are highly suitable for low temperature geothermal applications. Figure 3.1 Distribution of Temperatures in the WCSB
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CHAPTER 4 PLANS, POLICIES AND PROGRAMS TO DEVELOP RENEWABLE ENERGY IN ALBERTA 4.1 Barriers for Renewable Energy Development
This section highlights many barriers to the development of low-impact renewable energy (LIRE) in Canada, and more specifically Alberta, namely: 4.1.1 Information barriers; Institutional and policy barriers; Financial barriers; and Technical barriers. Information Barriers
These barriers relate to the lack of information about LIRE technologies or the existence of confusing or incorrect information on their performance. Stakeholders affected by these barriers include energy consumers, utilities and retailers, permitting agencies, investors, and the civil service. Information barriers affect stakeholder decision-making in the marketplace in such a way as to bias decisions against the installation of economically or socially efficient LIRE. For example, consumers may not be aware of the fact that solar thermal heating of a swimming pool is cost effective. Similarly, utilities may not be aware of the resource availability of wind energy and the financial performance of wind turbines.
Lack of Participation in Energy Markets by Certain Consumers

Many residential and some commercial sector energy consumers are unaware of energy issues. Energy is invisible and has traditionally been very cheap relative to other expenses, thus little time is invested in understanding energy supply options. A greater level of consumer participation in energy supplies could result in the greater deployment of LIRE, as they have inherent social values for which people may be willing to pay.
Lack of Awareness of LIRE Options

Even those consumers who are actively engaged in managing their energy supply and use (e.g., large commercial and industrial consumers), may not be aware of LIRE options. The new LIRE market has few suppliers and does not engage in mainstream marketing efforts. Thus, consumers may not be aware of cost-effective options. Utilities or the government may need to play an active role in providing information on LIRE technologies in order to raise awareness.
Lack of Information on Suppliers

There is a lack of information on potential suppliers in Canada and companies that provide maintenance services. This barrier affects utilities and/or consumers, depending on the scale of the LIRE technology that is being considered. Although there are industry associations for wind power (CANWEA) and solar energy (CANSIA and SESCI), no associations are in place for biomass energy, small-scale hydro power or other LIRE technologies.
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Lack of Information on LIRE Resource Availability

There is a lack of information on LIRE resources in Canada. This barrier is significant because the financial performance of LIRE technologies is highly correlated with resource availability. For example, a wind turbine will produce energy at a capacity factor71 of over 40 percent for average wind speeds of eight meters/second (m/s) or greater and as little as 15 percent for wind speeds under five m/s. The capacity factor affects the annual electricity generation and hence the financial performance of the wind turbine in providing electricity. In this example, an increase in average wind speed by 60 percent results in almost a 30 percent increase in energy production. Without information on where the optimal LIRE resources are, prospective developers face the risk of under-performance. This barrier is particularly severe for wind energy resources in Canada, as the geographic terrain makes it very complex to estimate wind speeds in many parts of Canada, and there is no comprehensive wind speed atlas in the country that is appropriate for the assessment of wind energy supplies. 4.1.2 Institutional and Policy Barriers
Institutional and policy barriers relate to the market and regulatory structure, including energy regulations, utilities, technical requirements and procedures for connecting LIRE to the electricity grid. Many of these barriers may exist because of an historical orientation of the electricity market toward large-scale, centralized power supplies such as storage-hydro or large coal projects. Thus, the policy and market structure reflect that history and may disadvantage smaller-scale, distributed, LIRE supplies.
Interconnection and Operational Barriers

Interconnection and operational barriers are often cited as being the most severe for LIRE technologies, particularly for small-scale, distributed technologies. These are related to technical, financial and operational requirements in order to connect to the grid. Interconnection standards and costs may include the following, depending on the jurisdiction where the renewable energy technology (RET) is being connected72: Requirement for the completion of technical interconnection studies (i.e., assessment of the impact of the LIRE technology on the grid and consumers); Boiler code requirements (i.e., full-time operator required, even for small systems); Connection fees (e.g., insurance, disconnect relays, meters, costs of transformers or line upgrades); Operation costs (e.g., transmission and distribution system connection charges); and Excessive application and processing time.
Interconnection barriers ultimately affect the cost of developing a new LIRE supply. This can affect overall project economics and is often particularly severe for small-scale technologies
71 Capacity factor is the total energy production within a year divided by the maximum energy production at the rated power output. Reductions in capacity factor could be due to the limited availability of resources, maintenance shutdowns or other factors. 72 Details on these barriers are provided in Making Connections: Case Studies of Interconnection Barriers and Their Impacts on Distributed Power Projects. B. Alderfer, M. Eldridge, and T. Starrs, National Renewable Energy Laboratory, 2000.
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because many of the interconnection costs are fixed for all sizes of generators. Thus, smaller generators will have to cover those fixed costs with less power production revenue.
Market Barriers
One of the most significant barriers to LIRE is related to the monopoly that electric utilities have on the marketplace in most of Canada. Although many jurisdictions have opened up their wholesale marketplace to competition, in practice, the lack of wholesale buyers in many jurisdictions means that options are limited to private LIRE suppliers. Also, the costs of transmission and distribution on monopoly systems are largely aggregated and the rates that are paid by private power producers reflect system-wide tariffs rather than regional tariffs. The majority of the power supplies in many parts of Canada are far from the load centers, particularly in British Columbia, Manitoba, Quebec and Newfoundland. New supplies in the load centre provide support to the transmission system and have inherently lower transmission and distribution costs than new supplies in hinterland areas. However, rates do not reflect this. In some cases, this may disadvantage prospective LIRE projects located near load centers. In Alberta, the market restructuring effort will attempt to alleviate this barrier by providing financial locational credits for generation that is located near the load centers.
Regulation of the Energy Sector

The regulation of the electricity sector varies among provinces, but a universal characteristic is to require utilities to purchase the cheapest source of power with no consideration for environmental and social costs other than the private price of electricity generation. This is addressed below. 4.1.3 Financial Barriers
Financial barriers are related to taxation structures for energy suppliers, behavior of investors and issues surrounding market externalities such as environmental impacts.
Lack of Access to Capital

Access to capital for investments in new LIRE supplies can be a barrier. Although a large part of total project costs can often be covered by debt financing from banks or insurance companies, a portion of the project must always be covered through an equity investment in the actual project (i.e., ownership). Small LIRE producers often do not have access to sufficient capital, even if their projects are cost effective. Instead, they rely on external equity investors for part of the project costs. Investors will typically put their money into projects that offer the optimal return on equity investment, or that pay a regular dividend for the investment. LIRE must compete with other investments such as conventional oil and gas, technology companies, stocks and mutual funds, and real estate, among others.
Level Playing Field for Competing Energy Supplies

Fossil fuel investments in Canada receive superior federal taxation treatment to LIRE. Efforts in the late 1990s by the Department of Finance have alleviated some of these differences, but have not gone far enough to level the playing field whereby all energy supply options receive identical treatment.
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The first difference relates to so-called development expense write-offs. Oil and gas producers gain access to the Canadian Exploration Expense (CEE) and Canadian Development Expense (CDE) categories which allow 100 percent of their pre-development expenses to be written off in the first year of operation and 30 percent of their development expenses. They can transfer these write-offs to non-energy investments through a flow-through share arrangement. For LIRE, the Canadian Renewable Energy and Conservation Expense (CRCE) provides 100 percent of pre-development expenses to be written off. However, no similar category for the CDE exists for RETs which allow for the flow-through share arrangement. The second difference relates to depreciation of actual project assets. Oil and gas producers gain access to Capital Cost Allowance (CCA) Class 1, 8 and 41, ranging from four percent per year write-off to 25 percent per year. Oil and gas producers can also write off many asset costs through the CDE mentioned above. Oil sands producers and mining operations (i.e., coal) can write-off 100 percent of their capital costs through CCA Class 41(a). Power plants can only write off four percent per year under Class 1. LIRE have access to CCA Class 43.1 depreciation which is 30 percent per year. On the surface, this appears to offer an advantage to LIRE over conventional energy. However, this write-off is limited in scope. It applies only to energy, manufacturing and mining companiesthey cant pass the benefit onto other types of investors such as small commercial businesses. Also, many LIRE companies are not profitable for many years after a project has been developed and thus, cannot gain access to tax write-offs until that time. This makes the flow-through arrangement more valuable.
Lack of Pricing for Environmental Externalities

The energy marketplace includes several environmental and social externalities, defined as those costs and benefits that do not have a direct financial value but have indirect financial and/or social costs or values. Externalities include environmental impacts of energy production and consumption such as greenhouse gas (GHG) emissions, toxic wastes, local air pollutants, watershed impacts and others. There are no well-established markets for GHG emissions, clean air or water as of yet and thus, no financial cost or value for their production. Human health impacts are also considered externalities because it is often difficult to pinpoint the primary and secondary causes of health issues. Health care costs are therefore borne by society as a whole, rather than targeted at the source. The impact of such externalities to the energy market is that purchasers of energy such as utilities and consumers do not apply a financial price to environmental impacts. This is despite the fact that society as a whole often pays for such impacts through government environmental clean-up programs, health care costs, or other expenses. Without price signals for such externalities, energy projects that impact on health, society and the environment, such as new coal or large hydro power plants, are subsidized by the public through a government liability to deal with the environmental impacts in the future. In addition, the lack of price signals means that LIRE projects are not financially rewarded for their environmental benefits. For example, in 1990, Albertas greenhouse gas emissions from electricity were 40 million tonnes (Mt) 73 . They increased to 47 Mt in 2000 and are expected to be over 57 Mt in 2010 with the
73
The emission amounts are expressed in units of carbon dioxide equivalents.
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introduction of 1,700 MW of new coal supplies proposed in the province74. Future efforts to control greenhouse gas (GHG) emissions could include establishing market-based systems for reducing these emissions. Given a conservative price of $20/tonne for GHG emissions, Albertas electricity consumers will be on the hook for a minimum of $400 million every year, increasing in proportion to the rate of growth of electricity demand. This represents the minimum necessary to return emissions from the electricity sector back to six percent below 1990 levels. Some potential market-based instruments under consideration would, however, cover all emissions from the sector, increasing the liability to over $1 billion per year. LIRE supplies would not be subject to this liability. Current plans for power plant expansion in Alberta do not attach any financial value to the environmental benefits of LIRE technologies or the environmental costs of coal. Those environmental costs include: 4.1.4 Greenhouse gas emissions, which impact on global climate; Mercury, nitrous-oxide and particulate matter which impact on human health through airborne emissions which people breath; Urban smog; Sulphur dioxide, which causes acid rain; Land-use impacts from coal mining; and Impacts on watersheds through power plant cooling. Technical Barriers
The level of success of renewable energy technologies depends on their cost competitiveness and reliability relative to conventional technologies. Several LIRE technologies and resources are intermittent, meaning that they do not produce power at all times when it is needed. These include wind and solar technologies for daily variation in supply, and hydro technologies for seasonal variation. This intermittency can be moderated by integrating LIRE facilities into an electrical grid with biomass, storage hydro, nuclear or fossil fuel facilities, or by providing storage for off-grid applications. A major academic report outlined a strategy for developing a 100 percent renewable energy supply in the world through a portfolio of different technologies including non-intermittent biomass and hydro resources and intermittent wind and solar resources75. Others envision a hydrogen economy which would store renewable energy in the form of hydrogen gas or solid compounds, and running hydrogen through fuel cells to power energy demands. Iceland has set about to establish a 100 percent renewable energy system based on a hydrogen distribution system and significant indigenous renewable energy resources. Costa Rica has adopted a policy of aiming for a 100 percent renewable power supply based on wind and storage hydroelectricity. Although there have been some major achievements over of wind and solar power industries, additional technical achievements and value engineering techniques will lower with commercialization. Other renewable technologies the past five years in the manufacture challenges remain. Further technical large-scale production costs and assist such as wave energy and biomass
74 Natural Resources Canadas 1999 forecast for emissions in 2010 was 49 million tonnes, assuming natural gas supplies. Pembina Institute has added eight million tonnes to reflect the net increases of 1,700 MW of new coal above new natural gas supplies that were anticipated in the NRCan forecast. 75 Kelly and Weinburg, Utility Strategies for Using Renewables, Island Press, 1993
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gasification systems are still in the early stages of commercialization, and require continued research and development support as well as market demonstration. Many areas of Canada are also located in more harsh environments than many other countries, and as a result the technical requirements of LIRE systems are even more complex for successful operation. Cold climatic conditions create constraints that challenge small-scale hydroelectric, wind power and PV systems. Rime icing takes place on PV panels and turbine blades, thereby decreasing performance. Small hydroelectric design must provide for control of frazil ice and pipeline freezing. The resolution of this issue can considerably add to capital expenses and operating costs. Canada is not capturing its full energy market share because we have not encouraged the development of our renewable resources through early industry support mechanisms similar to those in other industrialized countries and those employed in Canadas fossil fuel and nuclear sectors. Table 4.1 highlights federal government spending on energy in Canada. Table 4.1 Federal Government Spending on Energy $1,350 million $850 million $353 million $156 million $93 million $12 million Average annual direct federal spending on fossil fuels between 1970 and 1999.76 Cost to the federal government of cleaning up radioactive waste in Port Hope and decommissioning uranium tailings sites. Average annual subsidies to the nuclear energy industry by the Canadian government since 1953.77 Federal subsidy to the Canadian nuclear industry in 2000. Average annual loans to the fossil fuel industry written off by the federal government since 1970, over and above direct spending.78 Yearly funding for renewable energy by the Canadian government.79
Source: CANWEA, Wind Vision for Canada, June 6, 2001
There are opportunities and challenges in moving forward and defining a Canadian strategy for renewables. There are opportunities for increased inter-governmental coordination and cooperation in order to develop and promote renewable energy. Specifically, incentives and partnerships to bring renewable energy technologies to self-sufficiency and commercialization must be supported, and mechanisms must be established to recognize the environmental, economic and competitiveness attributes of renewable energy. Following are several areas in which further effort is required and at which other countries have already excelled or developed a strategy. The Council of Energy Ministers (CEM) is currently looking to systematize the renewables policy to promote higher integration of renewables into the electricity grid. There are several ways that government can systematize renewable energy by implementing the following steps:
76 Total spending was $40.4 billion between 1970 and 1999. Source: Report of the Commissioner of the Environment & Sustainable Development - 2000. 77 Total spending was $16.6 billion since 1953. Source: Ibid. 78 Total spending was $2.8 billon since 1970. Source: Ibid. 79 In 2000, including R&D and tax incentives
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Establish early-stage financial support mechanisms for renewable energy (largely Federal Government)
Implement market-wide production-based revenue incentives for renewables. This means that all renewable energy suppliers large or small, profitable or emerging, public or private can take advantage of federal government financial incentives. Remove tax barriers for renewable energy development allowing all players, regardless of size or earnings, to benefit from the existing accelerated depreciation in our tax laws.
Enact provincial and territorial electricity supply policies for renewable energy (Provincial and Territorial Governments)
Implement renewable energy portfolio standards (RPS) in all provinces and territories. Provincial and territorial government legislation would require all retailers of electricity to meet a minimum proportion of their sales from cost-effective renewable energy sources. Trading of renewable energy credits (RECs) between retailers would allow this commitment to be met at the lowest possible cost. Trading between jurisdictions with portfolio standards in place would ensure that the most cost-effective renewables in Canada would be developed. The cost of such a system would be shared equally among electricity consumers. BC Hydro has already announced 10 percent of its new electricity supplies will be met from green power resources. Establish net metering or net billing in all provinces and territories, allowing electricity users to generate a portion of their own electricity and receive a credit on their electricity bill when they produce more than they can use. This policy has already been established in Manitoba, Toronto and parts of rural Ontario, and has been recently introduced in the Yukon.
Establish foundation measures (Government and Industry)
to
support
renewable
energy
development
Develop a comprehensive wind energy atlas for Canada. This requires an extensive wind-speed prospecting process in many parts of the country; similar to what has already been completed in SW Alberta, Saskatchewan and parts of Ontario and Qubec, and which is currently underway in British Columbia and the Yukon. Environment Canada is working on developing a comprehensive wind atlas for Canada, but it is still not nearly as detailed as some European or US wind atlases. Introduce electricity product labeling for all electricity sales in Canada. These labels, similar to consumer food labels, would indicate the sources of electricity and the environmental impacts of those sources, facilitating consumer choice in the purchase of environmentally friendly sources of energy such as wind. Continue to provide education and marketing materials to the Canadian public and business on the benefits and costs of wind energy. Establish a Greenhouse Gas (GHG) Emission Reduction trading system incorporating renewable energy as a cornerstone to long term emissions reduction. Continue to provide financial support for renewable energy technology research and development which adapts technology for the Canadian environment or builds on Canadian skills and core competencies. Much of the manufacturing of components is
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The Role of Renewable Energy In Albertas Energy Future done outside of North America. significant this is likely to change.
59 As renewable energy generation becomes more
For example, through personal communication with Mr. Mindorff, Advisor Wind Sector, at Brascan Power, an Ontario wind power developer, he points to the level of wind support by the province of Quebec that has led to wind manufacturing being established in the province. As a result, Quebec will now have in-province manufacturing for blade manufacturing (LM Glasfiber), nacelle assembly (Marmen), and tower manufacturing (Marmen). He suggests that if Ontario made a long-term commitment to increasing generation by wind in a significant fashion that this would bring costs down as transportation costs are significant due to the large size of components. This applies to other provinces as well.
Expand government purchases of green power

The federal government recently announced its plan to purchase green power to meet 20 percent of its total electricity needs. Provincial and municipal governments should set a similar positive example of environmental stewardship. For example, the Alberta government has signed long-term contracts for about 210,000 MWh a year or 90 percent of the electricity used in its facilities from green sources starting in 2005.
Considerable evidence points to the fact that our major trading partners are moving dramatically away from non-renewable resources to renewable energy, and erecting trade barriers to economies and trading partners that continue to be highly carbon-intensive. Coincident with these actions, renewable energy technologies continue to decline in cost due to volume and technological improvements. In short order, renewable energy may be less expensive than conventional fossil energy. Countries positioned with renewable energy resources and industrial strength to capitalize on this retooling of the global energy infrastructure will be highly advantageous. Currently, there is a significant risk that Canada will not participate in this infrastructure revolution. In addition, we may risk a loss of competitiveness by having to purchase technology and greenhouse gas emission reduction offsets from others, or by suffering large penalties for our lack of action and large fossil fuel base, which create immense emissions that will be regulated by the Kyoto Protocol or other international treaties. 4.2 4.2.1 Current Federal and Provincial Incentives Federal Initiatives
Although Canada is not a leader among industrialized countries in the development of renewable energy through government policy, there are several programs in place, which are highlighted in the next section.
Wind Power Production Incentive (WPPI)

An important contributor to Canadas more vibrant market has been the federal governments Wind Power Production Incentive (WPPI). One of the main objectives of the WPPI program is to help establish wind energy as a full-fledged competitor in the electricity market by the Kyoto commitment period of 2008-2012. In May 2002 the Government of Canada introduced the first phase of the WPPI, a 15-year, $260 million program to encourage the installation of 1,000 MW of wind energy installed capacity by 2007 and the annual production of 2.6 terawatt-hours of electricity.
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The WPPI is the Canadian federal equivalent of the Production Tax Credit (PTC). WPPI is lower in value than the PTC but is more egalitarian. Unlike the PTC, the WPPI is a payment, not a tax credit. As such, the WPPI is a more direct mechanism than the PTC. Unfortunately, use of WPPI triggers federal environmental review, increasing the cost, complexity, and length of time needed to develop a project, even if only one turbine is involved. The WPPI that was announced in the 2002 federal budget is intended to support electric utilities, independent power producers and other stakeholders in gaining experience in wind energy. The 1 cent per kilowatt-hour incentive will cover approximately half of the current cost of the premium for wind energy in Canada compared to conventional sources. This incentive will be available to electricity producers from all regions for the first 10 years of a project. The WPPI is expected to leverage approximately $1.5 billion in capital investments across Canada. Wind power capacity installed under WPPI, and consequent displacement of other energy sources, is projected to reduce GHG emissions by three megatonnes annually by 201080. This program was extended in the 2005 Federal budget from a 15- to 18-year program (20022020) with a budget of $1,180 million (the initial $260 million plus a proposed additional $920 million) 81. This additional investment will expand the existing program to 4,000 MW of installed wind energy capacity by 2010, with payment of the incentive on eligible wind energy production extending to 2020. The incentive will remain at 1 cent per kilowatt-hour to wind power generators for ten years and to support the development of up to 4,000 MW of capacity over the period to 2010. There are, however, potential changes in three areas proposed by Natural Resources Canada (NRCan). These areas are eligible production, standard threshold price/proposed repayment mechanism and approval process. Eligible Production Because most contribution agreements signed under the program have higher capacity factors than the 30 percent CF originally assumed, and because the funding committed for each project is based on expected production, the current program was not able to reach its 1,000 MW target. The current program resulted in only 730 MW of capacity before all of the $255 million contribution funds were committed. Hence, NRCan proposes to limit payments of the WPPI incentive to a maximum yearly capacity factor (CF) of 30 percent for wind farms commissioned after March 31, 2006. Thus, over the ten-year period, when a particular wind farm will have reached an average yearly CF of 30 percent the payment of the incentive will be stopped to prevent lapsing of funds. In the CANWEAs comments82 to the NRCans discussion paper, CANWEA is completely opposed to the proposed 30 percent capacity factor cap on eligible production as a potential solution. They believe that the cap of capacity factor will: Discriminate against wind projects with better wind regimes and discourage development of such projects eliminating WPPI payments for any production above 30 percent CF makes wind projects in areas with the best wind resources less attractive to investors; Likely deter the development of offshore projects; and
Natural Resources Canada (NRCan) Web cite: http://www.nrcan.gc.ca NRCan, Discussion Paper on the Expansion of the WPPI Program, October 2005. 82 CANWEA, CANWEA Comments related to the Discussion Paper on the Expansion of the WPPI program, November 15, 2005.
81
80
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Likely influence wind turbine technology choice wind developers will choose the make of turbine and hub height that will bring them closest to 30 percent CF, even if a different wind turbine in the same location could achieve a higher overall output and lower cost per kWh.
Standard threshold price and proposed repayment mechanism Under the current WPPI program, every contribution agreement contains a repayable contribution clause (also known as a claw-back clause) in the event that unusually high electricity prices prevail in the future. However, no consideration is given to the actual reductions in capital and operating costs, overhead expenses or output gains, which are expected as the wind energy industry grows and expands. It is therefore proposed that more detailed financial data be requested and made available to NRCan such that it can better monitor the progress the industry is making on cost reduction, and to make appropriate changes to future program parameters when necessary. The NRCan study83 in November 2004 found that the existing repayable clause was generous to recipients and that, under current parameters, the likelihood of recipients repaying in whole or in part any WPPI contributions was extremely low. It concluded that the current Standard Market Price (SMP) was too high compared to the price level wind energy developers around the world receive. Lastly, the report recommended that financial indicators such as return on equity (ROE) or return on investment (ROI) be considered for use in clawing back the WPPI incentive in the event of windfall prices. To the extent that the adoption of a financial indicator like ROE may not be feasible, a revenue proxy can be used as a benchmark (threshold) level over which the project does not require WPPI. The concept is similar to SMP, which, on a per unit basis, is assumed to provide the project with an adequate return. The actual revenues received, including WPPI, can then be compared to the revenue estimated by a threshold price to determine whether the project is making excessive revenue and therefore the amount that should be clawed back. Thus, NCRAN has indicated that it is compelled by the Treasury Board to put in place some form of claw-back/repayment mechanism within the WPPI program to prevent government funds from being paid out in a scenario where excessive profits are being made by a wind energy project. However, CANWEAs response was that it believes that electricity market structures in Canada, where wind energy is competing with heavily depreciated power generation assets, make it very unlikely that any wind project will generate excessive profits. As well, most wind energy projects initiated in the next five years will require fixed long term power purchasing agreements, obtained through extremely competitive procurement processes (i.e. RFPs), to proceed. Accordingly, they believe that the existence of a proposed claw-back/repayment mechanism is unnecessary within the context of wind energy markets in Canada. Approval Process To improve the process of registering, reviewing and approving project proposals, NRCan proposes a 7 Steps to a WPPI Contribution process. Although this approach would add three additional steps to the existing 4-step process, it would also streamline some of the administrative and technical requirements of the program. You can find the details of the proposed changes to the existing process in NRCans Discussion Paper on the Expansion of the WPPI Program. Here we only comment on CANWEAs response. CANWEA believes:
83
NRCan, Repayment Mechanism of the WPPI Program, November 2004.
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NRCan must commit to a specific timeframe for completing a conditional contribution agreement (Step 4) once NRCan has decided on a projects Environmental Impact Statement and accepted a proponents Detailed Project Description. That in some cases, three months might not be enough time to complete Step 5c (PPA signature) and requests that a binding letter of intent that binds the proponent and the purchaser might be sufficient in this timeframe.
A final WPPI program document on the new terms and conditions for an expanded WPPI will be released by NRCan following consultations with wind energy industry, represented by CANWEA, provincial and territorial governments, utilities and other interested renewable energy associations, and Government of Canada approvals.
Canadian Renewable and Conservation Expenses (CRCE)

The Canadian Government Department of Finance established a new class of expenditures for income tax write-offs in 1996the Canadian Renewable and Conservation Expenses. Included in this class of expenses are several pre-development costs associated with the renewable energy projects. This applies to costs associated with equipment eligible for Class 43.1 (see below). The CRCE category of expenditures allows for full deductibility in the first year of operation and permits such expenses to be transferred to shareholders who have entered into a flow-through share agreement84. Expenses included are: The cost of pre-feasibility and feasibility studies of suitable sites and potential markets; Costs related to determining the extent, location and quality of energy resources; Negotiation and site approval costs; Certain site preparation costs that are not directly related to the installation of equipment; Service connection costs incurred to transmit power from the project to the electric utility; The cost of test equipment for wind energy, which is loosely defined as turbines that are 1,500 meters apart from another machine in a project. In addition to the turbine spacing requirement, the government requires separate monitoring of performance on each machine with data sent to the government for a two-year period; and Cost of acquiring and installing more than one test turbine as part of a wind farm. This is a recent amendment as of 2002. Class 43.1 Capital Cost Allowance Class 43.1, described in Schedule II of the Canadian Income Tax Act, provides an accelerated rate of write-off for certain capital expenditures on equipment that is designed to produce energy in a more efficient way or to produce energy from alternative renewable sources. Class 43.1 allows taxpayers to deduct the cost of eligible equipment at up to 30 percent per year, on a declining balance basis.
84
Canadian Government Department of Finance. Tax Expenditures 2000, Chapter 3 Description of Corporate Income Tax Expenditures
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The 2005 Federal Budget indicated that the production from wind test turbines under the Canadian Renewable and Conservation Expense (CRCE) would not be eligible for a WPPI incentive. However, the Budget also proposes to accelerate the Capital Cost Allowance rate from 30 percent to 50 percent for the full range of renewable energy generation equipment included in Class 43.1, including wind turbines, for investments made before 2012.
Sustainable Development Technology Canada (SDTC)

Sustainable Development Technology Canada (SDTC) is a not-for-profit foundation that finances and supports the development and demonstration of clean technologies which provide solutions to issues of climate change, clean air, water quality and soil, and which deliver economic, environmental and health benefits to Canadians. To do so, the Foundation draws from an investment fund of $550 million. SDTC was established by the Government of Canada in 2001 and commenced operation in November of that year. SDTCs mission is to act as the primary catalyst in building a sustainable development technology infrastructure in Canada. The Foundation reports to Parliament through the Minister of Natural Resources Canada. SDTC bridges the gap in the innovation chain by fast-tracking groundbreaking clean technologies through development and demonstration stages, in preparation for commercialization. By doing so, the Foundation protects Canadas original investments in research, increases technologies chances of success, and helps Canadian entrepreneurs carry out their innovation efforts. The organization fosters and encourages innovation and collaboration among private, academic and public-sector partners, and strives to ensure the dispersion of clean technologies in relevant market sectors throughout Canada. One of SDTCs chief aims is to de-risk clean technologies in a way that will ultimately attract downstream private-sector investment and open up opportunities for commercial success. They do this by employing a stringent due diligence process when selecting technologies to support, and by actively strengthening project consortiarequiring every project to involve representatives from the entire supply chain: researchers, product developers, manufacturers, distributors, retailers and end customers. In all, 80 percent of their consortia are industry-led. By assembling a consortia of partners who strengthen one anothers go-to-market capabilities, SDTC helps build the capacity for innovation and success of Canadas clean-technology entrepreneurs. Through this process they help innovators sharpen their market savvy, increase their ability to identify the economic and environmental strengths of sustainable development projects, and define the investment potential that their clean technologies ultimately represent to venture capital financiers.
Market Incentive Program for Emerging Renewable Energy

The Market Incentive Program (MIP) for Distributors of Emerging Renewable Electricity Sources is part of the Government of Canada Action Plan 2000 on Climate Change as a new measure to reduce greenhouse gas emissions. The incentive program is intended to complement another government initiative, the Procurement of Electricity from Renewable Resources program for Federal Facilities, which commits the Government of Canada to purchasing electricity from these sources for federal facilities. MIP is meant to encourage electricity distributors to experiment with ways of stimulating electricity sales from emerging low-impact renewable energy sources. The program will provide $25 million of funding through to March 31, 2006.
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Climate Change Plan for Canada

The Government of Canada released the Climate Change Plan for Canada on November 21, 2002. The plan sets the target of at least 10 percent (3.9 MT) of new electricity-generating capacity in Canada to come from emerging renewable sources. According to the Climate Change Plan, This could be achieved in a number of ways, including expanded production incentives, renewable energy portfolio standards in provinces, increased efforts to develop market demand, as well as the stimulus provided by the proposed emissions trading system. A federal-provincial working group is examining how renewable portfolio standards could work in the Canadian context.85 The Plan also sets out a three-step approach for achieving Canadas climate change objective of reducing annual greenhouse gas (GHG) emissions by 240 megatonnes (MT). First, there are the investments to date that will address one third of the total reduction (80 MT). Second, it articulates a strategy for a further 100 MT reduction. And finally, it outlines a number of current and potential actions that should enable Canada to address the remaining 60 MT reduction. Consumers are also urged to purchase emerging renewable energy from their utilities. The development of an electricity labeling scheme indicating the relative environmental impact of different electricity-generating sources is also proposed.
Renewable Power Production Incentive (RPPI)

In the Federal Budget 2005, and subsequently in Canadas Climate Change Plan, Project Green, the Federal government announced a Renewable Power Production Incentive (RPPI) to stimulate the installation of up to 1,500 MW of new renewable energy electricity generating capacity, other than wind. An incentive payment of 1 cent per kilowatt-hour of production for the first 10 years of operation will be introduced for eligible projects commissioned after March 31, 2006 and before April 1, 2011. Budget 2005 provided $97 million over the next five years and a total of $886 million over 15 years for the RPPI.
EcoLogo
The Environmental Choice Program (ECP), Environment Canada's ecolabelling program, provides a market incentive to manufacturers and suppliers of environmentally preferable products and services, and thereby helps consumers identify products and services that are less harmful to the environment. Established in 1988, the ECP was the second national ecolabelling initiative undertaken. The Program's official symbol of certificationthe EcoLogo belongs to the Government of Canada and is a founding member of the Global EcoLabelling Network. The program is stewarded by TerraChoice Environmental marketing. A key aspect of the certification process is the requirement for third party verification of compliance to ECP certification criteria as a condition for certification and licensing. The EcoLogo program is about to release a set of guidelines for a new standard for Renewable Low-Impact Electricity. Wind qualifies under sources that are included in the EcoLogo program. 4.2.2 Provincial Initiatives
One of the main drivers for renewable energy development has been policy commitments and targets adopted by provincial governments. This includes both Requests for Proposal (RFPs)
85 Government of Canada, Climate Change Plan for Canada, accessed on January 24, 2006 at: http://www.climatechange.gc.ca/english/publications/plan_for_canada/
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initiated by provincial power utilities for a specific quantity of renewable or wind energy, Renewable Portfolio Standards (RPSs), where the power utility or provincial government sets a target for the contribution from renewables, establishing demonstration projects and developing grid connection standards.
Request for Proposal (RFP)

Request for Proposal (RFP) is initiated by provincial power utilities for a specific quantity of renewable or wind energy. Between 2004 and 2006, provincial governments and utilities will have issued RFPs for 6,000 MW of renewable energy; results so far show that the largest share will be awarded to wind projects86.
Renewable Portfolio Standard (RPS)

The Renewables Portfolio Standard (RPS) is a market-based policy for increasing the amount of renewable energy serving a province. It requires each seller of electricity to demonstrate to end users, through ownership of tradable renewable energy credits (RECs), that they have supported the generation of a certain amount of renewable power. Because the RPS applies equally to all sellers, it is competitively neutral. A primary advantage of the RPS as compared to other methods for promoting the commercial development of renewables is that it does not require the centralized collection and dissemination of funds or require Government agencies to make decisions about winners and losers. The market makes all decisions regarding which renewable plants to build, where, and for what price. The bottom line is results and certainty: the generation of a designated amount of renewable power by a specified date. It is the task of the market to deliver these results at the lowest possible costs. The US experience with RPS revealed another important benefit. The RPS encouraged electricity sellers to sign long-term purchase agreements with wind developers. These contracts (often for both RECs and energy) were used by the wind park developers to secure long-term project financing at attractive rates. In Canada, RPSs are implemented only in a few provinces. Canadian provinces such as Ontario and Quebec are leaders in deploying RPSs. Alberta employs Voluntary Renewable Alternative Target (VRAT), which is similar to RPS, except that it is voluntary not mandatory. Volunteer Renewable and Alternative Target (VRAT) has been put in place to see 3.5 percent of total electricity coming from new renewable energy sources by 2008, equaling about 560 MW of new capacity. It is expected that the majority of the new renewable generation will be from the roughly 500 MW of wind generation projects that have applied for access to the transmission grid. To enable the growth of wind, the Alberta Electric System Operator (AESO) has made upgrading the existing transmission system in southwestern Alberta one of its main priorities, along with the upgrading the 500 kV transmission line between Edmonton and Calgary. The upgrading is viewed as necessary because the current system is limiting the capacity to transmit wind-generated electricity. In early 2005, the Alberta Energy and Utilities Board approved an application for $80 million in transmission investments. The following is a list of provincial incentives offered to the developers of renewable energy to meet the target of 3.5 percent.
Green Procurement The Alberta government has signed long-term contracts for about 210,000
MWh a year or 90 percent of the electricity used in its facilities from green sources starting in 2005. The province currently purchases a small amount of its requirements from renewables.
86
Emerging Energy Research, Wind Power 2005 in Review, Outlook for 2006 and Beyond, January 6, 2006
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Alberta Energy Research Strategy - The alternative energy and renewable energy sectors will be
allocated between 13 and 23 percent of the total proposed new funding for the Alberta Energy Research Strategy.
Bill 0 37 Climate Change and Emissions Management Fund - The Fund may be used only for purposes related to reducing emissions of the specified gases or improving Albertas ability to adapt to climate change, including, without limitation, the following purpose: demonstration and use of new technologies that emphasize reductions in specified gas emissions through the use of alternative energy and renewable energy sources. Green Power Offerings Retailers, such as Enmax and EPCOR, provide a rate offering for a small premium for electricity sourced from renewables.
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CHAPTER 5 CONCLUSIONS 5.1 Concluding Remarks
The Institute for Sustainable Energy, Environment and Economy (ISEEE) commissioned the Canadian Energy Research Institute (CERI) to undertake a study that explores Albertas endowment of renewable energy resources, analyzes their cost-competitiveness and identifies barriers to their development. In summary, the purpose of this project is to achieve the following: Discuss the renewable energy technologies (RETs) and their respective costs. Provide a summary of information on the mix of renewables (by resource type, capacity and owner), as well as discussing the potential future capacity of the particular renewable. Illustrate some of the barriers to the development of renewable energy and various federal and provincial initiatives to overcome those obstacles. Present potential future research ideas.
Alberta currently relies heavily on coal, oil, and natural gas for its energy. However, as energy and environmental issues are likely to arise, the provinces renewable energy resources will play a role in Albertas energy future. That being said, despite the many initiatives to develop new renewable electrical energy sources, there likely will continue to be a reliance on gas-fired generation and imports to meet peak demands on Albertas electrical grid. Demand-side management is expected to play an increasing role in Albertas future, given that even a small increase in load reduction during peaks could have a large impact on electricity prices in the province. Table 5.1 illustrates the installed capacity of renewable energy in Alberta. In reviewing the current status of renewable energies relevant to Alberta, wind energy is the most promising renewable generation technology in Alberta, with an installed capacity of nearly 300 MW. Table 5.1 Renewable Energy Installed Capacity in Alberta
Type of Renewable Energy Wind Solar Photovoltaic Biomass Small Hydro Geothermal Installed Capacity MW 275.5 0.028 178 315.5 negligible
Small hydro has physical potential for development as well. However, siting is often an issue because of opposition from local interest groups. The capital costs of hydro are highly sitespecific, and essentially all of the costs associated with hydro are capital costs. Because of its
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dispatchability, zero fuel costs and low forced outage rate, hydro is highly valued in economic dispatch where it is employed in both base load and peaking. In the long-term, biomass-fired generation and IGCC technology may be developed to help meet the electrical and steam demands of oil sands and pulp and paper industry operations. Biomass offers the potential to employ alternative fuels in a gas turbine, which in turn can be operated in combined cycle with a steam turbine. Gasification can prevent many pollutants from entering the atmosphere; combined cycle operation offers the prospect of higher thermal efficiency, enabling a given quantity of electricity to be produced from a smaller quantity of fuel. Solar PV technology, which converts sunlight directly into direct current, is limited to niche markets. In spite of its vast potential, the costs of energy have to decrease substantially for solar to be competitive with the other renewable energies. In summary, the future of renewables in Alberta is optimistic. The potential for each renewable source is presented below. Wind: 1,036 MW in proposed projects Solar PV: 1.4 MJ/m2/yr in Southern Alberta and 1.1 MJ/m2/yr in Northern Alberta Biomass: 585 PJ/yr in forest, agricultural, forest & mill; 900 2,700 GWh/yr in landfill gases Hydro: 60 TWh in both small & large-scale Geothermal: in Southern Alberta high (>1,500oC) to medium (90-1,500oC) temperatures geothermal resources; in Western Canadian Sedimentary Basin: 2-5 trillion of oil equivalent.
This study illustrates some of the plans, policies and programs to develop renewable energy in Alberta. Highlighted are some of the many barriers to the development of low-impact renewable energy (LIRE) in Alberta and in Canada, namely, informational, institution and policy, financial and technical. Although Canada is not a leader among industrialized countries in the development of renewable energy through government policy, there are several programs in place, which are highlighted. Discussed in this study are federal and provincial initiatives such as Wind Power Production Incentive (WPPI), Canadian Renewable and Conservation Expenses (CRCE), Sustainable Development Technology Canada (SDTC), Market Incentive Program for Emerging Renewable Energy, Renewable Power Production Incentive (RPPI) and Renewable Portfolio Standard (RPS). 5.2 Future Research Ideas
We identify a number of areas for potential future research. These are: Including hydrogen fuel cells into the current report; and Expanding the current focus of exploring renewable energys used in electricity generation to examining the role of all renewable energy.
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The Inclusion of Hydrogen Fuel Cells

While originally discovered by Sir William Grove in 1839, fuel cell technology is among the latest energy sources to be explored and developed. Fuel cells can be used to provide energy for a variety of applications, including the ability to produce electric power from hydrogen and oxygen. A fuel cell can be seen as a hybrid between an electrochemical cell, or battery (electrochemical process) and a generator (fuel fed from outside the system). As in any electrochemical cell, a fuel cell is made of two electrodes, the negatively charged anode and the positively charged cathode, divided by an electrolyte. However, unlike batteries, the electrodes are not "consumed" over time nor are the chemicals stored inside the cell. Hydrogen (fuel) and oxygen (oxidant) power fuel cells. They are provided from external sources, and as long as they are supplied to the cell, electricity will continue to flow. A fuel cell consists of two electrodes sandwiched around an electrolyte. Oxygen passes over one electrode and hydrogen over the other, generating electricity, water and heat. Hydrogen fuel is fed into the anode (the negative electrode) of the fuel cell. Oxygen (or air) enters the fuel cell through the cathode (the positive electrode). Encouraged by a catalyst the hydrogen atom splits into a proton and an electron, which take different paths to the cathode. The proton passes through the electrolyte87. The electrons create a separate current that can be utilized before they return to the cathode, to be reunited with the hydrogen and oxygen in a molecule of water. Figure 5.1 shows a schematic diagram of Proton Exchange Membrane (PEM)88. The PEM is a substance that allows hydrogen and oxygen to pass through fuel cell.
87 electrolyte in a Proton Exchange Fuel Cell this material is between the Cathode and the Anode and is primarily made of Nafion which is a Dupont Polymer 88 http://www.netl.doe.gov/coolscience/teacher/lesson-plans/lesson6.pdf
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The Role of Renewable Energy In Albertas Energy Future Figure 5.1 PEM Fuel Cell
71
Three main components of a fuel cell system are the hydrogen fuel reformer, fuel cell stack and the power conditioner. A "fuel reformer" utilizes the hydrogen from any hydrocarbon fuels such as natural gas, propane and methanol and feed to the fuel cell. The produced mixed hydrogen and other gases should be purified. This process lowers the efficiency of the fuel cell. However, since the fuel cell relies on chemistry (converts chemical energy to electrical energy) and not combustion, emissions are smaller than combustion fuel processes. The fuel cell stack converts the hydrogen and oxygen from the air into electricity, water vapour and heat. Furthermore, a single fuel cell produces only about 0.7 volts electricity. To get this voltage up to a reasonable level, many separate fuel cells must be combined to form a fuel-cell stack. The power conditioner then converts the DC current from the stack into the AC current for using the electricity for the appliances.
There are several different types of fuel cells, each using a different chemistry. Fuel cells are usually classified by the type of electrolyte they use. Some types of fuel cells work well for use in stationary power generation plants. Others may be useful for small portable applications or for powering cars. Alkaline fuel cell (AFC): This is one of the oldest designs. The AFC is very susceptible to contamination, so it requires pure hydrogen and oxygen.
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Phosphoric-acid fuel cell (PAFC): The phosphoric-acid fuel cell has potential for use in small stationary power-generation systems. It operates at a higher temperature than PEM fuel cells. Solid oxide fuel cell (SOFC): These fuel cells are best suited for large-scale stationary power generators. This type of fuel cell operates at very high temperatures (around 1,832F, 1,000C). This high temperature makes reliability a problem, but it also has an advantage: The steam produced by the fuel cell can be channeled into turbines to generate more electricity. This improves the overall efficiency of the system. Molten carbonate fuel cell (MCFC): These fuel cells are also best suited for large stationary power generators. They operate at 6000 C, so they also generate steam that can be used to generate more power.
Fuel cells have applications that range from providing heat and power for buildings through to powering buses, trucks and cars, to replacing batteries in cell phones and even serving as the power source for alcohol breathalyzers. It would be interesting to include hydrogen fuel cells in investigating the role of renewable energy in Albertas energy future.
Examining the Role of All Renewable Energy

Renewable energy heating systems, hydrogen generation and transportation fuels are beyond the scope of this project. As such, it is important to remind that this report does not include solar thermal, only solar photovoltaic. As well biomass includes hog fuel, fuel wood, spent pulping liquor, municipal solid waste and landfill gas. It, however, does not include the discussion of ethanol and biodiesel. While the applications for biomass are plentiful, this study focuses primarily on electricity generation, and, hence, space and water heat, heavy vehicle fuel and automobile fuel are beyond the scope of this study. Again, it would be of interest to include a more diverse definition of renewable energy when examining the role of renewable energy in Albertas energy future.
November 2006

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The Role of Renewable Energy in Albertas Energy Future

Paul Kralovic Dinara Mutysheva

Paper No. 15 of the Alberta Energy Futures Project

The Role of Renewable Energy in Albertas Energy Future i

The Role of Renewable Energy in Albertas Energy Future iii

CHAPTER 3 3.1 3.2 3.3 3.4 3.5

Canadian Energy Research Institute

CHAPTER 5 5.1 5.2

Canadian Energy Research Institute

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The Role of Renewable Energy In Albertas Energy Future

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The Role of Renewable Energy In Albertas Energy Future

Canadian Energy Research Institute

Canadian Energy Research Institute

Source: Alberta Department of Energy (ADOE), Electricity Statistics, available at http://www.energy.gov.ab.ca/537.asp

Canadian Energy Research Institute

The Role of Renewable Energy In Albertas Energy Future

Canadian Energy Research Institute

The Role of Renewable Energy In Albertas Energy Future

Canadian Energy Research Institute

1 Some turbines operate without a gearbox

Canadian Energy Research Institute

The Role of Renewable Energy In Albertas Energy Future

Canadian Energy Research Institute

The Role of Renewable Energy In Albertas Energy Future

Canadian Energy Research Institute

The Role of Renewable Energy In Albertas Energy Future

Canadian Energy Research Institute

The Role of Renewable Energy In Albertas Energy Future

Canadian Energy Research Institute

The Role of Renewable Energy In Albertas Energy Future

Canadian Energy Research Institute

Canadian Energy Research Institute

Figure 2.3 Solar Thermal Electric Technology

System (SEGS) Assessment for Hawaii, 1992, available on

Canadian Energy Research Institute

The Role of Renewable Energy In Albertas Energy Future

Canadian Energy Research Institute

The Role of Renewable Energy In Albertas Energy Future 2.2.3 Costs

38.1 38.1 4.8 4.8

165.5 269.4 120.6 209.1

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Solar Thermal 100 10,280 2,960 0.00 50.23 3 2007

Photovoltaic 5 10,280 4,467 0.00 10.34 2 2006

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The Role of Renewable Energy In Albertas Energy Future

29 Biomass Technology Group, http://www.btgworld.com/technologies/gasification.html

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The Role of Renewable Energy In Albertas Energy Future

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The Role of Renewable Energy In Albertas Energy Future

56 36.01 $1,696 3.48 $13,675 8.20 6.31

COE (/kWh Constant 1990 $)

Canadian Energy Research Institute

The Role of Renewable Energy In Albertas Energy Future

IGCC 80 8,911 1,757 2.96 47.18 4

Small Hydro Description