IPPSO FACTO, December 1995, electronic edition
Excerpts from the magazine of the Independent Power Producers' Society of Ontario

Volume 9, No. 6, December 1995

What's In This Issue (Selected topics only)

Toronto: Ontario Hydro's Director of Environment and Sustainable Development Brian Kelly in early October announced the shortlisted candidates in the Round 1 request for proposals in Hydro's Renewable Energy Technologies (RETs) program. Kelly was speaking at the annual conference of the Canadian Wind Energy Association (CanWEA) in Kincardine, Ontario, where he also introduced Hydro's proposal for a new "Greenshares" green energy pricing experiment (See sidebar 1 for the shortlist, and the article on the CanWEA conference in this issue of IPPSO FACTO).

Round 1 is designed to add 60 MW of independent green electric capacity to Hydro's grid. Hydro developed the two-round RETs request for proposals to gain experience with a diversity of intermittent, decentralized renewable energy technologies new to the utility (IPPSO FACTO, May 1995, p 1). By helping to remove market barriers to RETs, Hydro will assist new renewables to become a commercially proven, competitive supply option, fully integrated into the public utility's generating system.

According to current projections, 200 MW of RETs could be added to the provinical grid annually from 2003 to 2020. (This estimate excludes utility-owned hydroelectric generation.)

"Renewable energy technologies are the wave of the future, as they offer a localized, decentralized way of meeting electricity needs," said Hydro president and CEO Allan Kupcis.

The request for proposals is the centrepiece of Ontario Hydro's $110 million RETs program for 1994-1999, which also includes utility R&D in advanced photovoltaic materials and power inverters, and improved methods of installation and electrical connection for wind turbine generation. RETs also features in-house, stand alone applications of renewables, off-grid replacement of diesel generation in remote communities, and "net billing" (running the meter backwards down to zero) for customers who generate some of their own power from renewable sources.

The shortlisted projects announced by Kelly total 54.1 MW, consisting of 3 projects fuelled by wood waste, managed wood or biomass (22.2 MW), 11 proposals for individual wind turbines (4.2 MW), 4 for small wind farms (13.8 MW), and 4 others based on anaerobic digestion or sewage treatment gas (13.7 MW).

Round 1 RETs projects are all being developed by the private sector. The bidding in Round 2 for 65 MW, expected in late 1996, will be opened to Hydro's own business units and possibly also to municipal electric utilities.

The Round 1 shortlist does not yet include several proposals for medium wind farms, sized between 10 and 22 MW, which are delayed due to the need for 42 weeks of wind resource assessment.

Hydro has asked the shortlisted proponents to submit a lower, final bid price, which includes the cost of grid connection, by January 1996. Winners will sign power purchase contracts with Ontario Hydro by spring 1996, and the in-service date for projects is on or before December 31, 1997 except for medium wind farms, whose in-service date is December 31, 1998.

Kelly emphasized that Ontario Hydro will continue the RETs RFP despite the fact that Ontario's new Progressive Conservative government has begun to make sharp cuts in many provincial programs. CanWEA delegates were aware that the Saskatchewan Power Corporation last summer cancelled an RFP for 3 MW of independently generated windpower.

Kelly said that "Ontario Hydro sees RETs as a business, not a charity operation." Also, "at this point, we're trying to gain an understanding of the technologies and their value to the utility and the province. The short-listed proposals represent a broad range of technologies, proponents and locations that will contribute to Hydro's experience with RETs."

Ontario consumers increasingly prefer green power and could soon gain the opportunity to contribute financially to future renewable electricity projects in the province, if the "Green$hares" plan is approved. The Green$hares fund would support Round 2 of the RETs program.

The Green$hares renewable energy funding program would enable customers to pay a voluntary premium for new green sources of electricity in the form of non-equity and non-convertible Green$hares, whose proceeds would flow into a Green Fund. The Green Fund would support possible additional solicitations in the RETS program beyond 125 MW.

There would be three classes of Green$hares: residential, commercial/institutional and industrial, with the latter two involving greenhouse gas reduction credits. Kelly envisages the Green$hares program as part of a wider menu of greenhouse gas reduction options, which might also qualify for existing fiscal incentives including tax credits for small business investment and charitable contributions.

The Green$hares program would be administered by an independent board of directors, and encourage competitive, cost- effective project selection. Many specifics on the method of customer payment and the status and privileges of Green$hares remain to be elucidated.

Kelly cited recent consumer market research conducted by Ontario Hydro to test the Green$hares concept. Surveys of all customer classes found that:

* They believed wind and solar powered generation are the two most environmentally friendly methods of electricity generation.

* Given a choice, nearly one in two residential, agricultural and commercial customers would very likely specify that the electricity they buy be generated by renewable technologies.

* Many customers would be prepared to pay green premiums. Most non-industrial customers would pay a 5 percent premium, and about one in three would pay a 10 percent premium.

These and other poll results showed "extraordinary" levels of support for the program concept, said Kelly.

In one scenario, if 50 percent of 3.3 million residential customers of Hydro or the municipal utilities it regulates make monthly contributions of $13.30, an annual income of $247.2 million would be available to the Green Fund. "There are exciting opportunities with Green$hares to expand the RETs program," said Kelly.

In the same poll, conducted during August and September with over 1,500 Canadians by telephone, CanWEA discovered that more than four in five Canadians would buy wind-generated electricity for about the same price as electricity from other sources. Moreover, four in five want their provincial electric utility to expand the availability of wind generated electricity.

CanWEA announced that given the choice of buying wind- generated electricity for roughly the same price as electricity from other sources, 47 percent of Canadians nationally said they would definitely buy the wind-generated electricity, and another 35 percent say they would probably buy it. Asked if Canadians want their provincial electric utility to priorize expansion of availability of wind-generated electricity, only 15 percent think this should be a minor priority. Fully 35 percent of Canadians want their electric utility to assign major priority to expansion of wind-generated electricity, and another 45 percent want it to be a moderate priority.

Some 72 percent of Canadians want their provincial electric utility to pay for expansion of windpower as part of its overall mix of generating sources, and pass on the costs to all of its customers. Another 20 percent of Canadians would be happy to choose the option of having their household supplied by wind energy, even if it meant paying a premium ("green pricing").

If their provincial electricity utility offered the option, 65 percent of Canadians say they would be interested in paying more to have their households supplied with wind energy. Some 17 percent say they would definitely pay a little more, while 48 percent say they would probably do so.

Those interested in the green pricing option are willing to pay an average of $13.70 more per month for wind-generated electricity in addition to a typical $75 bill.

The RETs Round 1 shortlisted proposals

Individual wind turbines, up to 1 MW

Fuller Electric M. Fuller

J.Weilandt P. Andres

J. Liovas J. Liovas

J. Liovas J. Liovas

Bidsmore J.E. Seeton

Controltech I. Baines

Controltech I. Baines

Controltech I. Baines

Windtechnik F. Siemonsen

Wenvor Technologies A. Paulissen

Great Lakes Power P. Atkins

Small Wind Farms, 2 to 5 MW

Tacke Windpower P. Andres

New World Power R. Milling

Wolfe Island Power V.M. Parker

York Research A.H. Bellac

Medium Wind Farms, 110 to 22 MW, deferred 42

weeks for wind resource mapping

Biomass and wood waste, up to 15 MW

Energy Engineering T. O'Farrell

Polsky Energy A.C. George

Orenda J. Barber

Anaerobic digestion, up to 5 MW

Canada Composting P. Blanchard

Browning-Ferris J.T. Bean

ProlerInternational J.S. Thakur

Laidlaw Energy R.G. Marshall

Hybrid and other innovative technologies,

including microhydro less than 100 kW, up to 4 MW

Wildside Foundation P. McKay

BRM Microhydro R. Tosswill.

Externalities Collaborative sets numbers for environmental costs

By David Bright and Stephen Salaff, PhD.

Toronto: In a significant advance for demand side management and carbon dioxide reduction in Ontario, a new report offers the Ontario Energy Board a dollar-based benchmark for deciding which DSM programs make economic sense in the natural gas industry. In its major finding, the report says that a carbon dioxide emission value of $40 (1995 Canadian dollars) per metric ton (tonne) should be the point value used in cost-benefit testing for gas DSM programs. DSM programs that avoid substantial CO2 emissions could thus be valued highly.

Carbon dioxide is the major greenhouse gas, and its release from fossil fuel combustion is the chief human contributor to global warming.

The document is entitled "Final Report of the Collaborative on Externalities for Natural Gas Integrated Resource Planning in Ontario."

The report is the product of nearly two years' work by an "externalities collaborative" of the three major Ontario gas local distribution companies (LDCs), who funded the exercise, along with government agencies including OEB staff, environmental groups, and industry organizations. IPPSO was a member of the collaborative.

The collaborative was formed as a result of the findings of the OEB in 1993 on the generic aspects of DSM in gas integrated resource planning for Centra Gas Ontario Inc., Consumers Gas Company Ltd. and Union Gas Limited.

The collaborative's mandate was to achieve consensus on the methodology for identification, measurement and monetization of externalities, and the monetized values themselves. The result establishes a common basis for the OEB to include monetized externalities as part of its review of DSM programs and portfolios.

External costs and benefits are those effects on society at large which arise due to the use or conservation of energy, but which are not reflected in the market prices of the energy.

The $40 figure was recommended by the Tellus Institute of Boston, the consulting firm retained by the collaborative. An LDC representative explained that in order to stress the inherent uncertainty of this estimate, the collaborative wrapped a $10 to $60 sensitivity range around the $40 point value.

The $40 value lies near the middle of the range of values adopted by various public utility commissions in the United States. The range for sensitivity analysis reflects the range of CO2 emission values, excluding the highest and lowest values, recommended or adopted by utilities and regulatory commissions in Canada and the US. The figure is also approximately the size of a "carbon tax" which some analysts advocate for Canada.

The collaborative cited two Canadian "top-down" studies which estimated the carbon dioxide taxes that would be needed to stabilize Canada's CO2 emissions at the 1990 level by the year 2000. According to a 1992 federal Department of Finance study, a CO2 tax of $32 per tonne would be required. A 1993 study by Data Resources Inc. Canada and Marbek concluded that a $47 per tonne tax would be needed for stabilization.

Top-down studies use abstract computer models of the national economy to estimate the hypothetical CO2 tax necessary to achieve the desired national reduction in CO2 emissions. These models assume that before the tax, consumers and businesses have already made all of the cost-effective energy efficiency and fuel switching investments given the prevailing and expected retail prices of energy.

In contrast, bottom-up studies perform engineering analyses of the cost of reducing CO2 emissions for a specific end-use by adopting more energy-efficient technologies or switching to a cleaner fuel. According to a 1993 DRI/Marbek "bottom-up" study, Canada could stabilize its CO2 emissions at the 1990 level by 2000 at no net economic cost.

Many analysts believe that such bottom-up studies underestimate the cost of reducing CO2 emissions, because they may ignore many real costs to consumers or businesses of evaluating and implementing energy efficiency and fuel switching options.

The collaborative's values for methane ($440 a tonne) and nitrous oxide ($10,800 a tonne) are based on current estimates of the global warming potential of these compounds relative to that of CO2. The corresponding uncertainty ranges are $110 to $660 a tonne for methane and $2,700 to $16,200 a tonne for nitrous oxide.

The global warming potentials of methane and nitrous oxide were revised upwards in the report Climate Change 1994 published early in 1995 by the Intergovernmental Panel for Climate Change. If the collaborative were writing today, the externality values for methane and nitrous oxide might therefore be significantly greater.

The report set per-tonne values for judging the financial feasibility of DSM proposals to reduce five air pollutants in addition to CO2. Two of these are the primary substances which cause urban smog: volatile organic compounds (up to $7,500 a tonne) and nitrogen oxides (NOx) (up to $15,000 a tonne).

As well, the report established abatement cost benchmarks for sulfur dioxide (up to $4,800 a tonne). SO2, along with NOx, is the major cause of acid rain. An abatement cost is also set for carbon monoxide ($1,400 a tonne), and for particulates (up to $16,400 a tonne).

Monetization of externalities does not imply that retail prices of gas will directly incorporate the monetized values of externalities. These values are intended to be used as inputs to the gas utility planning process, when evaluating the relative costs and benefits of DSM options from an overall societal perspective.

The report claims that the collaborative addressed full fuel-cycle impacts to achieve the most balanced and comprehensive result possible. However, Greenpeace Canada, which participated in the collaborative through the Green Energy Coalition and left the coalition in early 1995, advocates a more explicit recognition of the pollution caused by natural gas processing plants in western Canada.

Kai Millyard of the Green Energy Coalition said that future deliberations, with more financial resources, will consider the upstream issue more fully, along with the externalities of the nuclear fuel cycle and other controversial issues.

Presently there are no environmental regulations governing emissions of CO2 in Canada. The National Action Program on Climate Change hopes to return greenhouse gas emissions to 1990 levels by 2000. Canadian industry, working through the Canadian Industry Program for Energy Conservation and other industry and civic organizations, is committed only to voluntary actions for achieving stabilization.

However, a growing body of opinion holds with Environment Minister Sheila Copps that more aggressive measures, covering a full range of federal policy instruments, which could include a carbon tax, are needed.

CIPEC was the lone dissenting voice in the collaborative on the monetization of CO2 emissions. CIPEC argued that "since Canadian industry is committed to voluntarily stabilizing CO2 emissions at the 1990 level by the year 2000, assuming an average annual economic growth rate of no more than 2 percent between 1995 and 2000, and because the government of Canada has not yet made a commitment beyond that point, the externality value assigned for industry should be zero."

Environmental members of the collaborative greeted the report enthusiastically. "If the OEB adopts this report, it would be a green light for a large number of gas conservation projects which will reduce air pollution," said Bruce Lourie, director of energy policy at Pollution Probe. "These conservation programs typically require consumers to invest in energy efficient equipment."

"The report is a successful start on externalities evaluation, using the best available information," added Millyard. "Major energy, consumer and environmental groups have agreed on how to value the environment in supply and conservation investments. This agreement will stimulate DSM investments by the LDCs, since much more energy efficiency is justified than on a pure financial savings basis alone."

Arunas Pleckaitis, the Consumers Gas Company representative on the collaborative, concurred that "the process was arduous, time-consuming and a great learning experience. Although we did not achieve full consensus, we now have a common set of numbers for utility DSM planning. Consumers Gas intends to use these numbers for planning purposes until the OEB directs us otherwise, or until better numbers are derived."

The influence of the collaborative report on LDC planning will be determined by the OEB's regulatory response to the document. Pleckaitis expressed the hope that the OEB will adopt the near-unanimous conclusions of the report.

See sidebar for a discussion of the collaborative's cost of control methodology versus the "cost of damage" methodology of the Intergovernmental Panel on Climate Change.

Which methodology to use?

In accordance with the OEB's current guidelines, the primary methodological approach for estimating externalities (based on societal willingness to pay to avoid environmental, public health and amenity consequences of energy activities) in Ontario was the "marginal cost of control" technique. The marginal cost of control approach seeks to define, with reference either to government regulations or emission reduction targets, the incremental cost of abating a given emission to conform to the relevant regulation or achieve the specified target. The collaborative considered, where appropriate and where information was readily available, other techniques for establishing externality values for Ontario. These included "damage costing" and examination of values adopted elsewhere in North America.

The damage cost approach, favoured by a number of electric utilities, seeks to directly trace and evaluate the damage sustained by society at large due to a given emission. Ontario Hydro reduced its status in the collaborative from an active participant to an observer in 1994, claiming that "the collaborative has expanded its scope of work to include the development of cost of control based external cost estimates for electricity generation options (nuclear, fossil fired and hydraulic options) because of the perceived potential for fuel switching to natural gas."

In fact, argued Hydro, "the majority of the scientific and research community around the world have recognized the damage function approach as the methodologically sound approach."

Jack Gibbons, senior economist with the Canadian Institute for Environmental Law and Policy, who served as consultant to Pollution Probe in the collaborative, described three major shortcomings of the damage costing methodology for climate change. These include the difficulty in tracking the wide range of global warming impacts, the problem of assigning a dollar value to non- market goods, and the discounting of costs to future generations.

Damage cost estimates for climate change are available in the peer-reviewed literature and were assessed. This methodology has been adopted by the Intergovernmental Panel on Climate Change (IPCC). The IPCC was established in 1988 by the United Nations as a diverse and impartial body of experts encouraged to conduct independent assessments. The Summary for Policymakers approved in Montreal at the mid October session of IPCC Working Group III stated that, "IPCC does not endorse any particular range of values for the marginal damage of CO2 emissions, but published estimates range between $5 and $125 (1990 US dollars) per tonne of carbon emitted now. Expressed in units of CO2 emitted, this range is between $1.36 and $34 (1990 US dollars).

These estimates, developed using simplistic models, represent the present value of a tonne of carbon emitted today over its expected atmospheric life. IPCC's Working Group III, co-chaired by Canada and South Korea, assesses the socioeconomics of mitigation, impacts and adaption to climate change.

Gibbons noted that "even with all the many flaws in the damage costing methodology of the Montreal estimate, the upper end figure of $34 (1990 US dollars) per tonne of CO2 emitted is well above the $40 (1995 Canadian dollars) value chosen in the collaborative. "This shows that our $40 value lies within the range quoted by the IPCC. I would say that this makes our $40 value look even more reasonable."

The literature also contains estimates of the annual damage for equilibrium climate change associated with a doubling of the pre-industrial CO2-equivalent concentration of greenhouse gases. The "best guess" values are on the order of 1.5 to 2.0 percent of world GDP assuming that the structure of the economy is similar to that of the world economy today.

This damage estimate appears in chapter 6 of the report, although not in the summary for policymakers. The estimate assumes a CO2 emissions level double that of 1870, which remains constant. The analyses cover only one year.

The Global Commons Institute of London, England, claimed that these controversial estimates are erroneously low, in part because the damage in the developing world is greatly underestimated, particularly the value of the increased risk of mortality (value of a statistical life). However, Eric Haites of Margeree Consultants in Toronto, who heads the technical support unit for Working Group III, noted that the GCI criticisms focus mainly on the regional damage estimates. "There is no disagreement that all lives ought to be treated equally. The global estimates are based on a global average value of a statistical life."

Haites added that "the reality is that the amount individuals and governments are willing and able to spend to reduce risks to human life vary widely, largely due to differences in income. Thus, the value of a statistical life varies significantly on a regional basis for the same global average. The GCI believes the studies that present regional estimates underestimate the impact of climate change on developing countries."

Herman Daly on FCA

Hydro News

Ontario Hydro saves the day after Kortright funding cut

Vaughan, Ontario: The Kortright renewable energy education centre was saved from destruction at the eleventh hour by Ontario Hydro, after the provincial government cut off all its funding. Myrna Moore of the Energy Action Council of Toronto reports that "Plans were in place to lay off the two staff who were responsible for the energy programs and to close down all the renewable energy exhibits. However at the last moment, Ontario Hydro, through the Division of Environment and Sustainable Development, stepped in and has agreed to help fund Kortright's role as a public educator on renewable energy."

For the past ten years, the Metro Toronto and Region Conservation Authority provided a public education program on renewable energy at its Kortright Centre for Conservation just north of Toronto. The Kortright Centre is a general purpose educational facility that provides schoolchildren and the public with natural environment interpretive programs. Ehibits included an "autonomous cabin" powered by wind and solar energy, a grid- connected 10 kW wind generator, a water pumping windmill, a deep well PV water pumping demonstration, and solar water heating systems. Some of the programs Kortright has sponsored include "The Power Trip" (an overview of renewable energy); Go Fly a Kite (wind power); Solar Energy - A Bright Future; The Green Revolution (wood energy); and Solar Electricity for the Remote Cottager.

For the past ten years, the Kortright renewable energy program had been funded by the Ontario Ministry of Environment and Energy, with support from Ontario Hydro and other sources. Funding had been reduced last year, but in mid-August the new provincial government informed Kortright that all renewable energy funding was being cut to zero immediately. According to Moore, Ministry staff stated that "the Ministry's mandate is no longer to promote the use of any one specific type of energy." Energy Action Council members believe that it will be hard for the government to reconcile such a policy statement with any programs of any sort in the future, even energy efficiency programs.

Kortright's Bob Burchett has assured the public that new funding will be in place by January 1996, so that the Centre can resume its renewable energy programs.

Field to Head OH Nuclear

Toronto: Ontario Hydro recently appointed Ron Field as the new General Manager of its Nuclear Business Unit. Mr. Field has 27 years experience with Ontario Hydro, most recently as the business group's director of Finance and Business Services Division. Field has also held a number of other positions with the Corporation, including director of Purchasing and Materials Management, and Manager of Project Services for both the Darlington and Bruce nuclear power stations.

Hydro internal efficiency program making big gains

This Ain't Rocket Science

By Alex MacDonald

Kincardine: Ontario Hydro disclosed surprising information at a conference it sponsored recently entitled "Energy Efficiency and Sustainable Development Make Good Business." The conference took place at the Bruce Nuclear Power Development Information Centre on October 17 and 18. The event featured speakers from Hydro's Nuclear and Fossil business units, the in-house energy efficiency group and the private sector.

Several consistent themes recurred during the presentations on energy efficiency and much of the content sounded like an Amory Lovins presentation from ten or fifteen years ago, when the "soft energy path" seemed like an modern-day form of utopia. These included:

- visible participation and commitment from senior management is essential for success.

- buildings or systems must be viewed as an integrated whole (all components must work together) Ä i.e. reduced lighting loads have an impact on chiller loads.

- turn it off when not in use.

- replace worn out equipment with higher efficiency equipment.

- constantly monitor results to keep up standards (Neil Burnett, OHT, pointed out that a $200,000 investment in monitoring had reduced a $9 million dollar utility bill by $2 million).

The most common phrase used during the conference was "This ain't rocket science".

Part of the holistic philosophy expressed included a recognition that energy efficiency had many side effects. These effects had to be recognized when calculating payback and included water savings, lower maintenance costs (high efficiency lights don't have to be changed as often), improved lighting levels result in improved worker productivity, and reduced environmental impact (Andy Lemay from INCO pointed out that a reduction of from 42 to 29 BTU/lb. of nickel had resulted in a reduction in CO2 output of .0028 to .0013 in 1995 - tons/lb. between 1981 and 1995.

At a purely financial level, energy savings go directly to the bottom line, pre-empt regulators, improve the corporate image and therefore attract investors.

That bottom line thinking extends to Hydro itself. Jim McConnach (Ontario Hydro Manager of Internal Energy Efficiency, Ontario Hydro) pointed out that Hydro is its own largest customer and that improving internal energy efficiency was an essential step in lowering costs to prepare for a competitive market. Money motivates. Hydro business units now must pay for electricity bills and staff bonuses in energy efficiency are related to results. Each of these factors has contributed to the success of the internal energy efficiency efforts (which have significantly exceeded targets).

The target for 1997 for Hydro is a sustained saving of 3 TWh/ yr. valued at $50 million per year. In addition, there is the savings in CO2, NOx, and ash. All these savings go on, compounding year after year.

Ontario Hydro's Managing Director of Energy Services John Fox spoke to the conference participants after dinner the first day. He noted that Hydro was now "driven by competition." Its monopoly is no more. Hydro must now compete with other fuel sources, self- generators, independent generators, and out of province generators.

That competition is not limited to the sale of electricity. Ontario is competing with every jurisdiction in North America to retain existing businesses and to attract new business. This competition bears directly on Hydro's health since that health is directly related to the health of Hydro's customers and the economy they support.

For IPPSO members Fox had good news and bad news. The bad news was that Hydro's Board of Directors had approved "economic development load retention rates" to give Hydro more pricing flexibility to compete with self generators and co-generators. This in addition to another rate freeze and a lowering of costs to some of Hydro's direct customers.

The spot market part of the pool had been opened to competition in July 1995 for certain independent power producers. The good news was that the whole pool would be opened for competition January 1997. "This is necessary and inevitable and we have chosen to get in front of the wave instead of being drowned by it," he said.

On the Sustainable Development front Fox noted that Sustainable Development requires a balance between economic sustainability and environmental sustainability. He did note that environmental issues had moved from being a peripheral issue to a central one at the recent World Energy Conference. (See article elsewhere in this issue of IPPSO FACTO). An economy can't be sustained in an unsustainable environment.

In response to a question from the floor, Fox said that he could not predict the exact future relationship among Hydro, the OEB and the government. He did suggest that the marketplace rather than OEB will regulate price. The regulator will regulate the playing field but not the price.

On the issue of privatization Fox suggested that industry restructuring and ownership are separate issues. "There are poorly run investor owned utilities and poorly run public utilities."

The big issue around privatization would be the impact on customers. Given the extensive re-structuring and cost cutting at Hydro over the last three years and the current efforts to retire debt, "It's hard for me to believe in the short term where there is a scenario where privatization would reduce rates." The question might have had a different answer three years ago before the public company did its restructuring, but a lot has changed since then.

On the question of future power sources (if load grows), Fox stated that they will be price-determined. Right now gas turbines have an advantage because of short lead time and low cost for natural gas. Some renewables are close to being competitive. One way or another, new power will be open for bidding. Whether that power comes from internal business units, independents, or imports, doesn't matter, he said.

One questioner asked if full cost accounting would apply. The problem, Fox outlined, was that full cost accounting can't be done unilaterally. It only works if everyone is held to same test and same cost conclusions. Hydro is presently engaged in efforts to monetize factors like emissions in preparation for full cost accounting but this had not yet been applied.

There may well be some losers in a competitive electricity market. In a competitive market there may be regional or local pricing. Since competitors will be able to bid for local markets, Hydro will have to have the flexibility to match any offer. The reality is that some customers cost more to serve than others. The government may be forced by political pressure to intervene through the regulatory or tax systems if regional, urban / rural, or industrial / residential disparities become too great. However, the form of that intervention is currently unpredictable.

By the end of 1997, Ontario Hydro expects to save about 1200 million kWh of energy annually (worth $50 million per year) through its In-House Energy Efficiency Program. For more information on the program or for copies of conference papers, contact Scott Rouse at (416) 592-8044.

Head Table guests, at Ontario Hydro's In House Energy Conference dinner, October 17: (top row, left to right) Jim Burpee, General Manager, Fossil Business Unit; John Fox, Executive Vice President and Managing Director, Customer Services Group; (bottom row, left to right) Sal Hassanien, Technical Superintendant, Bruce B; Scott Rouse, Section Head, Internal Energy Efficiency, Energy Services Division; Val Churchill; Brian Churchill, Director of Bruce B Nuclear Generating Station. All are with Ontario Hydro.

photos

Rankin cycle to create new heat market?

Kincardine: Thomas O'Farrell, General Manager of Energy Engineering Corporation of Sarnia, gave a presentation on Organic Rankin Cycle generation at Hydro's internal energy efficiency conference, October 18. These systems use fluids other than water to create steam to drive turbines. This allows power production from lower temperature sources than conventional generating systems require. The technology is most mature on a power plant scale in geothermal applications (5 - 45 MW).

Industrial applications for waste heat recovery still need demonstration projects and careful application selection to show cost effectiveness. To be cost-effective, a Rankin Cycle system needs a heat source that is constant and of a stable temperature. This limits the potential for industrial waste heat recovery although Energy Engineering is presently working with some of the large petrochemical plants in the Sarnia area.

O'Farrell echoed the constant conference theme that systems must be fully integrated. Therefore a Rankin Cycle system had a better chance of being cost-effective if integrated with a plant's cooling system. This meant that systems had to be custom built for the application rather than using modular systems.

That said, Rankin Cycle is a growth field, not a stable technology. O'Farrell speculated that, in an open electricity market, Rankin specialists might contract with selected industries to buy waste heat of appropriate characteristics to produce electricity to sell into the grid.

One of O'Farrell's projects has been shortlisted in Ontario Hydro's RETs program. (See article elsewhere in this issue).

Ontario Hydro claims to have lowest operating costs in North America

Toronto: Ontario Hydro has recently released estimates which appear to show that its operating costs are the lowest amongst all competing utilities in North America. Although its total costs remain high, the figures show, most of these costs are fixed (i.e. related to capital and depreciation). Ontario Hydro's choice of capital-intensive technologies with low fuelling cost (nuclear and hydraulic) would logically tend to tilt the balance between fixed and variable costs in the direction of fixed costs.

"Clearly Hydro is preparing government and the public to accept the idea that it can sell power well below its average costs in strategic situations, and well above its average costs for everyone else," said one observer. Ontario Hydro has promised to freeze average rates for five years, but is seeking more pricing flexibility in the meantime.

Ontario Hydro has made huge mistakes in terms of investing in the most expensive and polluting generation technologies in North America, according to its critics. Knowing that it will soon have to face low-cost power from competitors both inside and outside Ontario, it is forced to find ways to undercut the competition. Its solution apparently is to offer certain customers discount rates that recover only its variable costs, making minimal contribution towards debt retirement or other fixed costs. "Selling power only one notch above operating cost may make sense for a fuel-intensive utility," according to IPPSO Executive Director Jake Brooks, "But it is a recipe for stranded debt for a capital-intensive utility. You've got to pay for your capital investment through rates sooner or later. Ratepayers will ultimately pay more if the utility waits to start charging them for capital costs until it is forced to at some point in the distant future. In any case, it is not right for a public entity which is competing with the private sector to use a lower rate of return on capital than the private sector receives."

Other comment on this matter revolves around the question of what is really a fixed cost. Brooks and others believe that too much of Hydro's operating costs are treated as fixed, because of the technical demands for keeping certain operations going at nuclear plants. "A lot of capital modifications are not as fixed as Hydro claims they are," Brooks says, noting that when units are shelved as they have been recently, all kinds of fixed costs are avoided. A utility like Ontario Hydro has a powerful incentive to overstate its fixed costs, he notes. "Most plant managers tend to see their pet projects as necessary, and therefore fixed costs, when in fact it's possible to reduce them."

chart from Rod Taylor

Power workers campaign to keep Hydro public

Toronto: The Power Workers' Union (PWU) has begun a very vocal campaign to keep Ontario Hydro in public hands. With several full- page advertisements in major Ontario newspapers, the campaign is clearly aimed at the new Ontario government's inclination to privatize Ontario Hydro.

The arguments used in the newspaper ad came under criticism from IPPSO, amongst others. "The PWU is using the most specious of arguments to defend public ownership of Ontario Hydro," according to IPPSO Executive Director Jake Brooks. "Claiming that public power is cheaper than private power because private power has to pay taxes and make a profit is the same as saying public power is cheaper because it gets special concessions. I think most people will see through that."

The ads quote from studies by Professor Myron Gordon which indicate that if privatized, Ontario Hydro ratepayers would pay over $1 billion per year more for power. Professor Gordon's study encountered stiff criticism when presented to the Electricity Policy conference at the University of Toronto last summer. (See IPPSO FACTO, July 1995).

"There may be some compelling reasons for retaining some or all of Ontario Hydro in public hands," Brooks said, "but the PWU ads aren't using them." Ron Daniels, Dean of Law at the University of Toronto, recently completed a study on privatization of Ontario Hydro. He found that one of the biggest mistakes made in this area is the tendency to base arguments for public or private ownership on ideological grounds. There are practical considerations in any one situation that should outweight ideological ones, he argues.

PWU logo

Ontario Hydro announces revised greenhouse gas reduction plan

Toronto: Ontario Hydro's newly unveiled strategy for reducing greenhouse gas (GHG) emissions holds promise for independent producers in Ontario. It does not, however, preclude a continuation of the reliance on nuclear and traditional electricity sources.

Entitled, "Strategies for Sustainability," Ontario Hydro states its goal is to reduce greenhouse gas emissions to 5% below 1990 levels by the year 2000. This standard is based on a certain amount of emissions permissable per-terawatt-hour-equivalent of "useful energy supplied to its customers." If population or energy intensity increases, emissions are allowed to increase proportionately. In this way, it differs from federal and other commitments to stabilize GHG emissions.

By basing emission reductions on useful energy supplied to its customers rather than total energy produced, Hydro has avoided making a clear commitment to promoting more efficient methods of power supply such as cogeneration. Using methods such as this would likely involve independent producers as partners. The door is thus left open to a continuation of the current reliance on, and possible further development of, nuclear and other large scale conventional generation projects.

The strategy does, however, recognise the value of cogeneration and district heating and cooling systems as viable methods of improving energy efficiency in Ontario and contributing to a reduction in greenhouse gas emissions. Still, there is no clear commitment to developing partnerships in this area other than to discuss options with government and other concerned parties.

In terms of overall greenhouse gas emissions from Ontario Hydro facilities, the report sets a goal of stabilizing emissions to 1990 rates by the year 2000 and reducing by an additional 10% by 2005. This target only includes Ontario Hydro owned and operated facilities in Ontario and excludes emissions that result from electricity purchased from independents and imports. IPPSO and others have criticized this approach, since the levels of independent power and imports are currently controlled by Ontario Hydro.

The overall strategy appears aggressive. Ontario Hydro is the largest single source of greenhouse gas emissions in Canada and, until relatively recently, had given no clear indication that emission reductions would be possible. In December, 1993, Hydro initiated consultations with stakeholders and stated for the first time that serious greenhouse gas emission targets would likely be met. This was due, according to Hydro official Pat McNeil, to the utility's expectation of meeting the electricity demands of its customers without as much use of coal as in the past, mainly because of an anticipated slowing of demand.

Hydro uses fossil fuel generation primarily to make up shortfalls from nuclear and hydroelectric sources. This causes fluctuations in the amount of coal burned during the course of a year and, subsequently, fluctuations in greenhouse gas emissions.

This latest strategy document, though, states that Hydro may be forced to resort to greater than anticipated use of fossil fuels. According to the document, this could be due to "fluctuations in the electricity needs of customers, changes in nuclear and hydroelectric operating conditions and performance, and the cost of reducing greenhouse gas emissions." IPPSO Executive Director Jake Brooks says, "If Hydro's nuclear plants perform poorly, we will possibly be forced to accept even more CO2. Coal is on the margin almost all the time anyway."

Although some of these emission increases are beyond Hydro's control, the document also states that fossil fuel generation could be increased "to take advantage of export sales opportunities and the important revenue they earn." This could become far more crucial a reason if Ontario's Conservative government moves to privatize the utility. If this were the case, revenues would be a primary concern for potential buyers, and pressure to allow further increases would be almost impossible to resist.

Hydro is also obviously concerned over the future of its nuclear power generation capabilities. With concerns raised by both the public and Canada's nuclear regulators over the aging Bruce and Pickering nuclear facilities, Hydro is clearly worried that they may not be able to rely on these sources as greatly in the future. The strategy states that, "Business decisions such as reinvestment for increased reliablity of nuclear supply," will have an impact on future operating decisions in regards to greenhouse gas emissions.

Hydro's overall concern over its future energy production and development options is evident in the report. While its greenhouse gas reduction strategy is covered in a page and a half, the remainder of the 12-page document is spent explaining the problems that could arise and emphasizing the need for the co-operation of government and other players.

Hydro's Greenhouse Gas Strategy is apparently unrelated to its Renewable Energy Technology Strategy or to its Sustainable Energy Development Program.

Hydro chart

Moose Basin study group underway

Cochrane, Ontario: The Ontario Ministry of Natural Resources, in co-operation with numerous other groups has set up an agency to gather environmental data about the Moose River Basin. The Environmental Information Partnership (EIP) is intended to help organize the consideration of future development proposals for the area of land in the watershed of the Moose River, which commprises over 100,000 square kilometres of Northeastern Ontario.

IPPSO has been invited to be part of the EIP because of its concern about the construction and use of transmission lines through the area. There is significant potential for NUG development in the Moose Basin, if transmission capacity is not used up for other purposes.

The benefits the EIP hopes to provide are:

- efficient decision-making

- funding efficiencies through elimination of duplication, provision of "seed money", and access to information

- improved information base and reinforced partnerships.

For further information, contact George Duckworth at the Ministry of Natural Resources in Cochrane (705) 272-7185 fax 272- 7151, or IPPSO.

graphic?

Hydro chooses development plans for Ear Falls and Kakabeka

Thunder Bay: Ontario Hydro has chosen its preferred redevelopment plans for two existing hydroelectric generating stations in Northern Ontario. Kakabeka Falls, a 23 MW development west of Thunder Bay requires a new water intake system to forestall safety problems. The Ear Falls station near Dryden is 16.8 MW and needs new civil works and generating equipment to make use of water that is currently being spilled.

In both cases, there has already been some public consultation and environmental assessment documents have been submitted. Public comment and inquiries are invited by Ontario Hydro. Contact Chris Walker, Ontario Hydro, H19D04, 700 University Ave., Toronto, Ont., M5G 1X6 (416) 592-3867 or fax (416) 592-9232.

Privatize London Hydro to forestall takeover - Deputy Mayor

London, Ontario: Grant Hopcroft, budget chief and Deputy Mayor for the City of London, says the City should sell its municipal utility and apply the $230 million it could fetch towards the city's budget shortfall. He implied that such a move would forestall Ontario Hydro taking over assets of the municipal utility "with the stroke of a pen." Maurice Strong and others have proposed arrangements that would involve some sort of acquisition of municipal utility equity.

The mayor of London and other prominent public figures have also endorsed the idea of privatizing London Hydro.

- London Free Press and Hydromonthly

Hydro updates 4C's report

Toronto: Ontario Hydro released a "green paper" in October designed to help chart its course into the next century. Formally entitled "Competition, Convergence and Customer Choice: Finding new paths to the customer by restructuring Ontario's electricity services sector," it is largely an update to a similarly-titled paper released last summer. (See IPPSO FACTO, September 1995, page 10).

Both papers postulate a convergence between the industries supplying energy and communication services, and a transition towards competition in areas that were formerly monopoly preserves. The latest paper places more emphasis on the need for legislative change, clearly tossing a ball into the government's court.

For further information or a copy of the report (dated September 30, 1995) contact Hydro's Corporate Strategic Planning Group at 700 University Ave., H19G1, Toronto, Ontario, M5G 1X6 fax 416-592-3205, http://www.hydro.on.ca

OH aquires American solar firm

Ontario Hydro Technologies (OHT) recently purchased Spheral Solar Technology from Texas Instruments. The purchase includes all equipment, patents and intellectual property of Spheral from Tesas Instruments who are exiting the solar field.

This marks the first time a major utility anywhere in the world has ventured heavily into solar energy technology and comes on the heels of OH's recent largely unsuccessful attempt to market the solar En-R-Pak to rural customers.

Spheral currently doesn't market any of its technology and OHT estimates it will take at least 1 to 2 years with assistance from Texas Instruments to make Spheral commercially viable. Despite this fact, Canada's solar industry sector sees this purchase as a major step in developing a niche for Canada in the international solar market.

According to Canadian Solar Industries Association (CanSIA) President Raye Thomas, "I concluded over a year ago that if something major were to happen in Canada in photovoltaics, only a large player could achieve it."

OHT has pledged to work closely with private Canadian solar industies to develop this technology and, in fact, used Canadian experts to assess Spheral's technology before purchasing it.

Although Thomas foresees potential difficulty for private companies to obtain financing to develop their own solar technologies now that there is already a major player in the small Canadian market, he feels there may also be advantages. One of the advantages, he says, is that private Canadian producers may be able to use partnerships with OHT to break into international markets. OHT is already well known and respected internationally, he says, which is an advantage the relatively small Canadian industry has not been able to obtain itself.

In the end, though, much will depend on OHT's willingness to develop solar technology and work with the private sector in competition with its own generating facilities. Currently, OHT is downplaying the significance of this purchase, claiming it's only one area they are exploring for future development.

OH nuclear review says safety improvements needed

Toronto: The 1994 Ontario Hydro Nuclear (OHN) Review of Nuclear Safety had some positive findings, but also identified shortfalls in nuclear safety at OHN facilities.

The positive findings included: No workers were exposed to exessive amounts of radiation; no member of the public has ever been exposed to unsafe levels of radiation; chronic radioactive emissions were less than 1% of regulatory limits; and special safety system performance improved noticably over previous years.

There were three main areas where the report expressed concern over OHN's safety performance.

The report found that previous audits and peer evaluations consistently said that OHN is not correcting identified shortcomings in operations, maintenance and safety-related systems.

The report also said that OHN must "do a better job of learning from operating experience." Nuclear industries around the world recognize that learning from past operating mistakes and shortcomings is crucial to avoiding accidents, both large and small.

Finally, the report said that OHN must do a better job of controlling changes in operating conditions. Controlling changes helps avoid undue stress on equipment and the general structure of nuclear facilities and helps avoid accidents.

The report is based on audits, peer evaluations, significant event reports and a general review of the Nuclear Safety Management System. This years report, according to OHN General Manager Ron Field, emphasized the need for a stronger focus on safety. "Improving nuclear safety must be our top priority throughout the organization," he said.

Lake Huron tritium levels 15 times above normal

Owen Sound: Bruce County may invoke Ontario's Nuclear Emergency Plan after tritium levels in Lake Huron rose to 15 times normal rates in the first week of November. The rise in levels follows an unusually high spill of heavy water from the Bruce A Generating Station.

While still well under acceptable levels, Bruce County's Medical Officer of Health, Dr. Murray McQuigge, reported to Canada Press that he is considering invoking the plan. This would enable health authorities in the area to increase water sampling for the Port Elgin, Kincardine and Southampton areas. "I'm not feeling comfortable at all," said McQuigge about the levels of tritium. If levels continue to rise, he says that the towns may be ordered to stop taking drinking water from Lake Huron until the levels return to normal.

Station A Director Ken Talbot says that an investigation into the cause of the unusually high release has begun. "More than we expected got released," says Talbot, "We probably put as much (tritium) out in a week as we do in a month."

By November 18th, tritium levels had reached 1,900 becquerels per litre of water, up from the normal levels of between 20 to 100 bequerels. Under 7000 bequerels per litre is concidered acceptable.

Tacke wind machine inaugurated at CanWEA conference

By David Bright and Stephen Salaff

Kincardine: The eastern shore of Lake Huron, a region with southern Ontario's best wind energy resources, was the location of the 11th annual conference of the Canadian Wind Energy Association (CanWEA) in early October. Well over a hundred windpower proponents and over a dozen exhibitors converged on the small town of Kincardine for the conference, 20 kilometres south of Ontario Hydro's Bruce Nuclear Power Development (BNPD), and learned of significant windpower developments in Ontario.

In a major announcement at the conference, Brian Kelly, director of Hydro's division of environment and sustainable development, announced the shortlisted candidates of Hydro's "Renewable Energy Technologies" (RETs) Round 1 request for proposals for 60 MW of grid-connected green generation capacity, as well as a proposal for a "Green$hares" renewable energy funding program (see article in this IPPSO FACTO).

"Ontario is presently the centre of windpower activity in Canada," CanWEA president Bernard Saulnier told delegates. "Wind power is mainstream technology embodying social responsibility. Cost competitiveness, reliability, growth of demand for the technology, ease of integration, cleanness, job creation - all these factors are placing wind among the lowest risk and highest value energy options available today." Saulnier observed that Ontario has the most coherent vision for the renewable energy industry, even though Qu‚bec and other provinces have more abundant wind energy potential.

Inauguration of the Tacke 600

Days before the conference, North America's largest operating wind turbine, a German Tacke 600 kW machine, was erected near BNPD on land leased from Ontario Hydro, and connected to Hydro's grid. The project was inaugurated at the BNPD Nuclear Information Centre during the conference by Tacke representatives and local politicians. "Visitors to the information centre can now learn about windpower," observed a speaker at the inauguration.

The turbine has a 43 meter rotor diameter and stands on a 50 m tubular tower. The Tacke 600 kW CWM ("cold weather modified") is the first TW 600 designed specifically for cold climates, and can produce energy efficiently at minus 30 degrees centigrade. The system automatically shuts down at temperatures below this limit. The turbine will be tested for one year, and domestic blades will be installed shortly, said Philipp Andres, vice-president of Tacke Windpower, the Canadian subsidiary of Tacke Windtechnik of Germany.

Tacke Windpower will make the blades at its new facility in Huron Park near London, Ontario, south of Kincardine. The plant, which was inaugurated in late September, can manufacture blades for any Tacke turbine, and will create 60 to 70 jobs by year end. Some 300 blades will be manufactured in the first twelve months of operation, on contract with Tacke Windtechnik.

Regional interest in the conference was keen, and Charles Mann, mayor of Kincardine, said "We have met before, welcome back." Kincardine hosted the CanWEA seminar on small wind turbines in April 1994, and hopes for employment resulting from renewable energy technologies as Ontario Hydro's nuclear program begins to shrink.

The Tacke 600 project was committed well before Hydro's RETs program, and was supported by Natural Resources Canada and a loan from Ontario Hydro.

The site of the Tacke 600 installation, the Bruce Nuclear Power Development, is Hydro's largest nuclear power complex, with eight Candu reactors totalling nearly 7,000 MW in capacity. The shut down of the unit 2 reactor, rated at 825 MW, in October was the first retirement of a fully commercial Canadian nuclear reactor, an event of significance to many conference delegates.

At the Tacke 600 inauguration, Ontario Hydro nuclear representatives who liaised with the Tacke project strained to portray nuclear power as a version of sustainable, green energy technology akin to windpower and other renewable energy technologies. This point was received by conference goers with polite disbelief.

The BNPD experiences regular maintenance and nuclear safety problems, some of which are generic to all Candu facilities. After only 17 years of its expected 40 year life, Bruce 2 was mothballed due to severe steam generator corrosion problems, a sizeable utility generation surplus and Hydro's cutbacks in capital spending. The prospect of future employment in the local nuclear industry is poor, but several Ontario Hydro nuclear workers have trained in Germany on the maintainance of the Tacke 600 turbine.

The Tacke 600 CWM has become the new demonstration wind turbine for Ontario. Local agricultural company Canadian Agra Corp. (CAC) owned a Lagerwey 18/80 wind turbine sited near Kincardine airport, but this was demolished by a dramatic tower failure in November 1994.

At the conference, Izaac Cruson of Saskatchewan-based Dutch Industries, which supplied the Lagerwey turbine and tower, described the engineering investigation of the tower failure. Cruson said that the tower failed from thus far unknown causes, even though it was four times stronger than necessary to meet all the stresses it experienced. The failure sheared the tower above the base flange "as if it had been machined."

Dutch has offered CAC a replacement turbine and tower, and has developed additional metallurgical engineering for the site of the failure designed to prevent a repeat of the mishap. The next move is up to CAC, he indicated. In the meantime, delegates hoped that the TW 600 CWM would help restore confidence in windpower technology after the tower failure.

Cruson said that another Lagerwey 18/80 from Dutch industries continues to perform well at Cambridge Bay, above the Arctic Circle in the Northwest Territories. This machine has generated 155,500 kWh since its installation in September 1994. A Lagerwey from Dutch was also successfully tested at the Atlantic Wind Test Site in Prince Edward Island.

Dutch assumed the new role of independent power producer in Cambridge Bay, and expects to sign several similar windpower deals in remote northern communities. Dutch would also like to install a Lagerwey 18/80 turbine at its manufacturing facilities in Regina to supply load displacement electricity, but is prevented from doing so by SaskPower policies.

Cruson and many other Canadian windpower proponents were angered by SaskPower's recent cancellation of an RFP for 3 MW of independently generated windpower, the latest in a series of similar cancellations by the provincial utility.

Dutch Industries' Dutch Delta 16 wind-powered water pumper continues to perform well, and the company is developing a smaller, more economical "Delta Junior" model which would pump water and also generate 1 kW of electricity for battery charging, said Cruson. Dutch anticipates installing the 250 kW Lagerwey turbine model, and also the new 750 kW Lagerwey turbine, which should be available in Canada by 1997. The large machine "will really turn some heads," Cruson predicted.

Mean wind speeds for the Kincardine area along the eastern shore of Lake Huron are approximately 6 m/s at a height of 30m, according to an initial assessment of existing wind records and topography by Jim Salmon of Zephyr North of Burlington, Ontario. The southwest Ontario wind energy study has created a wind speed map, and has found the best winds along lake shorelines, mostly westerly, with relatively low average wind speeds in summer and higher speeds in winter.

Ontario Hydro now allows customers to use wind turbines under its RETs program to run their electricity meter backwards, but only down to zero, on a monthly basis to reduce their electricity bills. This unenlightened policy falls short of net energy billing, because any production from the wind turbines above the monthly electricity consumption is essentially a gift to Ontario Hydro. Since larger than average wind energy is obtained in the winter period, Salmon advised turbine owners seeking to exploit this program to negotiate with Ontario Hydro for annual "balancing" of electricity production and consumption. Such balancing is not presently a part of RETS.

Salmon found that an Atlantic Orient Corp. (AOC) 15/50 turbine could reap $73,000 net return after twenty years if annual balancing were allowed. Michigan's green windpower project

Michigan's green windpower project

Steven Smiley of Bay Energy Services of Traverse City, Michigan, described a pioneering windpower project of publicly owned Traverse City Light and Power (TCLP), a Michigan utility which serves 9,000 customers. The first of its kind in North America, the project embodies green electricity pricing and is most likely the conceptual forerunner of Ontario Hydro's Green$hares proposal.

Smiley managed and developed the project for TCLP under an independent contract.

TCLP allows a group of customers to choose a higher, optional electricity rate to develop new renewable electricity sources of their choice. The utility benefits by diversifying its electricity sources and decreasing its reliance on fossil fuels. In addition to the encouragement of new renewable resources and giving customers a green choice they appear to want, green pricing "improves the utility planning process by widening the range of resource options considered and the sophistication of the process itself," said Smiley.

The project calls for the installation of a 600 kW Vestas V44 wind turbine in spring 1996. This turbine, with an expected power generation of 1.1 million kW hours annually, is expected to supply the needs of some 200 customers, who will start paying the higher rate when the turbine is installed. A total of 245 residential and 18 commercial customers have already enrolled (some residential customers are on a waiting list), with a three year commitment for residences and 10 years for commercial customers. The project could displace 3 tons of coal and 10,000 lbs of CO2 annually per residential customer.

Residential customers will pay only US$7.58 more than their current average monthly electricity bill of US$32. This premium is only US$0.0158 per kWh, which is calculated as the tubine production cost of US$0.0569 in a moderate wind area, less the federal windpower production credit of US$0.0156 and the TCLP avoided cost of US$0.0255. The US$0.0158 premium is a 23 percent rate increase on an average residential rate of US$0.068 per kWh.

The project was stimulated by a US$50,000 Michigan Public Service Commission grant. Traverse City Light and Power was the only Michigan municipal utility to take advantage of this opportunity.

NRCan seeks a renewable energy policy

Richard Godin of Natural Resources Canada (NRCan) described his federal department's efforts to develop a new market-oriented renewable energy strategy. Although only $10 million was spent by his department on renewable energy initiatives in 1994/95, at least this modest sum was not cut in recent federal government downsizing, he noted. There is a new interest in his department in developing "market initiatives," and active consideration of the idea that the federal government procure green power for perhaps 15 to 20 percent of its electricity purchases, to be phased in by 2010.

Godin identified an opportunity for renewable energy to help close Canada's greenhouse gas "stabilization gap." Canada's National Action Program on Climate Change is centred on a Voluntary Climate Change Challenge and Registry, under which companies and other organizations make voluntary greenhouse gas reductions. However, this is not expected to meet the country's 1992 Rio treaty commitment to reduce CO2 and other greenhouse gas emissions to 1990 levels by the year 2000.

A national carbon tax plan of federal environment minister Shiela Copps was defeated earlier this year due to opposition by Canada's large and powerful fossil fuel industry centred in Alberta, led by the minister of Natural Resources Ann McLellan, the voice of Alberta in the federal cabinet. Should the voluntary program fail to produce the needed reductions, an outcome that is widely expected, new interventionist regulations or initiatives such as energy taxes or green tax credits may be implemented. These measures have been recommended in recent reports of the Canadian Global Change Program of The Royal Society of Canada, the Canadian Climate Program led by Environment Canada, and the UN's Intergovernmental Panel on Climate Change (IPCC). Direct government intervention could substantially benefit Canada's renewable energy industry.

Gaspe wind farms update

Richard Legault of Kenetech Windpower in Montreal presented an update on progress towards regulatory approval and construction of Kenetech's two 50 MW nameplate wind farms on the Gaspe Peninsula, for electricity supply to Hydro Qu‚bec. Kenetech has begun the micrositing of turbines on 10,000 hectares of land under option, some 2 to 3 times the expected project size.

Kenetech will have wind data from 20 locations for up to 26 months by next spring, when approval to construct the project is expected. The company expects to shortly receive approval of its environmental impact study from the Qu‚bec government, and will soon seek project financing, and will sign an interconnect agreement with Hydro Qu‚bec. Power purchase contracts were signed nearly two years ago).

Engineering, procurement, construction and commissioning is expected next summer and fall, with commercial operation in December 1996. Legault sees a "reasonable objective" for windpower in the Gaspe area as the eventual supplying of the peninsula's total peak consumption of 1000 MW. The Gaspe currently has no generating stations, and imports power from James Bay hydroelectric plants.

Legault also discussed the current lively energy policy debate in Qu‚bec, its first energy policy review since 1963. A new energy policy for Qu‚bec will be announced in the first half of 1996. Legault cautioned that the province still has a large, well organized lobby group favouring waterpower megaprojects, so active windpower promotion is still required.

Clarence Grebey of Kenetech Corp. gave an update on the 18.9 MW Cowley Ridge windplant near Pincher Creek, Alberta, which utilizes 52 of Kenetech's KVS-33 wind turbines. The project was developed in two phases by Kenetech with Alberta partners Wind Power Inc., and The Chinook Project Inc. The plant sells electricity to TransAlta Utilities Corp. under long term contract assisted by the Alberta Small Power Research and Development Act. The plant was sold to Canadian Niagara Power Ltd., a privately owned electric utility in Ontario and subsidiary of Opinac Energy Corp. in December 1994, with non- recourse debt from Mutual Life Assurance Co.

Cowley Ridge is a "proving ground" for Kenetech's cold weather windplants, and its first utility-scale project using the KVS machine outside of northern California. After initial startup problems outlined by Grebey, Cowley Ridge availability exceded 90 percent in 1994, and has been consistently above 97 percent in 1995. Through August of this year, the plant has delivered 64,383 MWhs to the grid.

Software and engineering modifications were required to cope with "robust" winds in the area, which frequently cause a yaw rate of change as large as 25 to 40 degrees per second. The windplant installation does not harm bird life, has no significant environmental impact, and is a model for other cold weather sites in Minnesota, Europe and elsewhere.

Wind energy comes of age

United States wind energy advocate, author and consultant Paul Gipe gave a comprehensive, three-hour overview on how wind energy is being developed and accepted internationally, based on his new book "Wind energy comes of age" published earlier this year by John Wiley & Sons.

Gipe said that installed windpower capacity and generation climbed substantially in 1994. As of mid 1995 there were 26,000 wind turbines operating worldwide, representing 3,600 MW of installed capcity. Worldwide wind generation exceeded 6 TWh in 1994 for the first time. At the current rate of growth, wind turbines will be generating 14 TWh by the year 2000. Total worldwide sales of wind turbines are expected to reach nearly $1 billion and sales of wind- generated electricity will add nearly $750 million to total revenues by the end of 1995. Gipe, who is headquartered near California's Tehachapi wind farms, said that the industry has not seen turnover in excess of $1 billion since 1985 at the height of California's "wind rush." At that time, revenues were due almost entirely to sales of new wind turbines.

According to Gipe's world view, Europe's rapid growth continues to outstrip that in North America, and Europe's feverish development shows little sign of abating. Europe has exhibited a more uniform pace of windpower development than in the US, and by the end of 1995, Europeans will, for the first time since the early 1980s, be operating more wind generating capacity, some 2,200 MW, than that in North America.

Despite the existence of large wind farms, new development is primarily through small rural applications of distributed generation in the form of single wind turbines and small clusters of turbines for farms and municipalities.

Gipe spent considerable time on a theme he emphasizes in his book: aesthetics and public acceptance. He pointed out that public opinion surveys show that wind has high public support, yet also a worrisome NIMBY ("Not in my backyard") factor. Thus, this support can erode quickly once specific projects are proposed. Because support is fragile and can quickly be squandered by ill-conceived projects, he encourages the wind industry to do everything it can to ensure that wind turbines and wind power plants become good neighbours. A critical means for doing so is to incorporate aesthetic guidelines into the design of wind turbines and wind power plants.

The key to aesthetic design, says Gipe, is to provide visual uniformity. When large numbers of turbines are concentrated in a single array, or there are several larger arrays in one locale, visual uniformity can create harmony in an otherwise disturbing vista. Visual uniformity is simply another way of saying that the rotor, nacelle, and tower of each machine should look similar. They need not be identical, he notes, but simply appear similar.

Gipe quoted the California Energy Commission in identifying windpower as the least cost generating source now, after small hydro - modern wind turbines are gaining economies of scale, with greater efficiency, better airfoils, greater swept areas and energy production, and lower operation, maintenance and administration costs than earlier models.

Gipe and several other speakers emphasized that wind and other solar electricity generation technologies "aren't even on the scale" when external social and environmental costs are compared with those of all traditional generating technologies. Gipe repeated his Kincardine presentation the following day in Toronto for Ontario Hydro.

Rachel Brailove of Resource Insight Inc. in Boston described the valuation of externalities for traditional and renewable energy production. Externalities are the "non-price" environmental costs and benefits of energy sources, which can help rank renewables economically higher than fossil fuels. Policy opportunities appear as the utility industry restructures from a traditional vertically integrated, minimally regulated monopoly framework to competitive commodity markets.

The components of the restructured industry include: many unregulated generators; power pools; regulated transmission companies; regulated monopoly distribution companies; and numerous licensed marketers and aggregators.

The hitherto unpriced benefits of renewable energies include low environmental impacts, predictable environmental control costs, externality savings within the integrated resource planning paradigm, fuel diversity, fuel security, distributed generation, flexibility, reliability and superior load matching. Brailove forecast a time when wind turbines would be erected within 48 hours to meet new load anticipated later in the week.

"Absent regulatory intervention, retail competition is unlikely to credit renewables with reductions in environmental externalities," said Brailove. "If the market is incapable of appropriately valuing the non-price benefits of renewable resources, regulators or other policymakers have several tools available for restoring economic efficiency."

Among the mechanisms to factor environmental externalities into resource selection, Brailove listed pollution taxes per ton of emissions, pollution caps with allowance trading, planning and dispatch adders, and renewables obligations (set-asides).

Externality valuations of fossil fuel emissions vary widely. Thus CO2 emissions per ton are valued (in US dollars) at $7.64 in California, $22 in Nevada, and from $10 to $40 in Oregon. Values for the Bonneville Power Administration are among the lowest in the US, and these are the ones utilized by BC Hydro in the social costing for its current RFP for up to 300 MW of independent power (IPPSO FACTO, September 1995, p.19). Brailove helped derive values for Massachusetts, where gas combined cycle power plant emissions are valued (US cents per kilowatt hour) at up to 1.31, new pulverized coal plant emissions at up to 3.61 and old pulverized coal plant emissions at up to 8.82.

Both the "cost of damage" and the "cost of control" methodologies are used for externality valuations in the US. Brailove found that neither one yields consistently higher or lower estimates.

A wind atlas for Canada?

A five year plan for creating a National Wind Atlas for Canada was described by Robert Morris of Environment Canada's Atmospheric Environment Service in Toronto, in a paper coauthored with Dr. John Walmsley, also of AES.

A wind atlas for a region provides an overview of the wind resource over the region, and sufficient information regarding the wind regime at any location "to allow a reasonably accurate estimate of the energy output of a single or collection of wind turbines."

The creation of the $800,000 atlas by Environment Canada would utilize a sophisticated atmospheric simulation model called the "Mesoscale Community Compressible" (MC2) model, to supplement the analysis of long term wind observations at 144 Canadian locations. For many areas of Canada, the density of observing sites is insufficient to resolve all the features of regional wind patterns. The MC2 model will be adapted to simulate hourly (or other suitable time step) wind speed and direction values for a substantial period of perhaps two years, on a regular grid of about 15 km with suitable vertical resolution, over one region of Canada at a time.

MC2 is a numerical simulation model of atmospheric flow, based on the dynamical equations of motion coupled with the moist thermodynamic equations. It uses recently developed numerical techniques for the efficient solution of these differential equations, while retaining numerical stability. MC2 would allow modelling in the relatively large-scale ranges of 10 to 300 km.

The MC2 model would be nested within operational runs of the larger scale "Global Spectral and Regional Fine Element Models" of the Canadian Meteorological Centre in Dorval, Qu‚bec. The Centre models, with 50 km resolution, guide Canadian weather forecasting. These models provide large scale meteorological field values such as temperature, pressure and moisture.

These models would provide the meteorological initial and boundary conditions to MC2, which will then create reasonable local estimates of wind and precipitation fields, down to resolutions of 15 km.

MC2 would also forecast local wind speeds up to 48 hours or longer into the future. "This will provide a significant benefit as the new 'stock market' approach of bidding power into a common pool in advance becomes increasingly common," said Morris. The National Wind Atlas will thus assist wind firms to compete more effectively in the deregulated energy production scenarios of the future.

Micrositing tools would then allow the adjustment of the MC2 information to the local terrain and surface cover of a particular location, at resolutions of less than 15 km. The envisaged atlas would provide all relevant maps, data summaries, analysis procedures, and micrositing tools in a single, easily used report or software package. The first year of the project would be a proof-of-concept phase to confirm the feasibility of using MC2 in this task.

The creation of such an atlas, which would put Canada on a par with the US and Europe, is supported by the CanWEA board and industry players. The main source of funding would be the federal government's Panel on Energy Research and Development.

Passmore elected President

CanWEA held "think tank" sessions at the beginning and end of the conference, aimed at elaborating CanWEA vision and mission statements, and developing a Canadian National Action Plan to achieve new windpower capacity goals for the years 2000 and 2010. The plan and goals are still under development.

The new CanWEA board of directors is: Jeff Passmore, Izaac Cruson, Richard Legault, Mary Ellen Jones, Dave Baker, Philipp Andres, and Bernard Saulnier. Passmore replaces Saulnier as CanWEA president on January 1, 1996. Winner of the CanWEA R.J. Templin award was Carl Brothers, manager of the Atlantic Wind Test Site (AWTS) in Prince Edward Island.

CanWEA announced at the conference that it now has two Internet home page sites. The first is in Ontario, with the address http://www.web.apc.org/sustenergy/ and the second is in Berlin, with address http://keynes.fb12.tu-berlin.de/luftraum/konst/canwea.html. CanWEA can now be reached by Internet e-mail at CanWEA@eWorld.com.

Tacke photo

Andy Hoffer, SED Advisor for Ontario Hydro, Louise Comeau of the Sierra Club, and Pam Kertland of Environment Canada publicly agreed on the urgency for action to combat global warming, at a public meeting held at the University of Toronto, October 23.

Ontario Energy Caucus issues restructuring position

Toronto: The Ontario Energy Environment Caucus (OEEC) Steering Committee has released a position paper outlining its view of how the restructuring of Ontario's electricity sector should look.

Entitled, "Restructuring the Electricity Sector in Ontario: Power to Change," the OEEC sees renewable sources of electricity and energy efficiency technologies replacing non-renewable generation within 20 years.

The first step in achieving this objective, according to the OEEC, is to separate electricity distribution and transmission from power generation. Whereas Ontario Hydro currently monopolizes all aspects of the electricity sector in the province, the OEEC would have municipal utilities and a new rural retail utility control the delivery of electricity to customers. Ontario Hydro would then be divided into three separate companies operating nuclear, fossil and hydraulic generation respectively. A new transmission utility would also be created to control the electricity grid, purchasing electricity from all generators, including independents, and selling it to the municipal and rural utilities. Hydro's current debt would be divided appropriately among the new companies.

The second step would be to create a competitive market in electricity services. A new "Negawatt" utility would sell bulk purchases of electricity and energy efficient equipment to municipal and rural utilities. New energy service companies would provide energy efficient retrofits directly to customers.

The third step would be to establish a "binding and effective" provincial regulator. This new body would solicit public participation in planning Ontario's electricity future, schedule the phase-in of renewables and the phase-out of non-renewables, and dictate the energy mix required by the transmission utility.

The fourth step would be to demonopolize electricity generation. Independent producers would be allowed to compete freely with the nuclear, fossil and hydraulic companies. Competition would be regulated by the provincial regulator.

The final step would be the phasing in of energy efficient technologies and renewable generation. The minimum amount of electricity that the transmission utility would be required to purchase from renewables would gradually be increased to 100% over approximately 20 years.

The OEEC believes that these developments are crucial to the development of a truly sustainable energy future for Ontario. "Our economic future depends inextricably on the impact of our activities on the environment," the OEEC says in its position paper. "The restructuring debate offers a window of opportunity to introduce a more sustainable means of generating and using electricity for Ontario."

The OEEC will be publishing a more detailed version of this position, as well as a pamphlet form, in early 1996. They are also considering producing appendices on restructuring experiences in other jurisdictions, the history of public power in Ontario, and the implications of free trade agreements for the structure of the electricity sector. The Steering Committee is also attempting to set up meetings with the provincial energy critics for interested stakeholders, to be followed up with a meeting with Environment and Energy Minister, Brenda Elliott.

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Proper names

A group of political leaders once asked Confucius what rules they should follow in governing a society. The master's response was, "To call things by their proper names, so that the truth guides your actions."

Report calls Ontario's natural resource use pattern "Unsustainable"

Toronto: The Canadian Institute for Environmental Law & Policy has issued a report slamming the Government of Ontario for policies that act as "Barriers to the successful development and diffusion" of sustainable energy technologies.

The report states that, "Current patterns of resource use in Ontario are unsustainable." It recommends substantial changes to government policy to encourage the growth of renewable and sustainable technologies in all sectors of the Ontario economy.

The costs of implementing sustainable technologies and limits to available financing are listed as key problems for the province's industries.

Several recommendations were made to make Ontario's long-term business climate more favourable for sustainable practises. These recommendations include the removal of subsidies for primary resource extraction (to make renewables more cost competitive), and the continued internalization of environmental costs associated with primary resource extraction.

A complete copy of the report entitled, "Putting the Environment in Green Industry Strategies: The Role of Environmental Industries in Restructuring for Sustainability," is available from the Canadian Institute for Environmental Law & Policy at (416)923- 3529.

Ontario company sells innovative steam turbines

Cambridge: Innovative Steam Technologies (IST) of Cambridge, Ontario has become a successful international player in the development and marketing of Once Through Heat Recovery Steam Generators (OTSGs).

Much simpler in design than traditional drum-type heat recovery steam generators, OTSGs convert all feedwater into high purity superheated steam. There are fewer parts, less chance of solids being carried through to the superheater and steam turbines, and greater efficiency at higher presures.

OTSGs are also more flexible in their application, as they can be used in more small-scale situations. OTSGs for combined cycle and cogeneration applications are currently available from IST for gas turbines from 3 MW to 150 MW. OTSGs for steam injection applications are available for any size gas turbine.

IST has recently aquired contracts with TransCanada Pipelines and Westcoast Power here in Canada, as well as contracts in Australia, New Zealand and Puerto Rico.

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University Alternative Energy Institute goes commercial

Ottawa: The University of Ottawa's Electrochemical Science and Technology Centre has now become ESTCO Energy Inc.

The Centre had formerly been a non-profit institute affiliated with the University of Ottawa that researched alternative energy technologies. The new company will now focus on developing technology for use in electric vehicles.

ESTCO still has an agreement with the University of Ottawa which will provide the new firm with research and development know- how. It now also has a partnership with Battery Technologies Inc. of Richmond Hill which will provide ESTCO with marketing expertise.

This new arrangement represents an innovative method of linking academic research with the business community and bringing the research to the market place.

Tacke opens new plant with $9.5 M contract

Huron Park, Ontario: Tacke Windtechnik of Germany has opened its first Canadian plant with a $9.5 million dollar sale to Ontario Hydro.

Ontario Hydro facilitated a loan to Tacke to modify its TW 600 model for cold weather conditions. Under this loan agreement, Hydro also agreed to purchase the modified system and connect it to the grid adjacent to the Bruce Nuclear Power Development.

The contract, already in production, will result in 60 full time jobs by the end of 1995.

This agreement is good for Tacke because it breaks it into the Canadian market and it provides for new developments in its cold climate technologies. Besides these reasons, though, Tacke executives say moving to Canada was already an attractive option. The American market is important to Tacke and, with an undervalued currency, an educated workforce, a modern infrastructure and close proximity to the US, Canada was a logical choice for a new plant.

Green-up home plan helping to save energy

Peterborough: The Ontario Green Communities Initiative has been helping Ontario homeowners improve the energy efficiency of their homes since 1993.

A Program of the Ontario Ministry of Environment and Energy, the initiative helps improve local economies by getting communities to work together to reduce energy waste at a grass roots level.

Under the program, local green community organizations set up storefronts that offer area residents information about ways to reduce energy consumption and improve their environmental awareness. One of the main ways they do this is through green home visits.

In these visits, two representatives go to a customers home and inspect it inside and out, telling the owner where energy consumption can be reduced and exactly what they can do to correct the problem.

Gordon Plumpton, a Peterborough customer of the initiative, says, "The visit was amazing. These people really new what they were doing. I've recommended them to a lot of my friends who have called Green-Up as well." The visit only took about two hours, he says, and he began to see results immediately.

Under the advise of the Green-Up advisors, Plumpton got a $6000 Enviroloan from Canada Trust. These loans are provided at premium rates to home owners planning environmental renovations. Most of this, he says, was spent on insulation for his older home. The long term benefits in lower heating bills make up for the cost of installation in the long run.

Peterborough was the first of the now 17 Ontario communities with Green Community Initiative store fronts. The Province provides money for planning and start up costs and 50% of the operating costs. The remaining funding comes from other community sources such as municipalities, Ontario Hydro, local utilities, Consumers Gas and area businesses.

As a result of the program, not only do individual home owners save money, but entire communities as well. Discounts given by Crane Canada on water efficient toilets have helped the City of Peterborough defer a $25 million waste water treatment plant.

Besides Peterborough, other communities that have set up Green-Up store fronts include: Atikokan, Barrie, Belleville, Collingwood, Cornwall, Elora, Guelph, London, Markham. Oshawa, Ottawa, Port Hope, Toronto East (Riverdale, Cabbagetown and the Beaches), Sarnia, Sault Ste. Marie and Thunder Bay.

New mid-size family of gas turbines launched

Stewart & Stevenson International Inc. of Calgary has added three new mid-size models of industrial gas turbine engines to its product line.

According to the manufacturers, all engines are pre-tested at the factory using both power generation and closed-loop compressor test facilities. "With a Steart & Stevenson gas turbine package, there are no surprises," say company officials, "Just high reliability, proven performance and a world class service organization backing you up."

The first new model is the 5 MW Typhoon. A single shaft configuration with 6,500 SHP in a twin-shaft, mechanical drive configuration.

The Tornado has 6.3 MW of electrical power in a single-shaft configuration and 8,900 SHP in a twin-shaft, mechanical drive configuration.

Finally, the Tempest has 7.5 MW of electrical power to suit a wide range of utility, oil/gas and industrial power generation applications.

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New voluntary reduction program in Ontario

Toronto: The Ontario Ministry of Environment and Energy has launched a new Pollution Prevention Pledge Program aimed at encouraging industry in the province voluntarily reduce pollution.

According to the Ministry, businesses benefit by lowering production and maintenance costs, improving their public image and receiving public recognition through the program.

The program has four levels of participation that businesses can achieve.

The first level is the registration and planning stage. At this level, companies register with the Ministry their intent to take part in the program and begin to plan what and how they plan to reduce. Companies have one year from registration to identify what pollutants they plan to reduce, how much they plan to reduce by and how they plan to achieve their goal. All companies who register will be recorded in the Pollution Prevention Register.

Level two is the reduction commitment pledge. Companies identify their reduction goals, including timelines, and the Ministry will record their commitments in the registry and issue certificates of recognition. A company can stay at this level for two years, or as long as it continues to make progress toward its goals.

Level three is for reduction achievement. A company reaches this level when it achieves 50% of its stated reduction goals for specific substances, or a 20% overall reduction in that substance. To remain at this level, a company must show progress every three years. Achievements will be recorded in the Register and certificates will be issued.

Level four is recognition of pollution prevention achievements. A company reaches this level by obtaining level three and using at least one recognized pollution prevention technique. These techniques are: improved process design, operation and maintenance; elimination or substitution of raw materials; or product reformulation. A company must show progress in one of these areas at least every three years to remain at level four. Recognition in the registry and certificates are given at this level as well.

At all levels, reduction estimates and tracking of reductions must follow approved methods as outlined by the Ministry.

The Ministry is also issuing a further challenge to industry called the 50/90 challenge. Under this program, additional recognition will be given to companies that make further reduction to the most toxic, persistent and bioaccumulative substances. Recognition will be awarded if companies reduce these substances by 50% compared to 1990 levels by the end of 1995 and by 90% by 2000.

Five winners of awards under this program were announced in November for 1995. Hamilton District Autobody Repair Association won a Leadership Award. Davlin Cleaners of Rexdale won a Small Business Achievement Award, Elf Atochem of Oakville and Strataflex Canada Corp of East York won Medium Size Business Achievement Awards. Finally, Xerox Canada of Mississauga won a Large Business Achievement Award.

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National News

Alberta prepares for open access

Calgary: Alberta is set to become the first jurisdiction in Canada with open access to its transmission system for electricity producers. The function of the new Alberta electricity power pool which is to begin operation on January 1, 1996 was described by Chris Holly of Alberta's Department of Energy at the CanWEA conference. (See article elsewhere in this issue of IPPSO FACTO, and the Financial Technical Supplement to the July 1995 issue).

Alberta's Electric Utilities Act (EUA), passed in May 1995, is the first arrangement of its kind in Canada to allow open transmission access and wholesale competition among electrical generators. The EUA will enable competitive market forces to guide decisions about generation, minimize the costs of effective regulation and provide incentives for efficiency. The EUA replaces Alberta's existing Electric Energy Marketing Act, which averaged electricity rates across the province. It is also intended to reduce "distortions due to unfair advantages of government-owned participants" in the current system, provide incentives for efficiency, and minimize the cost of regulation.

The new arrangement will feature an open access power pool and a distinct transmission provider. Holly defines the "Power Pool" as the scheme for the dispatch and exchange of electric energy and financial settlement. The EUA allows competitive bidding as all generators, including investor owned utilities, municipal utilities and independent power producers are required to offer all their power to the pool. Distributors will obtain all of their power supply from the pool. The power pool acts as an an hourly "spot market." There is no retail competition.

The lowest cost generating units are dispatched in succession to meet demand, with the highest cost, last unit dispatched in each hour setting the system marginal price.

The pool also allows real time pricing in an hourly spot market, with price hedging arrangements. Investment in new generation will be a commercial decision and not directly regulated. Distributors will initiate new financial arrangements to manage the financial risk of the future pool price, with price hedging arrangements (contracts for differences) to facilitate financing for construction of new generation projects.

There will be a regulated single province-wide price for transmission or "System Access Service." System Access Service also includes access to exchange electric energy, and access to system support services. There will be postage stamp rates for distribution systems (regional power companies), and location-based rates for new generation.

Under the new system, generation will be built in response to either the pool price, or a regional power company's desire to manage the financial risk associated with the pool price. The regulator, the Alberta Energy and Utilities Board (AEUB), will ensure that any such arrangements are the result of a competitive process, but will not examine either economics or cost of the project. Distributors must maintain a "portfolio" of pricing arrangments to manage the cost of electricity they take from the power pool.

Renewable electricity technologies will still need to compete against low-cost coal and natural gas fired generation in Alberta, where the major externalities associated with fossil fuel combustion are not yet monetized. Air quality issues are governed by the Clean Air Strategic Alliance of Alberta (CASA), which is open to further regulation. The Act permits the market or distributors to recognize the unique generation characteristics of renewables, which may help them compete on other than price bases.

Independent power developers are presently studying the new system closely for opportunities.

(With files from David Bright and Stephen Salaff)

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Federal study finds efficiency penalized by the tax system

Ottawa: A federal study has found that energy efficiency projects are systematically disadvantaged in comparison to other projects, because of the way the tax system currently works. "Although one might quibble with the methodology of the study," said IPPSO Executive Director Jake Brooks, "It is highly commendable that the federal government has begun systematic analysis of these questions. We are clearly getting closer to getting distortions out of the system."

The study, entitled "The Level Playing Field - the Tax Treatment of Competing Energy Investments" was performed by Natural Resources Canada, as part of its response to the Parliamentary Task Force on Economic Instruments and Disincentives to Sound Environmental Practice. (See IPPSO FACTO, March 1995 for more information on the Task Force).

Neil McIlveen of Natural Resources Canada reports that the study, although still being finalized, has come to the following tentative conclusions:

"There appears to be no obvious bias in the tax system in fabour of petroleum. Small oil and gas projects have relatively low uplifts with less than 10 percent of capital costs covered by incentives in the current tax system

- oil sands, offshore oil and renewable electricity projects receive roughly comparable treatment. These projects exhibit uplifts in the 10-20 percent range. Arguably these greater benefits reflect the high technological and/or commercial risks associated with such projects

- the uplift for the ethanol project is extremely high with almost 140 percent of capital costs supported by the current tax system. Approximately 120 percentage points of the uplift is, however, accounted for by the exemption from federal excise and Ontario motive fuel taxes

- stationary application of energy efficiency projects (e.g. retrofits, solar walls) have negative uplifts, suggesting that they are penalized under the current tax system. This conclusion results from the current tax treatment of such investments whereby they are considered to be part of the building or structure in which they are installed."

Of course the methods and conclusions of the study have attracted significant criticism. John Keating, Vice Chairman of the Independent Power Producers' Society of Alberta, comments that the impact of the "specified energy property rules" for renewable energy projects "creates the single most important obstacle to attracting financing for projects," and that "the impact of these rules is not and cannnot be quantified in (this) study." He stresses that "no other manufacturing and processing investments and no other types of energy investments carry this onerous restriction."

Keating also objects to the way the federal study discounts the impact of the flow-through share financing which is available only to the conventional oil and gas industry. "To deny this privilege to IPP energy technologies is inconsistent with today's emphasis on the environment and the efforts in society to achieve sustainable energy development," he writes. Clearly, the federal study still leaves something to be desired.

Guido Bachmann, Chairman of IPPSA, contends that the study's unjustified assumptions about oil and gas well "reserve additions" understate the investment required to produce non-renewable energy "by a factor of ten." Bachmann also disputed the study's assumptions about industrial electricity rates, factors which have a material impact on the study's conclusions.

IPPSO Executive Director Jake Brooks expressed concern that the study attempts to equate the subsidies to Hibernia (a conventional energy source that will take years to actually produce usable energy) to, for example, a wind farm, which is a new, clean energy source that produces usable energy within a year or two of the investment. Direct comparisons of the support for capital investments of such different characters, on a purported per-unit of useful energy output basis, is highly questionable at best, he says, partly because of the enormous differences in stage of commercial development, scale and timing, and therefore risk.

Brooks also questioned whether it is logical to use such methods to compare investments which produce products of different energy qualities. For example, ethanol fuel is a highly dense and portable fuel, not easily compared for example with offshore oil, which is a primary fuel product, usually converted into some other form before use, at significant added cost. "The uplift method is commendable for its reliance on NPV of cash flows, but appears to require some adjustments before it is really useful for policy purposes," Brooks says. "I wish they had consulted us before going so far down the road with this work."

The Natural Resources Canada study acknowledges that it did not study the tax treatment of cogeneration, biomass energy, or district heating and cooling. Similarly, it remains to be seen how geothermal, photovoltaics, or other efficiency projects will appear when subjected to the same analysis. IPPSO and IPPSA intend to keep working with Natural Resources Canada in this area in the near future.

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GLP helps Canadian Hydro with new 20 MW project

Revelstoke, B.C.: Independent Ontario utility Great Lakes Power has entered a joint venture with Canadian Hydro Developers Inc., based in Calgary, to develop a new hydroelectric project. Located on Pingston Creek, about 60 miles south of Revelstoke, the project will cost about $30 million to build.

Canadian Hydro will be the operator, and oversee construction. Great Lakes Power will own 50% of the enterprise. Canadian Hydro has already succeeded in having the project shortlisted by BC Hydro in its latest NUG RFP. If a power purchase agreement is negotiated, construction will start in 1997 and commissioning in October 1998.

BCUC recommends utilities post wheeling rates and submit to bidding

Victoria: The British Columbia Utilities Commission (BCUC), after an extensive public hearing, has recommended significant changes to the electric power system in British Columbia. The changes are not as far-reaching as Alberta's (see article elsewhere in this issue of IPPSO FACTO) but they are "a positive first step," according to David Austin of the Independent Power Association of British Columbia.

The major recommendations of the BCUC include the following:

1. Reject retail competition as an option for the BC electricity market at this time

2. Require all electric utilities in BC owning generation and transmission assets to establish fully separate operating divisions for these, with elimination of cross-subsidies with other divisions of the utility

3. Establish a policy that requires utilities owning generaito to refrain from bidding new resources, with the possible exception of upgrades to existing facilities, if the utility wishes to act as the evaluatior of new resources, or, conversely, submit to a resource bidding and seleection process adjudicated by an independent third party.

4. Require all utilities owning transmission assets to submit wholesale transmission service tariff applications to the BCUC

5. Eliminate the PEO (Power Exchange Operation) as constituted and direct the BCUC to work with the utilities to develop an RTP tafiff option that is transparent and offers prices that accurately reflect market conditions.

6. Direct British Columbia's electric utilities to transfer their generation assets into separate corporate entities.

7. Establish a process for determining the appropriate design of entitlement contracts and horizontal de-integration in generation that would optimize: (1) competitiveness in the electricity generation market both for new investments and dispatch of existing capacity; (2) retention of entitlement rights of BC customers to existing low embedded cost facilities; and (3) co-ordinated operation of all hydropower facilities for economic, enviornmental, and social objectives.

David Austin's comments on these findings make a number of points. First of all he notes that the timing of these changes is likely to be forced by a precipitating event, such as BC Hydro making a low-price wholesale sale to a major US industrial buyer. When that happens, that US buyer's BC-based competitors will be able to demand access to the same kind of contract, and the whole question of non-discriminatory transmission access will need to be resolved in short order.

Austin stresses that "the passage that excuses upgrades [from point number 3] must be deleted." He says "Hydro could take advantage of the proposed exemption and characterize any repowering as an 'upgrade' to an existing facility."

He also cautions that recommendation 4 is insufficient, given current circumstances: "As long as BC Hydro owns most of the generation in BC as well as the electrical transmission system, there remains potential for it to award itself preferential access to transmission and to use so-called 'black box' economics to allocate costs and in effect charge itself less for wheeling than it does others. What incentive is there for a government to rigidly control the use of 'black box' economics when it owns the company it is attempting to control?"

Austin concludes with the comment that "There will never be a competitive electricity market in BC if the government, as sole shareholder of BC Hydro, continues to also own the majority of electrical transmission and distribution wires in the province and most of the generation that is used to produce electricity for sale."

BC Hydro has objected to the recommendations not so much for their content, but because of what it perceives as the BCUC chairman's "real intentions." In a letter to BC Energy Minister Anne Edwards, BC Hydro Chairman John Sheehan said that although the short term recommendations were not unreasonable "We are unable to supoprt such a model." Sheehan believes that BCUC chair Marc Jaccard disclosed in media briefings and other fora that his true agenda is the breakup of BC Hydro, somthing which "puts the wealth of this province at risk for the sake of ideology."

A coalition of BC industrial power users generally supported the BCUC recommendations, suggesting only that they probably didn't go far enough. A municipal utility agreed with the idea of wholesale competition, but expressed "grave concern" that "the recommendations are designed to create the conditions for retail competition at a later date."

The BCUC recommendations are now before the provincial government which is expected to make a final decision on at least the short term recommendations in the near future.

Hydro Qu‚bec to lay off 5000

Montreal: Hydro Qu‚bec has revealed plans for massive lay-offs of its workforce between 1996 and 1999. According to unconfirmed reports in the Montreal Gazette, the number could be as high as 5000, or one fifth of Hydro Qu‚bec's current workforce.

The lay offs are the result of orders by the utility to cut $120 million from its 1996 operating budget. Hydro spokesman Jean- Guy Ouimet confirmed that major lay offs are planned, but has so far refused to confirm or deny the Gazette's claim of 5000.

BC Hydro's new policy favours independent producers

Vancouver: BC Hydro's shortlist of 10 NUG proposals, released in August, 1995 (see IPPSO FACTO Fall 1995), marks the first step in BC Hydro's new resource aquisition policy.

Under this new policy, BC Hydro is evaluating new proposals based on corporate and customer costs, environmental impacts, community and social impacts, and development impacts. The goals of the policy are to ensure a continued supply of low-cost electricity for the province, with as little negative impact on the environment as possible.

BC Hydro views this current call for proposals as a first step in a new partnership with independent producers as it seeks to become more competitive in the North American Energy Market. Just a few months ago BC Hydro, and its export marketing arm Powerex, joined the Western Regional Transmission Association and the Northwest Regional Transmission Association. President and CEO John Sheehan says that BC Hydro has taken a, "Shift in focus from traditional, long-term contracting. Already we are seeing a move away from 20 and 25 year terms."

BC Hydro anticipates obtaining 200 to 300 MW of power from one or more of the short-listed proposals begining in October, 1998.

Of the ten proposals, three are natural gas fired projects, four are hydroelectric, and three are wood residue projects. Five out of the ten projects would be located on Vancouver Island.

The gas fired proposals include a 337 MW combined cycle plant in Abbotsford by AES Transpower. AES operates similar plants in the USA and Europe. This plant may include a steam loop to provide for local agricultural processing in the lower Fraser Valley. Fletcher Challenge Power Generation and Westcoast Power Inc. are proposing a 240 MW plant at the Elk Falls Pulp Mill, north of Campbell River. MacMillan Bloedel Ltd. is proposing to use steam from its Port Alberni pulp mill in a gas co-generation plant to be built with CU Power International Ltd. and PanCanadian Petrolium Ltd.

The proposed hydro projects are: Ledcor/North Pacific Power Corp.'s 45 MW Ashlu Creek project near Squamish; the 35 MW Kokish River project by Northern Utilities Inc. near Port McNeil; Canadian Hydro Developers' 20 MW Pingston Creek project near Revelstoke; and the 16 MW Zeballos station of Island Power Corp.

The wood residue proposals include: the 28 MW Harmac Cogen of Harmac Pacific in Nanaimo; 45 MW Intercon WW Cogen of Canadian Forest Products in Prince George; and the 10 MW Stothern Power Purcell plant in Skookumchuck.

$150 million deal between BC Hydro and GE Canada

Vancouver: BC Hydro and GE Canada signed a $150 million 10-year partnership agreement in September, 1995 that will boost British Columbia's economy and create export opportunities for GE Canada.

Under the partnership, BC Hydro will purchase $150 million dollars worth of new, more efficient turbines and generators for its hydroelectric generating facilities.

GE Canada, in return, will invest in industrial initiatives in the province an amount equal to, or greater than, the contract. GE will also help create supply and service opportunities for British Columbia businesses and help them to break into foreign markets. GE Canada does conciderable business in the Pacific Rim and can help smaller west coast businesses by providing expertise and partnerships in some of the fastest growing economies in the world.

The partnership between BC Hydro and GE is expected to directly create up to 1,800 person-years of employment in British Columbia. Even more employment is expected as other businesses benefit from the agreement.

Saskpower cancels Wind Project

Regina: Saskpower has canceled plans to build a 3 MW wind power demonstration project in Southwest Saskatchewan.

The project, originally intended to provide 10 MW of electricity, was cancelled, according to Saskpower President Jack Messer, because of costs.

In a news release, Saskpower said, "It has now been decided that the additional cost is not supportable in the current and anticipated operating environment."

Saskpower went on to say that existing energy conservation projects and alternative energy programs will not be effected by this decision. In terms of the utilities ability to reduce greenhouse gas emissions, given that much of the provinces' electricity is generated by coal fired plants, Saskpower claims this cancelation will have little effect. "This represents less than one tenth of one percent of the total electricity consumed in the province annually," the release says.

The Canadian Wind Energy Association (CanWEA), however, believes that this cancellation, along with a previous cancellation of a 25 MW cogeneration project that had been put out to bid, show a lack of commitment by Saskpower to renewable energy.

"Saskpower has clearly demonstrated that it has no vision for a long term, sustainable future using the rich wind resource of the province," says CanWEA President Bernard Saulnier.

Saulnier says that, despite promises to proceed with the wind project by the two previous provincial energy ministers, Saskpower never did have the will to proceed. Constant delays and reductions in size are a clear indicator of this, he says. CanWEA had previously told Saskpower that 3 MW was one tenth the size required for a wind project to be commercially viable. They gave the example of Northern States Power in Minnesota recently committing to build a 100 MW wind project at an energy cost below Saskpowers current costs to generate.

Saulnier says the cancellation is a particular blow to the Canadian Wind Industry which he says has invested well in excess of $500,000 in preparing for the project.

According to Dale Johnson of Wind Power Inc., "They were merely on an information gathering expedition, costing small businesses untold thousands of dollars."

Ministers set strategic direction on air issues

Ottawa: The Canadian Council of Ministers of Environment approved new strategic directions for the National Air Issues Co- ordinating Committtee (NAICC) last summer. For background information on this process, see previous issues of IPPSO FACTO. The new strategic directions include the following:

"1. Maintain and enhance the current national measures of Phase I of the NOx/VOC plan to reduce ground-level ozone.

2. Establish bilateral partnerships between the federal and appropriate provincial governments to develop detailed domestic actions and where appropriate, pursue actions with the United States

3. Implement a tracking system to ensure effective program evaluation."

The committee's staff wrote recently that "It is our intention to form nationally and regionally oriented multistakeholder consultation groups to make further progress in developing the next steps of the program." IPPSO intends to continue its involvement in these efforts, and hopes to persuade other provincial independent power associations, as well as the Canadian Council of Independent Power Associations (CCIPA), to make their views felt on the issues. Independent power producers are largely concerned that the standards give due consideration to the value of high-efficiency combustion projects, and that standards have the effect of levelling the playing field between various forms of power production.

The committee's recent report summarized its participants' views on a number of relevant topics. For example, the advantages and disadvantages of emission standards, emission trading schemes, emission charges, and voluntary action were summarized. (See table below)

Participants agreed that there were a number of important roles for government in controlling atmospheric pollution:

- Provide the scientific information to guide the necessary actions

- Through a multi-stakeholder process, set a broad and clear objectives based on health and environmental criteria; (e.g. by how many tons do emissions have to be reduced to meet the objective)

- Act as auditor of actions so as to verify participant claims of reduction

- Create and manage accurate and timely emission inventories as well as tracking and reporting reduction initiatives

- Provide recognition for voluntary initiatives

- Regulate those sources that do not act voluntarily to reduce emissions

- Set standards where appropriate

- Take a coordinating role to ensure that all emission sources (companies and individuals) contribute to the solution

- Provide leadership by reducing its own emissions of NOx and VOCs.

It remains to be seen if Ontario's new government will substantially change Ontario's position on these questions, and its participation in the air issues committee.

Environment ministers reach auto emissions pact while similar pact in energy sector remains elusive

Whitehorse: While Canada's energy sector continues to produce only vague promises of "voluntary action" on greenhouse gas emissions, the environment ministers of Canada reached a precise and detailed agreement in the Yukon on auto emissions.

At a Ministers conference on October 23 and 24, 1995, the federal and most provincial environment ministers agreed to require manufacturers to produce cleaner running cars. By 2001, all vehicles sold in Canada will be required to include technologies that will reduce emissions of tailpipe exhausts by as much as 70%. The Federal Government also received the go-ahead to establish minimum standards for gasoline additives.

The auto and petroleum industries argued against the new regulations, claiming the costs would be too high and would have to be passed on to the consumer. Auto manufacturers claimed the price of a new car could go up by $1,291. The ministers disputed that figure, however, and all ministers in attendance backed the new proposals. The environment ministers of New Brunswick, Newfoundland and the Northwest Territories were not in attendance, and Qu‚bec sent a deputy minister to observe.

Federal Environment Minister Sheila Copps says that with similar regulations planned for the United States, Canadian industries must adopt new technologies in order to compete globally. "The message to Canadians is, if we have a proper, clean vehicle and also clean fuel, we can save lives and we can actually help the economy," says Copps.

With little movement on greenhouse gas emissions in other sectors of the economy, including the electricity sector, this agreement in the auto industry can perhaps be seen as a response to public pressure for concrete improvements.

Just a month before the Whitehorse Ministers Meeting, a survey by Environics Research Group and Synergistics Consulting indicated that 53% of Canadians believe that automobiles are the major contributor to pollution in this country. The poll also showed that 48% believe government regulation is the best way to reduce industrial pollution followed by tax incentives (25%) and public reporting (19%). No one, out of the 1,500 polled, chose voluntary encouragement as the best way to reduce pollution.

Provinces fail to support federal environment goals

Edmonton: Federal Environment Minister Sheila Copps had few allies at a one day intergovernmental meeting in Edmonton on greenhouse gas emissions.

Even Federal Natural Resources Minister Anne McLellan failed to support Copps' call for greater government action to enforce emission controls. Copps stated that without the support of the provinces Canada will not be able to meet its commitment made at the Rio Summit to reduce greenhouse gas emissions to 1990 levels by the year 2000.

Canada's greenhouse gas emissions have already risen 5% since 1990, and are expected to be 13% higher than 1990 levels by 2000 if current trends continue. Alberta and Saskatchewan have been the greatest contributers to greenhouse gas increases due to increased use of fossil fuels. British Columbia also saw sizable increases in emissions due to population increases and the related rise of automobile use. This has countered reductions in emissions in Ontario, Manitoba, Newfoundland and Prince Edward Island, and only marginal (less than 1%) increases in the other provinces.

Without the co-operation of the three Western-most provinces, says Copps, significant emission reductions will not be possible. British Columbia was the only province to support Copps' call for greater government control, however. Alberta supports voluntary reductions by industry only, and Saskatchewan hasn't even developed a plan yet. "Yes, I'm frustrated," said Copps outside of the meeting, and "no, I have no intention of giving up."

McLellan, her fellow cabinet minister, however, feels that voluntary reduction programs can work. "I am confident we can achieve our goal," she told reporters. "It's not going to be easy. But let's not kid ourselves. It's not going to be easy for most of the nations of the world."

Public opinion polls, as well as a recent report by the environmental research and advocacy firm, The Pembina Institute, show that many people in Canada do not have faith in voluntary action.

The Organization for Economic Co-operation and Development (OECD) also recently released a study of Canada's environmental performance that was critical in regard to greenhouse gas emissions. While finding improvements in air quality and general stabilization of water pollution, greenhouse gas emissions were cited as one area where Canada has failed to live up to national and international commitments.

Federal Finance Minister Paul Martin, according to Copps, is taking this into consideration and is reviewing federal incentives and subsidies which make fossil fuels attractive as part of pre- budget discussions.

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Canada's coal industry supports voluntary action on emissions

Ottawa: The Coal Association of Canada (CAC) signed a Memorandum of Understanding with Natural Resources Canada (NRCan) in August 1995 whereby the coal industry agreed to, "Work together (with NRCan) to meet Canada's commitment to stabilize greenhouse gas emissions at 1990 levels by the year 2000."

This statement, by Federal Natural Resources Minister Anne McLellan, follows on the heels of similar "understandings" reached with the Canadian Association of Petroleum Producers, the Canadian Electrical Association and the Canadian Energy Pipeline Association.

All of these agreements call for the stabilization of greenhouse gas emissions at 1990 levels by the year 2000. None of these agreements are guarantees and none are enforced by penalties for failing to comply. There will be, however, a registry maintained by NRCan to record the levels of reduction achieved.

According to CAC Chairman Mike Lipkewich, "The Coal Association is pleased to cooperate with NRCan in this voluntary endeavor. Our continuous improvement in energy efficiency will assure international competitiveness while reducing the rate of emissions, both meaningful objectives."

CAC's membership account for over 95% of the coal produced in Canada and much of the energy generated by coal.

Montreal meeting on global warming issues mixed opinions

Montreal: Uncertainties over the actual human contributions to global warming, and complaints from developing nations over policies they claim are biased against them, marred a recent UN- sponsored conference on global warming in Montreal.

The October meeting, attended by about 160 international delegates, had difficulty reaching any consensus as a result of these issues.

While it was concluded that temperature increases will be less than earlier predicted (1 to 3.5 degrees Celsius by the year 2100), the cause of the problem is definitely human activity, not natural pollution, the specialists agreed.

At the same time that greenhouse gasses are trapping heat into the Earth's atmosphere, sulphur based gasses are also preventing some solar energy from reaching the Earth's surface. Many of these sulphurous gasses come from industries such as smelters, but much is also natural. The eruption of Mount Pinatubo in 1992 released large amounts of these gasses and resulted in colder than normal global temperatures for the next two years.

The uncertainty over what can be blamed on nature and what is a result of human activity caused the most debate at the meeting. Ian Burton of Canada's Atmospheric and Environment Service said, "Greenhouse gasses continue to rise, and the anthropogenic (human) content of them continues to rise, but I would not be prepared to say how much."

Some delegates argued that the information on sulphur based gasses should be omitted because it will be used as excuse for inaction. That it will be argued that one human factor was cancelling out another. The Swedish delegation wanted to include that information, but point out that sulphurs are the leading cause of acid rain.

The final decision was to include the combined carbon dioxide (greenhouse gas) and sulphur figures, but not give reference to how it has affected previous predictions on climate change.

The other source of controversy at the meeting was the way in which the impact of climate change is being measured.

Current calculations give more weight, according to developing nations, to the economic impact over the human impact. For example, current methods of calculating the impact of flooding due to a rise in sea levels show greater impact on the Netherlands than Bangladesh. Both are low-lying nations that would experience flooding as polar ice caps melt. The Netherlands, though, has more industry and higher valued agricultural crops. Current methods of assessing impact show greater damage there. Bangladesh, conversely, has 10 times the population. Currently with 150 million people, Bangladesh could have as many as 500 million people by the year 2100, according to UN estimates. The Netherlands has about 15 million and will have little more than that by 2100. Clearly, economic models have to explain why displacement of Bengalis is less disruptive than displacement of Dutch citizens.

No consensus was reached in Montreal on this issue. The results of this meeting will now be taken to another to be held in Italy in November, 1995. The human impact on global warming is to be the topic of discussion at that time.

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Environmental consortia growing in Canada

Toronto: Companies in Canada's environmental sector have increasingly been joining forces in larger consortiums in order to break into the international market. According to the Canadian Environment Industry Association (CEIA), five main corporate groups have led the way in this phenomenon which began in the early 1990's.

CANORA (Asia) Inc. is a Canadian corporation made up of 28 partners established to focus on the Southeast Asian market. The knowledge and technology of its members spans the environmental market and it has been able to compete well internationally. It currently has sales of $225 million in 23 countries.

Canadian Environmental Solutions Consortium (CENSOL) was established to provide a vehicle for Canadian firms to gain access to highly competitive overseas markets. It often works with non- member companies to give them the ability to bid on projects to which they would not otherwise have access.

Toronto International Partnership (TIP) is a Metropolitan Toronto government-based agency that works with private consultants to gain access to international urban infrastructure contracts in the environmental field.

North American Environmental Services Inc. is a consortium that focusses on site remediation and soil clean-up and is especially active on US military defence sites.

R.V. Anderson Associates Ltd./India Project is a partnership of R.V. Anderson of Canada and PHE Consultants of Bombay established to work on a 6-year sewage project in Bombay.

According to CEIA, "These clusters, or consortia, are a necessary part of the Canadian environment industry's efforts to access lucrative export market opportunities." By banding together in this way Canadian companies can successfully compete for large environmental contracts with America, Japan and Europe. Clearly there are parallels in the power project development industry.

Canadian Gas Association sees package cogen as part of future development

Toronto: The Canadian Gas Association (CGA), in an August 1995 discussion paper, listed cogeneration as one of the most favourable development areas in the gas industry.

CGA sees increased overall market competition and stagnant gas prices as the main obstacles to development in the gas sector. In response, according to the paper, "Technological improvements in gas utilization in all market sectors," is vital.

"Small packaged cogeneration," located at the building or institution level, is listed as one of the best growth sectors. Natural gas is already used extensively at this level, distribution grids are in place, and the technology is available, relatively cheap and compact. Other growth sectors listed were gas heat pumps, pollution abatement technologies, natural gas vehicles, engine drive systems, gas cooling and fuel cells.

In the energy sector as a whole, CGA expects natural gas to gain a greater share. "After industrial end-use, the electric power generation sector represents the greatest potential for increased gas consumption during the next two decades," the report argues. CGA forsees an increase in the natural gas share of electricity generation from 132 PJ in 1993 to 319 PJ in 2005.

CGA feels that concerns over greenhouse gas emissions from other fossil fuels and the costs and public concerns over nuclear energy are expected to turn utilities, and NUGs, toward gas.

This report, issued in August 1995, is titled "Natural Gas Development Plan," and is available through the Canadian Gas Association at 243 Consumers Road, Suite 1200, North York, Ontario, M2J 5E3 or call (416)498-1994.

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Federal committee says costs should not determine environmental law

Ottawa: A federal government committee aimed at examining the Canadian Environmental Protection Act has stirred the industrial and energy sectors through its recommendations.

The committee, headed by former Liberal Environment Minister Charles Caccia, has stated that cost effectiveness should no longer be the determining factor in the Act.

Looking at costs first, according to Caccia, "Means you do the environmental thing only when the economy permits. You do not see the environment as the basis for your economic growth."

Other government departments, however, say this change would be detrimental to the investment climate in Canada and could scare away foreign companies from locating in Canada. They believe the costs to industry could be too high and recommend trying to achieve a balance between the environmental and economic costs.

Ironically, both sides are using "sustainable development" as the reason for their positions. The problem is in the definition of what sustainable development is. The Caccia committee defines it as meeting the needs of the present without compromising the needs of the next seven generations. The reference to the next seven generations could force industry to turn away from non-renewable resources since immediate supply and cost would no longer be the only factors to determine.

Industry Canada defines sustainable development as including an analysis of an activity's economic impact on today's economy. This would mean that the lowest cost alternative would tend to be the one favoured regardless of what that decision means to future generations.

With this debate in mind, the Federal Government is required to respond to the recommendations of the Committee by November 17, 1995.

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Canadians like wind power, poll shows

Calgary: A recent opinion poll by the Environmnental Monitor and the Canadian Wind Energy Association (CanWEA) shows that 82% of Canadians are interested in buying wind energy, and paying a premium if necessary.

The results of the poll clearly show that Canadians feel wind generated energy is a clean, safe and desirable alternative to traditional energy sources. Many would even be willing to pay more in order to help the environment.

After having wind turbine generators described to them, 45% of respondents said they would definitely be willing to buy wind energy, 37% said probably, 10% probably not, 4% definitely not, 2% said "it depends" and 2% had no opinion or did not respond.

34% said their provincial utility should make expanding wind power a major priority, 45% said it should be a moderate priority, 15% said a minor priority, 2% said it depends and 3% had no opinion.

72% felt that the cost of expanding wind power generation should be paid by all customers as part of overall electricity rates, 20% said extra costs should be optional to customers who want it, 3% said neither, 1% said both and 4% had no opinion.

17% said they would definitely pay more for wind generated power, 48% said they probably would, 17% said probably not, 12% said definitely not, 4% said it depends and 2% had no opinion.

Overall, Qu‚becois were the most supportive of wind generation, followed by British Columbia and Saskatchewan. The remaining provinces, including Ontario, were behind, but still generally supportive.

The poll surveyed 1,519 adult Canadians by phone. A sample this size is considered to be accurate to within 2.6 percentage points, 19 times out of 20.

New guide to Canadian renewable energy released

Toronto: A comprehensive new book has been published which is designed to help people make more use of renewable energy in Canada.

Published by the Solar Energy Society of Canada Inc. (SESCI), The Canadian Renewable Energy Guide gives an in-depth look into all aspects of renewable energy as it exists in Canada today.

The Guide includes sections on homes, home power systems, transportation, commercial and industrial applications, agricultural and aquaculture applications, remote and northern applications, and international applications. There are general industry overviews on wind energy, biomass, independent hydro, geothermal energy, solar thermal and photovoltaics. There is also information on Canadian associations involved in renewables, government, on-line information, Canadian supplier catalogues and books, as well as classified listings and an extensive directory of companies in the renewable energy field.

"The Canadian Renewable Energy Guide is a comprehensive guide to using renewable energy to preserve the environment, to save money, and to ensure secure, reliable energy," say editors Duncan Noble and Robert Swartman.

SESCI began this project in order to create an accurate and up-to-date directory of renewable energy suppliers in Canada. Soon after starting to research the book, however, they realized that a "bridge" was needed to help customers interested in renewable energy identify the suppliers who can provide them with their needs. The Book was then expanded to identify the sources of renewable energy in Canada, show how these sources can be practically applied, and then identify the suppliers who can assist.

Numerous case studies of renewable energy projects are given to show how current technologies have been utilized and demonstrate the benefits and difficulties associated. These case studies were chosen, say Noble and Swartman, to show how, "The early birds in our society have been demonstrating for years that renewable energy solutions are environmentally preferred, practical, and cost effective in many applications."

The 238 page, well-illustrated book was financed by Industry Canada, Natural Resources Canada, Ontario Hydro, the Ontario Ministry of Environment and Energy, the British Columbia Ministry of Energy, Mines and Petroleum Resources, and the Saskatchewan Energy Conservation and Development Authority.

The Guide costs $24.95 plus $5.00 for GST, shipping and handling and can be ordered through General Store Publishing House, 1 Main Street, Burnstown, Ontario, K0J 1G0. Telephone orders can be made by calling 1-800-465-6072. Fax orders to (613)432-7184.

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Environmental industries cooperation needed to train foreign students

Ottawa: Environment Canada is currently offering Canadian companies with environmental know-how an opportunity to establish contacts with foreign markets. This is to be accomplished by companies sharing their knowledge and some of their staff time with employees of overseas companies sent to Canada for this program.

Called the Canadian Environmental Training Opportunities Program, Canadian industry partners are being solicited by Environment Canada to provide training opportunities to individuals and companies in Canadian environmental products and services.

The goals of the program, according to Laura Tupper of Environment Canada, are to expose and educate people from other countries in Canadian technology in this field and to give Canadian environmental companies contacts and business opportunities abroad.

Short hands-on courses and work sessions, ranging from 2 days to a week in duration, are offered in a variety of environmental fields.

Courses currently offered include health and safety at contaminated sites, pollution prevention and control, waste water treatment, and environmental inspection and investigation. These courses are offered at a variety of locations across Canada at fees ranging from $325 to $1000.

Environment Canada organizers would like to expand the program by getting businesses and organizations with environmental technology and knowledge to assist in the organization and presentation of these sessions.

According to Tupper, "The exposure generated through presentation to foreign audiences, as Canadian experts in various environmental fields, can be a great asset to business development."

Companies and organizations with expertise to offer are encouraged to contact Mike Schulz at the Environmental Technology Transfer Office of Environment Canada, 425 St. Joseph Blvd., Hull, Qu‚bec, K1A 0H3. You can also call him at (819)953-1834.

BC Council community energy planning and alternative energy

Vancouver: The BC Energy Council is looking into ways to make municipalities more responsive to energy issues. The Council's Executive Director Michael Margolick feels that the best way to plan sustainable energy options for the future is to get municipal governments to make energy a priority issue in their planning processes.

"Energy is not in the (municipal) budget," explains Margolick, "And it's not in the plan except when a new facility might be sited in somebody's back yard."

Energy planning in the 1980's and early 90's primarily involved developing more efficient ways of providing energy to customers, primarily in cities. A more efficient way, according to Margolick, would be to look at ways in which cities could be designed to require less energy.

This can be accomplished through many aspects of municipal planning including: district heating and cooling; cogeneration; better building codes and zoning laws; reducing urban sprawl and the consequent need from travelling distances; and better public transit.

The main reason Margolick gives for the current lack of this type of planning is that energy in most parts of Canada is supplied by provincial utilities or international oil companies. Municipalities are not responsible for providing energy for its citizens and are not generally capable of co-ordinating sustainable energy policies.

The BC Energy Council is trying to find ways, through consulting with municipalities, to make them a part of the energy planning process in the province.

Margolick will be speaking at the IPPSO Conference "Pragmatic Privatization" on December 13 in Toronto.

GE Canada a partner in Chinese hydro project

Lachine, Qu‚bec: GE Hydro inaugurated its new Tech Centre at its Lachine, Qu‚bec plant by hosting the 3rd liaison meeting of China's Tianghuangping (THP) hydroelectric project.

Representatives of 13 companies from 6 countries attended, all of whom are working on the project in China's eastern Zhejiang Province.

GE Hydro, part of GE Canada Power Systems, was awarded the contract to supply the massive generators and motors for the project in November 1993.

When completed, THP will be the second largest pumped storage project in the world after an American project. In a pumped storage project, water is diverted from a nearby source and pumped into either a natural or a man-made basin which acts as a reservoir. The water is then used to turn turbines and generate electricity at times of peak demand. The benefit of this kind of project is that water flow can be increased or decreased as energy requirements fluctuate.

The THP project utilizes a basin at the head of a small branch of Daxi creek and the lower valley of the creek to create two reservoirs. Daxi Creek is a tributary of the Xitiao River which is about 175 km from Shanghai, China's largest city.

The project will use 6 generators being built at GE Hydro's Lachine plant and will generate 1800 MW of electricity for the East China Power System beginning in the year 2000.

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EMF responsible for melatonin deficits?

London: Scientists with the US National Council on Radiation Protection believe that the health risk of living near power lines may be higher than previously acknowledged, according to a leaked report. The British journal New Scientist quoted a leaked report which argues that previous scientific studies have underestimated the risk, partly because they have focussed on relatively high levels of exposure to EMF (Electro-Magnetic Fields, such as those given off by power lines and normal electrical appliances.)

"The sensitivity of the brain and its mechanisms to these fields is key to understanding the issue," says Ross Adey, Chair of the US National Council on Radiation Protection. A "powerful body of impressive evidence" exists he says, corroborating the view that very low exposure to EMF has health effects. One of these effects is the reduction of the hormone melatonin, which has been in the news lately in Canada, because of its growing popularity as a "nutrition supplement." Although supplemental melatonin is technically banned in Canada without a prescription, it is relatively easy to purchase in many outlets, and is unregulated in the United States. Melatonin advocates credit it as a cure for everything from autism to lagging sex drive (See the Toronto Globe and Mail, November 18, 1995, p1.)

The US National Council on Radiation Protection report recommended a limit of .02 microteslas for electromagnetic radiation. This level is well below that in many homes. A person standing 30 centimetres from a conventional vacuum cleaner may be exposed to more than that amount. The cost of meeting such standards is astronomical and could necessitate major re- engineering of electrical systems and appliances around the world. Distributed generation would be part of the solution to such problems.

Newspaper unleashes backlash on global warming

Toronto: The Toronto Globe and Mail caused a torrent of controversy with its editorial in early October which suggested that global warming might have positive side effects, and that Canada should consider adapting to global warming instead of trying to stop it. Greenpeace representative Kevin Jardine wrote that "wilderness can not adapt," and predicted increased forest fires, insect outbreaks and coastal flooding. He said the paper "should stop counselling delay and support the growing global movement to sharply cut consumption of coal and oil and shift to the efficient use of clean, renewable energy." Doing so, he said "will reduce costs, increase employment, and protect the environment at the same time."

Peter J. Stoett sardonically asked about the Globe's suggestion that we should "invest in population movements" to adapt to global warming: "Are you suggesting an increase in refugee/immigration levels as people are forced to leave degraded areas in tropical regions? Or are you suggesting that Canada expand its overseas development spending to help the displaced?"

Louise Comeau of the Sierra Club wrote: "As a so-called prophet of doom, I am not rubbing my hands in glee. Climate change is serious business; responding to it requires a complete restructuring of the world's energy systems. That's good news, not bad. The process will drive a technological and social revolution that will improve the quality of life, particularly in our urban centres and move global society from the Carbon Age to the Solar Age. I for one, am not afraid of this prospect. Why is the Globe and Mail so threatened?"

Solarwall wins awards for Canadian producer

Toronto: Conserval Engineering of Toronto has won four recent awards for its Solarwall technology. The Solarwall employs solar heat collection panels, which are installed on the south-facing walls of existing factories, office or apartment buildings, to collect heat from the sun and transfer it into the buildings heating and/or ventilation systems. These units have led to substantial reductions in the need for outside energy sources to meet buildings' heating requirements.

The relatively simple, yet highly effective system has led to Conserval's latest awards. They include: Popular Science's Best-of What's-New Award; R & D Magazine's Top 100 Award; an outstanding achievement award and financial prize from NRCan's Canada Centre for Mineral & Technology; and the Toronto Construction Association's Most Innovative Product of the Year Award.

Since its first major installation of a Solarwall at Ford's Oakville assembly plant in 1986, Conserval has installed over 40 systems around the world. Ford has since purchased Solarwalls for 6 other plants in Canada and the US and upgraded at its original Oakville plant. "This is a really cost-effective way of improving the workplace and it requires very little maintenance," says Ford Manager of Plant and Energy Engineering Ken Rossi. The Oakville plant alone has saved over $100,000 a year in its heating energy costs since the solarwall was installed, according to Rossi.

Besides Ford, other buyers of Solarwall technology have included General Motors Canada, McDonnell Douglas, Bombardier, Uniroyal Ltd and even an American Antarctic research facility. Conserval has also more recently made sales to large apartment buildings.

Recent improvements by Conserval have raised the efficiency of the units, reduced the size and made the product more attractive to a wider range of buyers, including private home owners, says company founder and president John Hollick. "It's performing better than expected," says Hollick. "Solar collection efficiency averaged 72 percent over the entire year, whereas the older glazed version averaged just 59 percent."

For buildings where the south wall has many windows or other features which cannot be covered up by the solarwall, Conserval has developed a canopy version which sits along the top part of the building and collects heat that rises up to it. Hollick says he is now targetting this technology to residential contractors and utilities who may want to offer it to consumers. He says the technology is cost effective both in terms of reducing heating costs and in its comparison to other energy efficiency technologies.

"There's definitely a lot of interest out there," says Hollick, but he adds that it's still difficult to sell people on non-traditional technologies, especially solar.

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Canadian Environmental Network tells how to fix CEPA

Toronto: The Toxics Caucus of the Canadian Environmental Network (CEN) earlier this year issued a detailed report on how they believe the Canadian Environmental Protection Act (CEPA) should be ammended. The overwhelming message is that the federal government must become a strong leader in enforcing environmental standards in Canada.

"The CEPA is the most important of Canada's environmental laws," says the CEN. "But since its inception, environmentalists from across Canada have had major concerns about its scope and effectiveness." The CEN says that the current review of CEPA by the federal government is an important opportunity to strengthen Canadian environmental law and ensure that Canada is able to meet commitments made in the Rio Declaration on Global Warming.

The CEN's 27-page document entitled CEPA: An Agenda for Reform outlines how the CEN feels amendments should be made. The document, broken down from an earlier 200-page report, has been endorsed by over 50 non-governmental groups in Canada.

The CEN states that the federal government must clearly state, through CEPA, that it will enact and enforce environmental standards for all Canadians. They also say that the onus of proof, in regard to environmentally risky activities, should lie with the party proposing to carry it out. The federal government should then base its decisions on the "weight of available evidence" rather than requiring absolute proof of environmental damage.

In terms of the federal role in environmental protection, the CEN states that the government must affirm its commitment to being a leader and include this commitment in the preamble of CEPA. The process for developing and implementing agreements with the provinces must be improved and made more public. All final agreements should be published, require annual reporting to Parliament, have sunset clauses requiring periodic review and permit the government to prosecute violations under federal statutes.

Environment Canada must be given a clear mandate to enforce environmental laws with clear mechanisms to do so. They should be given the mandate to prosecute without the permission of the Ministry of Justice as is currently required and they must have stronger options to take against violators. Individuals should also have the right to sue under CEPA, according to the CEN.

The public must become better informed of the levels of pollution being released into their environment. Workers rights must also be included in CEPA.

The CEN also believes that the government should implement economic incentives, such as green taxes, to promote environmental initiatives and cleanup.

The full report also includes specific recommendations on how these principals can be better addressed through CEPA. All reports and recommendations have been submitted to Parliament's Standing Committee on Environment and Sustainable Development, chaired by Liberal MP Charles Caccia. The Government is expected to release its proposed ammendments to CEPA in December of 1995.

BC small hydro project financial success

Revelstoke: The Akolkolex Hydro Generator near Revelstoke, BC went online in April 1995 at a cost well below the average for new hydro projects in North America.

Innovations in design and construction kept costs to about $1000 a kilowatt for the 10 MW project, and amongst the lowest in recent memory.

Akolkolex Power Company Ltd., a wholly owned subsidiary of Canadian Hydro Developers (CHD) Inc., built the project after being awarded a contract for new capacity by BC Hydro. The contract is for 20 years at 4.3 cents per kilowatt hour, escalating at 3% per year.

CHD maintained control over the $10.2 million project itself, through Akolkolex Power, rather than contracting out to a single contractor. Individual contracts for different components of construction were then parcelled out to various contractors. Although CHD took on more personal risks through this management method, they were also able to maintain tighter control over construction, helping to keep costs down.

An example of how CHD was able to use innovative responses during construction was demonstrated during the building of the covered canal. Unexpected weaknesses in the rock structure during tunnelling resulted in necessary changes to the design of the roof. This left CHD with well over 100 unused beams, intended for the original roof. Rather than scrapping them, or trying to resell them at a loss, CHD utilized them in three other areas of construction.

Other innovations to meet the specific needs of the Akolkolex River were made possible through consultations with local residents and fishermen. Specific information about seasonal fluctuations in water flow and the amount of debris carried by the river allowed CHD to make design changes which saved money and prevented unnecessary disruptions to generation as well as to the river, which is part of the Columbia River system.

The project, with a net head of 113.5 meters and flow rate of 10.7 cubic meters per second, now produces 50,000 megawatt hours annually for sale to BC Hydro.

Photovoltaic cell-phones provide security in remote areas

Kelowna: Solar-powered distress phones have been installed on two rural college campuses in the BC interior.

Developed by Nova Solar Systems and Devises in Kelowna, the phones provide a cost-efficient means of providing emergency service to areas where traditional electricity and phone lines are inaccessible.

Using PV power-fed batteries and cellular phone technology, the phones are cheap, movable and easily installed, requiring no wiring of any kind.

The phones are currently being used in remote parking lots surrounded by heavily wooded areas on the campuses. These lots have traditionally been sources of safety concerns for students and faculty who have been worried about physical attacks given the absence of security. Prior to the availability of these phones, there was no affordable means for the Colleges to provide security in these areas.

Now, a student in an emergency situation need only hit a red button on the phone to be instantly connected to campus security. The programmable logic controller (PLC) developed by Nova automatically sets off strobe lights and tells security staff the location of the phone. The PLC can also detect malfunctions or damage caused by vandalism and alert security.

Because of the versatility of the PLC, "We can manufacture (the phones) to suit the application," according to Chuck Price, a director at Nova. The technology can be utilized in any area where phone service is required, and electricity and phone transmission lines are not feasible. Applications could include emergency phones along highways, at transit stops and even for regular rural phone service, provided cellular phone service is available.

3rd annual Energy Efficiency Act report issued

Ottawa: The 3rd annual report to parliament on developments under the Energy Efficiency Act (EEA) gives many examples of programs meant to encourage energy efficiency, but few examples of concrete results. Conspicuously absent are figures on greenhouse gas emissions for the 1994-95 fiscal year.

The Efficiency and Alternative Energy (EAE) Program is one of the main initiatives taken by the Ministry of Natural Resources (NRCan) under the EEA. According to Natural Resources Minister Anne McLellan, it "is a key component of Canada's National Action Program on Climate Change." This is the program whereby Canada hopes to meet its international commitment to reduce greenhouse gas emissions to 1990 levels by 2000.

The only figures indicating reductions, however, are in the amount of energy used per household. For residential buildings, this fell 2% over the 1994-95 fiscal year, and in commercial buildings it fell 11% over the same period. Overall commercial use of energy, however, rose by 8% over the year.

In the NRCan report, McLellan lists the main areas of progress for the past year. One of the main areas, she indicates, is the first set of federal regulations under the EEA. These include: energy performance standards for energy using products, doors and windows that are imported to Canada or shipped between provinces; energy labelling of energy using products, doors and windows that are imported or shipped between provinces; and the collection of statistics and information on energy use and alternative energy. What these regulations do, effectively, are back up existing provincial standards, which vary from province to province.

NRCan also released the first draft of new national energy codes for buildings and houses.

McLellan, who has supported voluntary action over government regulation, cites several developments on this front in 1994-95. She says there has been, "An increase in the number of energy innovators from 125 to 200 Canadian corporations, institutions and municipalities, representing 50 million square metres of floor space." She also cites the construction of 1000 new R-2000 homes and the launch of the Auto$mart Program to reduce auto emissions.

In the area of research and development, McLellan cites the launch of a 3-year program to perform 20 energy audits of foundries per year. She also says that several federal government heating plants have had energy saving and emission reduction systems installed.

The report goes on to list numerous federal programs to encourage the development and installation of new energy efficiency technologies. In the end, however, although greenhouse gas emissions have been reduced in Ontario and several other provinces, emissions across Canada continue to rise.

Environment Canada unveils new funding program

Ottawa: Environment Minister Sheila Copps announced September 29 a new funding program to help Canadian organizations take environmental action.

The $10 million annual fund, called Action 21, fulfills a commitment in the Liberal Governments Red Book of election promises. The funding will come from existing Environment Canada resources and will be made available to non-profit, non-government groups. This includes community groups, environmental groups, service clubs, associations, youth and seniors organizations and labour unions. Action 21 funding will not be provided to individuals, government agencies, political organizations, academic institutions, industry or business.

Action 21, according to Environment Canada, is designed to, "Encourage projects that protect, rehabilitate or enhance the natural environment, and build the capacity of communities to sustain activities into the future." This could include plans to reduce the emission of pollutants into the environment, or protect ecosystems and wildlife.

"These are important issues that will affect our future and the future of our children," says Copps. "Lasting solutions will only be found if all Canadians work together to confront our environmental problems. Action 21 will help them do just that."

Action 21 also includes an educational component where Environment Canada will try to educate Canadians about environmental issues and encourage groups to become active in protecting the environment.

Groups with an interest in the environment or with a project they would like to have funded through Action 21 are encouraged to contact the Action 21 office. For Ontario, the office is located at 4905 Dufferin St., Downsview, Ontario, M3H 5T4. The phone number is (416)739-4768 or toll free at 1-800-661-7785.

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Retail sector commits to voluntary action

Edmonton: Edmonton's 11th annual Energy Awareness Week closed November 3rd with a commitment by the Retail Council of Canada to encourage voluntary action within its membership to improve energy efficiency and reduce greenhouse gas emissions.

"The Retail Council is committed to raising environmental awareness and responsibility within the retail community," said Council President and CEO Diane Brisebois. "We are pleased to support the Energy Innovators initiative which will assist retailers in meeting environmental goals through the provision of information and guidelines."

The Retail Council of Canada represents more than 65% of Canada's retail trade with 6,600 members.

Superior Propane also took this opportunity to announce a tree planting program in support of voluntary action for a cleaner environment.

"Superior Propane is proud to introduce voluntary measures," said President and CEO Donald Edwards, "And will continue to support sustainable development for the benefit of present and future generations of Canadians."

Canada and BC to co-operate on environmental assessments

Whitehorse: A draft agreement was reached in October between the governments of British Columbia and Canada to co-ordinate federal and provincial environmental assessment proceedures.

The agreement, when ratified, will avoid duplication and improve efficiency in carrying out environmental assessments in BC. It defines a single set of proceedures that meet the standards of both governments and provides a process for exchanging information about projects that may require joint assessment.

"this agreement demonstrates the continued cooperation between the governments of Canada and British Columbia," says federal Environment Minister Sheila Copps. "Efficient and co-ordinated environmental assessment will be good for Canada and good for BC."

Copies of the draft agreement are available through the BC Environmental Assessment Office Project Registry, 1st floor, 836 Yates St., Victoria, BC, V8V 1X4. You can also call (604)356-7441 or use the internet address hhtp://www.ceaa.gc.ca. Written comments will be accepted until December 15, 1995.

New database to help link private and public partners

Ottawa: A new database is being set up by the Office of Public/Private Partnerships (OPPP) designed to help link up private business ventures with public sector projects.

Called the Best Practises Database, OPPP is working with a group of MBA students at the University of Ottawa to develop the project. They are also consulting with relavent parties across Canada to set up a system that can best achieve the objective of linking the private and public sectors in joint ventures.

According to the OPPP, "One way in which governments are meeting new challenges is through innovative arrangements with the private sector to deliver public goods and services."

According to OPPP, a best practise involves at least one of the following characteristics: it serves as a model for other partnerships; it is innovative in involving the public sector in the delivery of a good or service to a non-traditional area; it has an unusual partnership mechanism; or, it has demonstrated success in attaining partnership objectives.

There are numerous benefits to private/public partnerships, says OPPP, including shared investment, shared risk, shared planning and mutual benefit.

Although OPPP is under the federal Ministry of Agriculture, the new database is open to all areas of public interest, including energy. The initial version of the database, containing 400 partnership profiles, is expected to be ready by March 31, 1996. The parameters of the profiles will include location, sector, type of partners, partnership structure, goods or services provided and type of financing.

For further information, please contact Mike McAuley at (613)957-7078 ext.3029.

NWT Snare Rapids hydro project upgraded

Yellowknife: Canadian Hydro Components Ltd. has supplied a new turbine and generator to the Snare Rapids Hydro Project in the Northwest Territories.

Northwest Territories Power Corp. ordered the new equipment to replace an obsolete standby unit at the project. The new 450 kW generator went into operation in September, 1995 and augments the existing 8 MW main unit.

Quebec plant wins $2 million Brown Lake BC contract

Granby: GEC Alsthom Neyrpic Minihydro Inc., of Granby, Quebec, has been awarded a $2 million contract to supply a 7 MW hydro system to the Brown Lake Hydro Plant in British Columbia.

Synex Energy Resources Ltd ordered the horizontal Francis turbine, generator and control system supply package after announcing in June that they would proceed with the $10 million development.

The site, located about 40 km south of Prince Rupert, features a natural lake for a reservoir and a 104 metre head. Discharged water will go into the Ecstall River in the remote coastal region, accessable only by water or air.

Sigma Engineering of Vancouver is the engineering firm for the project which is scheduled to go on line in the fall of 1996 for sale to BC Hydro.

Scuzzy Creek hydro project begins operations

Algonquin Power Corp. Inc.'s 8 MW Scuzzy Creek hydro project went into operations in August, 1995, supplying 40 gigawatt hours of electricity annually.

BC Hydro is purchasing 6 MW of supply for domestic use and its exporting arm, Powerex is purchasing the remaining output. Algonquin built the plant for developer Boston Bar Hydro Inc. in response to a call for bids by BC Hydro in 1989.

The run-of-river project is located at the mouth of Scuzzy Creek on the Fraser River about 180 km northeast of Vancouver, near the town of Boston Bar. The plant utilizes two turgo impulse turbines under 200 metres of head. The turbines were provided by Dependable Turbines of Vanouver and the generators are from Kato Engineering/Reliance Electric of Mankato, Minnesota.

The project is located near an association of 6 area Indian Bands who hold an equity interest in the project.

BC First Nation Exploring Small Hydro

New Aiyansh, British Columbia: The Nisga'a Nation of Northwestern British Columbia is exploring the development of a new small hydro project.

The Naga'a Nation, made up of 4 communities in the Nass River Valley are proposing using stored water from streams feeding into the valley to fuel between 15 and 50 MW of power. Nisga'a Economic Enterprises (NEE), the Nation's non-profit development company, would develop the project which is perhaps a year or two away from commitment according to NEE General Manager Matthew Moore.

"These watersheds have a fairly low fishery value to them," says Moore, "or no fishery value at all," so the environmental and social impact on the region should be minimal. NEE has identified 4 possible sites for development, he says, which would replace abandoned hydroelectric facilities that once provided power to area canneries and mines.

NEE is currently seeking partners to provide project financing.

International News

NY utilities want wholesale competition

Albany: Eight electric utilities in the state of New York have endorsed a move to wholesale competition, but not retail access. "We advocate a carefully planned transition to competition at the wholesale level," the utilities say in the executive summary of a new plan released by the Energy Association of New York State. It continued, saying that retail wheeling "involves a number of risks and uncertainties that require careful analysis." The plan also calls for a Pool Market Mechanism, and an Independent System Operator to co-ordinate the physical supplies.

The Energy Association made its support for wholesale competition contingent on four principles:

- a reasonable opportunity to recover stranded investments

- regulatory support for utilities continuing in the generation business

- appropriate treatment of nuclear plants, and

- adoption of a clearly defined transition plan.

The group believes that nuclear plants can not be operated on a deregulated basis. It also believes that taxes on energy are excessive and should be reduced. They call for a moratorium on new programs that would raise prices and a review of existing programs to modify those that add to the cost of electricity. This last is clearly aimed at demand management, renewables and integrated resource planning.

In a separate development, Niagara Mohawk, a major utility in upstate New York, has proposed major restructuring to break up the company and force the state to reform its regulatory system. Existing regulations are outdated and costly Chairman William Davis said, and "the present system doesn't work. ... There must be a fundamental restructuring of the electricity market in Niagara Mohawk's service area or the upstate economy will continue to bear the burdens of growing electricity prices." Shortly after the announcement bondrater Standard and Poor's downgraded Niagara Mohawk's debt and placed the utility on "credit watch with negative implications." Standard and Poor's termed the utility's plans to spin off generation assets and NUG contracts into a separate company as "extremely difficult."

The Independent Power Producers of New York panned the utilities' paper, saying customers would see little relief in their bills, and no change in their relationship with their utility.

Utility installs grid-connected PV system to save money

Kerman, California: Pacific Gas & Electric Company has found that photovoltaic (PV) power can be cost effective in supporting transmission and distribution (T&D) systems.

A test facility that went on-line in 1993 at the Kerman 500 MW plant showed that, under the right conditions, PV power can be used to avoid much more costly upgrades to T&D systems.

The Kerman plant was chosen because it matches the ideal conditions that make PV a cost effective option. The peak availability of solar energy coincides with the peak demand times for electricity, and local T&D facilities are near maximum capacity. Being located in the relatively rural San Joaquin Valley, installing PV at Kerman means avoiding costly upgrades to substations, transformers and/or underground feeders in order to serve a relatively small load.

Locating areas where PV power can be used in this grid support capacity is a somewhat complicated procedure. First, meteorological studies of the utility's service area have to be conducted to locate areas where weather, and terrain, conditions allow for adequate sunshine. Next, areas where peaks in solar availability (60 to 100% of PV capacity) coincide with peaks in electricity demand. Finally, out of these areas, only the ones where existing T&D systems are near their maximum capacity can be considered as possible cost effective locations for PV use.

Given current costs for installing PV systems of this kind, not many areas exist in Canada where this technology would be worthwhile. However, as PV technologies improve and costs become more favourable, PV grid-support systems will become more attractive to Canadian utilities.

Relatively rural, remote and dry areas of the Prairies could be attractive for PV systems as they match the conditions required for cost effective installation.

photo?

US NUGs endorse paying for stranded assets through transmission

Washington, DC: The Electric Generation Association (EGA) which represents many non-utility generation interests in the United States, has endorsed "broadly distributed access charges" to pay for stranded costs. It views the alternative approach of applying exit fees as arbitrary, blunt and outmoded.

The EGA's position was part of its comments on the US Federal Energy Regulatory Commission's Notice of Proposed Rulemaking on "Promoting Wholesale Competition Through Open Access Non- discriminatory Transmission Services by Public Utilities." The position is similar to the position taken by IPPSO in its recent paper on restructuring Ontario's electric system.

The EGA also commented on other issues: 1) the preservation of existing NUG contracts; 2) the need to make sure that the utilities' methods of providing posted "pro forma" transmission rates do not involve discriminatory pricing because of technical terms and conditions; 3) the need to preserve the option of moving to retail competition, in addition to wholesale competition, and related questions of wholesale/retail rate comparability; and 4) generation market power standards.

For a copy of the EGA paper, contact the EGA at (202) 965- 1134, or IPPSO.

World Energy Congress calls for sustainability

Tokyo: The 16th World Energy Congress (WEC) held in October in Tokyo concluded that its members around the world must act now to plan for a sustainable energy future.

While recognizing that the current stability in conventional fuel supplies and prices doesn't encourage a strong commitment to change, the WEC called on members to use this fact as a window to initiate a long term plan.

"The first challenge is to respond now," the WEC said in its Tokyo Statement, "with urgency and determination to the plight of over 2 billion people in lower income developing countries who neither have electricity nor adequate access to other commercial energy."

"The second challenge," according the the Tokyo Statement, "is that of achieving a path to sustainable development in the longer term."

The development of more efficient technologies, particularily those utilizing renewable sources of energy, was identified as key to meeting these challenges by the WEC. The main barrier to an increase in research and development in new technologies was seen to be costs. With fossil fuels remaining inexpensive and available, the commitment to developing sustainable technologies will not likely increase.

In order to change this, the WEC called on governments to eliminate energy subsidies, "so that rational decisions are taken on the basis of the proper costs." Full cost accounting of energy must also be utilized so that environmental and sustainability factors are fully considered.

The WEC recognized that these developments will likely take years to achieve and will require an unprecedented partnership between government, industry and consumers.

Numerous recommendations were endorsed and included in the Tokyo Statement at the conclusion of the six day congress.

While eliminating energy subsidies and phasing in full cost accounting, governments should include a social welfare provision "where personal hardship and deprivation result." Otherwise, according to the WEC, these policies could be hard to sell to consumers.

Developed and developing nations must work together to provide commercial energy to the 40 % of the world's population that currently do not have access to it.

Governments and energy-related industries must work harder to educate consumers on the benefits of developing sustainable energy technologies. They must also spend more money on research and development to create better, more reliable products which will be more attractive to consumers.

The WEC saw nuclear energy as an important future source of energy and called on government and industry to "secure the public acceptability of nuclear power, both by technological development and the provision of accurate information."

Governments must ensure competitiveness in the energy market, both internally and internationally, giving weight to long term goal of sustainability. Improvements in financing methods and availability was identified as important in this area, particularly in the developing world.

Most importantly, according to the WEC, is that all parties must act now to implement sustainable energy plans, keeping in mind future population growth and industrial needs.

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New power marketer makes big sale

Salt Lake City: Illinova Power Marketing Inc. has "Hit the ground running," according to a news release from the new Utah- based company. Illinova issued the release to announce its first transaction, a sale of 50 MW of electricity in September 1995.

The sale, to a California municipal utility, came just one month after Illinova joined the Western System Power Pool (WSPP). WSPP is a group of more than 80 utilities, power marketers and independent producers that operate in the Western States. The organization acts as a facilitator between members to speed the negotiating process and help reach faster sales and cooperation agreements.

"There is no question WSPP membership helps us break into the wholesale power market," says operations manager Ed Stoneburg of Illinova. Prior to membership, it could have taken them several months to make one deal with one customer.

With membership, it took just one month to reach a deal worth at least $10 million (US) in sales for 1995 and 1996.

US cities turning to district cooling

Chicago: The City of Chicago is developing into a case study of the rising interest in district cooling in American cities.

Trigen Energy Corp. and Unicom Thermal Technologies are currently competing aggressively with each other for the growing market in the Chicago Loop. Trigen has also formed a partnership with Peoples Energy Corp. to provide district heating and cooling to the McCormick Place Exhibition and Convention Centre as it expands from 1.8 to 4 million square feet by 1997. To provide the cooling, they're building the world's largest chilled water storage tank (8.5 million gallons). Trigen also operates district cooling systems in 6 other American cities, as well as district heating in 12 cities across North America. They will soon be providing cooling to Boston as well.

Other players in the district cooling sector include: Mid- America Energy Resources in Indianapolis and Cleveland; NRG Energy Inc. in Minneapolis; and District Cooling St. Paul in St. Paul, Minnesota. Baltimore Gas & Electric is also planning to build a district cooling system.

John Fiegel, Executive Director of the International District Energy Association, says that he's recieved numerous inquiries about district cooling recently. Many of them from existing utilities interested in moving into the field. "There are phenomenal plans to grow," says Fiegel. "Utilities are watching closely the success of these district energy subsidiaries."

Some of the reasons for the increased interest are the elimination of large pieces of on-site machinery in buildings serviced by district cooling, reductions in energy costs and the elimination of CFCs.

Vietnam opening energy market

Hanoi: As Vietnam sheds its isolationist policies and opens its doors to foreign investment, the demand for energy is expected to expand rapidly.

The Vietnamese Gevornment projects a minimum of $6 billion (US) in new investments in the energy sector will be needed by the year 2010 to keep up with demands. The World Bank estimates that $3.2 billion (US) will be required for new distribution facilities alone. This will be necessary, world bank officials say, if Vietnam hopes to meet its goal of extending electricity supply to 80% of the rural population within 12 years. Only 58% of rural Vietnamese currently have electricity supplied to them as opposed to 98% of urban residents.

65% of Vietnams current 4000 MW of installed capacity is hydroelectric and 3 new hydro projects under construction will more than double the current capacity. Further hydro projects may be possible, according to officials in Hanoi, using private industry partnerships. Other prospects for independent producers exist in natural gas generation. Using large fields of largely untapped natural gas in Vietnam, and offshore in the South China Sea, Vietnamese officials expect gas to overtake coal as the main source of thermal energy by 2010.

Several events of the past year are contributing to Vietnam's surge in industrial, and consequently energy sector, growth. The lifting of the American embargo has made foreign investment much more attractive, not only to Americans, but to other foreign investors hoping to export to the large American market. Vietnam also became the 7th member of the Association of Southeast Asian Nations (ASEAN) this year, an organization made up of some of the fastest growing economies in the world. On January 1, 1996, Vietnam will become a member of the ASEAN Free Trade Area (AFTA) and will drastically reduce its tarrifs.

Although there are currently many obstacles within the communist government structure of Vietnam, official party policy is to open up the countries markets, including energy, to direct foreign investment. To that end, The World Bank and the International Finance Corp. have held meetings with the Vietnamese Government aimed at reducing barriers to foreign investment.

possible chart - independent energy Nov. p.32

Canadian company a partner in huge British power plant

London: The first power plant to be built in Greater London in over 30 years, and one of the largest independent power plants in the world, has been built by Atco Ltd. of Calgary.

Through its subsidiary, CU Power International. Atco and its British partner BICC Group own 51% of the 1000 MW gas-fired Barking Station in London's industrial east end. The remaining 49% is owned by the three electricity distributing companies that serve London and Southeast England.

Atco supervised construction of the $1.6 billion (Canadian) plant on the banks of the Thames which opened on time and under budget in October, 1995. Atco will now manage and operate the plant.

The plant has the capacity to provide electricity to a city of one million, according to Atco, and currently has a 15 year contract to sell energy to its partners in the project, London's three electricity distributors.

Barking Station is a very modern and efficient plant, according to Atco Chairman Ronald Southern, that can be operated by only four employees, two in the control room and two on the floor of the generating room. Total staff, however, including administration and maintenance is closer to 70.

Atco's British operations also include a 14 MW heat and power station at London Heathrow Airport. In a market that has been marked with numerous large mergers and takeovers since the Thatcher government privatized power generation in England, Atco remains a more minor player. Many in England have, in fact, feared a return to huge power conglomerates that Thatchers privatization plans were meant to break up. Southern, however, says that he is not concerned about Atco's competiveness or profitability in the British market.

Canadian partners in Tanzania gas project

Dar Es Salam: TransCanada Pipelines Ltd. (TCPL) and Ocelot Energy Inc. are partners in a $300 million (US) gas-to-electricity project in Tanzania scheduled for completion in 1998.

Full approval and financing is expected by mid 1996 for the project that will pipe gas from Tanzania's Songa Songa field to Dar Es Salam. About 45 mmcf of natural gas per day will be delivered for industrial use and power production. 146 MW of energy will be generated by gas turbines at the Ubango Power Plant.

Ocelot and TCPL signed a letter of intent in October, 1995 to invest $50 million in the project which they will own and operate for the first 20 years. The World Bank and the European Investment Bank have already agreed to finance the remainder of the project through the Tanzania Petrolium Development Corp. and the Tanzania Electric Supply Company Ltd.

The development will include onshore and offshore gas wells in the Songo Songo Field along Tanzania's central coast. A gas processing plant will be built on Songo Songo Island and will be connected to the mainland by a 25 km, 12 inch undersea pipe. A further 207 km of pipeline will take the gas to Dar Es Salam for industrial use and the Ubango generators.

Canadian firm looking for partners for small hydro projects in India

Pickering: MMC Canada Enterprises Inc. is currently recruiting team members, sponsors and/or partners to bid on small hydro projects in India's Maharashtra State.

Numerous projects, utilizing irrigation projects to generate electricity, are currently being sold to the private sector by the State Government, or are curently under construction.

The projects all use the runoff from intermitent releases of water for irrigation or water supply purposes to produce electricity for sale on the Indian Subcontinent market.

MMC is a Pickering-based company which provides business prospecting, development and project management skills. MMC is willing to tailor its services to varied needs of potential partners including turn-key, contract, consulting or in-house services.

Madan M. Chawla of MMC adds, "I am in the process of planning to visit Southeast Asia and look forward to conclude, in principle, an understanding which will help to develop exciting and rewarding business possibilities in India and neighbouring countries."

Interested parties should contact Chawla at (416) 605-1518.

Dutch electric groups pay industries to halt cogen projects

Amsterdam: Two Dutch national electricity generation and distribution groups have agreed to pay compensation to corporations that agree to cancel or delay plans for cogeneration projects.

The move is an attempt to avoid projected overcapacity of electricity generation in the country due to the oversuccess of a program intended to develop cogeneration. The program has been cancelled by the Dutch Government after it lifted a moratorium on the development of up to 4000 MW of new industrial cogeneration projects.

The main Dutch electricity generating group, Samenwerkende Electriciteits Producktiebedrijven (SEP), and the distribution association, EnergieNed, have agreed to pay about $51 million (US). This is just for the first round of agreements, and more are expected soon.

The reason SEP and EnergieNed are willing to pay these amounts is that current Dutch law requires the electricity industry to purchase surplus electricity fed into the national grid by independents.

Several private sector producers, however, have refused to cancel their cogeneration projects. Dow Chemical Company is one of these industries. They are continuing with construction for a 415 MW gas-fired cogeneration plant in conjunction with Destec Energy, PNEN and Deltan.

Philipine power project awarded to Canadians

Manila: SNC Lavalin International and Hydro Qu‚bec International have been awarded a contract by the Philipines National Power Corp. (PNPC). The contract is for the design, manufacture, installation and commissioning of a 400 MW HVDC transmission system.

The system is being built to carry power from a geothermal generating station on Leyte to Luzon, the island on which Manila is located. It will require two converter stations, 432 km of transmission line in two sections, and 23 km of undersea cable.

Scheduled for completion in June 1997, most work will be carried out in Manila, with Canadian assistance.

District cooling growing in Sweden

Vasteras: Sweden is taking advantage of its proximity to natural reservoirs of cold water to develop district cooling systems for its major cities.

The natural cooling energy of the Baltic Sea can be relatively easily harnessed and has proven successful. Sweden's first district cooling system went on line in the city of Vasteras, near Stockholm, in 1992. It now serves 12 major customers with approximately 11 MW of cooling energy.

Construction is currently underway in Stockholm for a similar system and Goteborg is in the planning and design stage.

The Swedish District Heating Association has created a district cooling group as a result of the rising interest in these systems.

Denmark backing biomass

Copenhagen: The Government of Denmark is turning to biomass to provide the bulk of its district heating fuel requirements according to the Danish Energy Agency.

The goal is to have biofuels, primarily wood, providing 90% of its district heating fuel requirements by 1997.

The Danish Energy Agency has asked 39 cities with district heating systems to have co-generation/gasification technologies installed by the year 2000. Once this is complete, Denmark should prove to be a major player in the biofuel gasification field.

With co-generation demonstrating itself to be a major energy saver in other parts of Europe, Denmark could be in a position to target other markets for biofuel technology sales, particularily Germany, Austria, Sweden and Italy.

Electrics create largest merger in US history

Baltimore: The merger of two US electric utilities will create the 9th largest power company in the US and the largest corporate merger in US history. Baltimore Gas and Electric and Potomac Electric Power have planned a $3.1 billion stock deal to effect the merger.

The combined company will have about $15 billion in assets, $5 billion in annual revenues, and will serve some 1.8 million electric customers in Maryland and Washington DC. A hiring freeze has been announced, and the new company is expected to reduce staff by about 10 percent. The combined company will still be less than half the size of Ontario Hydro.

- Reuters and Hydromonthly

UK Labour targets utility profits

London: The values of privately-owned utility stocks took a plunge last month in the UK after the Labour Party announced that if elected it would impose a new tax on windfall profits made by private utilities.

The Labour Party also said it would tighten a range of rules relating to the private utilities. "Pay, perks, profits, pollution and prices have all been rocketing," said Opposition critic Gordon Brown. Opinion polls suggest that Labour is likely to win the next general election.

- Agence France Press and Hydromonthly

Eastern Europe grid interconnected

Warsaw: The national grids of Hungary, Poland, Slovakia and the Czech Republic hooked up to the western European power system in late October. The link will provide hard currency and the prospect of lower electricity prices and more reliable supplies for both central and eastern Europe. However, the technical demands of becoming part of the western European system may necessitate technical upgrades, costs which will have to be covered by ratepayers in the newly independent states of eastern Europe.

- Wall Street Journal and Hydromonthly

Sweden deregulates

Stockholm: Sweden's parliament voted overwhelmingly in favour of opening up the electric industry to competition, as of January 1, 1996. Consumers will soon be able to choose supply from a number of competing producers. Both the Social Democrats and the conservatives supported the legislation. Norway has already made similar changes, which are expected to include the introduction of a spot market for electricity prices.

ABB GT24 turbine breaks records

Zurich: The GT24 turbine from ABB has apparently lived up to its advance billing. It is the most efficient and least expensive to operate gas turbine built to date. Under development for five years, the GT24 produces 165 MW at 58 percent gross thermal efficiency. It is also a very low NOx emitter. A larger version, the GT26 is under development.

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Resources

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E mail energy@comtch.ies.com

Economic instruments are compatible with cost-cutting

The cost of 'green' budgets

By Developing Ideas staff, International Institute for Sustainable Development

What do government finance officials do when they're not plotting cutbacks?

Increasingly and somewhat surprisingly, they talk about 'greening' their budgets - changing taxes and subsidies, charges and re-allocation schemes to protect rather than erode the environment. In Canada, for example, fuel taxes in Ontario and permanent crop cover subsidies in the Prairies are just two of a growing number of green budget initiatives receiving wide acclaim. A once-arcane field dominated by Organization for Economic Co- operation and Development experts with a weakness for economic jargon is suddenly the darling of development circles. It is de rigeur these days for World Bank publications and UN conferences to promote green budget ideas like 'economic instruments'. Not surprisingly, Canadian Finance Minister Paul Martin and Environment Minister Sheila Copps got into the act in 1994 by creating a federal task force on the subject.

Such talk is welcome. But when will it be reflected in national budgets? More to the point, is green budget reform compatible with the cost-cutting mood of many governments worldwide?

Many people still believe that when environmental and economic development issues clash, resolving them will be costly. But as links between the environment and the economy become better understood, the view is proving increasingly naive.

Flawed reasoning suggests that either industry will have to incur high cleanup costs and lose a competitive edge, or government will have to dish out funds and add to the deficit or impose higher taxes and slow economic growth.

A clear-headed examination of experiences in Canada and other western industrialized countries shows the economy, deficit and environment can all benefit from green budget reforms. All it takes is a little imagination.

Take, for instance, a recent study of 23 cases of reform in eight countries by a team from the International Institute for Sustainable Development in Winnipeg.

Starting in the late seventies, California and Denmark looked at energy pollution as an economic opportunity to pursue, rather than a problem to control. Today California leads the world in solar, wind, geothermal, biomass and other renewable electricity generation. Denmark towers above the rest of Europe in wind power generation.

The Californian and Danish successes are due largely to government subsidies for renewable electricity production. Calculations suggest these will be offset by new corporate tax revenues from this growing sector.

But a government intent on reducing the deficit today can go one better. Forget new subsidies and taxes that may leave taxpayers or industry holding the bag. Redistributing environmental charges within sectors is fast proving the most popular solution internationally.

For example, Germany promotes 'clean' gasoline by charging users of leaded gasoline and redirecting these funds to unleaded users. Saskatchewan runs a deposit-refund scheme on beverage containers that also manages to be one of Canada's largest employers of physically disabled people. Sweden reduces emissions of nitrogen oxide (an atmosphere-warming gas) by requiring its dirtiest energy producing firms to compensate cleaner producers. The UK transfers disposal cost savings from recycling to people responsible for collecting waste.

Such 'budget-neutral instruments' redistribute funds from poor environmental performers to superior ones. They create a dynamic within industries or economies to improve general standards of environmental performance without forcing everyone to comply with sometimes loathesome regulations.

In the spirit of cutting all unnecessary costs - to government, industry and the environment - can governments afford not to green their budgets in 1995 and beyond?

An adaptation of this article first appeared in The Ottawa Citizen on February 2, 1995, coinciding with the release of the IISD's Making Budgets Green: Leading Practices in Taxation and Subsidy Reform, 52 p., $20 (available from the IISD catalogue or bookstores like Renouf-Canada).

Developing Ideas is a news service of IISD, Canada. The views expressed do not necessarily reflect those of the International Institute for Sustainable Development.

Environmental lending may be harmful to the environment

by Frances F. Korten

In response to mounting worldwide evidence of environmental deterioration, world leaders have called on the multilateral development banks to step up lending for environmental projects. The banks have welcomed the new mandate, partly out of concern for the environment and partly because they are seeking justifications for increased lending to meet developing countries' fiscal needs. The multilateral banks have used new loans to provide the hard currency those countries need to repay past loans and maintain their imports. Environmental lending would appear to at once meet both fiscal and environmental needs. However, a closer look casts doubt on the wisdom of combining the two agendas.

The Philippines provides a useful example. Its economy has been fiscally stressed. In 1992, servicing its $32 billion external debt consumed some 28 percent of its exports, while imports exceeded exports by $1.4 billion. It is also environmentally distressed. Due to rapid deforestation, conservationist Norman Myers named the Philippines one of the world's 10 "hot spots," where biodiversity is most severely threatened. Finally, it has been a major recipient of official environmental loans, concentrated primarily in forestry projects. Between 1988 and 1992 the Asian Development Bank (ADB), the World Bank, and the Japanese government lent $731 million for forestry projects--more than 10 times the $60 million of international lending provided for forestry projects during the previous 12 years.

From the fiscal perspective, massive environmental lending for Philippine forestry projects is nearly ideal, because most of the actual costs are local. Therefore the foreign currency that is borrowed can be used to repay foreign debt and finance imports, while project costs are covered with local currency. An examination of the loans from an environmental perspective, however, reveals that in the design of these projects, the banks have placed fiscal needs ahead of environmental ones to such an extent that the environment may be a net loser.

An indicator of the fiscal emphasis is found in the extent to which loan size exceeds any reasonable estimate of the capacity of implementing agencies to use the funds effectively. The first of the environmental loans to the Philippine forestry sector was for $240 million--half from the ADB and half from the Japanese government. Its stated purpose was to reforest lands denuded by a combination of logging and slash-and-burn agriculture. The project design called for the Department of Environment and Natural Resources to contract with private groups to reforest 358,000 hectares over five years. According to a German study, over the previous 71 years this Department had successfully reforested a total of only 70,000 hectares. The project called on it to reforest an average of 71,600 hectares each year.

To its credit, the Department actually met and even exceeded the loan-funded program's contracting targets. It did so, however, by sacrificing the program's potential effectiveness. Department planners had expected to contract primarily with well established groups or families living close to the reforestation sites who would have a direct interest in the long-term environmental and economic benefits the trees would bring them - a condition shown to be critical to the success of reforestation efforts throughout Asia. To meet the high targets set by the lenders, Department personnel were forced to contract with many urban groups that hastily formed to gain short-term profit from the contracts. Independent evaluations studies revealed that under such circumstances, the residents in replanted areas had little or no commitment to protect the trees. In several cases where the labourers' wages were delayed, they burned the trees.

The scale of the project so far exceeded the Department's supervisory capacity that despite earnest watchdog attempts by senior management, evidence of corruption abounded. Spot checks identified a disturbing number of cases of contracts with phantom parties, contractors who were not paid the amounts stipulated on their receipts, and others who were never paid at all.

Another consequence of the unrealistic targets was the use of a single variety of seedlings. Planners had expected contractors to plant a variety of tree species suited to the local environment. But to meet deadlines, contractors commonly used readily available Gmelina arborea seedings, a fast growing tree with a natural life span of only fifteen years in the marginal soils of reforestation sites. While good for paper pulp, its short life makes it a poor choice for conservation purposes.

A commonly neglected feature of environmental loans is that the borrowing country is borrowing foreign exchange, which must eventually be repaid in foreign exchange. If the borrowed foreign exchange is being used to repay previous loans and finance current imports, it is appropriate to ask two commonly neglected questions: 1) are the imports moving the economy toward increased equity and sustainability; and 2) how will the additional foreign debt eventually be repaid?

The answers in the Philippine case are not reassuring. In addition to its already substantial debt service burden, a substantial portion of the Philippine's foreign exchange shortage could be traced to its highly oil-inefficient economy, which boasted the lowest price of petroleum in the region (lower even than oil-producing Indonesia); and to the import of substantial quantities of luxury goods to stock the shelves of air-conditioned mega-shopping malls that were springing up around the country.

With regard to loan repayment, it is fairly typical of environmental loans such as the Philippine reforestation projects that the loan-funded activities are not expected to generate foreign exchange. There is, however, no point in the project design and approval process at which anyone asks from where the foreign exchange for repayment will be obtained or with what environmental consequences.

In the Philippines, the need for export income to pay outstanding foreign debts was one of the most common justifications put forward for the unrestrained logging that contributed to the deforestation the ADB loan was intended to correct. However, with the forests now nearly gone, timber exports are no longer a foreign exchange earner and the country has turned to other sectors for export earnings. Many have their own environmentally devastating consequences.

Gold and copper mining, which seriously contaminates soil and water, produces several the country's top 10 exports. And the country subsidizes prawn farming for its export potential, despite the fact that prawn farms destroy protective coastal mangroves and commonly create salt water contamination of underground freshwater aquifers. The pressure to repay the environmental loans will likely accelerate such environmentally damaging export promotion.

The Philippine experience exposes the fallacy of addressing the very real environmental needs of indebted countries through massive international loan funding. A more appropriate approach to assisting low income countries with environmental problems would:

- Recognize that many environmental problems result from social and institutional conditions that are not readily corrected by large infusions of foreign funds;

- Build institutional capacities both within and outside the government to implement low-cost, effective environmental programs and keep assistance at levels that can be used efficiently;

- Provide assistance primarily in grant form, so as not to exacerbate indebtedness;

- Acknowledge the damaging environmental consequences of many developing country exports;

- Reduce export pressures by encouraging trade deficit countries to limit non-essential imports, especially for military hardware and luxury consumer goods;

- Provide debt relief in return for reduced foreign borrowing.

Under their current structure, multilateral banks will best serve the environmental cause by providing hard currency loans only to environmentally beneficial projects that generate the foreign exchange required for repayment. Since most environmental projects are not foreign exchange earners, their financing generally will need to come from agencies that can provide grants. Increasing the foreign borrowing of indebted countries in the name of environment protection will only accelerate the very damage the proponents of environmental lending seek to reverse.

Frances F. Korten is a Ford Foundation program officer. The column is distributed by the PCDForum based on her article, "Questioning the Call for Environmental Loans: A Critical Examination of Forestry Lending in the Philippines," World Development, July 1994. The views expressed are the author's alone.

People-Centered Development Forum articles and columns may be reproduced and distributed freely without prior permission. A copy of any publication in which a PCDForum column appears will be appreciated. PCDForum, 14 E. 17th St, Suite 5, New York, NY 10003, U.S.A. Fax (212) 242-1901; Internet: pcdf@igc.apc.org

Investor group notes steady decline in renewable energy costs

Renewable energy technologies are joining the ranks of the lowest cost electricity supply options and international markets are growing. However, renewable energy developers face an "adverse, almost hostile, operating environment" in the US due to low gas prices and uncertain government backing, according to a new study by the Investor Responsibility Research Center (IRRC), a Washington, D.C.-based nonprofit investment advisory group.

Power Plays: Profiles of America's Independent Renewable Electricity Developers, profiles 100 US companies spearheading development of power plants fueled by renewable resources ranging from wind to the earth's heat. The authors see a significant decline in plans to build domestic new renewable generating capacity. Low fossil energy prices, regulatory reform proposals and proposed cuts in government funding are driving some companies out of the US renewable industries, while others are shifting their emphasis to fossil fuel development domestically, and pursuing renewable markets abroad, the IRRC study finds.

Power Plays is the third in a series of renewable energy assessments that includes two earlier editions published in 1989 and 1986. Over the last decade, Power Plays reports have documented impressive cost reductions and improved track records of hundreds of domestic renewable power plants. "Yet cost targets set during the 1980s--and achieved and even surpassed by many of the [renewable energy] technologies in the 1990s--have fallen short of what it takes to be fully competitive in today's domestic energy marketplace," says co-author Susan Williams. "In effect, the goalposts for renewable electricity development have been moved back," Williams concludes.

Driving forces fostering growth of these technologies--reduced environmental impact, energy independence and diversification, inflation-proof fuel costs and modular design -- "are now taking a back seat to policies seeking the lowest possible price for power," the report finds.

Imminent restructuring of the electric power industry has heightened competition, exacerbated an emphasis on short-term energy costs, and interjected tremendous uncertainty into the marketplace. At the same time, government support for these emerging technologies, which is in part responsible for their achievements, also is in question, with legislation proposed that slashes funding by up to half. Power Plays concludes that the less than hospitable operating environment is taking its toll on U.S. renewable electricity developers, reporting that the "construction of renewable power plants, which already has slowed during the 1990s, appears likely to dwindle even further during the remainder of the decade."

In contrast to the slumping domestic market, international markets for renewable energy have never looked brighter. "Given the international surge in renewable electricity development, the pressures on U.S. renewable developers come at an especially bad time," says Williams. "Lacking a secure domestic base for future development, some U.S. developers lack the wherewithal to compete successfully abroad. Developers in a nation that nurtured early development of many renewable technologies now risk falling behind at a time when others abroad are reaping their benefits," she adds.

While renewable technologies have reduced their costs significantly, they still are not the lowest cost option in the United States, Power Plays observes. That ranking is now generally held by modular facilities using low-cost natural gas to produce electricity for around 3 cents per kilowatt-hour or less. Wind project developers have been signing contracts to deliver electricity at prices as low as 4 cents/kWh in a contract's first year. Geothermal and small-scale hydro plants can produce electricity for between 4.5 and 7 cents/kWh. Even the more expensive photovoltaics systems (which convert sunlight to electricity) have seen costs fall to around $7 a watt for grid-connected systems, down from $30 a watt for experimental systems in the early 1980s, to produce electricity for between 25 and 50 cents/kWh.

Power Plays concludes that "despite the adverse--almost hostile--current operating environment, some renewable technologies are on the threshold of being fully competitive in the U.S. energy market. With continued technological developments and inevitable increases in fossil energy prices, renewable sources are favored to become the fastest growing--and perhaps a dominant--source of power in the 21st century." Any future calls for quantifying environmental externalities, establishing sustainable development practices or reducing fossil emissions associated with global warming will further bolster renewables' prospects, adds the report.

Another wild card is the imminent restructuring of the U.S. electric power industry. While it is too early to predict the outcome of proposed regulatory reforms, how a restructured power market values renewable electricity will be a major determining factor for U.S. renewables. "With proven capabilities to develop renewable power plants, the companies profiled in Power Plays are taking steps to survive the domestic downturn and remain poised to build more renewable capacity," IRRC said in a news release. Key findings of Power Plays are:

- U.S. renewable power plant development is still growing, but the pace has slowed.

- The 100 companies profiled had 8,242 megawatts of renewable generating capacity on-line at the end of 1994--the equivalent of 16 utility-scale coal plants and more than three-and-one-half times the amount companies profiled in 1986 had on-line at the end of 1984. Biomass and geothermal capacity accounted for 70% of the 1994 sample.

- The pace of development has slowed, however. Profiled companies installed an average of around 725 MW/year in the four years between the 1984 and 1988 samples, but only 517 MW/year in the six years between the 1988 and 1994 samples. This drop occurred despite a banner year in 1989 when developers installed nearly 1,300 MW. The installed capacity of the 1988 sample was more than double the 1984 sample, while the 1994 sample showed only a 60% increase over 1988 levels.

- U.S. renewable electricity industries are consolidating. Just over half of the developers appearing in the 1989 edition are not included in the 1995 edition because they have left the renewables arena or become inactive. Were it not for the first-time inclusion of 10 utility affiliates or subsidiaries and doubling the number of profiled companies in the wide-open PV industry to nearly 20, the total number of companies appearing in the 1995 edition would have been around only 80.

- Developers are less optimistic about the near-term future. With each subsequent edition of Power Plays, profiled developers have reported significantly fewer planned projects with utility power purchase agreements. In 1986, profiled developers reported 5,056 MW of planned capacity with utility contracts. In 1989, planned projects with utility contracts dropped to 4,635 MW, and in 1995, the planned amount plummeted to 1,467 MW. Moreover, the number of companies offering projections of future capacity (beyond planned projects with utility contracts) has declined. In 1986, 66 developers estimated over-optimistically that they would double their operating and firm planned capacity to 14,534 MW by 1990--an amount that even the 1995 sample is not close to reaching. In 1989, 29 developers provided additional capacity projections totalling 1,441 MW by 1995. In 1995, only 16 developers provided projections totalling 1,681 MW, which would bring their total installed capacity to 11,191 MW by the year 2000--scarcely higher than the amount that the 1989 sample projected would be on-line by 1995.

- U.S. renewable electricity developers are pursuing more fossil fuel development domestically and increasing international activities. In response to the lackluster domestic market for renewables, more than one-third of the profiled developers reported pursuing fossil fuel development, and 12 of 42 respondents to a supplemental IRRC survey reported pursuing an equal or greater percentage of fossil fuel sources relative to renewables within the next five and/or 10 years. For instance, Calpine Corp., a leading geothermal energy producer, says its more significant growth prospects are in natural gas.

More than half of the companies profiled reported pursuing overseas development. Eighteen of 42 respondents to a supplemental IRRC survey reported an equal or greater amount of renewable electricity development internationally than domestically within the next five and/or 10 years. California Energy Co., another geothermal industry leader, is developing international projects totalling more than 1,400 MW, compared with only 66 MW domestically.

The Investor Responsibility Research Center is an independent, not-for-profit firm that provides impartial research and analysis on business and public policy issues. The Center's work is financed primarily by annual subscription fees paid by some 400 institutional investors. Power Plays (528 pp.) profiles 100 leading renewable electricity developers and contains assessments of seven renewable technologies--biomass, geothermal, wind, small hydro, photovoltaics, solar thermal and ocean. Some 93 companies worked with IRRC to produce their profiles. The report is available for $195 softbound ($210 hardbound) from IRRC. A Power Plays database is available for $255. IRRC's address is 1350 Connecticut Ave., NW, Suite 700, Washington, DC 20036, USA.

New World markets hybrid remote power package

New World Village Power Company (NWVP) has brought to market a hybrid power package for remote grid sites, according to company spokesman Lawrence Mott.

The system, including necessary controls, diesel generator, turbine, rotary converter, and battery bank, is the result of a technology developed by the firm and partially funded by the Alaska Science and Technology Foundation (ASTF), Sandia National Laboratory, and the National Renewable Energy Laboratory (NREL) in Golden, Colorado.

"The new power package is designed to deliver base load, grid quality power to remote sites while fully integrating renewable energy," Mott said. The package also has applications in grid stabilization at larger sites. "New World Village Power has just begun to open the markets to this technology," Jim Green of NREL said.

"Remote grids need support," Mott added. "Remote sites typically have scheduled shut-downs and often experience brown-outs. We (in the US) are accustomed to a constant, daily power supply. New World Village Power is in the business of supplying that sort of service to remote sites." The technology has developed, Mott said, because typical wind turbines are induction motor generators, supplying AC power, "but they require electrical support in order to operate correctly for use in AC power grids." A typical hybrid system also requires controls to manage generation sources.

Wind does not supply constant power to the grid, but it is often much cheaper at remote sites, where diesel may run as high as 50 cents/kWh. The NWVP package controls the power supply, switching automatically between generating sources, from a diesel generator, for example, to wind turbine or another appropriate renewable source; provides the required controls; and utilizes battery storage as a system stabilizer or storage buffer. "NWVP's power system package is a complete product," says Mott. "We envision it as a package used from 25 to 200 kW," he said.

The company has commissioned a wind/diesel unit in Northern Argentina as a part of a 50-kW power supply project with a 65-kW Danish turbine. NWVP has also shipped a 50-kW package to an NREL/DOE Brazil project along with four Bergey wind turbines and 10 kW of photovoltaic cells at a remote grid. In another development, New World has supplied the package to NREL's National Wind Technology Center in Golden, Colorado, where it will be tested with an Atlantic Orient Corporation 50-kW turbine. Those tests are scheduled to begin this fall.

The product grew out of New World Village Power's background in remote power applications. In the 1980s Northern Power Systems, the original company which became a New World Power Corporation subsidiary in 1992, developed a market niche for high reliability power applications in remote areas, typically wind/PV/diesel for telecommunications in very difficult terrain. "We used to say, 'The Nastier, The Better'," Mott said.

"The only prerequisite was a system ready to go. We would drop a box, sometimes by helicopter, at a site where there was little else but waiting connections," he said, "and off you go with a generation package."

The power package has been brought to the commercial stage partly through a development program funded by NWVP and the Alaska and federal agencies in 1993. That project will result in the installation at the end of this year of a commercial unit on St. Paul's Island in the Bering Sea.

According to Mott, NWVP looks for existing remote grids in developed and developing countries in Canada, Alaska, the Caribbean, South America, and the Philippines. Wherever the grids exist, NWVP goes in and often installs the complete package "including diesel generators and turbines from the most suitable vendor," Mott said. New World Village Power Company of Waitsfield, Vt., is a part of New World Power Corporation of Lime Rock, Conn., along with New World Grid Power of Palm Springs, Calif., and the Wireless Company of San Francisco.

"Historically, there have been few options for AC power at remote locations," NREL's Green explained. "There has been lots of DC power for things like telecommunications, but not much AC generation, not much to compete with the power generated from diesel gen-sets at remote locations," he said.

There have been three levels of NREL support during the development of the technology, Green said. The first was under the Cooperative Field Testing Program (CFTP) for wind systems from 1986 to 1989, where research on modeling and some limited experimentation with diesel generation and battery charging was performed. "DOE's cost share in this project was $100,000, the industry share was $171,000," Green said.

The second level, the Alaska program, was partially funded by NREL and initially planned on a commercial installation at a remote Alaskan village. That project will culminate in the St. Paul's Island project. The system should be up and running by the end of this year. The Alaska project from its inception has been funded by New World, the Alaska Science and Technology Foundation, Sandia National Laboratory of Albuquerque, N.M. and NREL/DOE. "NREL has a small current cost-share in the Alaska project," Green said.

The third level is the testing of the power system package with an Atlantic Orient Corp. turbine in Golden beginning this fall. New World Village Power has been eager to utilize NREL's facility for testing the package, Mott said.

Brower examines utility risk reduction benefits of wind

A team led by Michael Brower, one of the authors of the 1993 Union of Concerned Scientists POWERING THE MIDWEST report, is beginning work on a serious effort to model and quantify the potential benefits of wind in reducing the risk of a utility's resource mix.

The notion that renewable energy sources can provide diversity to a utility's resource portfolio and, in so doing, reduce price, regulatory, and supply risks is one that is frequently advanced by renewable energy advocates. Brower's study, "Risk Reduction Benefits of Wind Energy," aims to develop a computer model to examine the question more closely and to look at the effect of adding wind to the resource mix of TU Electric, a major Texas-based, investor-owned utility. The study is funded by the National Renewable Energy Laboratory (NREL).

"[V]ery little systematic effort has been made [to date to test] the argument that the addition of wind energy reduces a utility's exposure to the risks of fossil fuels, or to quantify the effect," Brower said in a briefing on the study at NREL's subcontractor review meetings August 1. "If a significant effect can be demonstrated," he added, "it may lead to wider consideration of risk in utility resource planning and greater use of wind energy."

In theory, Brower said, the use of resources with different characteristics should lead to lower overall risk for a utility system. The greater the difference, the more pronounced the risk reduction benefits should be.

The study will use the Strategic Resources Planning Model (SRPM), Brower said, which was developed by Convergence Research and Charles River Associates, two consulting firms. The SRPM uses a spreadsheet to create simplified 30-year resource expansion plans. It then runs up to hundreds of simulations, changing the resource plan slightly with each simulation, and provides a range of projected costs, emissions, and other results.

The SRPM, Brower said, is "flexible, easy to use and change ... [and] produces graphical and numerical output" that is easy to interpret. The disadvantage is that it is not a full-scale utility expansion or production-cost model. Such models, which might provide more accurate results, are commercially available but are much more costly.

TU Electric system data has been loaded into the SRPM, Brower said, and future decision points at which the utility expects to add fossil-fired capacity have been identified. The study will examine the consequences in terms of risk reduction of adding coal, gas, or wind at each decision point, running over 100 simulations for each scenario. The current schedule calls for the work to be completed by year's end.

For further information, contact Michael Brower, Brower & Co., 58 Dana Street, Cambridge, MA 02138, USA, phone (508) 749- 9591, fax (508) 749-9713.

New Scottish system to combine waves and wind

A new offshore energy system that combines wave and wind energy was scheduled for installation this week near Dounreay, Scotland, according to press reports.

The OSPREY (Ocean Swell Powered Renewable Energy) unit, developed by Applied Research and Technology (ART) of Inverness, is designed to produce 2 MW from waves compressing a column of air that drives two turbines, and an additional 1.5 MW from a conventional wind turbine mounted on top.

The wind turbine is a late addition aimed at bolstering the economics of OSPREY. The concept of offshore wind is generally regarded as attractive, since winds blow more strongly and consistently at sea. But the cost of building an undersea support structure has hampered progress, and an OSPREY unit provides a built-in foundation.

The wave section of the first OSPREY is designed for installation about 300 meters offshore, in water 14 meters deep. Two large sand-filled ballast tanks flank an air collection chamber. When the collection chamber is compressed by waves, the air is forced upward through a pair of turbines. ART touts the design as containing very few moving parts compared to previous wave power extraction mechanisms. However, skeptics suggest the OSPREY, too, may fall prey to the occasional intense storms that scour the North Atlantic.

OSPREY has received about $5.6 million in energy research and development (R&D) funding from the European Union. The initial plant is expected to generate power at a cost of 6 pence (10 cents) per kWh, but ART hopes that will fall to 4 pence (6 cents) per kWh with future units. The company notes that the generating plants create artificial reefs, which should provide hospitable environments for plant and animal life.

ART Managing Director Allan Thomson said OSPREY needs an ocean swell building up over about 500 miles of open sea to operate, making it unsuited to the Mediterranean Sea, but viable in many other coastal areas.

Suppliers of equipment for the demonstration plant include British Steel (structure), GEC Alsthom (power generation components), and France's Cegelec (controls).

Hybrid system analysis program nears completion

Customers for remote hybrid power systems may soon have a powerful new computer software tool for analyzing possible combinations of energy sources and making an intelligent selection.

The HYBRID2 program, which has been under development for the past four years at the Renewable Energy Research Laboratory (RERL) of the University of Massachusetts, is scheduled for release to the general public next year. The development work has been funded by the National Renewable Energy Research Laboratory (NREL) as part of the U.S. Department of Energy's (DOE) wind energy research and development program.

Hybrid systems are those that combine one or more different power sources. Renewable power systems may include one or more wind turbines, solar photovoltaic (PV) cell banks, batteries, thermoelectric converters, and/or one or more diesel generators of various sizes, making the choice for a customer a daunting problem.

NREL contract monitor Jim Green describes HYBRID2 as "a user-friendly program to predict the performance of a wide range of renewable and hybrid power options on a 'level playing field.'" Because of the enormous number of possible combinations of system components, Green said, "No available tool fills this need. Usually programs are limited to a specific range of output or type of system."

Speaking at NREL's Subcontractor Review meeting July 31, RERL's Ian Baring-Gould described the new model's ability to incorporate varying component characteristics. HYBRID2, he said, will allow potential users and system suppliers to compare system configurations that include:

- Multiple identical and/or non-identical wind turbines, installed at a range of varying heights;

- Multiple identical and/or non-identical diesel systems;

- Many different power conversion devices, "including rotary, static, and parallel";

- A detailed, user-specified set of instructions for when and how batteries connected to the system are to be charged and discharged;

- Detailed user instructions as to which diesel systems are to be operated and when, as power demand on the system varies throughout the day; and

- Either or both AC and DC electrical loads.

HYBRID2, Baring-Gould noted, can not only be used for hybrid system design, but for improvement of existing systems: "It can give you a lot of insights into system control strategies. In some cases, you can use the system components you already have, with some minor changes, and realize significant cost savings."

The program runs with a Windows-based interface, with online help, and results are presented in graphs and tables. Also, it will come equipped with information on many existing wind turbine models, so that users can readily plug the appropriate information into the particular system configuration they desire to investigate.

HYBRID2 has undergone extensive in-house testing at RERL and NREL, Baring-Gould said, and will undergo testing by independent individuals beginning next month.

- Wind Energy Weekly