I'm having a great time.
Thank you, Mr. Chair.
It's really good to see you again and to have been invited to this committee. I'm used to being on the other side of the table, so I do this with some trepidation.
First of all, my name is Ron MacDonald and I am president of the remote communities and mines division of NRStor Canada. NRStor Canada is Canada's leading energy storage and microgrid development company. We've been in operation for about four and a half years.
The president of the main company is Annette Verschuren, who most of you probably know. She's an esteemed Canadian business leader and former president of Home Depot Canada and Home Depot Asia. She took this job on about four and a half years ago because she believes that it's important for business people to take a stand on sustainability issues.
My presentation today—I'll try to be very brief—is going to talk about indigenous communities in particular, and some remote mine sites. I want to start off by doing a couple of quotes. It's always good to put it into perspective.
The first quote is from the Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development:
The Government of Canada is proud to support Indigenous peoples to become full economic partners in the development of our abundant energy resources.
The second quote would be from the Honourable Carolyn Bennett:
Genuine partnerships with Indigenous communities in the clean energy and natural resource sectors [will] increase Indigenous participation in economic opportunities, as well as strengthen local economies.
I want to put into some context the issue of indigenous communities and their lack of power resources and the cost both to the community in terms of economic development and on the environmental side of it, as well as the Government of Canada, which has set a number of broad goals and objectives in dealing with Canada's indigenous communities.
To put it into some perspective, across Canada there are roughly 300 communities that rely entirely on diesel-generated power for their power in their communities. Of these, between 170 and 180 communities are indigenous.
To put it into some perspective, I'll talk about one community, one that is not the exception to the rule but is closer to the rule. I'm not going to name it. It's a community that currently gets a direct subsidy for their power, a direct payment from INAC that amounts to between $4 million and $5 million a year. It's a direct subsidy coming from the federal treasury.
This community suffers greatly from a lack of power stability. Their diesel generators go down a lot in the wintertime, and they're subject to appeals to the federal government for emergency dollars for repairs. This community is growing at between 3% and 5% a year. In 15 years, its power needs actually doubled. In the current situation in this community, they need to find a solution so that they can take control of their power situation. They are leaning towards renewables. They no longer want dirty diesel in their community. They don't want the diesel spills to become the norm. Because it's a coastal community, they don't want their fisheries to be impacted by diesel spills.
I'll talk about another series of 27 communities up in Nunavut that are 100% on diesel. They range from maybe 100 people to the capital of Iqaluit, which is around 4,000 people. We have a significant problem up there. These diesel generators are all about the same age; it's about 30 years since they were installed. The government, as we hear it from Nunavut, is looking at an infusion of between $250 million and $500 million to update these diesel generators.
As we all know, dealings with indigenous communities have changed a great deal in Canada over the last number of years. The federal government said that they want to be respectful in their relationships with indigenous communities and deal on a government-to-government basis. That will take a very long time for that process to find its right level.
One thing is absolutely certain in the communities we're dealing with: they want to reduce the use of diesel in their communities as much as possible. The issue is, how do you find the money to do this?
What we're looking at, in our estimation, over a 20-year period if nothing changes, with growth rates of between 3% and 6% in indigenous communities, and government not allowing these citizens and these indigenous communities to freeze in the dark, is a continuous drain on the federal treasury to burn dirty diesel through those smoke stacks in order to supply these communities.
The problem gets more complex. Some of these communities are directly funded by the federal government, but most are funded, or their power rates are subsidized, by provincial and territorial utilities.
To go back to Nunavut, keep in mind as a federal panel that 93% of the budget for Nunavut comes from a federal transfer, so you can figure out that QEC, which is the utility that's responsible for providing power in these communities, gets a direct subsidy from the federal government to continue to use dirty diesel, so we have a problem and we have an opportunity.
There are 250 to 300 communities, including 170 indigenous communities, with direct and indirect subsidies on an annual basis. That amounts to anywhere between—we can't figure out the true number, because it comes from a whole bunch of different sources—$8 billion and $12 billion over a 20-year period that is going to go into subsidizing these communities. That will not address their desire to reduce greenhouse gas emissions and it will not address the requirement that they have stable power to create jobs in their communities.
Keep in mind that a lot of times subsidized power going into indigenous communities is for the household, and if a business comes in and needs to access power, which they all do, it doesn't mean that they get it at the subsidized rate. When you're dealing with these provincial utilities, the way that the rates are structured in the community is a disincentive for economic development in the community.
My company is NRStor. What do we do? We go in and build real and respectful partnerships with the community. We figure out what their power needs are and where they want to go. Do they want to go renewable, or what do they want to do? Do they want wind? Do they want solar? Is there a hydro resource that's close? Does it run a river? Is it biogen?
Then we work with them to develop an economic model so that they can take over responsibility and control of their power situation. We're not there to sell them anything. We're agnostic. We don't care if it's a wind turbine, or if it's a solar panel, or if it's biogen. We work on the economics of the case, and in every situation we will not sell anything to the community. It has to be a genuine partnership. When we engage in that partnership, we will put money in. We're an investment company.
I can tell you that we run a lot of models every day. In nearly every one of these communities, if the federal government reprofiles some of the monies they are spending on subsidy, then nearly every one of these communities could find a penetration level for renewable energy in their communities that makes economic sense and that would attract investment.
What am I talking about in all of this? I'm talking about going into these communities, building the model, working maybe with or against the utilities—it's a very difficult thing—and trying to coordinate with the federal government, which is spending a lot of money on a situation that gets worse by the day. We want those monies reprofiled. If it's $10 billion, federal and provincial, that's being spent, then you don't have to reprofile again. I will tell you that it will attract $2 billion to $4 billion in private sector investment. In the communities we're working in today, we're putting up at least 50% of the cost. When the federal government looks at all of these requirements—infrastructure development, greenhouse gas emission reduction targets, and development in indigenous communities—you're not alone. The private sector is there. The economics make sense today because of a lowering cost of storage, which is making renewables more economic.
We will finance, and we're not the only ones. We'll take15-year to 20-year financing on it. It's no longer seven years, which it used to be five years ago when it was coming from the financial community to support green projects.
My value proposition to the committee today is that as a priority the government, working with the provinces and territories, identify all direct or indirect subsidies that support diesel power generation in indigenous communities and immediately create the policies to reprofile some of these monies to support the development of community-based renewable energy and energy storage projects, which will attract private sector investment.
The monies are there. The government has a choice. It can continue to do it in subsidy over a long period of time, which does nothing for economic development in the community and does nothing for the environmental imperatives to reduce greenhouse gas, or it can take a different path and free these monies up as equity participation in real partnerships in indigenous communities that will attract private sector investment.
Thank you, Mr. Chair.