Natural Resources Committee on June 13th, 2006

[Rob McMonagle]

We are starting to get provincial governments involved in solar. In Ontario, the provincial government has targeted photovoltaics, with a feed-in tariff rate of about 42¢ per kilowatt hour. In British Columbia the provincial government has set a target of 100,000 solar domestic hot water systems. There are no programs there yet, but they have a target, which is always the first step. We also have support in Prince Edward Island, for example. They're offering low-interest loans for solar hot water heating systems. Nova Scotia has just announced a 10% subsidy for residential solar DHW. So it's starting, but we're roughly 15 or 20 years behind the support other countries have offered.

[Christian Paradis, Conservative, Mégantic—L'Érable, QC]

Thank you.

I understand from your presentation that we are far behind the leaders in wind energy. We're talking about 9,000 megawatts for 2015.

Can you give me some clarification so I can understand your statement? What is the relationship between energy production and consumption? For example, for a country like the United States, there is an estimated increase of 10,000 megawatts. I just want to understand the connection you're making so I can follow you in all this.

[Dr. Robert Hornung]

There are different ways you can measure penetration of wind energy. One is in terms of absolute megawatts. If you look at it in that way you can see countries such as Germany that have 18,000 megawatts of installed wind energy capacity. Right now we have 900 megawatts. Spain has over 10,000 megawatts. The U.S. will be at 12,000 by the end of the year.

You're right that if you look at this, I have to say the U.S. still doesn't really qualify as a world leader in wind energy either. They have big numbers because they're a big country, in that sense. If you look at the other measure, which is what percentage of electricity is coming from wind, the U.S. is still ahead of Canada, but it's a small number: they're still at less than 1%. It's the European countries that are leading in actually integrating wind in their systems.

[Christian Paradis, Conservative, Mégantic—L'Érable, QC]

My next question is for the representatives of both sectors. I know that, in general, we'd like growth to be faster since we know the benefits of this.

To what extent do we want to integrate wind energy? You're conducting studies to determine the maximum energy integration capacity relative to supply in general. The same is true for solar energy. I believe talks are currently underway as well, but do we know how far we can go? Do we have realistic targets?

You could say that we have to speed things up, because these are good forms of energy, but do we know the limits of each sector? I imagine there have been comparative studies on the subject, and that it can be said that we'll be more efficient in one sector than in another. Are there any intersectoral strategies yet?

[Dr. Robert Hornung]

I can take a first crack at that.

In terms of the levels of wind penetration, the answer will be different in every country. It will differ depending on the quality of your wind resource and it will differ in terms of what you can have to complement wind going forward.

You're absolutely right that Canada, because of its large hydroelectric capacity, has actually a higher potential in terms of integrating wind energy than other countries. That's because wind energy and hydro are a good mix for a couple of reasons. Wind is a variable energy source. A wind turbine will produce electricity about 80% of the time, but the amount it produces will vary with the wind. When wind is integrated into the system, you need to have a partner technology that can actually respond to those variations.

Hydro is very good from that perspective, because if the wind is not blowing, you let water flow through a dam; if the wind is blowing, you close the gates and you essentially store energy in the reservoir, going forward. Wind is also a good partner with hydro because wind energy production peaks in the wintertime. The air is densest in the winter and winds just naturally blow stronger at that time. For a hydro utility, hydro resources are hardest to accumulate in the wintertime. So there's a benefit there.

Finally, the third benefit is that although wind is more variable than hydro on a day-to-day basis going forward, on an annual basis, wind is actually less variable than hydro. So when you hear about a large hydro utility that has a dry year or a wet year and that affects their production, wind actually helps in that regard because its variability from year to year is actually less.

So in terms of how far you can go, we're quite confident that you can hit 20% of electricity production for wind energy in Canada. We recognize that wind cannot be and will not be the source of all electricity in the country. It needs to be partnered with other technologies, but we think it can make a substantial contribution.

As I pointed out earlier, if you look at the decisions that utilities and governments are trying to move forward with at this time, they see wind playing a major role in terms of the investment decisions they want to make going forward.

[Rob McMonagle]

I want to highlight what Robert was saying. The renewable energy technologies really do complement each other. We don't compete. We have a tendency in Canada to put things into different silos. By using the various technologies, you get a much greater benefit as a whole. You have to look at the different sectors. For example, it doesn't make a lot of sense using a large wind generator to provide electricity for heating up hot water when you're better perhaps to use solar hot water heating systems. It's much more cost-effective.

So it's looking at an overall package. That tends to be what we have focused on in Canada.

[The Chair, Conservative, Lee Richardson]

Thank you for your time as well, Mr. Paradis.

Mr. St. Amand.

[Lloyd St. Amand, Liberal, Brant, ON]

Thank you, Mr. Chair.

Mr. McMonagle, your tone was moderate and respectful, but your message was pretty direct. Twenty years of inaction--it's a pretty clear statement.

Two questions. Number one, how did Germany, Japan, and Austria do it? I presume their solar energy usage has not been simply incremental over the last 15 or 20 years but has been quite dramatic in its rise. So how did they do it?

Number two, on page 6 of your handout, on the recommendations at the bottom of the page, removing requirements, removing restrictions, etc., what level of resistance would you anticipate meeting vis-à-vis those recommendations?

[Rob McMonagle]

With regard to how other countries have done it, we found that normally there have been targets that have been set, first of all, and then an overall strategy has been developed so that you see what the barriers are, what the obstacles are, and then you work towards overcoming those. You need a consistent policy framework, which we have been lacking in Canada.

For example, REDI has been very good for the solar thermal industry. It has to be kept in mind that in the last five years we ran out of funds for actual deployment three times during the busy solar industry system. So you go up and down, up and down. You end up going nowhere.

With regard to recommendations for class 43.1, we've been working on this portfolio for 10 years. We know we have support from specific departments. We're not convinced we have support from NRCan, and to us that is a big issue. Why are we put in there, in class 43.1, when, in reality, and everyone acknowledges, we're not really there?

[Lloyd St. Amand, Liberal, Brant, ON]

I have a follow-up question.

You identified $75 million annually as a meaningful investment in solar energy. You know that as a country, the federal government spends approximately $195 billion annually. So $75 million would seem to be not quite the proverbial drop in the bucket, but affordable in a day of $12 billion surpluses.

How was that $75 million figure reached?

[Rob McMonagle]

There are about 30 countries that supply their budgets to the International Energy Agency for renewable energy. So we looked at what the per capita basis was in their investment.

We found that in Canada, we were typically running about 20% of what other countries do, on a per capita basis. So we said, to get the average, what do we need? It works out that we need a budget about five times what we have now.

[Lloyd St. Amand, Liberal, Brant, ON]

Thank you, Mr. Chair.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. St. Amand.

Monsieur Ouellet.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

I'd like to provide a brief history of solar and wind energy, which were originally grouped together. At that time, we defended the same energy forms.

I started in 1973. It isn't just recently that we've had trouble having renewable energies adopted. In 1973, knowledge was in the embryonic stage. At that time, Mr. Trudeau of the Liberal Party, who was perhaps somewhat of a visionary, began to put very promising research agencies in place. Then, when Mr. Mulroney came to power, he got rid of all those agencies. So this may be the second time we suffer cutbacks in energy sectors of the future under a Conservative government.

Canada has been lagging behind for a long time. I'll give you an idea of what was going on elsewhere in the world in 1981. I visited 17 European countries in 1981 to determine where research stood on solar energy, and the 17 countries were well ahead of us.

In 1992, I was Canada's representative in Rio on solar energy. At that time, we were nearly embarrassed to speak with the representatives of other countries because we were doing nothing about solar energy.

In 2006, we want to eliminate what little we have. The other day, the minister came to tell us that solar energy was expensive. That's what he said. We were here and we all heard him. That's false: it's not expensive. You can't say we shouldn't invest in something that seems to be slightly more costly for the moment, but that will provide us with really cheap energy. Naturally, when you cut Enersave, the recovery period of which is two years, you obviously have a short-term vision.

Why has Canada never been able to develop wind and solar energy? I get the impression, and I'm not the only one, that it's because the oil lobby is far too strong. It's managed to convince senior public servants. I apologize to senior public servants, but during all the years when I worked in the solar energy field, I always had trouble with senior public servants, because they somewhat reflect the government's attitude. Furthermore, governments haven't had long-term vision and don't have it now either.

However, the failure to have long-term vision is much more dramatic in 2006. I find that incredible because all other countries are now passing us. We say we want to build a Canadian plan. A Canadian plan means building things here at home, and not building wind energy facilities elsewhere, in other countries. That's the Canadian plan: it's building a major solar and wind energy industry here at home.

I very much appreciated Mr. Paradis' question. Mr. Vachon has already answered it, but I'd like to give you another example, Mr. Paradis.

For a number of years, Montreal had more sunlight in January and February than Miami. The fact that we have extraordinary sunlight is unknown. So we have fantastic solar energy, but we're stuck in neutral. When I say there are 10,000 solar businesses in China, when we only have two in Canada, I frankly find that appalling.

My question is for Mr. Vachon, who works in the industry and development. I'd like him to tell us what we should do immediately to start back up with confidence, with a plan and a project that are immediately applicable so that Canada is no longer lagging behind the other countries in 10 years.

[Christian Vachon]

Thank you.

All I can do is tell you about my experience when I lived in Austria for a number of years in the early 1990s.

I was a beginner in solar energy. There was already an environmental awareness at that time which still doesn't exist here, even in 2006. There was already talk of setting national objectives in Austria. The Germans fell in step a few years later; they were behind, but they've caught up today.

As I told you, the reason this works there is that government support is stable. They've set objectives; they've talked about 10,000 megawatts of wind energy, 10,000 thermal or electric megawatts of solar energy before a given year. We should set objectives like those for all the right reasons, which are not the same as theirs, decide to go ahead with something stable, regardless of the government in power, and if we change governments along the way, we must at least retain what we already have during the transition. I think that's the recipe for success. That's what has developed over there.

Today, as an industrialist, I import collectors from Germany. Why couldn't I build them here? We've even discussed that with our German partners. It's because there's no market here right now. So I'm better off operating on a small scale, importing by ship and by air, rather than building a plant in Canada. The market is still too unsteady here. However, the Europeans acknowledge that we could easily do better than them, given our climatic conditions.

We just need to set objectives and maintain stability. Those are the two winning formulas.

[Dr. Robert Hornung]

Canada is an energy super power, and that's because we've been blessed with a lot of tremendous natural resources, including renewable resources. But it's an energy super power because we've actually developed strategies to develop those resources, whether it's the oil sands, nuclear power, or something else. We have that opportunity now with renewables.

You will find universal consensus. You might disagree on what the final number is going to be, but everyone everywhere expects that the contribution of renewable energy to global energy systems is going to increase enormously going forward. If Canada wants to continue to be an energy super power in the energy technologies of the 21st century, it needs to get involved and develop a strategic approach on these issues.

We talked a little bit earlier about where Canada stands relative to other countries. In absolute megawatt terms, you might scratch your head a little bit about the fact that Canada is behind the Netherlands, Denmark, and Portugal--countries you wouldn't expect to be perceived as stronger than Canada in an energy source when we're so blessed with a tremendous resource. So there are tremendous opportunities, but we have to think strategically to try to tackle them.

[The Chair, Conservative, Lee Richardson]

Thank you very much.

Mr. Trost.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Thank you, Mr. Chair.

My first question is on a specific remark made by Rob. He listed three different cities--Calgary, Ottawa, and I forget the other one--and noted reasons why solar power couldn't be used. It struck me that those were regulatory reasons. Maybe I'm wrong, but what sorts of regulatory restraints, be they municipal, provincial, or federal, are out there? How can we effectively, at least from our position here on the federal committee, start to deal with those non-financial difficulties you seem to have alluded to?

The question is for everyone here, but since you provoked my interest in that, you may as well start.

[Rob McMonagle]

Federally we have the National Building Code, and code regulations can have a major impact upon on-site generation. A lot of other countries are starting to adopt energy regulations. They're regulating the use of energy efficiency in buildings and putting in requirements on the use of solar in their buildings.

The net zero energy initiative is an example. Right now it's at the pilot stage, but start pushing toward making that a regulation so you get away from this subsidy issue. When I was in Spain two weeks ago they said, “Well, we just did it. We levelled the playing field by requiring everyone to do the same thing.”

[Dr. Robert Hornung]

Clearly, federal, provincial, and municipal governments all have a role to play in terms of regulating and permitting wind energy projects. A recent project in Ontario calculated that it required 77 different permits in order to proceed.

There is a problem in the number of permits, but the other issue is that because of the structure of our federation, we have a situation where we have different sets of rules in different jurisdictions and different sets of rules across municipalities within a jurisdiction, leading to duplication of effort and increased costs going forward.

One thing we think the federal government could do that would be very useful is to parallel something that we've seen in the United States. In the United States the Department of Energy funds something called the National Wind Coordinating Committee, which brings together the wind energy industry, state governments, the federal government, municipal governments, and other stakeholders. They sit down together and ask, “What are the key issues where we're running into trouble? Where is treatment most inconsistent? What are the key areas of research that we need?” They agree on a joint research program that goes forward.

The idea is not to develop out of that exercise a national standard that gets imposed on everybody; the idea is to develop a common knowledge base from which everybody can develop their own standards. The assumption is that, first off, if you do it that way, then not everybody has to do it and you don't have to waste a lot of resources, with every jurisdiction trying to figure out the same problem. Secondly, you develop your responses based on a common set of information, which should at least ensure that there's more similarity in the responses taken than might be the case if everybody were sitting in their own black box and trying to do it.

In the U.S., that exercise is funded by the Department of Energy to the tune of, I believe, $5 million a year.

[Tom Wallace]

I'm glad you raised the question, because often when we're discussing renewable energy, we just focus on the financial side. It's easy to lose sight I think of other dimensions that are important.

Certainly, in some of these technologies, getting proper standards developed so that they can be certified can be very important. I know through the REDI program.... We haven't talked much about geothermal; I'll give an example of the geothermal industry today.

We have a partnership arrangement with the Canadian Geo-Exchange Coalition, which is an organization of five utilities. Actually, this is an industry that had large subsidies thrown at it by provincial governments in the 1980s in Ontario. There was a very bad experience with some shoddy systems being installed and poorly trained individuals, so the organization is determined to do it right this time. With help from the federal government, I think we invested about $4 million and the utilities invested $7 million. We've been working on trying to develop proper training programs and a system of certification so that consumers will have confidence that the systems they install will work properly.

So I think it's important as we consider various barriers in the way of renewable energy technology that we don't lose sight of some of the non-financial barriers that really have to be addressed. We need properly trained people. We need consumers to have confidence in the technologies, and they need to work well.

The worst thing we could do is throw a bunch of money at technologies and then have them.... Particularly, we're talking about the residential sector for solar. If you have a bunch of homeowners who are encouraged by government incentives to install systems that don't work that well, it would create some real problems down the road. So I think it's important that we continue to work on some of those institutional, training, and standards barriers.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

My time is very limited, so I'll just say one thing to everyone here, particularly to the industry groups.

One of the things I find frustrating is we have 10 or 20 different little technologies. Maybe I'm exaggerating slightly, but geothermal was mentioned here, and tidal, wind power, etc. As a policy maker, I'd like to do one thing that's fair overall to everyone. I know you say you're complementary to each other, but still, when you make a decision for one, you're cutting off another.

So I would just encourage, whenever you become lobbyists in the future, policy ideas that would help all new industries, even ones you don't...that would be appreciated.

That's my last general comment. I think I'll let the chair take it from there, unless someone wants to respond.

[The Chair, Conservative, Lee Richardson]

I think since it is a comment, we don't need to have you respond.

I do want to thank you very much for coming. Again, we're always sorry about the time.

Alan, did you want to get in a quick one?

I'll let Mr. Tonks get in a quick one, and then we have to wrap it up.

[Alan Tonks, Liberal, York South—Weston, ON]

Thanks, Mr. Chairman.

Mr. Chairman, I apologize again for being late. I cover another committee, but I'm very much interested.

At the risk of going over some of the material that has been the source and subject of questioning, my question is sort of in the spirit of Mr. Trost's question with respect to macro-planning the larger entity. It seems to me that as a result of the ice storm and as a result of the blackout that affected the eastern seaboard, and because of the north-south orientation of our primary grid--the distribution grid--there's an opportunity to evaluate the integrated capacity of hydro and wind as we start to readjust from a north-south grid to an east-west grid, particularly regionally, in the eastern part of the country. And I know this is a kind of superficial take on a very complex issue.

Where does the planning with respect to that kind of macro-adjustment take place? It's a provincial, federal, and even a state issue. It's not so much with respect to the legislative architecture; it's a whole combination of issues. Is there some approach that's being taken, as we speak, with respect to the strategic repositioning of our grid and the role that hydro and wind can play? How is that all being dynamically brought together?

[Dr. Robert Hornung]

A lot of the issues you're touching on are dealt with at the level of the system operators, the people who manage the electrical grid. And one of the areas where we're starting to see a tremendous amount of cooperation is in Atlantic Canada. The New Brunswick system operator is undertaking work, on behalf of all the utilities in Atlantic Canada, to look at what further integration of the electrical grids throughout Atlantic Canada means in terms of the capacity to enhance wind integration going forward. In fact, as an association, we're holding a conference in Charlottetown this Friday on expanding markets for Atlantic Canadian wind energy, which will focus specifically on these issues.

There is also work being done in other jurisdictions. For example, discussions have gone on between Manitoba and Ontario about a new transmission line linking some of the hydro resources in Manitoba with Ontario to provide more flexibility there in terms of Ontario being able to access its own wind resource. And it's interesting; if that line comes down through northern Ontario, that's where Ontario's wind resource is strongest, and it will actually open the opportunity to capture more of it.

But in many ways, this still tends to be an issue that jurisdictions deal with in their own black boxes. We just held a meeting, actually, last Friday, with the system operators from all provinces in Canada, to sit down and talk about trying to create a national grid code for wind energy. So instead of having different interconnection standards in each province to which manufacturers have to adapt their technology to go forward, which increases costs and everything else, can we all agree on one standard for everywhere? We're hoping that getting this process started can help to facilitate wind integration going forward.

It's not something that comes naturally in Canada. It's something we have to work at. Again, I think that's where the federal government may have a very useful role to play in terms of facilitating those sorts of discussions.