Vision An expanding role for wind energy in an electricity grid being transformed to power a low-carbon future

Transcription

1 Vision A Wind Energy An expanding role for wind energy in an electricity grid being transformed to power a low-carbon future for Canada January

2 Executive Summary A Canadian Success Story. Wind energy is the largest and most cost-competitive source of new electricity generation in Canada and is providing substantial economic and social benefits to local and Indigenous communities. A Competitive Price. The industry s success has been driven by global competition and innovation that have led to dramatic declines in the costs for wind energy and costs are projected to continue falling. A Reliable Partner. Levels of wind integration are going up all over the world, and wind energy is increasingly providing both low-cost power and ancillary services that help system operators maintain reliability. A Clean Solution. Since wind energy generates no greenhouse gas emissions and is one of the most environmentally-sustainable generation technologies available, it is well-positioned to play an important role in addressing climate change a challenge that requires Canada to reduce its reliance on fossil fuels and essentially decarbonize its electricity grid by the middle of this century. A Growing Demand for Wind Energy. Electricity supply scenarios for the coming decades envision significant growth of wind energy. However, they also have the country on course to miss emission reduction targets and for greenhouse gas-emitting natural gas to surpass wind energy as the leading source of new electricity generation in Canada. Replacing this fossil-fuel fired generation by mid-century with affordable, reliable and non-emitting electricity will create a significant opportunity for renewable energy. 2

3 A Low Carbon Electricity Grid. Canada has the abundance of renewable resources needed to power the clean grid of the future, which will be more diverse, decentralized, flexible and participatory, and no single technology will do the trick. Interesting possibilities for synergies are materializing that create significant opportunities for wind energy. An Electrified Nation. A clean grid is necessary, as concluded by Canada s most respected deep decarbonization studies, to address climate change, as that non-emitting electricity is needed, in turn, to help reduce fossil-fuel use in other sectors of the economy. Those studies also confirm that clean electricity generation must increase dramatically to meet this need. More to the New Mix than a Low Price. As the electricity grid evolves and electrification expands, wind energy will play an integral role alongside other technologies, while providing ratepayer protection, scalability, flexibility and many social, economic and environment benefits. Bringing the Vision to Life. Canada s transition to a low-carbon power system has already begun, and climate change is driving an urgency to accelerate it. The policy actions that Canada takes to fully capitalize on these opportunities will shape an exciting new chapter in its wind energy success story. 3

4 A Canadian Success Story Canada is endowed with exceptional wind resources, and almost all provinces and territories have been putting them to work. In fact, consistent with global trends, wind energy has been the largest source of new electricity generation in Canada for more than a decade. Wind energy met approximately 6 per cent of Canada s electricity demand in 2017 and more than that in jurisdictions such as P.E.I. (28 per cent), Nova Scotia (12 per cent), Ontario (8 per cent), Alberta (7 per cent) and New Brunswick (7 per cent). Further, wind energy has done more than keep lights on and factories humming. It has provided and will continue to provide substantial economic and social benefits to local and Indigenous communities across Canada. Wind energy is providing new revenue streams, benefits agreements, and green jobs that are helping communities thrive, while improving air quality and fighting climate change. 4

5 Canada s wind energy industry has Attracted more than $23 billion in investment Created over 58,000 person-years of employment in construction and operations Directly benefited more than 299 communities in 12 provinces and territories, including involvement with over 35 Indigenous communities Manufactured blades, towers and other components in the wind turbine supply chain 12,816 MW The growth of Canada s installed capacity over time 114 MW Canada s wind energy story offers much to celebrate and an exciting new chapter is about to begin. 5

6 A Competitive Price Wind energy has many attributes that make it a great choice for new electricity generation in Canada, but one attribute stands apart price. Around the world, competition and innovation have dramatically driven down the costs of wind energy to unprecedented levels and Canada is reaping the benefits. A December 2017 power auction in Alberta established wind energy as the most cost-competitive source of new electricity generation in Canada today. Weighted average cost per kilowatt hour for 592 MW of new wind power in Alberta: 3.7 cents This means that wind energy will be a serious contender any time there is a need for new power generation in Canada. Wind energy is the lowest cost option for new electricity supply, without subsidies (Lazard 12.0) Unsubsidized Levelized Cost of Electricity $/MWh $250 $200 $150 $100 $50 $0 Onshore Wind Utility Scale Solar Combined Cycle Gas Coal Nuclear C&I Rooftop Solar 6

7 Furthermore, with wind energy costs falling so steeply, some new wind energy facilities have already surpassed yet another milestone they have begun to produce power even more cost-effectively than many existing generating facilities. As with many other renewable energy technologies, there are no fuel costs for wind energy which means stable pricing over the long term. Wind is a resource that is poised to make a major contribution to ensuring that Canada s future electricity grid is affordable, reliable and environmentally sustainable. Drop in wind-energy prices in the U.S. between (Lazard 12.0) Anticipated drop in world wind energy costs between (Bloomberg) 69% 47% 7

8 A Reliable Partner As demand for clean electricity ramps up, Canada will increase its reliance on wind energy as a key technology that contributes low-cost power and flexibility to a modernized electricity grid. Levels of reliable wind integration are going up all over the world. Independent studies have shown that wind energy can readily be integrated into the grid at levels much higher than what is installed today in Canada. System operators have several options for balancing an evolving electricity mix like improved wind energy forecasting, expanded balancing areas using new transmission, enhanced demand forecasting, or better alignment of variable generation with flexible generation such as hydropower or energy storage technologies World Leaders on Wind Energy Integration % of total electricity generation Denmark 2. Uruguay 3. Ireland 4. Portugal 5. Germany The Pan-Canadian Wind Integration Study demonstrates that Canada can source more than one-third of its electricity from wind energy without compromising grid reliability while capturing wind energy s economic and environmental benefits. 8

9 Larger wind turbines and increased digitalization have also steadily increased capacity factors for wind energy, meaning they are now producing more energy, more of the time. Technology changes are also allowing wind energy to enhance its ability to provide many of the ancillary services that help grid operators maintain reliability in the case of system imbalances or emergencies services wind energy can often supply to the grid more quickly and cost-effectively than conventional generation Wind Energy Integration in Canada and the U.S. (American Wind Energy Association, Statistics Canada) AK 3% YT NT 4% NU HI 6.5% >20% 10-20% 1-10% >0-1% 2017 BC 2% WA 6.5% OR 11.1% CA 6.8% NV 1% ID 15.4% UT 2.5% AZ 0.6% AB 7% MT 7.6% WY 9.4% CO 17.6% NM 13.5% SK 4% ND 26.8% SD 30.1% NE 14.6% KS 36% MB 5% OK 31.9% TX 14.8% MN 18.2% IA 36.9% MO 2.3% AR LA ON 8% WI 2.3% IL OH IN 6.2% 1.3% 4.7% MS TN MI 4.5% AL KY GA FL QC 5% NB 7% ME VT 19.9% 13.4% NY 3.1% PA CT 1.7% NJ DE 0.1% WV MD 1.5% 2.2% VA SC NC 0.4% PE 28% NH 2.4% MA 0.7% RI 2.9% NS 12% NL 2% 9

10 A Clean Solution Canadians are increasingly concerned about the impact of electricity generation on our environment and wind energy is one of the most environmentally sustainable forms of electricity generation. Wind energy produces no air or water pollution, generates no toxic, hazardous or radioactive waste and uses significantly less water than virtually all other forms of electricity generation. The NREL report titled Life Cycle Greenhouse Gas Emissions from Electricity Generation has demonstrated that wind energy is one of the most environmentally-sustainable forms of generation even when impacts are considered on a life-cycle basis for all of the resources required to enable wind energy to be produced. The fact that wind energy production also generates no greenhouse gas emissions means it has an important role to play in addressing our biggest environmental challenge: climate change. Canada has committed to reducing its greenhouse gas emissions by 30 per cent below 2005 levels by the year 2030 and recognizes the importance of a clean electricity grid in supporting that objective. Today, Canada s electricity grid is 80 per cent nonemitting and the federal government has adopted a target to have this increase to 90 per cent by

11 Canada has also signalled long-term intentions consistent with the Paris Agreement on Climate Change by releasing a mid-century greenhouse gas strategy that envisions reducing its emissions by at least 80 percent below 2005 levels by the year This will require Canada to move to an essentially 100 per cent non-emitting grid by It s a tall order, but Canada is much better positioned than most countries to meet this objective with a tremendous abundance of untapped renewable energy resources ready to be harnessed from coast to coast to coast primarily running water, sunshine and wind. A significant expansion of Canadian renewable electricity production is economically beneficial, technically feasible, and critical for environmental sustainability. Reaching for Canada s Emission Reduction Targets Historical emissions Policy commitments as of Dec Greenhouse gases (Mt CO 2 eq) % below 2005 levels 80% below 2005 levels Year 11

12 A Growing Demand for Wind Energy In its most recent energy supply and demand projections to 2040, Canada s National Energy Board (NEB) published a reference case (business-as-usual scenario) that indicated the nation will need new electricity generation facilities to power the coming decades. This reference case predicts that wind energy will be a major contributor of that new power through the installation of an average of 510 MW of new wind energy capacity every year. This significant projected growth of wind energy is a reflection of wind energy s cost-competitiveness. Wind Energy s Role in Canada s Energy Forecast (NEB): Expected share of new power generation: 27% New installed wind energy capacity total: 12,400 MW Average new installed wind energy capacity annually: 510 MW While these are impressive numbers, there is room for more growth in wind energy. Over the past decade, Canada installed new wind energy capacity at a pace closer to 1,000 MW per year. Looking ahead, Canada will need more low-cost, reliable and clean electricity particularly in the face of climate change. If Canada is to do its part to address climate change, the nation must essentially decarbonize its electricity grid by the middle of this century and the country is not on course. 12

13 Today, 81 per cent of Canada s grid is non-emitting. Under the regulator s reference case, by 2040 that number will only climb to 84 per cent. Why such little progress? Because greenhouse gas-emitting natural gas is expected to surpass wind energy as the leading source of new electricity generation in Canada. Natural gas plays an important role in Canada s electricity system today. Its cost and flexibility make it an important complement to wind energy as Canada transitions to a low-carbon future. To decarbonize our grid, however, greenhouse gas-emitting natural gas must play only a minor role in Canada s electricity grid by Because generation facilities operate for several decades, this requires a long-term, strategic approach to investments in new natural gas generation, to minimize the risk of creating stranded assets. Increasingly, fossil-fuel fired generation must be replaced with affordable, reliable and non-emitting electricity creating a significant opportunity for renewable energy. If Canada s grid is to be 95 per cent non-emitting by TWh of the fossil fuel generation in the reference case must be replaced with non-emitting energy If half of that non-emitting energy is to be wind energy 816 MW of new wind-energy capacity would need to be installed, on average, each year for a total of 31,640 MW by 2040 That is Achievable, as Canada has been installing, on average, approximately 1,000 MW each year for the past decade Nearly 2/3 rds more than the NEB s reference case of 510 MW to be installed, on average, each year, until

14 A Low Carbon Electricity Grid Can Canada move to a decarbonized electricity grid? It certainly has the renewable energy resources to do so and the global revolution currently underway in the production and use of electricity opens up many interesting possibilities. The grid of the future will be far more diverse, decentralized, flexible and participatory because global competition and innovation are driving down costs and spurring rapid growth of: Utility-scale renewable energy Distributed and decentralized renewable electricity generation Electricity storage technologies Energy efficiency technologies Smart grid technologies Each of these technologies offers unique characteristics and attributes that are disrupting the electricity grid and changing how supply and demand are managed. This transformation is timely and promises to deliver electricity at a lower cost, introduce a wide array of new tools and approaches to tackle the global climate challenge, and help Canada transition to an affordable, reliable, flexible and low-carbon grid. According to Bloomberg s 2018 New Energy Outlook A boom in batteries means wind and solar energy will provide almost 50 per cent of global electricity by

15 The scale of the challenge is significant, however, and no single technology alone will do the trick. These technologies are complementary in many respects and, collectively, open many possibilities for synergies that can allow Canada to become a global leader in non-emitting electricity while making the most of its abundant wind and other renewable energy resources. For example, while Canada is already well-positioned to significantly increase the penetration of wind energy in the grid, the rapid advances currently underway in the development of energy storage technologies coupled with Canada s vast hydroelectric resources is one potential pathway to maximize the contribution of low-cost wind energy within a future non-emitting electricity grid. 15

16 An Electrified Nation Canada s most respected deep decarbonization studies conclude that it will only be possible to address climate change if the nation has a non-emitting grid that generates clean electricity that is then used to help reduce fossil fuel use in sectors like transportation, buildings and industry. In several parts of Canada, electricity is already used to heat and cool buildings and sales of electric vehicles are steadily growing while costs are steadily declining. If Canada is to significantly electrify key sectors of the economy, options to increase the use of electricity in other sectors will need to be cost-competitive. For this reality to materialize, it will also be necessary to increase electricity generation dramatically more than the 12 per cent increase by 2040 currently envisioned in the NEB reference case scenario. Since the electricity will need to be non-emitting, additional new opportunities will emerge for renewable energy. The Borden project, near Chapleau, Ontario, will be North America s first fully-electric underground mine. By electrifying the operation, Goldcorp will reduce annual greenhouse gas emissions by 5,000 tonnes. As battery costs plunge, Bloomberg New Energy Forecast expects electric vehicles will be cheaper to manufacture than internal combustion engine cars by 2030 when 30 million will be on the world s roads. 16 Photo source:

17 More to the New Mix than a Low Price As the electricity grid evolves and electrification expands, wind energy will play an integral role alongside other renewable energy technologies. Here is why: Ratepayer protection Wind energy can already provide the lowest cost for new electricity in Canada and experts predict additional cost declines. Furthermore, with no fuel costs, the price is stable over the life of the project. Social and economic benefits Wind energy provides many important social and economic benefits for rural and Indigenous communities. Scalability and flexibility Wind energy projects can be built rapidly at different scales by a wide variety of stakeholders, enabling Canada to flexibly harness wind in response to growing demand for renewable electricity. Environmental sustainability Wind energy does not produce greenhouse gas emissions, air or water pollution, nor hazardous, toxic or radioactive waste. A team player Wind energy is complementary to other renewable energy technologies. For example, electricity production from wind energy peaks in the winter and at night, while solar energy production peaks in summer and in the day. 17

18 Bringing the Vision to Life Rapidly declining costs for renewable energy sources mean that Canada s transition to a low-carbon power system has already begun, and there is an urgency to accelerate the transition in response to the most important challenge of our time climate change. Canada has a massive renewable and non-emitting resource base of wind, solar, and water and also has the technologies to expand their production and integration to help reduce its reliance on fossil fuels. The policy actions that Canada takes to fully capitalize on these opportunities will shape the next chapter in Canada s wind energy story. These are CanWEA s policy recommendations: Clearly define objectives. All jurisdictions should identify and legislate targets for the decarbonization of their electricity grid, and the targets should be consistent with national objectives of a 90 per cent non-emitting grid by 2030, a 95 per cent nonemitting grid by 2040, and a virtually decarbonized grid in Ensure policy signals encourage a shift to sustained decarbonization. Enact carbon pricing for all fossil-fueled electricity, with a price that steadily increases over time. Enact regulatory standards that drive a steady decrease in electricity carbon intensity. 18

19 Build infrastructure that enables the harnessing of Canada s renewable energy resources and ensures high levels of grid integration. Ensure investments in new transmission infrastructure either provide increased access to renewable energy resources or help to facilitate their integration. Increase the efficiency of permitting processes. While ensuring that permitting processes remain effective, increase their efficiency by ensuring processes are stable, transparent and streamlined. Enable private sector investment. In wholesale electricity markets, identify and value the grid services that non-emitting resources provide and ensure markets enable renewable energy to fairly compete on a level playing field. In all electricity markets, create competitive and transparent opportunities for the award of long-term power purchase agreements to enable wind energy to be provided at the lowest possible cost. Enable electricity consumers to directly purchase renewable energy. In many jurisdictions outside of Canada, companies, local governments, and consumers of all kinds, can purchase renewable energy directly from suppliers. This is not allowed in many Canadian jurisdictions and governments must take steps to provide Canadians with the opportunity to make such a choice. Develop strategies to electrify key sectors. Strategies are required to enable the building of infrastructure and removal of barriers to the increased electrification of transportation, buildings and industry. 19

20 For source documents, references, additional resources, and contact information, please visit: canwea.ca/vision