Saskatchewan can expect to lock in some of the lowest prices for wind energy ever seen in Canada as the province takes the first step in its ambitious plan to see wind energy make up 30% of total generating capacity by 2030 – up from 5% today.
SaskPower, the province’s government-owned utility, is starting with a request for proposals (RFP) for up to 200 MW of wind energy in 2017. Winning projects will be offered 25-year power purchase agreements by the end of the year and are expected to come online by April 2020. The utility has also laid out a tentative schedule for future procurement, planning nine solicitations totaling 1,700 MW dating out to 2030.
Saskatchewan’s planned wind expansion is part of a broader strategy that will see renewable energy sources make up 50% of generating capacity within 15 years. This is double current levels and represents a major shift for the province. What’s especially significant, though, is that SaskPower is pursuing this strategy because it sees wind energy as a low-cost, low-carbon solution to the challenges it faces.
SaskPower has seen 20% demand growth over the past five years and is projecting load to increase another 13% over the next five, while much of its generation fleet, built between 1960 and 1985, is reaching the end of its useful life. The utility is at a turning point, and by turning to cleaner sources of power, such as wind, it stands to gain on a number of fronts.
Dramatically increasing the role of wind and other renewables on its grid will reduce electricity sector greenhouse-gas emissions in the province by 40% from 2005 levels by 2030 – making a significant contribution to provincial efforts to address climate change.
For SaskPower and the Saskatchewan government, however, the most compelling reasons for more wind energy are economic.
Industry panelists at the Canadian Wind Energy Association’s (CanWEA) annual conference in November 2016 predicted prices in the 2017 RFP will likely hit C$50/MWh-C$60/MWh, lower than the most recent competitive wind energy procurements in Ontario and Quebec, which resulted in contracts in the C$60/MWh-C$70/MWh range. The fact that Saskatchewan has some of Canada’s best wind resources is one factor; SaskPower’s approach to procurement is another.[adleft zone=’190′]
Developers can see the long-term goal, and that gives them the confidence they need to invest in a pipeline of projects that can compete to deliver wind energy at the best-possible price. Pent-up industry interest in the province, which last contracted for wind capacity in 2012, virtually ensures an intensely competitive process. Investor interest is so strong that the utility has limited proponents to two bids each in the 2017 RFP. Finally, Saskatchewan’s measured and predictable approach to adding new capacity positions it to benefit from continued declines in the cost of wind energy in the coming decade.
For the Saskatchewan government, wind’s benefits extend beyond ratepayer value. The province’s economy is built on natural resources such as petroleum, potash, agriculture and forestry, and wind energy is a way to diversify that economic base by capitalizing on another natural asset – one that is not exposed to wide swings and slumps in commodity pricing. When Saskatchewan government officials talk about wind, they talk about jobs, rural economic development, new industrial expertise and technological innovation.
Wind and other renewable energy projects are also a strong fit with another key government priority: creating economic development opportunities for Saskatchewan’s First Nations. Aboriginal engagement and participation is likely to be a key part of SaskPower’s bid evaluation criteria, and the groundwork is already being laid for the kinds of effective partnerships between developers and First Nations communities already seen in markets such as Ontario and Quebec. The nonprofit First Nations Power Authority, created in 2011 to help generate opportunities for Aboriginal-led power projects in the province, brought industry and indigenous groups together at its largest-ever energy forum in Saskatoon in November 2016.
Saskatchewan’s commitment to a tenfold increase in installed wind capacity within 14 years illustrates how the cost-competitiveness and economic benefits of wind energy are transcending politics in Canada. Although the Saskatchewan Party has opted out of Canada’s recently crafted Pan-Canadian Climate Change Plan because of its opposition to a carbon tax, it has embraced wind energy as a key element of its own climate strategy and a critical part to an affordable and reliable grid in the future. The province currently has 221 MW of operating wind and another 207 MW under contract to be built. It expects to have at least 2,100 MW online by the end of 2030, supplying about 20% of the province’s electricity demand compared with the 3% it contributes today.
CanWEA’s Pan-Canadian Wind Integration Study, released last year, confirms that Saskatchewan’s targets are realistic and achievable. The study found no operational barriers to achieving 35% wind energy penetration nationwide by 2025, and importantly for Saskatchewan, it showed the significant role the province’s excellent wind resource – with an average site capacity factor estimated to be 37% – can play in reaching that mark. When it comes to Saskatchewan, the analysis found the province’s power grid could actually accommodate up to 4,400 MW of wind by 2025, which is enough to supply half of the forecast electricity demand. New interconnections with Manitoba and North Dakota would be required, but that would boost net electricity exports from the province by as much as 5.1 TWh a year, resulting in tens of millions of dollars of additional revenue for the province and paying back the cost of the lines within five years.
To help ensure that Saskatchewan is successful in meeting its objectives, the wind energy industry has been actively engaging with the provincial environment ministry on its recently released wildlife siting guidelines for wind energy projects to ensure the implementation of results-based requirements that balance protection of environment and wildlife with reliable access to strong wind sites with good transmission access. Similarly, CanWEA and the Saskatchewan Ministry of Environment are collaborating to address uncertainty about acceptable mitigation strategies and encourage more clarity on the treatment of sound, health and post-construction monitoring requirements.
The good news is that the ministry has committed to taking an evidence-based approach to wind project siting and plans to work with the industry after the 2017 RFP to evaluate how its wildlife guidelines affected project viability and economics, with a view to determining if further evolution in the guidelines is required.
Building on the strong public support wind energy enjoys in Saskatchewan will also be critical to meeting the province’s long-term goals. A poll of Saskatchewan residents commissioned by CanWEA in 2015 found not only that wind was their top choice for new electricity supply, but also that more than three-quarters of those surveyed felt more should be done to encourage its development in the province. Significantly, that support was high across all demographics, whether it was voting intention, age group, or urban and rural residency.
When it comes to evaluating bids, SaskPower has made it clear that local support and engagement on the ground in host communities is what counts. It wants companies that have successfully developed a utility-scale wind project and can demonstrate a community engagement history, as well as that have specific plans for their Saskatchewan sites. With clarity around SaskPower’s expectations and evaluation criteria, the wind industry will be ready and able to bring forward the best-possible projects, not just in terms of cost, but also when it comes to meeting community expectations through their operating life.
There’s no doubt that Saskatchewan represents an important new market for Canada’s wind energy industry, and the commitment it has made to new wind energy development also represents a significant opportunity for the province. Taking advantage of an abundant – but underutilized – natural resource will help diversify and bolster Saskatchewan’s economy, bringing new investment and jobs into the province. By leading the transition to a cleaner, affordable and modern grid, wind energy will make a critical contribution to Saskatchewan’s inevitable transition to a low-carbon economy.
As an industry, and as CanWEA, we are committed to working with the government and with SaskPower to ensure Saskatchewan meets and exceeds its wind energy targets in the most effective and efficient way possible.
Robert Hornung is president of the Canadian Wind Energy Association. He can be reached at email@example.com.