Tendering is not suited for wind energy development because it discriminates against projects with one or two turbines, said the president of the Canadian Wind Energy Association.
Robert Hornung said contractors are familiar with the tender process, where government asks for proposals and the best bid wins a contract to build a bridge or section of highway.
“It’s very hard for smaller projects to compete …. You don’t get economies of scale.”
That is one reason the Ontario government has taken a new approach to develop wind power. Last fall, it passed the Green Energy Act that establishes a feed-in-tariff, a guaranteed price for renewable energy, to encourage projects by communities, schools and farmers.
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“Ontario is hoping … to see wind go forward, for lack of a better term, in all sorts of shapes and sizes … projects that might have one turbine or two turbines. Or projects might have 100 turbines” said Hornung, explaining that Ontario borrowed the feed-in-tariff idea from Europe, where it’s a common practice.
“What the feed-in-tariff process says is, we’re wiling to pay this much. Anybody who’s comfortable and feels they’ve got a viable project at that cost, we’re willing to buy.”
Ontario has established a rate of 13.5 cents per kilowatt-hour for wind energy projects – substantially higher than the price paid by consumers, 5.8 to 6.7 cents per kilowatt hour, set by the Ontario Energy Board.
Ontario is the first province in Canada to take this approach but other jurisdictions may soon follow suit,.
As an example of the weakness of tendering wind energy, Hornung referred to Manitoba.
“(It) is a jurisdiction that has, clearly, a tremendous wind resource and quite a bit of potential,” he said.
In 2007, the Manitoba government issued a request for proposals to develop 300 megawatts of wind energy.
“(They) received a massive response,” he said, citing proposals received that would generate more than 10,000 megawatts if accepted.
The province selected an Australian company, Babcock & Brown, to build a 300 megawatt wind farm near St. Joseph, Man. The project never got off the ground because Babcock & Brown went bankrupt last summer. An American firm, Pattern Energy, is now leading the proposed wind farm.
The scenario of one winning bid is unhealthy for wind energy development, Hornung said.
“It has the potential to create a kind of boom or bust market,” he said, as companies await the outcome.
Tendering processes can take months or years.
Ron Monk, a manager of the energy division at KWL Consulting Engineers in Vancouver and former manager of sustainability at B.C. Hydro, provided an example of the turtle-like pace of tendering. B.C. Hydro issued a request for proposals for clean or renewable energy in June of 2008. As of January 2010, the utility hadn’t selected winning bids, Monk said.
Lawrence Lafond, project manager of Elton Energy Co-operative, a wind energy initiative near Brandon, said tendering produces only a few winners from a community’s perspective.
“Someone comes in from the outside, extracts a resource and pays royalties to a lucky one or two people,” he said.
Elton Energy is planning to erect two turbines at a cost of $7 million. The co-operative has also developed a model where groups that want to establish a small power project can get financial and technical expertise from a community power investment fund.
Dan Mazier, chair of Elton Energy, said wind energy policy can include many options.
“I think both (large and small projects) can exist quite nicely in the province. Without a doubt.”
