View
214
Download
0
Category
Tags:
Preview:
Citation preview
Vision Quest Windelectric Inc.: Developing Markets for Wind Energy in Alberta, Canada
By Juan L. Espinoza, Luis Escobar, & Harrie Vredenburg
TCPL International Institute for Resource Industries & Sustainability (TCPL - IRIS)
2003 BELL Conference, Fort Lauderdale, FL, July, 17-19
OUTLINE
Introduction Background
– Vision Quest Windelectric– Green energy in Alberta
Green Power Market & Vision Quest (VQ)– Customers– Enmax (Greenmax)– “Ride the wind” project
How is the future coming for VQ?
Introduction
Objective: To describe the development of a local “green power” market. It is hoped that the case will provide a framework for national & international application
Methodology:– Literature review (Secondary data)– Personal Interviews (2001-2002)– Feedback
Outcomes:– Teaching case (descriptive); Paper (theoretical)– “Pilot” study for dissertation topic
Introduction
Rapid changes in the electricity sector are moving countries like Canada to consider green/RE alternatives:
– Economic factors (globalization, diversification, deregulation)– Technological factors – Environmental/social factors
In Alberta, despite its high dependence on plentiful and readily available fossil fuels, the acceptance of wind power appears to be growing
This study looks at the different aspects contributing to the creation of a green power market, with special focus on the strategic opportunities that it brings to one of the private wind power producers, Vision Quest.
Background: Vision Quest Windelectric
Privately-held Canadian company based in Calgary, Alta. Active in wind energy exploration, development and
production. It is the biggest owner of wind farms in Alta. “We were the first utility to put a wind turbine in Alberta
on a commercial basis in 1994. And we built Canada’s first wind farm in 1987 in the high Arctic” (Vision Quest executive)
VQ has been involved in several governmental and non-governmental task forces focused on electrical industry restructuring, environmental policy, tax and industry changes designed to create an efficient electricity market.
Green energy in Alberta
DRIVING FORCES The growing renewable energy/wind power industry Deregulation of the electricity sector (from state
monopoly-based to open markets) Government support for green energy development
(climate change issue)
*BARRIERS Alberta’s strong fossil fuel sector (economic,
technological, and institutional forces)
Sources of Power Generation in the electricity system of Alberta
1998
Hydro9%
Coal67%
Gas23%
Wind & Biomas
s1%
2000
Coal55%
Hydro9%
Gas35%
Wind & Biomas
s1%
2005
Coal51%
Gas41%
Wind & Biomas
s2%
Hydro6%
Wind Energy Installed Capacity (MW) around the World
Wind Energy Markets (Countries)
2000 Additions
2000 Year End Total
2001 Additions
2001 Year End Total
Germany 1,669 6,133 2,659 8,750
United States 53 2,566 1,695 4,261
Spain 713 2,502 835 3,337
Denmark 552 2,300 117 2,417
India 90 1,167 240 1,407
Canada (*) 10 137 61 198
World Total (Approx.) 17,300 24,000
Source: AWEA, Global Wind Energy Market Report-2001(*) In order to compare with the ‘big five’ wind energy producers
Wind power still represents less than 1% of global power production BUT it is the world’s fastest-growing energy source (30% annually)
DEREGULATION:How the Alberta’s electricity market works
Marketers
Importers and
Independent Power Producers
Hourly demand bids
Hourly supply offers
Generation Power Pool Transmission Distribution Consumers
DeregulatedMain utilities:Alberta PowerEdmonton PowerTransAltaVision QuestCanada Hydro
RegulatedIndependent entity appointed by the government -ESBI Alberta Ltd
Deregulated
RetailersMunicipalitiesENMAX
The Vision Quest opportunity for developing a Wind Power Market?
“In 1996, the Federal Government was looking at recommendations from the national round table on the environment and the economy from the previous year, which suggested that the federal government take the lead in Climate Change and environmental issues by buying something that nobody really had heard very much before, green power”
…“we saw it [deregulation] as an opportunity…it was a survey across Canada saying that 70% of the people want wind energy as part of their mix and a large percent (20%-30%) said they’d pay more” (VQ executive)
VISION QUEST’s PRODUCTS
VER: Verified Emissions (CO2)
Reduction
Efficiency:Reduction of
Voltage Losses
Electricity only:From wind
power
GREEN ENERGY ®
“We decided to invent the product (‘Green Energy ®’) that was different and break the rules. And we said it’s different and it’s better...”
“...we were able to quantify the green power energy, and because we were through this auditing process we call that the
Verified Emissions Reduction (VER). So, that was also one of the first ever domestic reduction trades in Canada too”
VQ Installed Capacity
Vision Quest's Installed Capacity
1200 12009660
2838040440
01000020000300004000050000
1997(2)
1998(2)
2000(16)
2001(47)
Total
Year (& number of units)
Inst
alle
d P
ower
pe
r yea
r (kW
)
Some customers: Enmax (Greenmax), TransAlta, Suncor Energy
The retailer: ENMAX
Enmax is an electricity transmission, distribution, and energy supply & services company, and is wholly owned by the City of Calgary.
“Being Enmax a retailer, the company is the ‘middle-man’ between electricity producers and clients. Enmax realized that the environmental impacts from the electricity sector could lead to a carbon tax penalty to either the producer or customers, but not to Enmax itself. However, the company saw a role to play about this environmental problem. They created in 1998 an educational and marketing program as the starting point for Greenmax” (Enmax Executive)
Greenmax Program
It was the first program in Canada offering residential customers the opportunity to support “green power” “Greenmax offers customers a choice to support wind-generated electricity production through the payment of premiums ($5, $10, or $ 15 option) to offset the costs associated with sourcing wind power” (Enmax executive)
Two ways to encourage clients to pay more:– Educational program & “the green club program”
CLIENTS– 3,000 residential customers (1% of Enmax’s market)– Federal Government (NRCan & Environment Canada)– “Ride the Wind” project – AUMA and commercial clients
Clients of the Greenmax Program
Greenmax Clients
10 2.226 28.8
67
10 2.226
83.8
122
0
50
100
150
NR
Can
Env
.C
anad
a
Cal
gary
Tran
sit
Oth
ers
Tota
l
GW
h-y
ear
Sep-01
Jun-02
(*) Others include residential, commercial, and municipal clients
“When in 1998 the program was launched, Environment Canada and Natural Resources Canada facilities were the
first clients” (Enmax Executive)
Ride the Wind
Established in September, 2001. It’s a 100 % pollution-free project to power the LRT system (C-Train)
First public transit system in North America using wind power
Collaborative project: VQ-Enmax-Calgary Transit It contributes significantly toward the City of Calgary’s
goal to reduce its CO2 emissions. (It avoids the generation of 26,000 tonnes of CO2 annually).
“The City of Calgary has a particular interest in environmental issues at both corporate and community level...people saying to us: ‘if you do whatever change to be environmentally responsible, we’ll pay for it’” (City of Calgary’s executive)
x
Ride the Wind…
Comparison of electricity prices
1 2 3 4 5 6 7 8 9 10
Time (e.g., days or years)
Pri
ce
(c
en
ts/k
Wh
)
Power Pool
Wind powercontract
Long-term contract (10 years) with a fixed price
a
b
What should VQ’s strategic direction be? Toward a ‘sustainable’ green power market (Beyond
Greenmax?)– Economies of scale (e.g., “socially responsible” investors)– Role of large energy firms such as Shell, BP, Suncor, Transalta
Regulation (based on government-subsidies) vs. Deregulation (based on consumer-premium)?
Geographical focus (Alberta, Canada, US)? Competition within the wind power industry (e.g., CHD) Competition in the electricity industry: product
differentiation and cost leadership at once?
Vision Quest II: The Sequel
October 2002: Vision Quest became a wholly owned, independently operated subsidiary of the TransAlta Corporation, Canada’s largest non-regulated power generation company.
2003: Constructing Canada’s single largest wind farm (75 MW) at McBride Lake. With this, VQ is becoming Canada’s largest wind power producer
Vision Quest presently owns and operates 68 wind turbine power plants with over 46 megawatts of total peak capacity (to meet the demand of 21,000 homes)
Recommended