Promoting Green Power in Canada - Centre for Human Settlements

Promoting Green Power in Canada Pollution Probe6. Budget Considerations6.1 Extending the Wind PowerProduction Incentive (WPPI)One of the measures considered in thisreport is to increase the WPPI to 2.8 ¢/kWh,and to extend it to all renewable powersources in need of support. Currently, thegovernment only provides the Wind PowerProduction Incentive, with a budget of $260million over 15 years, or $156 million net,assuming a 40% corporate income tax rate(to compare, the US tax revenue loss due tothe Production Tax Credit was US$100million for fiscal year 2001 [CRS 2001b]).According to Table 4.23, between 1.7 and7.0 TWh a year of renewable electricitygeneration would be added to Canada’sportfolio under the proposed RPS. Table 6.1shows the annually added power generationand the annual expenses of a productionincentive of 2.8¢/kWh covering the entirerange of eligible renewable power sources.Such an incentive would exceed the $1billion mark after ten years, taking inflationinto account — a budget similar to Canadianspending on energy efficiency in the 1990s(see Figure 4.9). Given that Canadaconsumes about 600 TWh of electricity peryear, an SBC of 0.1¢/kWh would produce anannual budget of $600 million — enough tofinance the proposed production incentivewithout putting too large a burden onCanadian consumers. Phasing out theincentives over time or reducing the supportfor technologies, such as onshore wind, asthey become able to compete in the marketby themselves are options to reduce thebudget necessary to support renewables.Table 6.1 — Annual Budget Required for an Extended Power Production IncentiveYear Added Generation Cumulated New Annual BudgetGeneration at in Million $*End of Year2004 1.75 TWh 1.75 TWh 24.52005 3.5 TWh 5.2 TWh 98.02006 3.5 TWh 8.7 TWh 1952007 3.5 TWh 12.2 TWh 2932008 3.5 TWh 15.7 TWh 3912009 3.5 TWh 19.2 TWh 4892010 3.5 TWh 22.7 TWh 5872011 7.0 TWh 29.7 TWh 7342012 7.0 TWh 36.7 TWh 9302013 7.0 TWh 43.7 TWh 1,1262014 7.0 TWh 50.7 TWh 1,273* assuming that projects are started up through-out the year, thus applying half the added generation forthat year to the required budget151