Promoting Green Power in Canada - Centre for Human Settlements

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Promoting Green Power in Canada Pollution ProbeWith respect to policies used by thecountries examined to foster green powergeneration, the following was observed:• Tendering schemes resulted in smallincreases in renewable power generationcapacity, but the cost of renewable powergeneration was considerably lower thanfeed-in tariffs.• Feed-in tariffs were most successful indeploying new renewable generationcapacity, but were more costly to utilitiesand, consequently, to power consumers.• Countries most supportive of renewablepower reaped the largest benefits from itin terms of manufacturing capacities forrenewable power technologies, resultingin high export activity and employment.• Single policies were not effective bythemselves. Successful policies were usedin concert with other measures in favourof renewables, such as low-interest loans,clear and fair rules for grid access, andpriority transmission access.• Net metering had limited success, byitself, in increasing investment indistributed renewable power generationin amounts that would significantlychange the generation portfolio of ajurisdiction. Buy-down programs incombination with high electricity retailprices improved success rates of netmetering programs.• Renewable portfolio standards (RPS)have only started to be used in recentyears, but seem to have become thepolicy of choice both in Europe and inNorth America. Initial experience withTexas’ RPS indicates that an RPS is ableto combine the advantages of deployingnew renewable generation effectively andrapidly, while at the same time providingmarket incentives to reduce the overallcost. The reduced price for natural gasdue to reduced demand because of theRPS can offset the extra cost incurred byadding non-large hydro renewables tothe national generation mix.• It is very important that governmentpolicies and measures are stable andforeseeable. The risks for investorsinvesting in renewable power technologieswill be sufficiently reduced to createflourishing markets only when long-termstrategies are used. This conclusionconcerns every aspect of policy, includingtax exemptions, subsidies, R&D support,and the duration of contracts granted torenewable power producers. A ten-yeartime horizon seems necessary to makerenewable power markets attractive.• Mapping and assessing renewableresources is as important as giving policysupport. Without knowing how manyresources a country has and where theyare, both policy makers and investors arelimited in the action they can take.Mapping will also assist municipalitiesand provinces to set aside areas forrenewable power development and toaccelerate permitting procedures.• An RPS creates long-term financialstability for renewable power generatorsand provides independence fromtemporary support measures, such as taxcredits or production incentives, thatmay be needed initially to support therenewables sector.• A 15% share of intermittent powersources in the overall generationportfolio was considered to be possiblewithout special measures concerningback-up power or storage in theNetherlands. Larger amounts ofintermittent power sources wouldrequire such measures to maintaincontinuous and secure power supply.156
Promoting Green Power in Canada Pollution Probe• Grid expansion and strengthening arenecessary to support the rapiddeployment of renewable power, asexisting structures are often not capableof accommodating new generation fromlocations that were not foreseen inplanning based on conventional energysources (e.g., Texas, Portugal).Government support may be necessaryto alleviate the cost of gridimprovements.With respect to financial incentives, it wasfound that:• Emissions credit/allowance/offset trading• currently only provides marginalincome to green power providers asthese markets are at an early stage ofdevelopment; and,• may provide important incentives ifmultiple emissions credits can betraded and if CO 2offset pricesincrease substantially.• Past government subsidies for the energysector concentrated on conventionaltechnologies; however, the support forrenewable power in Canada was larger inthe 1980’s (in the aftermath of the oilcrisis) than it is now.• Moderate tax incentives, such asincluding capital investments inaccelerated depreciation schemes, canmake many renewable power projectscheap enough to compete with naturalgas as a power source.• Income tax exemptions on gains fromrenewables can lead to citizens investingin renewable power projects, which canin turn improve local acceptance (e.g.,Denmark).• Ecological tax reform that increases thetax load on fossil fuel-based energysources and that exempts and supportsthe renewables sector, could create astable and flourishing market for greenpower (e.g., the Netherlands).• Incentives given to a renewable powerproject must continue over long periodsof time (i.e., ten years or more) in orderto create continuing support andfinancial security.• Government support for renewablepower investments (e.g., grants, lowinterestloans, tax exemptions oraccelerated depreciation) is especiallyimportant to lower the financial risksrelated to this new technology sector, asinvestors are generally not familiar withrenewable power technologies, theirfinancial performance and their reliability.• Generous support for the renewablepower business will increase internalrates of return, attracting a variety ofprivate investors.• System benefits charges are being usedby several jurisdictions to raise importantamounts of money needed to supportthe renewables sector, similar to levels offunding used in the most successfulcountries (e.g., one billion dollars inCalifornia over five years).Green tags, or the separation of environmentaland social attributes from the electricityproduced by renewable power sources, arealready a reality in Canada (Ontario, Alberta,British Columbia). They provide the benefitof reaching customers without direct accessto bundled green power products, and arealso used as administrative and market toolsin the implementation of RPS requirements.Some concerns exist about potential doublesales of either the aggregated green attributesof green power production, or of disaggregated157
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Promoting Green Power in Canada - Centre for Human Settlements

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