Promoting Green Power in Canada - Centre for Human Settlements

Promoting Green Power in Canada Pollution Proberate required to get the last desired participantinto the market, which makes themeconomically inefficient and places extraburdens on ratepayers. These aspects can bediminished by creating flexible rates that arereduced over time, as stipulated in the newGerman Renewable Electricity Act, and byrevising the tariffs as a function of decreasingproduction costs of new projects. Suchmechanisms should, however, maintaintransparency in order to give confidence toinvestors about financial viabilities of projectsin the long run. To correctly interpret the datain Table 4.7 it is also important to know thatthe wind resources in the UK are far superiorto those in Germany, so that UK wind farmscan produce electricity at almost half theprice of Germany’s.It is important to understand that feed-intariffs have been successful because they giveinvestors long-term security. Some of thetariffs extend to 20 years or longer. Ingeneral, rules are clearly set in a way thatallows investors to plan ahead — such as 8years support at the same rate and then areduction to a lower rate. In the Netherlands,high incentives are given though the taxexemption, but it is far less foreseeable howlong these taxes will remain in place or whichenergy sources they can be applied to, as hydrohas recently been taken out of the definitionof eligible sources for the exemption. TheDutch system also grants the same amountof support to all sources, which effectivelyhampers the development of more expensivesources, such as PV.On the other hand, the tariffs have beencriticized as subsidies, and green powermarketing schemes have taken this intoaccount. Certification organizations, inparticular OK-Power, have tried to address thisissue by setting standards for the inclusionof government-subsidized capacity in greenpower products [NREL 2002, p. 29].What the European experience has shown isthat feed-in tariffs alone are not enough.No policy by itself is sufficient to fosterrenewables deployment, but needs tobe implemented in concert withothers. Feed-in tariffs together withplanning and permitting support andcheap loans or grants have shown thebest results.They have to be complemented by othersupporting action. The most importanthurdles, especially for wind development,have been identified as obtaining planningpermission, 24 securing and financing gridaccess, 25 transmission rules, and high initialinvestment cost. In Germany, the mostsuccessful nation to implement wind farmdeployment, regional planning agenciesidentify suitable wind park sites. The first stepin identifying these sites is to map local windvelocities, a task that can easily cost severalmillion dollars, requiring government orutility support in order to facilitate winddevelopment. Clear and favourable rulesabout grid access are also necessary, as canbe learned from the experience in France andthe UK, where grid access charges are notfixed or transparent and vary greatly from oneregion to the other [EEA 2001, p. 52]. Theneed for grid expansion or strengthening hasbeen a limiting factor to wind powerdeployment in Italy and Portugal [ibid.], andis now also a factor in Texas (see chapter3.2.4). Government aid, or burden sharingamong utilities for grid extensions orcapacity increases, will help the deploymentof renewable power generation. As the bestrenewable resources are often situated inremote locations, transmission costs thatincrease with distance can otherwise put anextra burden on new projects. In Sweden,transmission rules are very favourable evenfor small projects as they apply a tariffindependent of distance [FIRE 1998, p. 83].Germany also provides cheap loans torenewable power projects, which tackles theproblem of high initial investment. Sweden,83