Wind Power Part 3
Wind Farms in British Columbia, Canada
As Canada’s westernmost province, British Columbia’s surface area of 945,000 sq km (365,000 sq mi) roughly equals the land mass of France and Germany combined. Its main electricity utility, the provincial crown (public) corporation BC Hydro, serves over 95% of the province’s population (4.5 million people), and sources over 80% of its electricity from 30 hydroelectric dams. The rest comes from 3 natural gas-fuelled thermal power plants in the province and electricity imports from Alberta and the state of Washington.
BC Hydro was mandated in 2007 by the provincial government to achieve energy self-sufficiency by 2016, with 50% of the demand gap to be achieved through zero net greenhouse gas projects developed by private and public entities. In its 2008 Clean Power Call, BC Hydro issued a Request for Proposals (RFP) with the aim of sourcing 5,000 GWh/year of new, clean power. This will add roughly 10% to BC Hydro’s annual electricity generation, and provide enough power for 500,000 BC homes.
Several of the projects submitted included wind power development proposals from Independent Power Producers (IPP). In order to be included in the Clean Power Call, these IPPs were required to have Investigative Use Permits (IUP) for their project sites. Although over 135 IUPs have been filed for wind sites since 2002, only one wind farm is now in operation in the province, and 10 sites have made it through the latest phase of the Clean Power Call. 4 of these sites and their respective IUPs are owned and controlled by one of the companies we are initiating in this newsletter.
Four wind power regions in BC
With 75% of the province being mountainous, its geography presents certain challenges to wind farm developers. However, a 2008 wind power report by the UK-based independent renewable energy consultants Garrad Hassan identified four strong wind power regions in the province.
These four regions include Vancouver Island, the North Coast, the Peace River region, and the Southern and Eastern Interior. In terms of total potential onshore wind power, these four regions were ranked as follows: 1) Peace River region with 18.5 GW, 2) Southern and Eastern Interior with 9.5 GW, 3) Vancouver Island with 6 GW and 4) North Coast with 5 GW. In addition, the North Coast was estimated to have a potential for offshore wind power equal to 13.5 GW. This means that BC has wind power potential totalling 42.5 GW.
Assuming a very conservative capacity factor of 30% (many of these regions have capacity factors approaching 40%), this means that British Columbia could potentially triple its current electricity output (ca. 50,000 GWh per year) by adding 110,000 GWh per year of wind power.
The report also included a “general per project cost analysis for each region assuming some expected development and operational conditions.” Based on these findings, the Peace River region was considered to be the most economically advantageous of the four areas. At a Weighted Average Cost of Capital of 8%, the Peace River region’s all-in wind power cost was estimated to be in the range of $70 to $130 per MWh. This compares favorably with Vancouver Island ($90 to $170 per MWh), the North Coast ($105 to $215 per MWh) and the Southern and Eastern Interior ($100 to $195 per MWh).
This cost advantage was attributed to the Peace River region’s “very high forecast capacity factors…, as a result of high wind speeds”, and “due to the expected unidirectional wind regime.”
BC’s first wind farm
British Columbia welcomed its first fully operational wind farm on October 24th, 2009. Owned by AltaGas Income Trust, the $200 million 102 MW Bear Mountain Wind Park was completed on budget and ahead of schedule near Dawson Creek, in the southern Peace River region of British Columbia. Featuring 34 German-built Enercon E-82 wind turbines with a nominal capacity of 3 MW each, these 80 metre tall turbines were built in a single row along a ridgeline, covering 25 hectares, used for cattle grazing, forestry purposes, and oil and gas exploration.
Part of BC Hydro’s first Clean Power Call in July 2006, Bear Mountain Wind Park was one of three wind energy development projects to be awarded Electricity Purchase Agreements by the utility. Apart from Bear Mountain, EarthFirst Canada Inc.’s 144 MW Dokie 1 wind farm near Chetwynd was forced to declare bankruptcy halfway through the construction process on November 10, 2008, due partly to the global financial crisis and attendant financing issues. The third wind farm, Katabatic Power Corp’s 27 MW Mount Hays Wind Farm near the coastal city of Prince Rupert, is currently on hold, due to issues with turbine delivery and its environmental impact assessment.
Future Potential for Wind Power in BC
With only 102 MW of installed wind power in British Columbia (plus a single 1.5 MW wind turbine on Vancouver’s Grouse Mountain Resort, also installed in October 2009), it is easy to see that the province has tremendous potential for future wind power development. Taking into account Garrad Hassan’s assessment of the four wind regions, with an estimated onshore potential of 39,000 MW, British Columbia has a lot of room for growth.
In conclusion, wind power has the potential to be a major contributor to the planet’s future energy needs. Although its growth over the past 15 years has been nothing short of astounding, its potential for future growth remains a tremendous opportunity for investors. We showcase two exciting companies in this newsletter, one of them wind power related, and continue to do due diligence as we research additional opportunities.
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