Federal Money To Support Renewable Energy Is Welcome. Keep It Simple.
Posted July 29, 2022
On July 21st the federal government announced investments of $255 million in renewable power in Nova Scotia, of which $130 million is for batteries and the rest for wind projects. Some of the value is reduced by making the projects serve other agendas.
Prime Minister Trudeau was quoted as saying “Harnessing Nova Scotia innovation, and, yes, wind, we’re creating over 500 middle-class jobs across the province, we’re working in partnership with local first Nations communities and we’re delivering clean, made-in-Nova Scotia power to hundreds of thousands of homes.”
Memo to Prime Minister. We do not have 500 unemployed construction workers in Nova Scotia. We don’t have five unemployed construction workers. We just delayed the new art gallery indefinitely because demand for construction materials and labour is greater than the supply. Housing projects are being deferred for the same reason, though that is not to argue for delay in the wind farm projects
Memo to Prime Minister. Your program will not cause any more wind projects to be built. In February Nova Scotia announced a competitive procurement process for 350 megawatts of low-cost renewable energy. Up to five projects are expected to be selected from that process, which is scheduled to reach a conclusion next month.
Large-scale battery installations are valuable as stores of quickly available power when electricity generation drops from intermittent sources like wind and solar. This provides time for fuel-based sources to ramp up. The batteries can be recharged from fuel-based sources, imported hydroelectric power, or from intermittent sources when they are providing more power than can be immediately used.
The batteries, to be housed at four sites across the province, will expand the possibilities for employing intermittent sources of generation. The capital cost, having been covered, should not be charged to ratepayers. All good.
Less well spent is the $125 million for new wind energy projects. The program under which this will be dispensed provides up to $25 million per project. It does not require that projects meet a prescribed level of efficiency.
Majority Indigenous-owned wind energy projects are eligible for non-repayable contribution agreements of up to 75% of the total cost. For-profit entities can receive up to 10% funding, which will be repayable if they incur profits within the first five years of operation. In other words, this program is only for majority Indigenous-owned projects.
There is room for five of those. Once example, called Red Spruce, proposes 12 towers providing 76 megawatts of power. It would be built by SWEB development in conjunction with Glooscap First Nation.
SWEB specializes in supporting government subsidized projects. Under an NDP program they built many of the one and two-turbine projects, which were so cost-inefficient that NSPI had to pay six times the rates charged by commercial-sized projects of 30 or more turbines. Those higher rates, together with the cost of creating and managing the hookups, were passed on in full to ratepayers.
Projects such as Red Spruce are better than that, in part because the technology has become more efficient. To the extent that they are confined to locations controlled by First Nations the Indigenous-led projects may be less well situated than locations with the most wind. Scale matters. A project with 30 turbines will be more efficient than one with 12.
The support Indigenous projects are receiving from the federal government means that they will have to pay as little as one quarter of their project costs. By effectively eliminating any bidders without majority Indigenous ownership this undermines the tendering process goal of maximizing efficiency. Private sector projects will have no chance of being competitive if there are enough Indigenous projects to fulfill the 350 megawatt goal of the tendering process.
Nova Scotia ratepayers would have been much better served if the federal money was deployed in the same way as the money for batteries. Simply apply it towards paying for the winners of the even playing field auction process being managed by the province and give long suffering ratepayers a break.
Programs in support of Indigenous organizations are important but they should not promote inefficiency.
Meanwhile there is no visible progress on the Atlantic Loop, touted 22 months ago in the Trudeau Liberals’ throne speech. As time passes the likelihood of it being ready to do what is needed by 2030 diminishes. Having more wind projects and batteries to capture and store power is great. But there is no chance at reaching the emissions reduction goals for 2030 without the Loop.
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