HANSARD
Printed and Published by Nova Scotia Hansard Reporting Services
Mr. Sidney Prest (Chairman)
Mr. Howard Epstein
Mr. Jim Boudreau
Mr. Gary Burrill
Mr. Jim Morton
Mr. Leo Glavine
Mr. Andrew Younger
Mr. Alfie MacLeod
Mr. Chuck Porter
In Attendance:
Ms. Jana Hodgson
Legislative Committee Clerk
WITNESSES
Nova Scotia Power Inc.
Mr. Robin McAdam, Executive Vice-President, Sustainability
Ms. Pamela McKinnon, Director, Wind Energy
Scotian WindFields
Mr. Barry Zwicker, Chief Executive Officer
[Page 1]
HALIFAX, THURSDAY, NOVEMBER 18, 2010
STANDING COMMITTEE ON RESOURCES
9:00 A.M.
CHAIRMAN
Mr. Sidney Prest
MR. CHAIRMAN: Good morning. We'll call the meeting to order, and we'll begin with the introduction of our committee members.
[The committee members introduced themselves.]
MR. CHAIRMAN: We welcome everybody here this morning. We're going to have a full agenda. There has been a slight change - we are going to have the Nova Scotia Power witnesses go first and they will be followed by Scotian WindFields. We will have an hour for the presentation and a short time for a follow-up after, and I'd like to keep questions from the members to five minutes for the first round and, if time permits, we can go back again.
We have Mr. Robin McAdam and Ms. Pamela McKinnon as witnesses for Nova Scotia Power. We welcome you both here this morning and we'll turn it over to you.
MR. ROBIN MCADAM: Good morning. We certainly appreciate the chance to appear before the committee. It provides us with an opportunity to describe what's going on, and answer questions. I always feel like we don't do enough of this sort of getting out and talking about our business, so I appreciate the opportunity.
Just by way of introduction, Pam McKinnon, who is with me, is our Director, Wind Energy. I understand the primary focus of the committee in inviting us here was around wind matters. Pam has been involved in our wind initiatives for the better part of her career with the company, which is around 10 years at this point. Pam is also the recently appointed director of CanWEA, the Canadian Wind Energy Association. We're glad to have that representation in the industry body.
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My responsibilities are for renewables and development generally for the company under the title Executive Vice-President, Sustainability. I thought I'd just run through a few slides, and keep my introductory presentation brief so you have lots of time for questions.
Our focus has certainly been on fuel mix transformation over the last few years, so that's why you see that opening slide. So far it has been mostly about wind - we're very pleased with the dramatic increase in the amount of wind generation that has come on line in Nova Scotia. You can see we're going to be close to the 280-megawatt level by the end of March 2011, and what that means is that on a windy day in Nova Scotia, with just the recently added wind turbines, we could be receiving 15 per cent of our demand at a point in time from that resource. So that's quite a shift.
To just illustrate how much of a shift: going into 2009, which isn't that long ago, we would have had two-thirds of our energy coming from coal generation; a nice slice of natural gas coming into the mix - and that really had been the major change for the previous decade was incorporating natural gas, the Sable gas being available; hydro and tidal resources that we've had for some time; always some imports - but just getting into wind, of course there has always been some biomass at the Brooklyn energy plant associated with now the Bowater mill.
In 2002 we would have put up our first couple of wind turbines, sort of test units, one at each end of the province. Then there has been a dramatic change as we have gotten wind projects with a nice distribution across the province, and at this point in time I think that's showing about 325 megawatts of installed capacity, and that's changing every day with projects that are under construction - a dramatic shift.
Some interesting statistics here - this really puts us pretty much at the front of the pack if you measure Nova Scotia in terms of installed capacity relative to their total generation mix on a Canada-wide basis. New Brunswick and P.E.I. have obviously been busy as well, but we've gone from a low number to a completely different position on the national front.
Some of the specific projects - and I'm sure you're aware of these - we're partnered with RESL, a local development firm on the project by the Strait of Canso. It's just great driving down the highway to be able to see these turbines on the skyline, and that project has been on line since July. The Digby Neck project - all of those turbines are erected and your next guest, Barry Zwicker, was initially involved in the development of that project. I look forward to finishing off the transmission connection and bringing that project on line very soon.
Nuttby Mountain, another project initially developed by some local interests that struggled financially and we were able to develop in time to take advantage of the federal eco-energy credit that lowers the cost for our customers - that project, all of the turbines are
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now erected and we're just finishing the commissioning process on that. The slide is right up to date, the final three are up - there we go.
Of course Dalhousie Mountain is a great story. Reuben Burge, a local individual from near Salt Springs, worked his way through the financial crisis of a couple of years ago and persevered and brought that project on line, which is the largest wind project in Nova Scotia, a great tribute to a local entrepreneur's creativity and perseverance. Reuben is just a great guy.
Of course you've seen some coverage of the biomass project we've been working at on the Port Hawkesbury-NewPage mill site. We think this is quite an important initiative because we have an ongoing strategic initiative at the company of spending more of our fuel dollars in Nova Scotia, and we certainly have biomass here in Nova Scotia and that gives us a chance to inject money into the local economy instead of sending it to South America or the southern United States. You see the job estimates mostly in the woods, bringing that biomass to the plant. Of course the project supports the overall viability of the NewPage mill, but it will also support local hardwood industry as it makes it economic to get at some of the hardwood that is not economic to harvest at this point in time.
I want to emphasize that we've spent a lot of time thinking about the sustainability and the availability of forest biomass for this facility and making sure that it's harvested in a fashion that leaves the forest able to regenerate and so a big part of that is using only stem wood. I think it's also important to recognize that stem wood that is too diseased or crooked or knotty to be used for any other purpose - you obviously want forest products to go to the highest value market, but there is a lot of material that can be taken out of the forest so that a new, higher-value tree can grow and that's the focus of this initiative.
This is what we hope the tidal-test turbine looks like when it comes out of the water. That's what it looked like before it went into the water and you're seeing a lot of coverage of that in the media. I think people are wrapping their minds around that it's an R&D initiative, that it is going to take some time to perfect the design. We're really looking forward to getting the machine out of the water, learning what we can and getting an improved version back in the water as quickly as we can.
I would expect people are familiar with the renewable energy targets. I'll just mention a few things here. The 2011 target is largely being met with wind and then we've got plans in place for 2013 to change that mix a little bit to include biomass, as I talked about. In 2015 I expect the resource mix will be biased back toward more wind. We certainly appreciate that the government has a goal of 40 per cent renewables by 2020, and still working on strategy for how that will be met.
Certainly there are transmission initiatives underway. We have embarked on a very important reliability program that we're already seeing benefits from. Hurricane Earl did not have the same impact on our system as previous storms and so we're pleased that these
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investments are making a substantive difference. There is talk, as I listened to the radio, about subsea cables being built at some point in time, and that's true, there is talk. We, of course, have an agreement with New Brunswick to be working at expanding the inter-tie with New Brunswick Power.
The project that doesn't get much coverage is another important project from an energy efficiency and carbon footprint point of view and that's our Tufts Cove 6 Waste Heat Recovery Project. This 50 megawatts of capacity uses about half as much natural gas as a standard efficient gas turbine and so we're using the waste heat to drive 25 megawatts and then another technology for the other 25 megawatts. It's about a $70 million capital project that has been going on over at the Tufts Cove plant across the harbour and is nearing completion.
We're very pleased to be advancing the renewable initiative here in Nova Scotia. We have 1,900 employees in about 60 communities across the province. They're excited about being part of this renewables transformation and we're at an interesting time. Obviously we're a Nova Scotia-based company with our head office here. Emera's head office is here in Nova Scotia and I'm not sure people always remember all parts of the family are Nova Scotia based. With that introduction, I'm happy to take questions from the committee.
[9:15 a.m.]
MR. CHAIRMAN: Mr. Younger.
MR. ANDREW YOUNGER: Mr. Chairman, I apologize for walking in a couple of minutes late. Of course we've met, and I know there is only about five minutes, so I will be very quick. Grid capacity - this has come up a couple of times, especially with the new renewable energy targets. When you have small wind farms or if it goes to biomass or geothermal solar or any of these renewable energy sources, they obviously need to tie into the grid. Where are the weaknesses in the province in terms of grid capacity to accommodate that?
MR. MCADAM: I wish there was a very straightforward, brief answer to your question. The grid has been designed to deliver power to customers and most of our power generation capacity is biased toward the eastern end of the province. So it has some capacity to absorb new projects on a province-wide basis without much upgrading, but you really have to look on a project-specific basis and look at the load and load patterns in a particular area. The operation of the transmission system is complicated and so there is specific technical study required for any significant amount of generation that's being proposed.
MR. YOUNGER: Mr. Chairman, that's certainly fair enough, and one of the reasons I think about that is because where are you going to locate - especially wind farms, you obviously want to be in an area where the wind is there, so you don't want it around lots of tall buildings, and the grid tends to be around buildings or industrial sites.
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In the past couple of days, interestingly enough - I think it's probably because the EA has been submitted for the Hampton Wind Farm on North Mountain, and there has been some discussion as to whether that wind farm even has a power purchase agreement with Nova Scotia Power. As I understand it, there isn't a new RFP going out imminently. Can you confirm or deny whether that project has a power purchase agreement?
MR. MCADAM: That's certainly no problem. It does not have a power purchase agreement and our understanding is that the government is taking over responsibility for procuring power from independent power producers. That was announced in the new renewable energy plan and enacted in the recent revisions to the regulations, so I think the steps that are involved are that there will be a new procurement agency set up by the government and the government will subsequently issue an RFP for requirements to help meet the 2015 requirement. That is another 5 per cent.
MR. YOUNGER: The last question I wanted to ask, which I think is probably timely since the FAM rate announcement apparently is coming around the same time as the rumoured Churchill announcement at 10:30 a.m. There have been a number of people who have suggested that power rates would decline as a result of renewables coming onto the grid and my belief has always been - and really I just want to know if I'm right or I'm wrong on this - that you're not going to see power rates actually decline, but the goal of renewable energy would be to stabilize power rates over the long term, understanding that fossil fuel-based fuels - I think one could reasonably assume would continue to increase over time, perhaps dramatically. Do you have any thoughts on that?
MR. MCADAM: I think you've fairly captured the way we see it. When you build new capacity, it's more expensive than using old capacity. So the renewables program that we've embarked upon here - I think the number that has been publicized is that we expect this to produce an incremental impact of 1 per cent to 2 per cent annually for customers while we're meeting these renewables targets. So the hope, or certainly the fact, is that those will be more stable prices, and presumably fossil fuel prices will overtake the cost of those renewables in time. That has been the history of steady escalation of fossil prices.
MR. CHAIRMAN: Any more questions? Mr. MacLeod.
MR. ALFIE MACLEOD: Thank you, Mr. Chairman, and welcome to our guests. With the talk of this potential undersea cable coming from Newfoundland and Labrador, as things move on today, it would appear to me that there's probably only about three logical sites where it would land. One would be Lingan, Point Aconi, or Wreck Cove. If that line comes to one of those areas that will mean that we would see increased transmissions lines between there and other parts of the province.
My understanding right now is there is a concern about the ability to transmit power if it comes from a wind energy site from Cape Breton to other areas because not enough transmission capacity. Am I in the right ballfield?
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MR. MCADAM: Because we have so much generation at that end of the province, when you add more generation, greater line losses occur and you have system operating contingencies that you have to take into account. If you lose those transmission lines across the causeway, if they go down, that's a huge impact on the system. Those are the issues.
Over the long term, we would expect that there's less energy coming from the coal-fired facilities at that end of the province. That's really what needs careful examination is how that will all work over time.
MR. MACLEOD: I believe if your own statement of where you are as a corporation, coal generation will be a part of your life for the next 25 to 35 years or longer because of the simple fact it's hard to get other sources. I think you missed my question. My question was, if the deal comes together today, which there is all kinds of hype about right now, I know you can't say too much until whenever, it most likely will land in Cape Breton, the power transmission for this Churchill Falls project. Will that create a demand for Nova Scotia Power to increase its transmission lines from Cape Breton to the other parts of the province?
MR. MCADAM: I apologize for not hitting the question head on. I don't think we know enough yet. As Nova Scotia Power becomes engaged, there will have to be a specific study of the transmission system to understand the impacts and the options. I think there will be detailed study by the system operator of that very issue. It's a question we haven't answered yet.
MR. MACLEOD: So that's a definite maybe.
MR. MCADAM: I think it will depend on where it lands and what shape the energy flow has, where it's going to be consumed, the predicted future of other facilities. It depends on all those things.
MR. MACLEOD: I'll change my tack for a second then. Is there, when someone is looking at doing a wind project, is one of the criteria, does it have anything to do with its distance away from a transmission line? How far does your company, your resources, believe is feasible to transmit wind energy to an area where there's a major transmission line to get the power on the grid? I've known several projects in Cape Breton that have been working very hard to come forward. I've been told that transmitting the energy eight kilometres is too far, is what they were told. Yet, the same operator that's proposing this has been doing projects in the U.S. and transmitting power for 60 and 80 miles and not had an issue.
I'm wondering is it the lack of capacity of the transmission lines in Nova Scotia Power or is there a real issue of transmitting power for eight kilometres to a transmission line?
MR. MCADAM: It's difficult to speak for the independent system operator about specific circumstances, but let me talk about some general principles. The developer typically
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has to include the cost of getting to the transmission system in their project. So the closer they are, the lower that cost will be, the further away they are, then that adds to that cost.
In addition to that, we have a standard set of principles that are applied around system losses, and losses are greater when you add transmission at the eastern end of the province than they are when you add it to the western end of the province for example, so there is a set of figures that gets applied that disadvantage projects at the eastern end of the province because there is so much generation there already.
MR. MACLEOD: So if I'm following you - and please correct me if I'm wrong, because I've been wrong before, you can ask my colleagues - even if the proponent is willing to take on the cost of transmitting the power to the transmission lines that are in place, there is no guarantee that's enough because they're not able to transmit it even if they can get it to the system, is that what you're saying?
MR. MCADAM: There is always a way to transmit it, but is it as economic as what other proponents might be bringing forward with a different location? There is always a way to do it.
MR. MACLEOD: Again, it is my understanding that the proponents of this particular project were told by Nova Scotia Power that they were too far away from the transmission lines. It has been very hard for them and for me to comprehend that, knowing some of the other factors that go with that.
MR. MCADAM: We'd be happy to spend more time with that particular proponent and yourself and look at the specific situation - we'd be happy to do that, and we appreciate your raising the issue.
MR. MACLEOD: I appreciate that and I would like to take you up on that offer.
Mr. Chairman, I think my five minutes are up. Thank you.
MR. CHAIRMAN: Mr. Glavine.
MR. LEO GLAVINE: Thank you for coming in today and giving us the opportunity to ask some questions around Nova Scotia Power and, in particular, wind energy is a major theme this morning.
In the case of Digby Neck, you took over a project that was in process there, so you probably weren't engaged in any local consultations and so forth - because it wasn't without controversy, as we know from a number of the local residents - do you do any kind of follow-up, especially where you became a partner during the process of developing that project?
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MR. MCADAM: We've certainly been in unusual circumstances becoming involved with projects that were partway developed, and we have worked hard in those circumstances to have consultation or advisory committees in the community and work with those to make sure that we understand people's concerns, and work very hard at getting information out - so quite a significant effort in that regard. I appreciate the tone of your question or suggestion that we need to be looking at these things now that they're coming to completion, and determining what we can learn and making sure that is done as effectively as possible in future projects.
[9:30 a.m.]
This is a new undertaking. The people of Nova Scotia don't have that much experience with wind and so there is a lot of education to get out and a chance for people to get exposed to the industry and understand what it's about.
MR. GLAVINE: So then if Nova Scotia Power were signing off on a project tomorrow, would you engage in a consulting process with local communities, as far as the kinds of impacts that it could have and all of the precautionary elements that need to come into place? We all know, of course, the impact of sound from the turbines is a very real issue and so I'm just wondering, do you have, as a company, a policy that would say, yes, we would meet with local people, not as a reactionary thing but as a natural part of the process?
MR. MCADAM: Absolutely, and the environmental approval process of the province requires that you show that there has been consultation, so that's absolutely required.
I think you're suggesting that needs to be done as well as possible and that's something we can always learn how to do better, and we are trying to learn and do it as well as possible. We appreciate that input.
MS. PAMELA MCKINNON: I'd like to add something to that.
MR. CHAIRMAN: Sure, go ahead.
MS. PAMELA MCKINNON: With the Digby project, since you specifically raised it - we purchased the project, but Nova Scotia Power did have quite a community engagement process, particularly on the environmental and the sound side of things, once we did get engaged. In the environment assessment release that the province issued there's a requirement on Nova Scotia Power, or the owners of the project, to undertake a sound- monitoring program for once the turbines are erected. As part of our study during the pre-construction and the construction phase we've done quite a bit of sound testing, using various consultants.
At the Canadian Wind Energy Conference, about two weeks ago, I wasn't at the session but I heard afterwards that Nova Scotia Power was used as an example on how to
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engage the community on sound, how well it had gone with a contentious issue and how it had been dealt with in an appropriate manner - it was actually part of one of the presentations, our efforts on that project nationally.
MR. GLAVINE: So you talk about sound testing, sound monitoring - are there, currently, guidelines in Nova Scotia of sound levels that should not be exceeded in relation to distance from homes?
MS. PAMELA MCKINNON: There are sound guidelines under certain Acts, but not specifically related to wind turbines that I'm aware of.
MR. GLAVINE: As we expand wind energy in the province, do you think the province should have guidelines that do give people that comfort of knowing that there won't be any health implications and so forth associated with wind turbines? I mean it's something that we know has to be part of our energy future but also, to me, having guidelines would make very, very good sense to do.
MS. PAMELA MCKINNON: Certainly sound needs to be dealt with, and the way it's being addressed now is through the environmental assessment process. On the Digby project, specifically, a number of turbines were moved to accommodate concerns in the EA process, so sound does need to be addressed from an industry perspective. If the rules of engagement are clear, that's always a good thing.
MR. GLAVINE: Thank you very much, Mr. Chairman.
MR. CHAIRMAN: Mr. Morton.
MR. JIM MORTON: I want to go back first to one of your slides in which you talk about generation in 2009. Just for my understanding, you said 5.2 per cent of generation capacity was imported in 2009 - can you say a little bit more about that, what are you importing?
MR. MCADAM: It would come from a variety of sources. It obviously all comes from the direction of New Brunswick. We would seek opportunities to buy power when it is at the lowest possible cost, so when somebody is putting power on the market at lower costs than we can make it, we'll buy it instead of making it. It could be coming out of New England or New Brunswick or Quebec on any given day.
MR. MORTON: So in essence you're buying electricity in that category, as opposed to another fuel source.
MR. MCADAM: Yes, absolutely, we're buying electricity that would come across the New Brunswick tie.
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MR. MORTON: Am I correct that your tidal capacity is restricted at this point to the Annapolis Royal generation - is that where that would fit?
MR. MCADAM: That's exactly what is represented there, yes.
MR. MORTON: I guess I'm interested, too, and I don't know to what extent you have an understanding of this, the current state of municipal legislation with regard to wind farms - to what extent is that an influence in where you are placing towers at this point?
MR. MCADAM: I'll maybe offer some suggestions, and Pam is closer to this issue than I am, but municipalities are becoming involved and it's something that we are keeping an eye on.
I guess I would just want to provide a note of caution that the province does have an EA process that looks at each specific project and assesses the impact of that proposed project. I think what you need to do is do project-specific assessments, because the appropriate setback - there's a lot of talk of a uniform setback requirement - is very situation - specific and if you have a sweeping setback in a municipality they can legislate their way out of business in effect, they can make it very difficult for wind developers to do things and do that in a circumstance where the local residents would perhaps still be quite comfortable because they're upwind, they could be closer, or because there isn't a clear line of sight with the project - you know, sound doesn't travel around corners very well. We're watching to make sure that they appreciate that you need site-specific assessments.
I don't want to go off line with your question, but I thought it was important as we talked about the Digby project and Barry Zwicker is here. Barry spent an awful lot of time in Digby working with the community and did an outstanding job working with landowners in the early going , and that was all complicated by the number of parties that were involved. It made it hard for the community to understand the status of the project, but I certainly have to credit the job that Barry did with that community in making information available. Sorry, to provide that tangent.
MR. MORTON: So just to follow up on that a little bit, is your company fairly involved with municipal governments around these discussions - is that a routine part of your work?
MS. PAMELA MCKINNON: Some more than others. We've had discussions with Annapolis - Annapolis has a bylaw process underway; we've had discussions with Guysborough, and they have a planning strategy underway - they have an existing wind bylaw in place and a planning strategy that may impact on that bylaw; the HRM has an active process and we've been engaged in that as well; and over the last few years, Richmond, we've had some consultation process on their bylaws.
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MR. MORTON: I know Kings County has a planning process in place, too. I don't know, have you been involved in that?
MS. PAMELA MCKINNON: I personally have not, but Jessica Baxter from our government relations group has been involved with Kings County.
MR. MORTON: Apart from the locations in Digby, looking at your map, there are no towers in place in the Annapolis Valley at this point - are there plans that you have for any future installations?
MR. MCADAM: We would like to see wind at the western end of the province because of the efficiency of the way the grid works, and there's a pretty good resource in parts of the western end of the province - so we would like to see that. It's premature for us to be talking about specific locations, but we would certainly like to see that.
MR. CHAIRMAN: Mr. Epstein.
MR. HOWARD EPSTEIN: Thanks for the presentation. It was very interesting. In looking at some of your slides, it's pretty clear that there has been a big leap in installed wind capacity between a decade ago and where we are now. I'm looking at your figures for installed capacity - about 230 megawatts, 240 megawatts - and I'm wondering, of those various locations and of that capacity, what is actually owned by Nova Scotia Power and what is owned by independent power producers?
MR. MCADAM: Let me take a stab at some math here. Once the Shear Wind project is on-line, fully on-line, and that takes us to the 275 megawatt, 280 megawatt level, of that Nova Scotia Power has three projects of note - which is 30 megawatts at Digby, 45 megawatts at Nuttby Mountain, and 11 megawatts as a minority interest in the RESL Point Tupper project, so mental math takes me to about 86 megawatts out of the 280 megawatts. I don't know if I can do a fraction calculation, but that means we're about 35 per cent or 40 per cent, something of that nature.
MR. EPSTEIN: I have to say I haven't followed this in detail, but it seemed to me that Nova Scotia Power became involved in these different projects when the original proponents, who were I thought IPPs, got into some financial difficulties or other problems - is that accurate or is it not accurate? I guess another way to ask it would be whether Nova Scotia Power is, of itself, seeing itself in the business of initiating wind projects or whether your intention is simply to buy from independent power producers?
MR. MCADAM: Two parts to your question. The Nuttby Mountain project was a project that was in receivership and we waited for some time to see if somebody would buy it and they did not. We were concerned that the federal eco-energy funding money would expire and the ratepayers would lose that opportunity, so that's why we became involved in that project. It was a similar story with the Digby project - one of the owners, SkyPower,
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which was owned by Lehman Brothers that went bankrupt, went into receivership. Again, same concern, a good project and we didn't want to see the opportunity to get the eco-energy funding missed, so proceeded with that project.
The RESL project struggled with financing and, because we provided a guarantee as well as taking a minority position, that made the project effectively smaller for them to manage and we provided a loan guarantee for the rest of the project - that made that project viable so it still could proceed.
What has become apparent through this is just that the wind industry, and the power industry in general, is a capital-intensive industry. It takes a lot of money to put up a wind farm or any kind of generation facility. An advantage we have here in Nova Scotia of having a regulated cost-of-service utility is that we have an entity that can access capital on reasonable terms that flows directly through customers as a savings. So the Digby and the Nuttby projects had both been bid in at about the $95 level on PPAs and we put them in front of the Utility and Review Board at about the $85 level, so even though these were projects that nobody wanted to do at $95, our cost of capital enabled us to do it for $85. We just have that advantage, recognizing it's a business where economies of scale are important.
[9:45 a.m.]
We were able to go and borrow 30-year money at 5.61 per cent not that long ago - very attractive financing terms. People have trouble getting that term of financing, worry about getting at that rate. Some of you will be familiar enough with how our regulatory construct works, but interest costs become a direct flow-through - whatever we pay in interest is what customers pay, and if it turned out that we were able to subsequently borrow money at even lower cost, that benefit flows through to ratepayers. Interest cost is a pass-through, just like fuel for our company. That's the benefit of having a regulated cost of service utility, you can get money in a capital-intensive business.
You had asked, do we intend to be a wind developer? The government has put forward the 2015 regulations and we have an allocation, I think, of about 300 gigawatt hours under those regulations. We would expect we would fulfil that allocation with about 100 megawatts of additional wind. So we're looking at finding the best sites across the province at this point in time, to meet that allocation.
MR. EPSTEIN: So the answer to the first part of the question was yes, my impression was correct, that so far you've really become involved when some of the IPPs - Independent Power Producers - got in financial trouble but you do anticipate that you'll be developing some projects of your own.
MR. MCADAM: Yes. What we're worried about is if we didn't develop those initial sites that they would get bid into a subsequent RFP at an even higher rate and so while they'd been bid at 95, nobody wanted to develop them at 95. They're good sites but we could see
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them coming back at an even higher level so we wanted to save those sites and get them in at a good cost for customers.
MR. EPSTEIN: The next thing I wondered about was when it comes to wind, the existing capacity in the province to actually supply the components of the turbines - the blades, the shafts, the turbines, the motors themselves. I'm wondering what exists right now in Nova Scotia and what you see coming and clearly, when I ask that, I'm thinking about the Daewoo plant. I'm wondering whether Nova Scotia Power has started to talk with them and to what extent you are sourcing or you see the IPPs sourcing in Nova Scotia. Can you tell us where the existing turbines have come from and where you see this going in the future?
MR. MCADAM: Yes, it's quite an important topic because we don't want to be importing those components. We'd prefer to see them coming from local sources. On two of the three sites that I mentioned we're involved with, the turbines are supplied by a German-based company called ENERCON. To ENERCON's credit, they've set up their Canadian maintenance headquarters here in Halifax, actually, on the Dartmouth side of the harbour. It's something that hasn't received much coverage but they currently have, I think, between 40 and 50 people in that facility and expect it to grow to 100 very soon. That's been nice to see that activity land here in Nova Scotia as a result of ENERCON's participation in the market.
We've had extensive discussions with the DSME folks and we have a letter of intent with them that commits us to incorporating the blades and towers that they expect to be producing at that plant into projects that we're involved with in Nova Scotia. They have to meet competitiveness criteria and quality criteria. We have a long association with the community of Trenton and, as I said, our strategic plan is to maximize Nova Scotia input in our fuel mix and wherever we can. We want to work hard with those folks to add value.
There is another local turbine company that I'd suggest you ask Mr. Zwicker about because I think he is more familiar with them than we are but there's also one other company that makes smaller wind turbines here and that's quite an exciting initiative.
MR. EPSTEIN: I'm certainly glad to hear that you're having talks with Daewoo. Can you tell us anything about timing, time horizons on that? When do you expect that you might be able to be purchasing from them?
MR. MCADAM: Well again I think it's related to the 2015 requirement, so I expect to see windmills going up in late 2014 and 2015, in anticipation of the 2015 requirement and have them involved.
MR. EPSTEIN: Sorry, I've taken too much time, my apologies.
MR. CHAIRMAN: Mr. Jim Boudreau.
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MR. JIM BOUDREAU: I'll give you my time, not a problem. I have just a few questions, one in particular sort of leads off a question that Mr. McLeod asked and that's regarding development. You indicated in your talk that the eastern end of the province is not the preferred area for development, so I'm obviously interested in the area that goes sort of from the Canso Causeway up to Halifax. There's a significant void there with regard to any existing wind power. I wonder, is there anything in the works or any thoughts for that area?
I know you indicated that you've been talking to the Municipality of Guysborough with regard to their bylaws and their planning strategy. Can you offer any comments on plans for the future?
MR. MCADAM: Your interest is more on the South Shore and there is a void along the . . .
MR. BOUDREAU: The Eastern Shore.
MR. MCADAM: Yes, the Eastern Shore. We are getting a cluster of projects between Canso and Halifax on the other side of the province there because of its proximity to the transmission system and because of the excellent wind resource that's there. That's what has been going on there. There is an advantage because of the backbone transmission system going down that side of the province.
MR. BOUDREAU: Okay. Again, I'm sort of wondering, are there any plans for - as you said, there is a weakness there, but is there anything in the works? I do know that you folks have a hydro project in the Sheet Harbour area, so there are some transmission lines going out of there. I know there has been some interest in the Sheet Harbour area with regard to private individuals, to put up some wind towers, but I haven't heard anything as of late. I'm interested in the topic from where Mr. MacLeod is talking about too.
MS. PAMELA MCKINNON: There is a small distribution project going into the Sheet Harbour area that we have a power purchase agreement with. We actually expect to see that sooner rather than later, but I don't know exactly when they're going to put the turbine up.
I think with the county in general getting the wind bylaws amended, right now it's very difficult for a developer to go into the community because . . .
MR. BOUDREAU: Absolutely.
MS. PAMELA MCKINNON: The lots are spaghetti shaped and it's set back from a property boundary, so it's just . . .
MR. BOUDREAU: Impossible.
[Page 15]
MS. PAMELA MCKINNON: Right.
MR. BOUDREAU: I've had this talk with them.
MS. PAMELA MCKINNON: That's the first step, I think.
MR. BOUDREAU: Okay.
MR. MCADAM: Our criteria are very straightforward, though. We're trying to minimize cost to customers and so we look for the windiest sites. It's very simple when you're a wind prospector. Mr. Zwicker would support this. You look for the windiest sites that are farthest from the houses but closest to the transmission system. That's how the prospecting goes.
MR. BOUDREAU: I'm assuming we have some of the windiest sites along the Eastern Shore. We certainly have the distances between houses, I can attest to that. The transmission lines seem to be the major problem then, from what I'm hearing.
MR. MCADAM: It would be. If transmission has to be built to get that power to the system, then that becomes an added cost. You hope the wind is extra strong to compensate for that. That's the trade off.
MR. BOUDREAU: Just another financial-type question. It sort of goes from Mr. Epstein's question, sort of leads from that. With regard to the commitment of yourselves in getting involved, because my understanding was similar to what Mr. Epstein had indicated and what you confirmed with regard to your involvement up to this point. For those of you who might remember a show called Front Page Challenge, I'm going to ask some kind of questions similar to Gordon Sinclair. What's your overall budget with regard to sustainability and how does that relate percentage-wise to the overall budget of Nova Scotia Power - like percentages?
MR. MCADAM: Well, I do remember Front Page Challenge and Mr. Burton and his bowtie and Mr. Sinclair - colourful characters - and I won't be able to match them in responding. So if we take this year as an example, we've executed the largest capital program that any of us can remember within the company, and it has been about $575 million that we've spent this year within the utility - so a big number. About half of that would have been on wind farms this year. Now this, of course, was a busy year because we were scrambling to get everything done before the federal equal energy credit expired.
Now, next year will be completely different. There won't be significant wind construction going on until 2013-14, but we are embarking on the NewPage site biomass project and so over the next couple of years there's $100 million to be spent at that site as that project comes along. I think our total capital budget is expected to be in the $300 million range for the next couple of years, in round numbers, but what drives that is really meeting
[Page 16]
the regulations. So we will spend whatever it takes to meet the government's renewables regulations, mercury regulations, CO2 reduction regulations. We're very happy to invest in Nova Scotia and we've been doing it under big dollars.
[10:00 a.m.]
MR. CHAIRMAN: We're going to have to move along because we're running out of time.
MR. BOUDREAU: I've got a couple other, I'll go the second round.
MR. CHAIRMAN: Mr. Burrill.
MR. GARY BURRILL: Could we double-back to talk about biomass for a second? I have a naive, practical question. This point you speak about seems to be awfully important as people think about the project, that the project is not directed toward otherwise merchantable wood. Could you speak some about how, in fact, on the ground this is accomplished? In other words, it would preclude say clear-cutting a block exclusively for biomass because there would be no means of making that sortation. So could you say anything about how practically contractors will be able to get otherwise unmerchantable wood separated out?
MR. MCADAM: This will frighten real foresters, for me to venture into this area, but they have had me in the woods and what you see piled up at roadside are different piles of products. So there will be a pile of sawlogs, a pile of pulp logs, and a pile of other stuff that is the diseased, knotty, crooked material. So the contractors are absolutely doing that kind of sorting and they'll have a forestry management plan that is imposed on a particular block of land that they're harvesting. Typically you would only harvest biomass when you're in the forest getting higher-value products because the economics of just harvesting biomass don't stand up. So you'll be in there getting a higher-value product and at the same time, say, let me take this crappy tree and I'm glad I've now got a local market for it. There has been a market for this biomass. We've been supplying Denmark's power industry with biomass, with about 400,000 tons a year of biomass, out of Nova Scotia. So now people can take that biomass and see it consumed for exactly the same purpose here in our own province.
MR. CHAIRMAN: Mr. MacLeod.
MR. MACLEOD: A short snapper, I don't think that was on Front Page Challenge, I think that was another show. I guess my concern is, or my belief is, Cape Breton Island produces the majority of power for the Province of Nova Scotia. The first major biomass project that you're looking at is coming to Cape Breton Island. We are talking about an undersea cable that may land - and if it doesn't I'll be shocked - somewhere on Cape Breton Island because of economics.
[Page 17]
My question is, if we have a problem with transmission lines, if we bring in this new power grid from Newfoundland, that will mean you'll have to revisit where you are with transmission lines and how to move that power. Will you be taking into consideration - or you should be taking into consideration - additional capacity for wind power? Because we have some major projects that I believe are being held up because of the fact that we supply so much power on Cape Breton Island already. So we're being penalized when it comes to the ability to have people invest money on the island to make wind projects work because of a lack of transmission lines with Nova Scotia Power.
I would hope that when Nova Scotia Power moves on and is doing their long-range planning, that they will try to take away this penalty from the part of the province that has been so good to supply power, and has been a major portion of the power supply for this province for so many years. There are people who want to invest money on Cape Breton Island in wind energy. There are people who are already there who are producing wind energy and are having trouble finding ways to get it into your grid. Here we have what I believe is an opportunity to correct what I feel - and it's my opinion - what I feel is a wrong. We have people who want to invest on Cape Breton and can't because Nova Scotia Power doesn't have the capacity to take that product that they want to produce off the island. Yet we produce 67 per cent of all the electricity that's needed to keep the lights on everywhere else. So that would be the end of my - it's more like a statement than a short snapper.
MR. MCADAM: I appreciate your marketing zeal. You've got a big market share and you want to grow it and any good marketer would.
MR. CHAIRMAN: Mr. Glavine.
MR. GLAVINE: We've got the Cape Breton Post commentary for the day there, Alfie. I was wondering where we are in terms of power production and growing demand or are we in a steady stage? How do you look at the next 10 years? I would make my commentary in that I would think - and I'll be surprised if I hear differently - that we're still increasing demand in Nova Scotia. I feel we've done an abysmal job around conservation as a province, as a people. Not picking on Nova Scotia Power here, because you're in the business of wanting us to have high demand, I'm wondering where we are in that in the next 10 years, in the next decade.
MR. MCADAM: The agreed official forecast is for flat or declining load and it's proving out that the energy conservation programs that people are funding - and there's always debate about funding those - are working as planned. Our total load, year over year, is proving to be essentially flat. It's sort of our biggest forecasting challenge right now to kind of guess whether that will continue, whether those programs, as the government is taking them over, there was a plan for the funding to increase to those programs, and so there's a thought that that could result in an actual decline of load. So that's where our expectation is - that that load will not be growing, that it will be a flat or declining.
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MR. CHAIRMAN: I guess our time is running out, so we'll give you a few minutes for your final summary of your presentation, if you please.
MR. MCADAM: I can be very brief. We just appreciate the opportunity to meet with the committee and are happy to come back, whenever you feel the need, and talk about other aspects of our business and would certainly offer - individually I know we've made some commitments on follow-up here today to talk about specific things but I'm happy to chat with any of you or your colleagues about our business at any point in time, so we just appreciate the opportunity. Thank you.
MR. CHAIRMAN: Thank you very much.
Maybe we'll take a five-minute break and then we'll have our next witness.
[10:07 a.m. The committee recessed.]
[10:13 a.m. The committee reconvened.]
MR. CHAIRMAN: Okay, we'll get our meeting back to order. We have roughly 47 minutes, so we've lost some time of our next presentation. We'll start with the introduction of the committee members.
[The committee members introduced themselves.]
MR. CHAIRMAN: We have as our next witness, Mr. Barry Zwicker from Scotian WindFields, so we will let Mr. Zwicker make his presentation. We will have a question and answer period and we will stress five minutes for questions; otherwise, we're going to be running out of time.
Mr. Zwicker.
MR. BARRY ZWICKER: First, thank you for the invitation to come. A little bit of background about myself and our company. I am the President of Scotian WindFields Inc., and we started as an operating company in January 2007. I believe it was late in 2007 that I was actually here giving you a brief presentation about who we are, what we are and where we are headed. What I found the other day were the notes that I had from that 2007 presentation and a lot of things have changed - a lot of them for the positive, which is good.
[10:15 a.m.]
A little bit about Scotian WindFields. If you see anything - a letterhead or a business card from us you'll see that we describe ourselves as a community-based company. What that means in our context is that all of our shareholders are Nova Scotians and, in particular, eight community wind fields - six of which are CEDIFs, formed under the CEDIF program
[Page 19]
through the Department of Economic Development and financed in Nova Scotia - make up about 35 per cent of the ownership in our company, which collectively means about 700 families in Nova Scotia indirectly are shareholders now in Scotian WindFields Inc.
We were formed at the request of those local wind fields to basically bring renewable energy projects to Nova Scotia, and we've been trying to do that since our start-up in 2007. Robin described our involvement in Digby, there's a good news story there and a not so good news story as far as our involvement is concerned, but the bottom line is the project is close to being commissioned. It's a great project, we knew it would be a great project and we're still a part of it. We still have an interest in that project and we look forward to it running for many, many years. That part's good.
What I want to talk to you about a bit this morning is how our company has grown. The request was, what's the state of the union with respect to small, independent power producers in Nova Scotia. I can tell you that if Scotian WindFields Inc. had to rely on the revenue that it makes from its wind projects, we would be out of business. Since 2007 we've diversified and we actually have three other companies that generate the revenue that keeps us alive and able to continue to participate in the wind business.
We have a company called Scotia Renewables, we have another company called Doctor Solar and we have another company called Scotian Carbon Services. Scotian Carbon Services provides consulting services to companies who wish to understand their carbon footprint and work towards reducing it. We have a number of significant Nova Scotia companies, like Stanfield's, who are one of our clients on that. We have other clients who are actually from outside of Nova Scotia, outside of Canada that we're working with to help them deal with and understand their carbon footprint.
Around 2008, we got into the hot water solar business through Doctor Solar. It's a company that has been around for 20-odd years. They use technology that is built, manufactured in Dartmouth, Nova Scotia through Thermo Dynamics, who we have partnered with to supply all of our equipment. In the first half of 2010, we've done $1 million worth of solar work - providing hot water solar systems to major businesses, major residential units, condos and apartments and single family and two family housing units. That was the reality of being in the renewable energy business. As my friends from Nova Scotia Power have indicated, wind business is an extremely capital-intensive program.
Not only is it capital-intensive, there's a long time from the fact that you think about a project to the time you actually see revenue. The Digby project, as an example, was something we started in February 2007, it's now going to be December 2010 when it gets commissioned. That's the kind of time frame. That's not a long time frame, that's a realistic time frame from start to finish on a single project like that.
What we have done is ventured out into some other areas to try and provide renewable energy into the Nova Scotia system. One of our primary business objectives for
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existing in Nova Scotia is to increase the amount of renewable energy that's consumed in Nova Scotia. We're doing that partway through things like the Digby project. We participated in the distribution RFP that was out awhile ago, we have three of those projects, 6- megawatts in total. Two are in Cape Breton, one is in Annapolis for which we have permits and are ready to roll. We will be participating through our CEDIFs, in the Community-Based Feed-In Tariff, in a very large way when we get through the URB hearings and finally get a rate set on that.
We are participating with a number of other businesses to provide them renewable energy at their sites. The best example I have today is the Superstore down in Porters Lake. If you go there, you will see there's a 100-kilowatt turbine erected behind that store and we provide them about 35 to 40 per cent of their energy through that turbine. We've been selected by Michelin North America to provide them with 12- megawatts of renewable energy on their site in Granton.
The interesting thing about these companies is that they've seen the light from a couple of different perspectives. No matter how dedicated you are from an environmental point of view, we all know the right thing for Nova Scotia to do is to continue to reduce our reliance on fossil fuels in terms of generating electricity. The right thing with respect to fossil fuels is to stop burning it, for any purpose, and use it for all the other purposes that fuel would be good for. That takes time. We're working down that timeline.
I can tell you without a doubt the Loblaws of the world and the Sobeys of the world, who are two of our big clients, have seen that. However, if it didn't make economic sense, they're not about to put all of their ultimate sales revenue at risk, or go down that road. So they've entered into power purchase agreements with us to provide long-term, renewable energy on their sites, where the sites are capable of handling it: (a) that there is wind, (b) that their land is big enough, (c) that we can get a municipal permit to put these things up.
You'll see that we're putting two more up for Sobeys very shortly. There are six more coming for Loblaws and there are 12 megawatts coming for Michelin. From a small, independent power producer like we are, when we chew off a project like Michelin, in round figures that's a $30 million project. We have to raise the capital to do that and that's what we're into now.
When we saw the draft renewable energy policy that came out and the ultimate legislation, we thought this was wonderful stuff, and it truly is. It's a step for Nova Scotia that we haven't seen for a long time and it will go a long way in helping to improve and increase the renewable energy that we have. Like any legislation, there are a couple of things that we think you still need to tweak, you still need to spend some time dealing with it. One example is that example I just talked about, in terms of the turbine that is down in Loblaws. When we put those on these stores in the future, it will be coming through the Enhanced Net Metering program that is coming out of that.
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For some reason, within the legislation, the legislation is suggesting that all the renewable energy credits, or carbon credits or whatever you want to call them, get attributed to Nova Scotia Power - not to us, not to the client. There are no funds from Nova Scotia Power going into any of those projects. Why the legislation would suggest that those renewable energy credits get credited to Nova Scotia Power is beyond me. It is something to look at.
I think the other thing that has to be looked at with the great policy of going through this is there is no economic policy coming out of the government to support that, an economic policy in the sense that we're looking at communities to deal with the community feed-in tariff. Half of the large wind farm development that's going to come in the future will come from independent power producers.
Try going to Nova Scotia Business Inc. and suggest that you need to look at a loan guarantee in order for a small company like us, a start-up company from Nova Scotia that has only been around since 2007 - I think Mr. McAdam hit it on the head. Nova Scotia Power can borrow money a whole lot cheaper than anybody else can. They have the ability to go to the URB to raise rates so that they can maintain their credit rating, so they can borrow money at a cheaper rate.
It's impossible for a private company to compete with that, absolutely impossible. If we want to continue to build the industry, which think we do - I think that's what the legislation is saying, that we need independent power producers - we also need some economic policies in place to help support them. I'm not just saying that for our company, there are others out there that would fall into that same category.
I don't know how far you want me to continue to go with this before we break it off into questions, because I suspect that's probably led to a lot already. There were a number of points raised earlier about municipalities. There's another little gap, I think, that needs to be filled as a result of the amendments that were made to the Electricity Act and all of these great programs that are coming for renewable energy, and that is an amendment to the Municipal Government Act. There are five or six provincial interest statements within the Municipal Government Act today. They talk about things like flood risk, dealing with flood rise, maintaining quality of ground water, maintaining proper housing, protecting agricultural land. There is nothing in the Municipal Government Act with respect to energy.
You have to remember that when you go to get a permit to do anything in this province with respect to renewable energy, your ultimate permit doesn't come from the province, it comes from the municipality, so when you have municipalities out there that are uneducated, scared stiff of what a wind turbine might do in their community, it is a result of not knowing, it isn't a result of reality, it is perception. We talk about separation distances, there's more noise coming from this fan right now and the cars going by on the street than you will get from the Digby wind farm if you are 500 metres away from it - absolutely guarantee it, unequivocally.
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Why are municipalities now talking about needing a kilometre and two kilometres separation? It's fear of the unknown. One of the good things - we're getting a number of turbines up - the ongoing monitoring that's going to happen in Digby, I hope, will at least then be able to be shared and the province show some direction here - hey, we want to move into renewable energy, we're not going to let municipalities where the wind regime is good, where the transmission might be able to handle this stuff, say no because they've got a fear of the unknown.
That is where some really strong leadership has to happen at the provincial level, and adding to the provincial interest statements is the way to do it. As municipalities build municipal planning strategies and land-use bylaws, they have to be consistent with provincial interest statements. I teach this to my kids at Dal every year and they get it. The municipalities haven't quite gotten it yet and the province hasn't gotten it yet, from an administration point of view, how important provincial interest statements should be.
I could go on with my sermon, but we'd better . . .
MR. CHAIRMAN: Maybe if we get on with some questions, I'm sure you can add more information in the answers to your questions.
Mr. Boudreau.
MR. BOUDREAU: In your talk you referred to solar. I'd like to see if you could expand on that and talk about some of the successes that are out there, some of the opportunities and maybe some of the roadblocks that you see.
MR. ZWICKER: What I'm talking about is hot water solar - thermal solar, not PV - and there's a significant difference. PV uses the ultraviolet rays in the light from the sun to operate and hot water solar uses the heat from the sun. On a day like today, I can tell you that my hot water solar system is cranking away.
The successes of this and the business model around this are easy to figure out. The cheapest, cleanest energy in the world is the energy you don't use. Conservation is really where it's at. Somebody mentioned earlier that we're not doing a great job on conservation and we could do a lot better job. Hot water solar systems are, by far, the most cost-effective, the most efficient way of dealing with conservation and still not sacrificing anything with respect to the hot water that you want to use, whether that is for domestic hot water or for space heating.
The example I'll give you in terms of a business case is Killam Properties. Killam Properties is the single largest residential owner in Atlantic Canada. Give them a couple of years and they'll probably be the single largest residential owner in Canada, given that they're moving into Ontario. We have started converting their buildings. I think we've done four of them so far. We're doing a building on Parker Street in Dartmouth right now. It's a
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100-panel system that will provide the lion's share of the domestic hot water that they need to service their people in that building.
People say, how hot can you get water? We did a condominium over in Halifax a year or so ago where 24 hours after the system was installed, the system went to steam. That was because no one was using the water. It's a very efficient, cost-effective way of reducing your energy costs. Generally speaking, 30 per cent of the energy costs in a person's home are to heat their hot water. If you can get 75 per cent or 85 per cent or 90 per cent of that from solar, you've greatly reduced your energy bill, which ultimately converts to you using less fossil fuels because that is the bulk of how our energy is produced, so it has a real positive impact.
There are very few roadblocks to this, unlike what you have to do to get approval to put a wind turbine up; in most municipalities in this province you don't even require a building permit to do it, which is terrific. The orientation of buildings is important, shadow-casting on these panels is important, but it's a very efficient system. Before I ever got into this business I had hot water solar systems on my house for 28 years. The fact that we've got a manufacturer of the best, most highly-rated single panel system in Canada - and they test all the international stuff, this is CSA testing - that comes through in terms of efficiency, sitting right here.
[10:30 a.m.]
I think I might have said it the last time I was here, how many provincial buildings that use hot water have a solar system? Does anybody in the room know? One, and that's the Memorial Hospital in Lunenburg and the panels have been there for 25 years. There are a couple of new schools. I don't know whether you consider those provincially-owned or not. We've done a couple of schools down on the South Shore and we're doing three more over the winter, but ask yourself the question, why doesn't this building have panels on it? Why doesn't every single provincial building that the province owns and assists in the operating costs - hospitals - you've got to ask yourself the question.
Anyway, I'm off my wind, but to answer your solar question, it's a terrific business opportunity and it's a terrific tool to work closer toward our goal of reducing our reliance on fossil fuels and getting more into renewable energy.
MR. BOUDREAU: Would you care to give us a few comments on the PV systems?
MR. ZWICKER: We're actually looking at three different PV systems now and are in the midst of analyzing them in terms of efficiency. I think it's a shame that we don't have an opportunity for solar PV included in the program that's in the legislation now. There were a number of people, including us, who said that it should be there and the comeback was, well, we don't think it's economically viable.
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Well, with no disrespect, I'm not sure that the people who drafted the legislation are the right ones to tell you whether it's economically viable or not. The people who want to use it will make that determination. If you set a reasonable rate - I'm not suggesting you have to put a rate on a feed-in tariff that's anything like what Ontario did, they're pulling back on that, but it should not have been excluded is the issue there. There is an opportunity for some more PV solar in Nova Scotia - no question, no question - and you'll see that coming. In fact, we're dealing with two companies that want to come here to actually manufacture the facilities.
MR. BOUDREAU: Very good, that's great, thank you.
MR. CHAIRMAN: Thank you, Mr. Boudreau. Mr. Glavine.
MR. GLAVINE: Mr. Chairman, I also had a question around solar. Do you see the possibility of a large solar-collector energy provider in our province? Have you taken a look at our solar regime? We have, of course, our wind regime, which we know a fair amount about, are there parts of the province that would be more conducive, in fact, if that were a reasonable option to look at?
MR. ZWICKER: Yes, one of the interesting things with respect to PV solar - I assume that's where you're talking?
MR. GLAVINE: Yes.
MR. ZWICKER: Our best wind regime tends to be on our coastline, the best sun for solar tends to be inland, and part of that use was fog, the fog hangs more around the coastline than it does around the centre of the province. So there are some opportunities there, but today it still costs you somewhere from 30 cents to 40 cents a kilowatt hour to generate electricity from the current technology with respect to PV. So in terms of responding to an RFP, if you like, to provide renewable energy, I still don't see that's there on a large scale for us. On a small scale I think it is there. I think you can make arguments that it's efficient on a small scale basis, but I really don't see us having fields and fields and fields of PV panels trying to generate 25 or 30 megawatts of energy in Nova Scotia.
MR. GLAVINE: So based on what took place at Digby Neck - I know you still have an interest there - do you still plan to look at other significant size operations or are you going to do more of the Sobeys, the Atlantic Superstore, the small business model, I guess, in terms of wind turbines?
MR. ZWICKER: No, we're going to participate in that RFP for larger wind farms, which is, I think, technically up to about 150 to 200 megawatts. The reality is, from a business point of view, there are a couple of the wind farms that are out there now that have the capacity to expand. That will be the cheapest place that you're going to see some of that picked up. I think that might be in the 40 to 50 megawatt range. So there's going to be
[Page 25]
another 70 megawatts or so that will be available for our Greenfield site. I think Robin and Pam said it right - you've got to find the right site. You've got to have the wind regime. First and foremost, you have to have the wind regime.
I think some of your questions about what's the magic distance on transmission, there is no magic distance. It's all about the final economics of your project. In round figures, it's like $250,000 to run a kilometre of 69 KB line to get to your site. So there are only so many kilometres you're going to go that you're going to be able to work into a business model that says there's still a bottom line here that makes it worthwhile to put this project forward.
It isn't just the issue of transmission, there's the issue of when you go through this process, you go through an analysis that Nova Scotia Power takes you through on every one of your projects. It's basically called a system impact study. In and around the area of Guysborough and Antigonish, I can tell you that we have assembled a couple of thousand acres and we've gone through a system impact study that suggests there's $40 million of upgrades that are necessary. We're about 10 kilometres from a transmission line and $40 million worth of upgrades to the system need to be done to allow that project to be put on the Nova Scotia grid. Obviously that project can't go. There is no project in the world that can support $40 million with a system impact analysis.
In the Digby project, the system impact costs aren't just the transmission line. There are some upgrades that have to happen at the substation, there are some upgrades that have to happen in Tusket. So if you know where Tusket is relative to Digby, there are some upgrades that happen in Paradise because of the analysis of the total impact of putting that on the system. It isn't just transmission, there's a variety of things and every site is different because of the uniqueness of the site, the amount of consumption that can happen in that general area, the age of the transmission lines, the width of the rights-of-way. There are all kinds of things that come into play here. Once you find the windy site and once you find the landowners who are willing to participate, then the real interesting side of this happens.
My guess is that the examples that you were talking about in Cape Breton, those issues are less technical and more economic when you get right down to it. The economics of going through improvements to the system on the backs of a project ultimately kill most projects. Even on distribution projects where you hook into a three-phase line, there are impacts that you have to deal with there. One of our sites we have to pay to run some two-phase line along a road that's - I don't know how far away it is - 8 or 10 kilometres away from our site so that the system ends up being looped so we can more easily handle a 2- megawatt turbine. The system gets improved as a result of that but it gets improved at the cost to the developer who is trying to build these things.
If there is one of these things that has to happen, I guess, in the long run to make the feed-in tariff concept for 100 to 200 megawatts work, it's trying to figure out fair allocation of costs with respect to system impact. Some of these system impact costs also improve the system outside of what adding a turbine does to it. Some of that should be borne by the utility
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versus on the back of the community group who is going to be coming and proposing some of these sites. We're going to be putting sites in Cape Breton, we're going to be putting sites generally speaking within Scotian WindFields. In Nova Scotia we've got 20,000-odd acres of land that we have under option from landowners in Nova Scotia. We've got another 20,000-odd acres in New Brunswick. Every single week we have people coming to us wanting their land assessed as an opportunity to do some kind of a wind project.
MR. GLAVINE: I have one other. If you would just list those, rather than long commentary because I know my colleagues have lots of questions. In terms of 2020 and the 40 per cent target, I see that as both reasonable but also necessary for our province to do. What would be your one, two, three to get there? What would be your first, second and third means of renewables from your perspective that we should take as province? We know, of course, Nova Scotia Power is the most significant player in getting there but what would be your approach to get to that 40 per cent?
MR. ZWICKER: I would suggest that the province completely deregulates the generation and the transmission and the retail sales of energy in Nova Scotia, completely deregulate it - not unlike the telephone system - so that independent players like ourselves and others have the ability to build a facility, transmit energy and sell it to clients. I will guarantee you that there would be a take-up on that and that you would see us go through the roof with respect to renewable energy because no independent power producer is going to come in here and suggest that we continue to burn fossil fuels. That's my number-one suggestion. Whether there's the political will to even think about it, I don't know.
Buy back Nova Scotia Power and get control of it, so that it's not a private entity might be number two, and number three, make sure that the people who are put in the positions as the independent agency who are going to review all of these applications are truly independent.
MR. GLAVINE: Interesting. Thank you.
MR. BURRILL: You were saying that the community feed-in tariff is a great thing but that there is a lack of programming to support it, to give effect to community access to the project. Do you have any thoughts about the kind of programming, the way that it might be targeted that would be a way to deal with this?
MR. ZWICKER: Well, if you look at the groups that are eligible to participate, municipalities, non-profit organizations, CEDIFs, native communities - I think that's the four - their ability to go to the market and raise a number of millions of dollars to put up one turbine is extremely limited. If the province was prepared to provide loan guarantees, you don't have to provide the cash, to support that, knowing that the asset is there - there's no issue about the rating of Nova Scotia Power, who you're selling the power to, they're going to be there - it's an absolutely no-risk situation, but try to get one of those groups that I've just described to go to a traditional lender and seek approval for that.
[Page 27]
The first thing they're going to say is, okay, let's have a look at your balance sheet. Well, there is no balance sheet. We went to Nova Scotia Business Inc. to look for a guarantee to assist us on the Michelin project. Two responses: Well, we don't think that wind energy generates enough employment - now we just heard about ENERCON a little while ago with 40 or 50 people in Dartmouth, and there are a lot more people who are hired and working in the wind industry than the province might want to think; and the second thing is, well, we've had a look at your balance sheet and it's not strong enough. Listen, if I had a strong balance sheet, I wouldn't be here knocking on your door. That's the reality of this. You're sucking and blowing at the same time, which gets nobody anywhere. So that's where I'm coming from.
MR. MORTON: Thanks for the presentation, Mr. Zwicker, and your comments. I just want to go back to some of your comments about perception about wind energy and maybe the slow engagement of municipalities in this area. Apart from noise, I guess I'm interested in what other perceptions there might be that get in the way - are there other issues that get in the way of moving forward with this?
MR. ZWICKER: Well, there are other perceptions - that being too close to a wind turbine can somehow detrimentally affect your health. I just read an article three days ago, a new study that's been done, and there is absolutely no evidence anywhere of where wind farms have been in existence for 20-plus years that there are any negative health issues associated with living close to a turbine or a wind farm of some magnitude - zero. So why do we keep talking about it?
[10:45 a.m.]
One of the other issues is that it will create a visual blight on the landscape. Well, you know, no disrespect to Nova Scotia Power, but I don't like looking at the three stacks in Tufts Cove, but without those three stacks they wouldn't be able to generate energy. They make noise - I don't know of any machine that generates energy that doesn't make some kind of noise at some stage. The question is is it acceptable, is it liveable? If we're really concerned about health, there are more health issues that come from the exhaust that comes out of the top of a pipe from some kind of fossil-burning fuel than will ever come from some other form of renewable energy such as wind. It's a matter of trying to understand and deal with priorities. There is no question, putting turbines on a landscape, you don't hide a tower that's 80 metres high and a sweeping blade that's another 80 metres - you can't. Stop even thinking about trying to do it. What are you trying to do it for? If you don't like it, turn your head 10 degrees.
My background is in planning, I have 30-odd years of professional planning experience at the municipal and consulting business, and some of the things that you deal with when you're trying to introduce development and trying to introduce change are scary. People who don't understand the issues with this get scared stiff of the concept of change.
[Page 28]
Well, at least in Nova Scotia, from the legislation that we have, we are clearly stating that we know and accept that we have to change, so let's just not leave it hanging out there.
Just tell them - here's what we're going to do. Tell municipalities we will not approve of any bylaw that puts in restrictive convenants in your land use bylaw that will prohibit wind from potentially being developed in your municipality with a wind regime of 6.5 metres per second or higher. You know, put something serious in a provincial interest statement.
You've got to have the political will to do it and, as I tell every municipal councillor I've ever met, I've ever spoken to, every student I've taught in the last six years at Dalhousie, that if you don't have the ability to make the tough decisions, don't tell anybody that you're planning, because you're not. Planning requires tough decisions. You can write down all the policies and all the direction that you want, if you're not able to implement it, it is not worth the paper that it's written on. It's as simple as that.
That holds true at every single level of government. It's certainly true at the provincial government - you guys know it better than I would, for the most part. My complaint with the targets that we had a number of years ago - it's great to say to the world we've got the highest targets to get to renewable energy, well, if you don't have legislation to back it, it's not worth anything. Well, now we've got some legislation. Now we need just a few more things to prop it up and we could truly be leaders instead of just saying that we're going to be leaders.
MR. MORTON: If I get just one other quick question . . .
MR. CHAIRMAN: Quick.
MR. MORTON: A quick question, still with the issue of perception. I mean there must be a great deal of evidence that's accumulating in Europe, and maybe other parts of the world, about what effects turbines have on noise, health, migration patterns of birds, a whole range of things like that - is that information being collected? Is it readily available?
MR. ZWICKER: Absolutely. The Canadian Wind Energy Association has done a wonderful job of putting that material together and it isn't just based on the European example; there are lots of examples in Canada. I tell people, if you want to talk to some people who understand what it's like to live next to a turbine, go down to Pubnico, talk to those people. Don't talk to the one guy who has raised all the hell down there, but talk to the rest of the people who live in that community and see whether they have a problem, because I think you'll find that they don't, because I know, I've been down talking to them.
We've got a turbine in Goodwood; we've got a couple others that are close by. You don't have to go very far, if you're centred in Halifax, to listen, feel, touch. Go down to any of the projects - any of them - and experience them yourself. That's what I keep telling people at the municipal level. I've talked to the people in Richmond County about three
[Page 29]
months ago and not one of those people had been down the road to New Glasgow to get on that site to see what it's really like - and here they are writing a bylaw. You know it's like - give me a break.
MR. CHAIRMAN: Mr. Epstein, you can ask a quick question and get a quick answer.
MR. EPSTEIN: In that case - what's the equipment that you install? Where do you get it?
MR. ZWICKER: We try to source locally wherever we can. As an example, I'll tell you in our Michelin project we are going to get the first six towers, that's the first six set of blades that come out of the DMAC plant. If the nacelles were being manufactured in Nova Scotia to meet that need, we would buy them here, too. So we source locally first. It has to be good, it has to be quality, it has to be able to have some longevity to it and, once it does, if it meets that criteria, then we'll buy it.
MR. EPSTEIN: Yes, I mean I was talking about the wind side.
MR. ZWICKER: Yes.
MR. EPSTEIN: I know about Peter Allen's Thermo Dynamics, so that's local, but I meant on the wind side - are you actually able to source locally now? Because that's in the future, what you are talking about.
MR. ZWICKER: You can buy a 50- kilowatt machine locally, the Seaforth guys over in Dartmouth. There are other Canadian machines that we've been looking at. We have another 50-kilowatt machine installed in Lake Echo that was designed and manufactured in B.C., which for our money outperforms the local one, so we've chosen that one.
The towers and the blades will be manufactured in Trenton. I know that they're talking to all of the international manufacturers, like ENERCON and we're hoping they're going to be able to have their towers and blades ready as we need them.
MR. EPSTEIN: Are you importing from Germany right now?
MR. ZWICKER: No. That 100-kilowatt machine that's sitting in Porters Lake actually came out of the U.S., from Vermont. It's a direct drive machine and that's one of the things we were looking for.
MR. CHAIRMAN: Mr. Zwicker, would like to take a moment or two to just sum up?
MR. ZWICKER: No, I've been singing the praises of the new legislation since it was introduced in policy form and now in written form. I think with the couple of suggestions that we've made in terms of how that can be tweaked, I think it's a fantastic program. If we
[Page 30]
could add to that some serious economic policies and support for local, independent power producers to see that intention, I believe, to have more independent power producers in Nova Scotia in that business and local communities in that business. That's what is going to be needed.
I can tell you from our funding, and we're very close to signing a deal for all of our funding, none of it's coming out of Nova Scotia. It's not coming out of Canada. There's a reluctance here in terms of the local community to invest in some of this stuff. Thank you for the opportunity.
MR. CHAIRMAN: Very good, thank you very much. It has certainly been very informative and if we had the time we could go on for an hour yet.
MR. ZWICKER: If you'd like me to come back, just call.
MR. CHAIRMAN: We still have some committee business to do so we'll ask the members to stay back for a minute.
Okay, we have to get our meeting back to order here.
MR. BURRILL: A very important point of order, Mr. Chairman, the short snapper does not belong to Front Page Challenge but rather to Reach For The Top - I really think we should have this clarified.
MR. MACLEOD: Mr. Chairman, I will go one step further, not only did it belong to Reach For The Top, but the host of Reach For The Top was a one-time member of the House of Assembly here in Nova Scotia and a former Speaker of the Liberal Party.
MR. CHAIRMAN: And from Cape Breton?
MR. MACLEOD: No, he wasn't, it was Gerry Fogarty. Gerry was a member from out around Sackville, I believe.
MR. CHAIRMAN: Back to our meeting on committee business. We had a letter from Mr. Livingston - he would like to make a presentation at some future date, regarding energy. So with the committee's approval, we can respond to his letter.
MR. BOUDREAU: Mr. Chairman, considering where we want to go in this province, and I think the members across the table as well have indicated that this is an important topic to them and their area and their region, I'd like to see us sort of stay with this theme, if we can obviously, and deal with this because I think the whole concept of energy and renewables is extremely important.
[Page 31]
I found today's witnesses - it was very good, it was very informative. It's my feeling that we should explore this as best we can, because if we as a group of legislators around the table can improve legislation and look at opportunities to make this province more welcoming, more open and, as was indicated here, encourage some new industry, I'd like to see us move in that direction. My interest has been greatly piqued today's session.
MR. MACLEOD: I agree with Mr. Boudreau and I guess the other thing that I would like to see happen with our committee, if possible, this announcement today about the Lower Churchill Falls project, it seems to me that when you have the Premier of Newfoundland and Labrador and the Premier of Nova Scotia making an announcement it's probably a good-news announcement. However, the devil is in the details and it would be very good to get somebody who is involved in that project here, at an early stage, so that we can get a real understanding of how they see this thing fitting into the overall picture of power generation.
It's more for the Maritimes than just for Nova Scotia, but at the same point the impact of it coming into the Province of Nova Scotia and the involvement of Nova Scotia Power with the project is something that I think if we get on that case early, to get us an understanding as a group and then to bring it back to our respective caucuses so that we understand what exactly is happening - what the impact may or may not be across the province and certainly throughout the Maritimes would be a subject that would also be very interesting and would keep our interest level quite high.
[11:00 a.m.]
MR. CHAIRMAN: If there's much more discussion, with the committee's approval, we'll continue on beyond 11:00 a.m., or if we can wrap it up . . .
MR. MORTON: I'm certainly willing to continue on. I just want to, for clarification purposes, what do we have scheduled already?
MS. JANA HODGSON (Legislative Committee Clerk): What we decided previously, we have booked right now on December 9th the Nova Scotia Federation of Agriculture, and we have a presenter already booked for January as well and it has to do with the land and woodlot owners, someone that we had rescheduled from September. That's what we have booked right now.
MR. GLAVINE: We have made those two commitments, but beyond that point, as we move into Spring, I concur with my colleague that having a couple more sessions around this theme would be very valuable. There are a lot of things developing and I think the more background and foundational information that we have, it's good to be able to take to the actual Legislature. We know that the energy dynamic in our province has to change dramatically and I think Nova Scotia Power is just one of the players - the most important at the moment, but there are a lot of others who have possibilities around generation, around
[Page 32]
the environmental piece, that I think we need to hear from. Having somebody like Neal Livingston is also a good part of what we need to be hearing.
MR. CHAIRMAN: So possibly we could aim for February.
MR. GLAVINE: Mr. Chairman, the other point that I would make - when it comes to somebody like Neal Livingston, basically representing Black River Hydro, a very small entity in the power mix at the moment, but maybe combining with another operation in power development may be valuable as well. Today I thought it was a nice mix that we have here, for us to consider their viewpoints.
MR. EPSTEIN: I agree. I think that if we're going to look at a couple of the smaller-scale independent power producers, Black River is a good example, but probably a second one is good. When we heard from Mr. Zwicker today on behalf of Scotian WindFields, they're clearly the dominant - they're still small, but they're clearly the dominant entity amongst the independent power producers at the moment, so it would be good to hear from a couple of the smaller ones, to get their perspective.
I also heard in the general discussion some interest in the possibility of having a closer look here at this committee at whatever comes out of Newfoundland and Labrador today. That, I take it, would be a separate topic. Are we now agreeing that we're going to try and do that and schedule that at some point? Who would be appropriate witnesses? Presumably we would start with people from the Department of Energy, I guess, to hear from them - would that be correct?
MR. CHAIRMAN: That would be a starting point.
MR. MACLEOD: Just on that - I think the Department of Energy is part of it and I think the committee chairman may get some more insight today after the announcements are all out and about and we get a more stable view of what exactly is proposed, that there might be somebody there from Nova Scotia Power. There may be a new entity that is going to be guiding this project through and it would be good to get someone there along with the Department of Energy so that we could get, again, as much of a picture as we can.
One of our problems, where we only meet on a monthly basis, is that sometimes it's hard to connect everything together. I, for one, would be willing to meet an extra meeting if we had to tie that topic together in a way that would be meaningful and stay with us.
MR. EPSTEIN: Exactly the point I was going to make. I think this is a significant change in the landscape of energy in Nova Scotia, a very important step. I thought, indeed, that it would merit considering a second meeting in January. By that time we would probably know - in fact, we may know by the time of our December meeting - who we should think about inviting as witnesses, if we want to invite anyone on top of the Department of Energy.
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So we can turn our minds to witnesses then - if it's agreeable around the table, maybe we should look at a second meeting in January for this topic.
MR. MACLEOD: Maybe I could even be so bold as to suggest we could meet in the morning with one group and in the afternoon with the other, so there will be time for those who do the travel, but there would be also some time to clear your mind between the meetings and then if anybody is travelling distances, weather is going to be a consideration for some of us in January. I think we can leave it in the capable hands of the chairman.
MR BOUDREAU: I just want to tell the honourable member from Louisbourg over there that the line is coming to Cape Breton. I couldn't get it to Dover, I tried.
MR. MACLEOD: It stands to reason.
MR. CHAIRMAN: We will adjourn our meeting.
[ The committee adjourned at 11:06 a.m.]
