Thought Leadership SIEMENS “An Exciting Ride So Far”: Siemens Analyzes the State of Ontario’s Wind Industry Published by www.ofit2015.com “An Exciting Ride So Far”: Siemens Analyzes the State of Ontario’s Wind Industry By Elizabeth Judd, Canadian Clean Energy Conferences Reflecting on the world six years after the implementation of the FIT Program, Greg Thrasher, head of strategy and sales for the Wind Power Division at Siemens Canada, says that Ontario has been a “very exciting place and has seen enormous success.” He is particularly pleased that Ontario has demonstrated a commitment to procuring at least an additional 600 megawatts of large-scale wind over the next three years, a move that will reinforce the role of wind power in the provincial power generation mix for the immediate future. “The introduction of the FIT program created an influx of investment at all levels of the renewable energy value chain,” explains Thrasher. “In that regard, while there might be some criticism, the FIT Program accomplished its central tenets: to create a green energy economy and also to eliminate coalfired power generation.” According to figures provided by CanWEA, the Canadian wind energy market is now the ninth larg- www.ofit2015.com 2 “The introduction of the FIT program created an influx of investment at all levels of the renewable energy value chain.” - Greg Thrasher, Head of strategy and sales for the Wind Power Division, Siemens Canada est producer of wind energy in the world with current installed capacity at roughly 7,800 megawatts. Siemens holds a leading position in the Ontario market with over 1,600 megawatts of installed capacity and counting. Although the past few years have been undeniably exhilarating for wind-energy companies in Ontario, the future has a number of question marks. Thrasher notes that “policy stability” is enormously important and yet provincial priorities can reverse very quickly. He cites the fact that domestic content requirements were the basis for wind procurement in Ontario, but this criterion “vanished” with a stroke of the pen at the behest of the World Trade Organization. “The province can use a transitional approach to the Published by domestic content elements of the FIT Program, rather than a binary approach to driving investment in the province and really improving the competitiveness of the renewable energy manufacturing and service base,” says Thrasher. He notes that the current 600-megawatt procurement target is welcome, but alternative-energy developers and manufacturers are still concerned that the region continues to lack a long-term outlook and policy stability. “The future beyond the next few years is very uncertain, which can be a constraint to future investment decisions because you’re driving with your eyes closed,” says Thrasher. “A long-term commitment to a procurement target is something that’s really needed. While it’s been an exciting ride so far, it’s to be determined what we’ll see moving forward.” www.ofit2015.com 3 Wind Landscape in Ontario “The province can use a transitional approach to the domestic content elements of the FIT Program, rather than a binary approach to driving investment in the province and really improving the competitiveness of the renewable energy manufacturing and service base.” - Greg Thrasher, Siemens Canada Published by Thrasher underscores the tremendous progress wind technologies have made over the past decade in Ontario. With so many ambitious projects currently underway, it’s easy to forget that not so long ago “breaking the single megawatt threshold was a real achievement within the industry,” he says. “Not only have the technologies associated with wind energy improved, but the price for wind energy has decreased dramatically,” says Thrasher. “Less encouraging, though, is the expense for constructing wind farms, which hasn’t really budged.” Thrasher attributes Siemens’ success in the Ontario wind market to partnerships, its technological innovations and commitment to the market in terms of quality and service. Most importantly, though, he views his company’s willingness to partner with other providers in innovative, risk-sharing models as a major success factor. For instance, he notes that Siemens partnered with Samsung and Pattern Energy when investing in the Tillsonburg blade facility. Siemens opened the Tillsonburg manufacturing plant in 2010 to provide wind turbine blades for Siemens’ projects in the province. “At that time, the market was very uncertain,” recalls Thrasher. “There was a lot of political risk in the province, a lot of policy risk and a whole lot of project risk as well.” To underscore the importance of partnerships, Thrasher points out that Siemens’ Tillsonburg facility just celebrated the completion of its one-thousandth blade this past February. At the same time, he says, the company marked 1,000 days and one million hours without a lost-time case, a milestone that underscores the company’s commitment to safety. www.ofit2015.com 4 Current and Future Projects For Siemens, 2015 is “off to a shotgun start” in Ontario. In February, Siemens won the supply contract for Veresen’s Grand Valley III project, rounding out a partnership that installed nearly 100 megawatts of wind energy. Specifically, the project will feature 16 Siemens SWT-3.0-113MW wind turbines, which should come on line later this year. Also in February, Siemens signed a contract with Northland Power to forty SWT-3.2-113 turbines to the Grand Bend wind farm, explains Thrasher. These turbines are slated to be delivered in October. “A long-term commitment to a procurement target is something that’s really needed. While it’s been an exciting ride so far, it’s to be determined what we’ll see moving forward.” - Greg Thrasher, Siemens Canada Published by These new contracts solidify Siemens’ position in Ontario’s green energy economy. Meanwhile, Siemens is currently supplying SWT-2.3-101 turbines at the K2 wind project, which remains under construction. Along with the South Kent Wind project in Chatham-Kent, K2 represents the largest wind farm in Ontario to date. For K2, Siemens manufactured all 420 49-metre blades, as well as 140 towers. K2 is on track to begin delivering 270 megawatts of electricity this spring in order to generate clean power for approximately 100,000 Ontario homes. When asked about the upcoming RFP, Thrasher pointed out that while the draft had yet to be finalized, developers are concerned about the aggressive timelines being proposed. He is also wary about a lack of transparency in the transmission market in terms of where capacity actually exists. for making community participation and sponsorship a pre-requisite for joining the RFP. Looking Beyond Ontario Thrasher is pragmatic about the fact that the FIT won’t exist forever: “We never anticipated this mechanism [the FIT] would be in place in perpetuity. We had a very focused strategy on market diversification, and we’re set up to deliver blades where demand exists.” Recently, he points out, blades that Siemens manufactured in Tillsonburg were shipped to Sweden, demonstrating that made-inOntario products can compete at a global level. Outside Ontario, Thrasher sees a wealth of wind-energy opportunities throughout Canada. Specifically, Siemens is looking to Alberta, which has “an outstanding wind resource and positive prospects with the government’s commitment to an alternative renewable energy strategy.” He also notes that British Columbia “has an enormous wind potential, which plays very well into the anticipated increase in demand with the natural gas industry picking up.” Finally, Siemens has become increasingly active in Québec, another province that boasts an outstanding wind resource. Thrasher notes that Siemens’ first foray into Québec will be supplying at least 46 3.2 MW direct drive wind turbines for the 147-megawatt Mont Sainte-Marguerite wind project in Québec. Thrasher points out that progress on the community engagement front has been slow, perhaps because of “the residue from the FIT program.” By revoking the authority of the municipalities in the wind development process, the FIT “fueled antiwind sentiment in some areas,” he says. On the other hand, he applauds the new procurement program www.ofit2015.com 5
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