renew
SPRING 2015
ISSUE 42
Welcome to RENEW – a quarterly publication of the Ontario Waterpower Association (OWA). This issue focuses on “connecting the
dots” between emergent environmental, economic and energy imperatives and opportunities. Within the context of Climate Change, for
example, the achievement of Ontario’s targets will increase the value of flexible waterpower. The new emphasis on public infrastructure
presents an opportunity for the industry given that only twenty percent (20%) of Ontario’s dams are used for electricity production. And
a collaborative effort has been launched to leverage existing investment in environmental data collection with a feasibility study for a
“Waterpower Reference Centre”. With an abundance of waterpower opportunities available, 2015 is expected to be a year of growth and
new prospects for Ontario’s first energy source.
Welcome to the Century Club!
Ontario Power Generation’s (OPG) Eugenia Generating Station (GS)
is celebrating its 100th anniversary in 2015. The station is located on
the Beaver River in the small community of Eugenia, near Flesherton,
Ontario.
The Hydro-Electric Power Commission of Ontario (the predecessor
to Ontario Hydro and now OPG), began constructing Eugenia in 1914.
The first two units were placed in service on November 15, 1915, and
a third unit came online on March 1, 1920.
One of the outstanding features of the Eugenia plant is its steep
operating head which, at 180 meters, ranks it as the highest in Ontario.
Flexible Waterpower – a Key to Meeting
Ontario’s Climate Change Targets
With the recent release of the Ministry of the Environment and
Climate Change (MOECC) discussion paper, it is very clear that an “all
government” approach is being taken to address what the Minister
terms “the critical issue of our time.” It will most certainly be a core
issue for the mandate of this government, with a multi-faceted policy
approach that can be expected to reach across sectors, communities
and geographies.
In the electricity sector, Ontario is well positioned to adopt a leadership
role, in large measure due to the significant current and potential
expanded role of flexible waterpower in the provincial supply mix.
This context was well articulated in MOECC’s 2014 Climate Change
Update. The report provides an update of Ontario’s greenhouse gas
emissions (GHGs) and progress towards the targets set out in the
2007 Climate Change Action Plan.
The targets are:
• 2014 target: 6% below 1990 levels
• 2020 target: 15% below 1990 levels
• 2050 target: 80% below 1990 levels.
According to the report, total GHG emissions forecast for 2014 are
165 Mt, which is below the target of 167 Mt. This means Ontario
is expected to not only achieve, but surpass its 2014 target. Given
current policies and trends, emissions in 2020 are forecast to be 170 Mt
— which would achieve 69% of the emission reductions required
to meet the 2020 target. Investigating the reasons why and how the
province is meeting or could achieve targets demonstrates the critical
importance of the electricity sector and, hence, the role of waterpower.
As illustrated in the excerpted table (page 2), approximately seventy
percent (70%) of Ontario’s GHG reduction targets are expected to
be achieved through contributions from the electricity sector. Given
that the province fully eliminated coal last year, the correlation to the
achievement of the 2014 targets is obvious.
But what of 2020 and beyond? It is in this mid to longer term
timeframe that the increasing value of flexible waterpower, including
pumped storage becomes apparent.
continued on page 2
380 Armour Road, Suite 264 | Peterborough, Ontario | K9H 7L7 | Toll Free (866) 743 1500 | Tel (705) 743 1500 | Fax (705) 743 1570
TABLE 4 Emission Reductions by Sectoral Initiatives
Sector
Projected Reductions (Mt)
Initiative
2014
2020
Transportation
The Big Move regional transportation plan and Greater Golden Horseshoe Growth Plan
Passenger vehicle efficiency regulations
Freight truck speed limiter regulation
Municipal hybrid bus purchase and Green Commercial Vehicle programs10
Ethanol in Gasoline regulation11
Greener Diesel regulation12
1.9
4.6
Industry
Natural gas utility conservation programs
0.3
0.8
Buildings
Greater Golden Horseshoe Growth Plan
Natural gas utility conservation programs
Building Code amendments
Residential retrofits
0.9
2.3
Electricity
Long-Term Energy Plan: coal phase-out; Feed-In
program; residential, commercial and industrial demand management programs; and related electricity plans
20.5
32.5
Agriculture and Waste
Biogas Financial Assistance Program
Landfill Gas Collection and Control regulation13
1.5
1.8
26.0
41.9
9
All initiatives
Flexible Waterpower continued from front page
As best articulated by the IESO (formerly OPA), generation technologies
within Ontario’s supply mix deliver differing “products” to the reliable
operation of the province’s electricity system. A Megawatt is not a
Megawatt is not a Megawatt. As shown in the graphic to the right, each
technology brings something different to the table.
Within the context of climate change, it is the two left bars of this chart
that warrant particular attention. With coal now eliminated from the
supply mix, the only remaining fossil fuel based generation is natural
gas. Importantly, it is now waterpower and natural gas that provide
essential reliability services to the electricity system. In the mid to
long term, achieving climate change targets within the sector and
provincially necessitates an expanded role for Ontario’s First Choice
– Waterpower. While 2050 could be considered long term, 2020
most certainly is not. As the 2015 Climate Change Discussion Paper
suggests, action is required now.
The next iteration of the Long Term Energy Plan (LTEP) will
undoubtedly be informed by the emergence of climate change as a
government priority. However, the current LTEP adopts a model of
“flexibility” and already contemplates an increased role for storagebased hydro. Specifically, the LTEP indicates that “Pumped hydro
Comparison of Electricity Sources
80% CC
42,200 MW
1,700 MW 0% CF
15%
20% CF
20% CC
30,400 MW
1,300 MW
1,800 MW
25%
8,900 MW
10% CF
90% CC
166 TWh
16 TWh
10 TWh
44 TWh
9,700 MW
8,300 MW
55% CF
70% CC
9,000 MW
6,100 MW
96 TWh
60%
85% CF
100% CC
System Reliability
Nuclear
Hydro
12,900 MW
12,900 MW
2015 Contribution
to Summer Peak
2015 Installed
Capacity
Natural Gas
Non-Hydro Renewables
2015
Energy
Demand Response
storage can be used to store energy when it is not needed and
deliver it to the grid during periods of peak demand. Projects will
continue to be examined to determine their cost-effectiveness and
their ability to provide value to ratepayers.” Climate change policy
could fundamentally alter the accounting framework and value
proposition for pumped storage – and, like waterpower in general,
Ontario has significant untapped potential.
Leveraging Environmental Investment – a Case for a Waterpower Reference Centre
In 2013, the development timelines for waterpower projects in
Ontario were extended from five (5) years to eight (8) years through
a Directive from the Minister of Energy which acknowledged the
“unique regulatory requirements for waterpower projects.” Last year
the Association assessed the pre-development costs for small hydro
in Ontario and found, on average, that approximately $2Million was
being spent per project on environmental assessment and approvals.
Ten years ago, that figure was closer to $500,000.
before 2008 and are still awaiting permits to proceed to construction.
Since then, there has been the introduction of new legislation (e.g.
Endangered Species Act), and significant amendments to existing
legislation (e.g. Federal Fisheries Act). As importantly, the industry
is still awaiting final policy guidance under the Lakes and Rivers
Improvement Act and the Ontario Water Resources Act. Put
simply, longer development timelines inherently add to the risk of
regulatory change.
And while the industry and government continue to work to
modernize approvals, there are two key and related factors driving
the extended timelines and increased costs. First is the fact that
permitting requirements continue to evolve during development. The
majority of current active waterpower projects were commenced
The second factor is the lack of solid data and information upon which
regulatory approval decisions are being made. Despite more than
a century of waterpower development in Ontario, the overarching
energy policy of the province and the fact that waterpower is
acknowledged to be amongst the most environmentally sustainable
2
of electricity technologies, each and every project is assessed
premised on its own unique local impacts and benefits.
The potential benefits to the province and the industry include:
At present, an estimated $150 to 200 Million is being invested project
specifically in small hydro to support environmental assessments
and approvals that are fixed in space and time. This data and
information is project specific and while it could support longer term
effectiveness monitoring and adaptive management and broader
science questions, there is no formal mechanism to do so.
•
•
Informing key provincial science and policy priorities; and
This is not a criticism, merely the reality of the challenge of very long
term assessment programs and the limitations of annual government
budget cycles. To leverage the considerable investments already being
made by the industry, the OWA, in partnership with the Ministry of
Natural Resources and Forestry, has commissioned an initial feasibility
assessment designed to help determine the value proposition for the
design and development of a “Waterpower Reference Centre” (WRC).
•
Enabling additional modernization of approvals.
As envisioned the broader initiative involves five (5) phases:
1.Completion of Data and Information Gap Analysis and Needs
Assessment relative to existing provincial information management holdings (e.g. Land Information Ontario)
2.Design and Development of the Information Architecture for
and creation of formal Data Exchange Agreements with key
provincial ministries
3.Population of the Reference Centre with existing “books”,
such as Environmental Assessment Reports, Water Management
Plans, Species at Risk Mitigation and Monitoring Plans and Best
Management Practices
4.Development of data standards and protocols and data mining
of existing “books” to populate key data sets
5.Ongoing data submission from new projects, monitoring,
evaluation and improvement.
•
Leveraging the industry investment in environmental approvals;
Reducing costs for government investment in adaptive
management and effectiveness monitoring;
•
Reducing costs for future project investments for both
government and industry;
In February, Phase 1 (Data and Information Gap Analysis and Needs
Assessment) commenced with the award of a contract to the team of
4DM and Senes Consultants (both OWA members). The outcome of this
study will provide a high-level conceptual WRC model and necessary
information to support a business
case including estimates of cost
and benefit. The project will also
provide a broader understanding
of available information, the value
of data for supporting future
decision making, policies, and best
management practices.
As importantly, the initiative
demonstrates the Association’s
commitment to the continued
advancement of sustainable
development and the industry’s
achievement and maintenance
of social licence. Good decisions demand good information – the
very information that waterpower proponents are investing in and
collecting today can and must be used to advance our collective
knowledge in the future.
Rightsizing Regulation – Waterpower and the Feed-in Tariff Program
For some time now the OWA has advocated for an environmental
assessment and approvals process that fits the context within which
projects take place. In fact, the Class Environmental Assessment
(Class EA) for Waterpower Projects distinguishes between projects
taking place at existing infrastructure, those on managed waterways
and those on unmanaged waterways. In 2012, building on this
contextual framework, the OWA proposed a major amendment to
the Class EA and undertook broad consultation on the proposal.
At its core, the concept was to adopt a simplified environmental
planning process for projects which:
GALA DINNER SPONSOR
- use or be associated with existing water management
infrastructure (dams, weirs, locks etc);
- maintain the existing water management regime; and
- have a resultant installed capacity of 2 MW or less.
All applicable legislative and regulatory requirements (e.g. LRIA,
ESA) would continue to apply. While the proposal received good
support, it has yet to be approved.
continued on back page
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Frank Perri, P. Eng.
General Manager
St. Catharines Hydro Inc.
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340 Vansickle Road, Unit 1, St. Catharines, ON L2S 0C9
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Rightsizing Regulation continued from page 3
Key drivers for the proposal at the time included the province’s support
of small, decentralized generation, the emergence of new technology
for very low head hydro and the need to address the disproportionately
costly regulatory burden for these small projects.
As important is the reality that fewer than twenty percent (20%) of Ontario’s
water management infrastructure is used for electricity production and
the vast majority of this infrastructure is in public control (and hence
paid for by the taxpayer). As illustrated in the figure below, municipal,
provincial and federal levels of government are all owners of dams. A key
challenge for these organizations is the long term capital planning and
investment required to maintain and upgrade the structures.
A synergistic opportunity
exists, therefore, for a
relationship
between
Municipalities
the waterpower industry
and public sector dam
Conservation Authorities
owners. New waterpower
# of Dams
investment on these
Trent Severn Waterway
aging structures can
Ministry of Natural Resources
reduce taxpayer liability,
and Forestry
improve public safety
0
100 200 300
400
and support renewable
energy development in an
environmentally responsible manner. This is particularly true with the
next round of procurement under the Feed-in Tariff (FIT) Program. As
indicated in the graph below, there is a significant number of existing
dam sites that could be retrofitted or redeveloped to produce small
hydro within the FIT size criterion.
Public Water Management Infrastructure
The challenge of rightsizing regulation remains to be addressed,
however, if the opportunities are to be fully realized. A significant
development since the initial proposed amendment to the Class EA has
been the emergence of Ontario’s risk-based approach to environmental
approvals and the Environmental Activity and Sector Registry (EASR).
The EASR is a public, web-based system that allows businesses
conducting certain activities to register them with the ministry, rather
than applying for an environmental approval. The EASR is a tool that
maintains environmental protection. Registrants are required to follow
eligibility rules and regulations, and are subject to inspections and
compliance penalties.
250
200
150
100
50
0
50-100
kw
Initially brought forward as a concept by the Ministry at the 2013
Power of Water Canada Conference, MOECC has developed a
multi-step process to determine those activities or sectors that
could be suitable for the
EASR and subsequent
rules that would define
eligibility. Given the
significant effort already
undertaken on the core
# Sites
concepts through the
Total Potential (MW)
Class EA amendment
process, there is a
solid
foundation
of
100-200 200-300 300-400 400-500
information
upon
which
kw
kw
kw
kw
to base the analysis of
the practical application
of the EASR construct to this subset of small hydro projects. With
the next FIT procurement only months away, the time is now to
advance this important initiative.
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Last Word
Bring it Home
I had the good fortune recently to be invited to address the Muskoka
Watershed Council (MWC) as they deliberated about the review and
refreshment of their 2009 Position Paper on Power Generation. A
thoughtful articulation of the intersection between regional development
potential (transmission and generation) and watershed values, the
position paper is an excellent example of bringing the provincial and
often global conversation to a more local level. It is the same type of
outcome that may be made possible with the IESO’s introduction of
Regional Planning. What I found particularly insightful of the MWC’s
work was the development of overarching principles, including:
1. Renewable energy sources are sustainable and therefore more
desirable than non-renewable energy sources;
2. Small scale power generation projects are both economically
and ecologically more viable;
3. Individual projects, using renewable energy sources such
as hydro, solar or wind, are supported as they minimize
the requirement for new transmission lines;
4. Ontario should aim to be self-sufficient in meeting its power needs;
5. Hydro projects that use existing dam structures are preferable
to creating new dams; and
6. No new power source should have a negative impact on air quality.
The notion of self sufficiency in particular struck me as the discussion
moved into questions of electricity produced and consumed within
the watershed. As I have observed many times, while individual
projects, regardless of technology, can and do encounter local
challenges, I have yet to find a constituency strongly opposed to
electricity. Perhaps it is through this lens that the concept of “willing
host” could be contemplated. Perhaps if we brought home the
reality of our interconnectedness across regions and beyond, more
organizations and citizens would, like the Muskoka Watershed
Council, be actively engaged in balancing their electricity needs and
environmental values.
Paul Norris, President, Ontario Waterpower Association
380 Armour Road, Suite 264 | Peterborough, Ontario | K9H 7L7 | Toll Free (866) 743 1500 | Tel (705) 743 1500 | Fax (705) 743 1570