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 MEGAWATT SPONSORS KILOWATT SPONSOR BREAK SPONSORS OWA Advertising 2014 ½ page (Tab) advertisement in Membership Directory $200 St. Catharines Hydro Generation Inc. owns and operates the Heywood Generating Station in Port Dalhousie. The company is currently preparing to build a new hydroelectric generating station on the Twelve Mile Creek, pending a Purchase Power Agreement with the Ontario Power Authority (OPA), which, when completed, will become the Shickluna Generating Station with a 4 megawatt capability. power 15th Annual Frank Perri, P. Eng. General Manager St. Catharines Hydro Inc. St. Catharines Hydro Generation Inc. 340 Vansickle Road, Unit 1, St. Catharines, ON L2S 0C9 [email protected] cell: 905-328-7485 phone: 905-323-3452 of water Canada To sponsor or register call 1.866.743.1500 or online at www.owa.ca White Oaks Conference Resort • Niagara-on-the-Lake, Ontario • October 18-20, 2015 OWA SIGN STORE 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. ORDER NOW TO HAVE YOUR SIGNS IN BY SPRING! Check out the NEW OWA Sign Store at owa.ca or contact us [email protected] 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
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