Energy Self-Sufficiency

It’s probably not what occurs to most people as they wait for their morning toast to pop, but that day in my Cornwall, PEI home, I couldn’t help but ponder the possibility that water sitting behind a dam in the province of Quebec might soon be powering the appliance that makes my breakfast.

It’s all part of the promise brought to Island residents by the Liberal government in their Island Prosperity Plan. After what seems like an eternity of dependence on energy brought across the Northumberland Strait from New Brunswick, the PEI government wants to take charge of its energy future. For Islanders, who are paying more than twice the power rates of some jurisdictions, it’s not a moment too soon.

The Province’s Minister of Environment, Energy and Forestry, Richard Brown, believes the best way to reduce power rates is via “sustainable” energy. Ron Estabrooks, Energy advisor with the same Department, affirms that wind power can be less expensive than oil and natural gas. In 2007, the PEI Energy Corporation established has a 39 MW Power Purchase Agreement with Maritime Electric at an initial price of $77.50 per megawatt hour (7.75 cents per kilowatt hour) for power generated at East Point and the Norway facilities. This price has a component linked to the consumer price index. As the price of petroleum products goes up, the more economical Island-produced green power becomes.

That may be the case, but even the green route is not one that PEI can go alone. The Island has strong winds blowing in many places, which makes wind power a viable source for energy but it’s far too costly to be the sole source of power. “People always ask, ‘Why don’t we use all of our wind power here?’” Brown says. “That will never happen.”

Why is that? It’s because the wind only blows approximately 40 per cent of the time, so those are the only times that power can be produced from turbines. The Island currently has a 156 megawatt wind power capacity. While that would normally cover all of the Island’s everyday energy needs, rules set out by the Federal Energy Regulatory Commission (FERC) say that a jurisdiction needs the capability to be able to cope with its possible peak usage at any given time. Each year on December 24, PEI’s power usage spikes to around 220 megawatts.

While provincial wind turbine capacity is expected to expand to around 500 megawatts by 2013, the energy produced is too costly to store. Brown says that it would require the construction of a power storage facility as big as three aircraft hangars. According to the Minister, that just doesn’t make sense – at the moment, anyway.

Instead, the Province is leaning towards a balanced energy approach that includes either Quebec or Newfoundland and Labrador. If successful, the initiative would make the Island 100 per cent green energy powered.

The Plan is to increase PEI’s wind power capacity to 220 megawatts or more. When the wind is blowing, that would be the Island’s energy source. Any excess energy would be sold to a partner province. In exchange, the partner province would send hydro power to PEI when no wind power is being produced on the Island. The hope is to sell the wind power to the other province for 7.5 cents a kilowatt hour and buy the hydro at the same rate.

The logistics may be tricky but the basic concept is simple, Brown says. “We give you wind and you give me hydro, we load balance, and we all win.”

The coming June closure of the Dalhousie power plant in northern New Brunswick was originally considered a significant blow to the Island’s energy supply – it supplies approximately 13 per cent of the Island’s electricity. Now, however, the impending loss has become a catalyst to speed up the “100 per cent green power” plan. “It (Dalhousie) was very expensive dirty power anyways, and it was only getting more expensive,” explains Brown.

Other gas fired plants could be found to replace that energy, but Brown predicts carbon taxes are not that far down the road, which is why PEI is using this opportunity to make the green energy switch now.

The end result should be lower power rates on PEI, where rates are currently the highest in the country. Compared to the rest of the region, the Island has equal labor rates and equal taxes but the power rates have the potential to scare off businesses. “I’m not going to ask Islanders to work for less just so we can draw businesses here,” Brown says.

Jamie Ballem, a former Progressive Conservative Environment Minister and current energy consultant with his company(Island Green Power), is skeptical about the province’s energy balancing proposal.

“That would be good if you could do that, but Quebec has never been very receptive to doing that kind of thing,” Ballem says. “We’re saying ‘please sell us power when we don’t have any wind blowing.’ Usually they would charge a higher price to do that.”

Still, he admits that the balancing option is a logical, economical solution. Ballem toured Labrador’s Churchill Falls hydroelectric generating station when he was Environment Minister, and realized at that time that a partnership with a hydro producer would be ideal because the hydro fuel is easy to store. Whenever the water is shut off, you stop the generation. “Maybe Quebec is more willing to do that now than they had been,” he suggests. But he doesn’t sound hopeful.

Ballem also takes issue with the Island Prosperity Plan because he says it doesn’t support independent power producers. “It’s nice that the government sees that (increasing) renewable energy sources will help generate wealth in the province. But their Plan, in my understanding of it, is they are saying: ‘OK, you guys go do it and we’ll get the benefit from it’. They’re not saying ‘Here, we’ll give you this incentive, here’s a tax break for it and this is what you can sell it for.’”

For people and businesses who want to put up solar panels or small wind turbines, there’s really no incentive to do that. “Other provinces have incentives for people to set up their own personal turbines.”

Ballem claims there is little in the Plan to encourage wind developers to come here other than the Island’s good wind. One businessman crunched the numbers and told Ballem he would make more money if he went to New Brunswick, where there is 20 per cent less wind. Once he factors in transmission costs, government taxes, royalty costs, and renewable energy credits, the businessman said PEI is a losing proposition.

Minister Brown, however, isn’t deterred. He says he’ll keep fighting to get everyone to work together. “I’m a firm believer that when we take the politics out of power, the consumer wins.”

2 Comments to “Energy Self-Sufficiency”

  1. Avatar Darrin Steeves // March 12, 2010 at 9:53 am // Reply

    I like receiving the Atlantic Business Magazine because it feels so rich to the touch because of the highest quality of newsprint used. I want to comment on your feature report called “Whistling in the Wind” because is mainly a wish list from PEI’s Minister of Environment, Energy and Forestry, Richard Brown, who isn’t our sharpest knife on the Island. Firstly, the true cost of producing wind power is 19 cents per kilowatt/hour while the Province via the PEI Energy Corp. sells it to Maritime Electric for the bargain rate of 7.75 cent per kilowatt/hour and Island consumers pay an average price of about 17 cents per KH.for electrical power. Green energy is expensive and will never be cheaper than conventional sources. Today, Maritime Electric gets about 18 per cent of their total from wind energy so the cost of power to consumers has steadily increased not decreased every year since. The PEI’s Minister of Energy’s dream of energy swaps with other Provinces for wind power is not likely to happen because producing and selling power is all about profit and not good will. Most of the statements made by Jamie Ballum, once a dairy farmer, next a Binns Conservative Cabinet Minister and now an energy consultant are equally invalid. It’s unfortunate the writer Nicholas Oakes neglected to interview people like Malcolm Lodge who are experts concerning the facts and fiction concerning wind power on PEI because he ran the original test site at West Cape about 20 years ago. I like reading articles about PEI but this one lacked sufficient research and left the false impression with readers that the solution to our energy needs is wind power while it isn’t and never will be.

  2. Avatar jamie Ballem // July 11, 2010 at 2:10 pm // Reply

    Dear Editor,
    I would like to respond to letter published in your May/June issue from Ian McQueen and also to the letter on your website from Darren Steeves. Both letters are almost identical in the wording used so I suspect there is one author???
    I found both letters amusing since they are critical of your magazine for not doing any research but yet both gentlemen use numbers that are totally wrong which is more than a little ironic!
    Since I am mentioned in both letters as using invalid statements I would like to offer up the following;
    The average price of electricity in PEI is not 17c/kwh as claimed by the two authors, the top residential price was as high as 16 cents (now 13.65c/kwh) and some industrial rates are below 10 cents. This is public information if the 2 critics took the time to check. Yes I was a Dairy Farmer and proud of it but I am not sure what that has to do with the article except that maybe these 2 have negative concepts about farmers? What I do know is that if the highest number is 16 then the average cannot be 17?
    The next comment is the true cost of wind energy is 19c/kwh. I have no idea where that number comes from except from an oil industry that does not want to see locally produced energy from free fuel (wind). The energy sold to Maritime Electric is around 8c/kwh now and the Energy Corp makes a profit. Check the auditor Generals report for PEI, again public if someone took the time to check.
    My question, who funds Climate Truth Initiative, this group is always against locally produced renewable energy. You tell me?
    Jamie Ballem
    Island Green Power

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