Decision on biomass project may come by Friday

By JUDY MYRDEN Business Reporter
Thu, Oct 28 - 4:53 AM

An announcement is expected as early as Friday on the controversial $208-million project to generate electricity by burning wood proposed by NewPage Port Hawkesbury and Nova Scotia Power, a source has told The Chronicle Herald.

After getting the government go-ahead Oct. 14 to build the biomass-burning project outside Port Hawkesbury, the power company has yet to make a definitive decision on the plant.

Instead, it has been reviewing the regulator’s decision, which stipulated any cost overruns must be borne by the utility’s shareholders, not its customers.

"There hasn’t been much said. Were the conditions so onerous that it scared them off? I don’t know, from the point of view of Nova Scotia Power, perhaps they just don’t like that much risk," said Wade Prest, a small woodlot owner and director of the Nova Scotia Woodlot Owner and Operators Association, on Wednesday.

A Nova Scotia Power vice-president has said the utility has yet to make a decision on the project and is examining the conditions.

"There’s a process we have to go through to carefully consider the conditions and we are doing that," said Robin McAdam on Oct. 15.

Nova Scotia Power wasn’t supportive of the idea of sharing any risks of the project with its shareholders during a hearing into the development last month.

McAdam told regulators that sharing the risk with shareholders would be "proposing a different kind of regulatory construct than exists today in Nova Scotia."

Neither McAdam nor Bill Stewart, NewPage Port Hawkesbury’s lead manager on the project, were available for interviews Wednesday.

NewPage Port Hawkesbury, a subsidiary of Ohio-based NewPage Corp., is a partner with Nova Scotia Power in the plan to build the power-generating plant. The utility intends to spend about $200 million, including $80 million to buy NewPage’s boiler and $93 million in construction costs.

NewPage has previously said the $80 million from the boiler’s sale will enhance its liquidity. The company has reported having $7 million in cash and $113 million available on a line of credit, but it also has a $3.4 billion debt.

Next week, both NewPage and Emera, parent company of Nova Scotia Power, release third-quarter financial results.

In its 50-page decision, the Nova Scotia Utility and Review Board ordered the utility be on the hook if a penalty clause kicks in for a late start to the project.

The deal between the two companies stated that if Nova Scotia Power gives notice to proceed after Sept. 30, 2010, the contract price will escalate by 0.2 per cent per month.

The board also stated the most important part of the project is a contract worth $92.9 million covering engineering, procurement and construction costs. Any additional costs cannot be passed along to power customers on their bills.

Also, if there are capital cost overruns, the power company must come back before the board for another public hearing.

The utility says it needs the biomass project to proceed in order to meet the province’s renewable energy target of generating 10 per cent of its electricity from wind, tides or biomass by 2013.

http://www.thechronicleherald.ca/Business/1209022.html

Change is in the wind

Turbine demand drops in EU, rises in Canada
By KRISTINE OWRAM The Canadian Press
Wed, Oct 27 - 4:53 AM

TORONTO — Call it a tale of two continents: the world’s biggest maker of wind turbines announced that it will lay off nearly a third of its workforce because of a weak outlook for the European wind energy market in 2011, while Canada is expecting a year of record growth.

Denmark-based Vestas A/S on Tuesday posted a 24 per cent drop in third-quarter earnings and said it will lay off some 3,000 workers in Denmark and Sweden to adjust to lower demand in Europe.

The company said it shipped a total of 719 wind turbines in the quarter, or 27 per cent less than a year earlier, and CEO Ditlev Engel said growth in the European market next year will be below earlier expectations.

"When we look into 2011 we see a lot of uncertainty in a number of European markets which, for instance, the Danish factories have been servicing," Engel said in an interview posted on the company’s website Tuesday. "So you could say we have maybe been too optimistic for too long."

But the weaker outlook for European demand is having no impact on optimism on the other side of the Atlantic.

Robert Hornung, president of the Canadian Wind Energy Association, said over 1,000 megawatts of new wind energy capacity is expected to be installed in Canada next year — exceeding the record 950 megawatts of capacity that was installed in 2009. One megawatt is equal to one million watts.

"We are quite confident that we’re entering a period of sustained strong growth for the industry in Canada, and we think that’s going to provide some significant benefits, both environmental but also economically, to the country," Hornung said in an interview.

Contracts have already been signed for 6,000 megawatts of new capacity to be installed over the next five years, and Hornung said he expects that number will increase to 8,000.

Canada currently has 3,499 megawatts of installed wind energy capacity, and the wind energy association expects that to increase to 4,073 megawatts by the end of the year — enough energy to power more than 1.4 million homes annually.

Every province in the country generates some wind power, and there are commitments to build new capacity in every province except Newfoundland and Labrador over the next few years, Hornung said.

The biggest areas of expansion will be Quebec, with contracts in place for 3,000 new megawatts of capacity by 2015; Ontario, with contracts for 1,500 megawatts; and British Columbia, with contracts for 800 megawatts.

Currently, only about 1.5 per cent of Canada’s total energy demand is met by wind power, but Hornung said this is expected to increase to five per cent by 2015.

This demand is primarily being driven by government policy. Many provinces are working to reduce their reliance on polluting sources of energy like coal and are encouraging increased use of clean energy sources like wind. The development of wind farms is also helping to boost the economy of some regions.

Quebec, for example, is developing wind farms on the Gaspe Peninsula, an area that has been hard hit by declines in the fishery and forestry industries, Hornung said.

http://www.thechronicleherald.ca/Business/1208928.html

Williams edges closer to decision on N.L.-N.S, undersea cable

By ROGER TAYLOR Business Columnist
Tue, Oct 26 - 4:53 AM

Newfoundland and Labrador Premier Danny Williams seems to be the only one willing to talk openly about the possibility of Lower Churchill hydro electricity from Labrador landing in Nova Scotia via undersea cable.

Williams told the annual convention of his Progressive Conservative party on the weekend that the provincially owned Nalcor Energy was in talks with Emera about developing Lower Churchill in two phases — Muskrat Falls first, then the larger Gull Island phase.

Williams says the Muskrat Falls portion alone would be enough to eliminate the need to build a new generating station on the island of Newfoundland, with any excess power being sold to Nova Scotia and New England.

There is nothing new to the idea that negotiations are taking place between Nalcor and Emera. In January 2008, the two energy companies signed a memorandum of understanding to carry Lower Churchill electricity to Nova Scotia and the U.S. market.

The energy trading arm of Emera already sells a small amount of power from the original Upper Churchill hydro project on behalf of Newfoundland and Labrador.

But this time, Williams says he’s ready to announce a decision on the Nova Scotia option "sooner rather than later."

An Emera representative was reported to have indicated only that talks with Nalcor and NB Power are ongoing. Nalcor didn’t respond when contacted Monday. In an email, Murray Coolican, Nova Scotia’s deputy minister of energy, declined to comment on the status of discussions.

The fact that the federal government is expected to make some decisions on funding so-called gateway energy projects may be bringing this issue to a head. Williams confirmed on the weekend that the federal government will be asked to provide loan guarantees to assist in getting the project built.

It had been reported earlier that both Newfoundland and Labrador and Nova Scotia already asked Ottawa for $375 million from a federal fund for public-private projects.

One of the reasons the Nova Scotia option is on the table is the ongoing dispute the Newfoundland government has with Quebec over how it was treated for the original Churchill Falls power project.

"Imagine how exciting a day it would be if we could see that power avoid Quebec altogether," Williams was reported to have told his supporters during his speech.

If a deal is reached, Lower Churchill power would first have to be brought from Labrador onto the island part of Newfoundland, likely via undersea cable, and then by undersea cable to a landing point in Cape Breton.

The cost of building the cable from Newfoundland to Nova Scotia has been predicted to cost about $2 billion.

Negotiating an arrangement with Nova Scotia and Emera isn’t the least of the problems facing the Lower Churchill project. There is political opposition in Newfoundland by those who doubt whether it is possible to develop only half of the project and make money on it. Others question whether it is wise to bypass Quebec.

An agreement with the Innu of Labrador must also be ratified by the Innu before the Lower Churchill could be developed. There are some influential native leaders who fear building the Lower Churchill project will result in flooded burial grounds and the loss of traditional Innu hunting areas.

And that’s not all. The Quebec government took steps earlier this year to block Newfoundland and Labrador and Nova Scotia from gaining access to federal funds to help with the building of a Maritime transmission route.

Nova Scotia can’t count on Williams signing a deal for a Maritime transmission route just yet, either.

The Newfoundland premier seems to be leaving the door open to Quebec participating in the Lower Churchill if Quebec Hydro would agree to reasonable transmission rates.

On another note, the price of natural gas is calculated based on a per million British thermal unit measurement. The wrong measurement was used in a recent column.

http://www.thechronicleherald.ca/Business/1208814.html

Subsea cable still up in the air

Emera mum on talks to get Churchill power to N.S., U.S.
By The Canadian Press
Tue, Oct 26 - 4:53 AM

Emera Inc. is declining comment on whether a deal is imminent with Newfoundland’s Nalcor Energy on the proposed $6.5-billion Lower Churchill hydroelectric project in Labrador.

Over the weekend, Premier Danny Williams of Newfoundland and Labrador said talks continued between Emera and his province’s Crown-owned agency.

Williams said the project would likely be completed in two phases with the help of Halifax-based Emera and that he planned to make an announcement "sooner rather than later."

Emera spokeswoman Sasha Irving confirmed Monday that talks are ongoing with Newfoundland and Labrador, and New Brunswick on an energy link.

"When we have something that we are able to announce, certainly we will be happy to do that and provide details," said Irving.

Emera’s subsidiary, Nova Scotia Power Inc., has been talking with Nalcor about a subsea cable to carry electricity to Nova Scotia and the U.S. market since a memorandum of understanding was signed in January 2008.

Nova Scotia and Newfoundland and Labrador have also asked Ottawa for $375 million for the project from a federal fund for public-private projects.

Nova Scotia Energy Minister Bill Estabrooks said although he isn’t involved in the negotiations between the two utilities, he recognizes the talks are central to getting all the "moving parts" of the project off the ground.

"They are the key particularly when it comes to finances," said Estabrooks.

Meanwhile, Newfoundland and Labrador’s Liberal Opposition called on Williams on Monday to release details on any deal, saying "secrecy on this file doesn’t cut it."

"Taking just any deal doesn’t mean it’s a good deal," Kelvin Parsons, the Liberal party’s interim leader, said in a news release.

"I hope the premier is not grasping at straws just for the optics of him keeping his promise to cut a deal on this project."

The cost of the cable project hasn’t been revealed, although a study by SNC-Lavalin for the Nova Scotia government estimated the price tag at $800 million to $1.2 billion.

The Newfoundland and Labrador government vowed to seek an alternate route to get Lower Churchill power to the U.S. after losing a four-year battle with Quebec about moving electricity through that province. In May, Quebec’s energy board ruled that Hydro-Quebec was entitled to refuse to negotiate a contract with Nalcor Energy.

‘Taking just any deal doesn’t mean it’s a good deal. I hope the premier is not grasping at straws just for the optics of him keeping his promise to cut a deal on this project’

Interim N.L. Liberal Party leader

KELVIN PARSONS

http://www.thechronicleherald.ca/Business/1208808.html

World's largest wind-turbine maker to lay off 3,000

Firm says cheaper to build a windmill in Spain than in Denmark
By The Canadian Press
Tue, Oct 26 - 5:17 AM

COPENHAGEN, Denmark — Vestas A/S, the world's biggest maker of wind turbines, has posted a 24 per cent drop in third-quarter earnings and says it will lay off some 3,000 workers in Denmark and Sweden to adjust to lower demand in Europe.

Net profit was C126 million, down from C165 million in the same period last year. Sales dropped to C1.7 billion from C1.8 billion.

The company, based in Randers, Denmark, said Tuesday it shipped a total of 719 wind turbines, or 27 per cent less than in the third quarter of 2009.

Vestas CEO Ditlev Engel says it has become cheaper to build a windmill in Spain than in Denmark and that growth in the European market in 2011 will be below earlier expectations.

http://www.thechronicleherald.ca/Business/9018430.html

Why PEI’s wind plan is dying

RICHARD BLACKWELL

CHARLOTTETOWN— From Tuesday's Globe and Mail

Published Monday, Oct. 11, 2010 6:59PM EDT

Last updated Wednesday, Oct. 13, 2010 6:42PM EDT

In October, 2008, Prince Edward Island Premier Robert Ghiz made a bold promise. The province was going to dramatically increase the amount of wind power it produced, boosting production to 30 per cent of its total electricity consumption from the 18 per cent it then generated.

The move would make the province a green powerhouse, and the North American jurisdiction with by far the highest proportion of wind-generated electricity. At the same time, PEI would become an energy exporter – despite having no other homegrown sources of power – by building additional wind projects to sell power into the New England market.

All this was to be accomplished by 2013, when the province would have 500 megawatts of wind turbines churning out power – a substantial amount for a tiny island province. Only Ontario, Quebec and Alberta would have had more.

Mr. Ghiz vowed that the $1-billion worth of wind farm and transmission construction would be the largest project on the island since the building of the Confederation Bridge.

Two years later, the plan is in disarray. While PEI tried to attract private developers to the province, several of their proposals demanded higher power prices than the province was willing to pay. The government and its utility rejected the offers because they would have driven up electricity prices, which are already the highest in Canada.

Currently, the government is in negotiations with two developers to build projects that will add just 30 MW to the 164 MW of wind power already in production in the province.

PEI’s tarnished vision underlines the delicate economics of renewable energy around the world, where subsidies and high energy prices are often the keys to getting projects off the ground.

While there is tremendous pressure on governments to wean their power grids off fossil fuel, renewables are still an expensive alternative that can push up electricity prices. There is also an increasing public pushback against huge turbine developments – or other “clean” generation projects – near populated areas, forcing politicians to think twice. Just last week, the Ontario government backed down on a proposed natural-gas-powered electricity plan in the populous – and wealthy – Toronto suburb of Oakville, after a well-organized and intense public protest.

In PEI’s case, a key problem was that expected North American “cap-and-trade” carbon-pricing policies did not come to pass, Energy Minister Richard Brown said in an interview at his office in Charlottetown. If they had, carbon credits associated with wind power would have made development on PEI much more viable, he said.

At the same time, the plunge of the global economy into recession didn’t help. “Economic conditions went down the tubes, and that opened up a lot of excess [power generation] capacity,” Mr. Brown said. Consequently, energy prices dropped, making wind less viable.

Still, “the plan is not dead ... we are still committed to 500 MW of wind,” Mr. Brown insists. The time frame has merely been extended until the economy turns around and energy prices make wind projects more viable. “Any developer that wants to come forward with a project on Prince Edward Island, I am more than pleased to entertain [their plans],” he said.

PEI’s plan was formulated at time when oil prices were above $100 (U.S.) a barrel, noted Dinara Millington, a senior economist with the Canadian Energy Research Institute in Calgary. But that didn’t last. “They did not foresee these kinds of issues, with the economy being so depressed and prices for fossil fuel energy being so low,” she said. That removed any incentives for private developers to jump in with big projects.

Essentially, unless energy prices show substantial and sustainable increases, in most jurisdictions wind power is not economical without subsidies of some sort, Ms. Millington said.

The dilemma for PEI is that if it pays too much to wind developers, electricity prices for consumers and businesses will have to go up, and some of those businesses may leave the island as a result, damaging the overall economy.

By contrast, Ontario can pay high “feed-in tariffs” for the wind and solar power it buys from developers because those renewables still make up just a tiny proportion of that province’s power generation and thus put less upward pressure on overall electricity prices. Even in Ontario, however, the shift to renewables has raised the spectre of higher power prices over the longer term.

“I’ve had developers come in here and say ‘well I can go to Ontario.’ ” Mr. Brown said. “My comment to them is, ‘If Ontario is offering a better deal, see you later.’ ”

Indeed, Ontario currently pays 13.5 cents per kilowatt-hour for on-shore wind power, while PEI pays just 7.75 cents. That makes PEI far less attractive, unless a developer can export some of its power at a much higher price.

With 22 per cent of PEI’s electricity currently generated by wind, “we’re already a world leader in renewable energy,” Mr. Brown said, but he’s not willing to push those numbers higher if it means subjecting islanders to higher rates.

Transmission is also an issue, if PEI is to become a bigger wind energy exporter. Currently, undersea cables carry power to the province from New Brunswick, and some wind power (from a privately owned wind farm) off the island. But that capacity is limited.

The federal government needs to help finance new transmission lines, Mr. Brown said, but Ottawa should also be taking the lead in creating a better east-west power grid that connects the provinces together. The current situation, where most provinces connect north-south to U.S. states, is inefficient and counterproductive to Canada’s energy and environmental interests, he said.

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/why-peis-wind-plan-is-dying/article1752506/

NSP, Daewoo ink deal on wind power

By The Canadian Press
Wed, Oct 20 - 4:53 AM

Nova Scotia Power and Daewoo Shipbuilding and Marine Engineering have agreed to build and use made-in Nova Scotia wind towers and blades across the province.

Premier Darrell Dexter says his government has signed a letter of intent that provides the opportunity for Daewoo to supply wind turbine components for up to 100 megawatts of capacity over the next four years.

The Nova Scotia government is a partner with Daewoo to build a wind turbine plant at the former TrentonWorks railcar factory.

Nova Scotia Power will work with Daewoo on having the Trenton plant supply the towers and blades required by the utility during the next several years.

The private utility company will also encourage the use of those components by independent power producers working on their own or in partnership with communities. Under the letter of intent, Daewoo would supply Nova Scotia Power with the wind turbine components, subject to competitive pricing and quality, and the ability to meet requirements of the utility’s turbine suppliers.

http://www.thechronicleherald.ca/Business/1207865.html