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Emerging Technologies in Electricity Generation - Energy Market Assessment - Speaking Points

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Speaking Points
by Kenneth Vollman, Chairman
National Energy Board

Emerging Technologies in Electricity Generation
Energy Market Assessment

21 March 2006
Media Briefing
National Energy Board Hearing Room

Good morning. I'd like to thank all of you for coming to this briefing on the National Energy Board's view of Emerging Technologies in Electricity Generation. Before I get into the report's presentation, I'd like to take a moment to first introduce myself - my name is Ken Vollman and I am the Chairman and CEO of the National Energy Board.

As many of you will already know, the National Energy Board is an independent federal agency that regulates several aspects of Canada's energy industry.

One of the mandates of the National Energy Board is to keep under review and inform the Canadian public on the outlook for energy supply and demand.

To fulfill this mandate, the Board produces Energy Market Assessments, or EMAs, on the major energy commodities in Canada.

This past October, the Board published an EMA on the deliverability of natural gas and natural gas liquids. Next week, we'll be releasing a joint report with the Ministry of Energy, Mines and Petroleum Resource of British Columbia entitled Northeast British Columbia's Ultimate Potential for Conventional Natural Gas.

As for today's report, it represents the Board's independent and objective assessment of current Canadian emerging technologies in electricity generation.

The term "Emerging Technologies" refers to increasingly significant potential for power generation from wind power, small-hydro, biomass, geothermal energy, fuel cells, solar cells, ocean energy and clean coal.

It outlines some of the prospects and developmental challenges facing these technologies, and provides an overview of regional perspectives related to the technologies. Demand management programs are also included in the analysis.

Interest in these "greener and cleaner" technologies is growing in Canada. It is driven by growing concerns about the adequacy of our electrical supply and the need for energy supply diversification, and environmental concerns such as air quality and global warming. In some regions of Canada, emerging technologies represent opportunities for local economic growth.

Global developments in energy markets have created the conditions for rapid growth in emerging technologies.

These conditions include large increases in fossil fuel prices in recent years; a move toward more competitive generation markets in many provinces; increasing public concern with environmental issues; and decreasing costs resulting from technology improvements.

In addition, there are a number of provincial and federal initiatives encouraging the development of emerging technologies.

These include programs and incentives like renewable portfolio standards, provincial policy targets for generation from these sources; the development of grid connection standards, or fiscal incentives.

As described in the report, each of these technologies has technical limitations such as the intermittency of wind. Some of these limitations will be addressed as the technologies develop. However, considerable non-technical barriers to the greater development of emerging technologies still exist.

There is low penetration of emerging technologies in power generation. This is in part because of the low costs of electricity derived from conventional sources, such as large-scale hydro, coal, nuclear power and natural gas. To some extent, the low penetration is also due to the structure of the industry, which historically has favoured building large central generating stations with conventional power sources. A major consideration is that the external costs associated with traditional sources (air pollution and other environmental costs) are not included in electricity prices.

Another barrier is the lack of access to the transmission grids and the need to set a priority status in generation dispatch. To a large extent, power systems are set up to connect large-scale generating stations, enabling the centralized dispatch of power. The rules for connecting smaller, remote generators are often unclear or apparently restrictive.

In regard to project approval, emerging technologies often face many of the same issues as established technologies. Their smaller size can make regulatory requirements more of a burden, and new project proponents may not have developed the expertise to deal with the regulatory process.

Yet another factor impeding the implementation of emerging technologies is that most government guidelines were developed for traditional generation sources. Consequently, they are not necessarily appropriate for emerging technologies. In addition, provincial initiatives supporting the development vary across Canada.

Canadians must now determine appropriate sources of electricity generation in light of increased concerns about the adequacy of supply, fluctuating energy costs, and the environment. And if Canadians desire to encourage the development of emerging technologies, governments will need to take steps to reduce barriers, promote cooperation, and improve certainty.

Some of the options for action that governments could pursue would include:

  1. Adopting rules for access to the power transmission grid that facilitate the development of emerging technologies.
  2. Ensuring that regulatory timelines are clear and application requirements are commensurate with the size and scope of the proposed project.
  3. Continuing to support research into emerging technologies.
  4. Encouraging regional or interprovincial solutions. Sharing resources can capture synergies, for example between wind and hydro regimes.
  5. Continue to provide financial incentives to emerging sources of power.
  6. Allow electricity prices to more closely reflect current market conditions. Governments could consider pricing regimes that would enable the development of emerging technologies. These technologies require higher prices than those paid for power generation from historical assets.
  7. Guarantee minimum prices for electricity generated from emerging technologies, such as the current proposal for standard offer contracts in Ontario.

Diversifying our electricity generation capabilities with the addition of alternative and renewal technologies could translate into an economy that is better equipped to respond to the growing needs of Canadian consumers. It would also indicate a greater level of involvement on the part of governments and industry towards the protection of our environment for future generations. It is now up to Canadians to consider how to best balance our potential for supply with our increasingly complex demands.

Thanks and for those of you who might have questions, the subject experts and I would be most pleased to provide the answers.

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Date Modified:
2011-10-28