canadian solar industries association

www.cansia.ca

Canadian Solar Industries Association

Alberta’s Solar Future:

Industry Status, Market Obstacles and Policy Proposals

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If there was only one message that I could leave with you all…..

Alberta’s electricity sector is on the cusp of a major paradigm shift,

Economic, environmental and social opportunities are colossal,

Leadership needed to enact this change cannot be underestimated,

If you support this change - make your voice heard!

Canadian Solar Industries Association | Alberta’s Solar Future: Industry, Market and Policy

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About CanSIA

Who we are:

National trade association representing the solar energy industry throughout Canada

Since 1992, worked to develop markets and create opportunities for our Members

Why we are:

Trade associations exist to represent the interests of their Members

CanSIA exists to maximize the benefit of the solar industry to Canada

Where we will be in 2020:

Solar as mainstream energy source, integral part of Canada's diversified electricity-mix

Ensure solar industry will be sustainable with no direct subsidies


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About Me

Patrick Bateman

CanSIA Director of Market Intelligence & Research.

Almost a decade in the Renewable Energy sector.

With CanSIA since 2009, during build-out of >2 GW.

Solar policy and market development professional.

Current role includes Western Canadian markets

and lead on Utility & Regulatory Affairs Network.


Prior to CanSIA, consulting in England for municipal government clients to integrate

supportive policy for renewable energy into their local development plans.

Hold an MSc in Renewable Energy from School of Construction Management &

Engineering in England (evenly split between the engineering, policy and business).

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About what I do


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Presentation Outline

1. What is the current status of solar electricity industry activity in Canada?

2. What misperceptions about solar electricity are being overcome in Alberta?

3. What could the future of renewable energy policy look like in Alberta?

Scale, Pace and Policy Principals.

Renewable Portfolio Standard (RPS).

Standing Offer Program (SOP).

4. What can Albertans do to support these policy outcomes?

5. Conclusion and Summary.

6. Solar West 2015.


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Presentation Context

CanSIA has been engaging with the Government of Alberta for the past decade.

Period was characterized by “policy supply” being in excess of “policy demand”:

“Policy Supply”: Several formal industry consultations but no significant change.

“Policy Demand”: Seven Ministers of Energy (average of 1.25 years per mandate).

Premier Notley and her Government now deeply committed to accelerating thedeployment of renewable energy and transitioning from coal-fired generation.

In 7 – 9 weeks, policy announcements from the Government of Alberta areanticipated in advance of COP 21 that will give indication of level of ambition.

These announcements have the potential to transform Alberta in many waysincluding global branding and perception, environmental impact, electricitysupply-mix and industrial strategy.

This is a pivotal time of boundless opportunity coupled with uncertainty as globalenergy policies and markets evolve and shift.


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Current status of solar electricity industry activity in Canada (1/6)

During 2015, the cumulative installed capacity in Canada surpassed 2,000 MW:

An annual average of 250 MW was added nationally in 2010, 2011 and 2012.

445 MW added in 2013, 635 MW in 2014 (Canada’s record-year to date).

Canadian Solar Industries Association | Alberta's Solar Future: Policy & Market Considerations

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More than 99.2% of this installed capacity is in the province of Ontario:

Solar fleet meets ~1.5% of Ontario’s total annual demand (generates >2 TWh per year).

Reduces provincial summer peak load by ~8% (peak is 20% lower today than in 2006).


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National Ontario

Ontario installed >1 GW in 2013 and 2014

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Solar has contributed to Ontario’s phase-out of coal (~6 GW):

Ontario’s electricity sector will emit ~20% in 2015 of what it did in 2010 (from 20 to 4 Mt).

Phase-out equivalent to displacing >50% of Alberta’s annual electricity sector emissions.


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Cumulative Installed Capacity Ontario Electricity Sector Emissions

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Alberta represented ~42% of the cumulative installed capacity outside of Ontario by

the end of 2014 (and was the only province with more than 5 MW):

Alberta market is also growing faster year-on-year.


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The national average rate of deployment in Canada is ~52 watts per capita:

About twice the global average of 25 watts per capita.


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Alberta would need ~100 MW of cumulative installed capacityin 2014 to meet the global average deployment rate.

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When Ontario is excluded, the national average is ~1.5 watts per capita:

Alberta ranks 4th with a deployment rate around the national average.

This should be viewed as future potential and not a slow start.


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What misperceptions are being overcome in Alberta?


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One-by-one, many long-held misperceptions that have served as obstacles to solar

and renewable energy are being overcome:

Misperception #1: Renewable and Solar Energy is Too Expensive

Misperception #2: AIES cannot manage High Penetrations of Solar

Misperception #3: Carbon Pricing Alone is Sufficient to Level Playing-Field

Misperception #4: Wholesale Markets are Incompatible with Solar

Misperception #5: Solar Will Increase GHG Emissions

....................Others?


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What is the future of renewable electricity in Alberta?

Renewable electricity should not be “forced” onto the grid:

Targets should reflect electricity demand growth and coal phase-out schedule.

With limited load growth, coal phase-out would be the key enabler of new renewables.

How should the Government of Alberta set renewable energy targets?

Targets: TWh (percentage of electricity)?

Timelines: 2020, 2025 and 2030?

Example scenario:

• 17% (2020), 27% (2025), 40% (2030)?

• Others……………?

What role (%) should solar play in those targets?


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How can that future for renewable electricity be realized?

The low cost of power and volatile energy-only market makes it difficult to finance anynew generation assets in Alberta, especially those with high upfront capital costs and lowongoing fuel and operational costs.

The key obstacles for renewable electricity in Alberta are:

The absence of creditworthy long-term PPAs.

Pricing which reflects the true value that solar brings to the grid.

An inability to obtain full value for GHG attributes.

Small-scale renewables also face additional unique benefits.

CanSIA and CanWEA have entered into a partnership to jointly develop and advocate fora common suite of policy options that would overcome these obstacles:

Broadened Carbon Price application and incremental increases in price over time.

A Renewable Portfolio Standard (RPS) for utility-scale; and a complimentary

Standing Offer Program (SOP) for Distribution-Connected.


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Definitions

Renewable Portfolio Standard:

“A regulatory mandate to increase production of energy from renewable sources. In most RPS, anexplicit annual goal for renewable generation is defined as either a percentage of total electricitygeneration (for example 15 percent of generation must come from renewable generation by 2020),or as new generating capacity (for example 1,000 MW of new renewables must be added by 2020).The goals typically increase annually and are informed by projections of load growth and theretirement of existing generation.”

Standing Offer Program (SOP):

“An on-going “call for power” that offers long-term contracts (PPAs) to eligible applicants. Acommon trait of SOPs is that they are exclusive to small-scale zero-emissions generators.Application, technical and interconnection requirements are typically standardized to streamline andreduce the burden on proponents to a level that is proportionate to the size of the project.”

Distribution-Connected Solar:

“Electricity generation assets using solar photovoltaics connected to the distribution system. InAlberta, the majority of the distribution network has a line voltage of 15 and 35 kVA. As a result (anddue to additional technical considerations such as interconnection capacity at distributionsubstations and thermal and short circuit capacity) solar assets which connect to the distributionnetwork are limited to typically 5 MW in capacity (some projects could be as large as 15 MW). Thisscale of project has several unique characteristics related to system benefit, ownership and theability to deploy rapidly which differentiates it from larger utility-scale assets.”


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How do these proposals relate to global solar policy experience?

Approximately two thirds of solar globally was procured through a policy that results

in a Power Purchase Agreement (PPA) for the generator:

RPS have been important in the United States, present in 33 jurisdictions.


2014 Market Incentives and Enablers and Historic Market Incentives and Enablers

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US RPS Policies


Adapted from: www.dsireusa.org / June 2015

WA: 15% x 2020

OR: 25%x 2025 (large utilities)

CA: 33%

x 2020

MT: 15% x 2015

NV: 25% x

2025

AZ: 15% x

2025

NM: 20%x 2020

(IOUs)

HI: 100% x 2045

CO: 30% by 2020

(IOUs) *†

MN:26.5%

x 2025 (IOUs)31.5% x 2020 (Xcel)

MI: 10% x

2015WI: 10%

2015

MO:15% x

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IA: 105 MW

IL: 25%

x 2026

OH: 12.5%

x 2026

NC: 12.5% x 2021 (IOUs)

ME: 40% x 2017

29 States + Washington

DC + 3 territories have a

Renewable Portfolio

Standard

Renewable portfolio standard

U.S. Territories

DC

TX: 5,880 MW x 2015

NMI: 20% x 2016

PR: 20% x 2035 USVI: 30% x 2025

NH: 24.8 x 2025

VT: 75% x 2032

MA: 15% x 2020(new resources)

6.03% x 2016 (existing resources)

RI: 14.5% x 2019

CT: 27% x 2020

NY: 29% x 2015

PA: 18% x 2021

NJ: 20.38% RE x 2020 + 4.1% solar by 2027

DE: 25% x 2026

MD: 20% x 2022

DC: 20% x 2020

Renewable portfolio standard with solar/distributed generation provision

22 States + DC have an RPS

with solar or DG provisions

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What key Considerations need to be made for RPS design?

Solar “Carve-Outs” have been essential for solar and distributed generation in US:

76% of United States jurisdictions with an RPS have these provisions.


Adapted from: www.dsireusa.org / June 2015

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Why a different policy approach for

distribution-connected assets than for utility-scale?

Distribution-connected solar electricity generation (typically <5 MW but could beas large as 15 MW) has several unique characteristics related to system benefit,ownership and the ability to deploy rapidly which differentiates it from largerutility-scale assets.

In addition to the unique benefits, small-scale generation also have differentrelative cost considerations and process requirements due to their size and costrelative to larger projects.

The SOP would address these differences with a tailored program:

Provide eligible generators with a “bundled” PPA (i.e. electricity plus environmentalattributes)

Pricing would need to deliver an appropriate rate-of-return and reflect true value ofsolar.

Program would be largely funded through wholesale market and the REC market.

Electricity generated through the SOP would contribute toward the province’s RPSmandate but would not bid into pool (i.e. net-load).


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Conclusion

This is a pivotal time of boundless opportunity coupled with uncertainty as globalenergy policies and markets evolve and shift.

In 7 – 9 weeks, policy announcements from the Government of Alberta are anticipatedin advance of COP 21 that will give indication of level of ambition.

CanSIA is advocating for:

Broadened Carbon Price application and incremental increases in price over time.

A Renewable Portfolio Standard (RPS) with a “Solar Carve-Out”; and for

A Standing Offer Program (SOP) for distribution-connected solar.

Demonstrated public support for new policies are essential to enable action. CanSIAwill be undertaking polling and media relations to demonstrate this support.

I hope that all of you will be taking a pro-active role in communicating to the LeachPanel, your Elected Official and your Friends and Family that this is good for Alberta.

I hope to see you all at www.solarwestconference.ca at the Westin Calgary fromOctober 7th to 9th.


http://www.solarwestconference.ca/

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Contact Details

Patrick Bateman

Director of Market Intelligence & Research

Canadian Solar Industries Association (CanSIA)

– Email: [email protected]

– Phone: (613) 736 9077 ext 227

– Linkedin: https://ca.linkedin.com/in/pdbateman


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CanSIA’s Board of Directors

Nigel Etherington, Planet & Company

Robert Leah, Recurrent Energy

Greg Scallen, SunEdison

Bob Waddell, Centrosolar

Utilia Amaral, SunEdison

John Rilett, ENMAX

Thomas Timmons, Gowlings

Bonnie Hiltz, GDF Suez Canada

Jon Kieran, EDF EN Canada

Ivano Labricciosa, Oshawa Power and

Utilities Networks Inc.


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