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Power Procurement in British Columbia. Advanced Renewable Tariffs. Thomas Vlcek – Royal Roads University MBA. This presentation will cover: BC’s Electricity Deficit Mechanisms of support for renewable electricity Quota versus Feed-in models BC tender results Feed in tariff results.
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Power Procurement in British Columbia Advanced Renewable Tariffs Thomas Vlcek – Royal Roads University MBA
This presentation will cover: • BC’s Electricity Deficit • Mechanisms of support for renewable electricity • Quota versus Feed-in models • BC tender results • Feed in tariff results
BC’s Electricity Supply Outlook Source: BC Hydro, “2006 Integrated Electricity Plan,” (Vancouver: BC Hydro, 2006), p.3.
A Looming Power Crunch Demand for electricity in BC is beginning to outstrip heritage supply • BC Hydro a net importer since 2001 • Projected shortfall of nearly 20,000 GWh by 2025. Source: BC Hydro 2006 IEP.
Imports by Resource Type Source: BC Hydro Company Web site, accessed February 2006.
BC Energy Plans 2002 Plan’s four main objectives: • Continued low electricity rates • Secure and reliable supply • Private sector investment, jobs • Environmentally responsible development. 2007 Energy Plan • Self-sufficiency by 2016 • Zero net GHG emissions from new electricity generation
Mechanisms for Supporting Renewables 1.Quota obligation/Tender: Quantity fixed, market determines price 2.Feed-in Laws: Fixed Price, market determines quantity
Tender Process in BC BC Hydro has issued Calls for Power since the late 1980’s: • 2001-02 Green Call • 2002 Customer-based Generation Call • 2002-03 Green Call • Vancouver Island Call for Tender (VICFT) • 2006 Open Call for Power
CFP Project Status Results of BC Hydro CFP Between 2001 and 2006
CFP Resource Mix Share of BC Hydro EPA’s by Resource Since 2001/02
Issues with the Tender Process in BC Reasons for Attrition: • Licensing and regulation, cost • Financial hurdles, pursuit of lowest price • Transmission expense/economies of scale • Delivery shortfalls/liquidated damages Other issues: • Exclusion of smaller, community developers • Lack of technological/resource diversity
So What are Advanced Renewable Tariffs? Basics: • Fixed minimum price paid to suppliers of renewable electricity • Long term contracts lasting 20 years • Guaranteed non-discriminatory access to electricity grid • Cost of tariff borne by all consumers based on level of use
Dissemination of Alternatives Obligation or Quota Model • Employed in 38 countries worldwide • Renewable Obligation – RO (UK) • Renewable Portfolio Standard – RPS (USA) • Mandatory Renewable Energy Target (Australia) Feed in Tariffs • Employed in 41 countries worldwide (2006) • Western/Eastern Europe, Asia • Introduced in Ontario in 2006 (SOC)
Renewable Tariff Design Key components: • Simple and transparent • Simplified Interconnection • Prices sufficient to drive development • Contract lengths sufficient for profitability • Prices differentiated by technology • Prices differentiated by resource • Limit on project size but no program cap.
ARTs in Europe 2005 Europe has more than 50% of the world’s wind capacity
ARTs in Europe 2005 Germany has developed nearly 40% of world PV capacity
Benefits of ARTs • Pay only for generation • Increased program flexibility • Lessens Pressure to Get Prices Right the First Time • Reduced development risk • Contract equals collateral • Distributed generation • Tiered tariffs distribute development, add security • Reduced pressure on best sites • Profitability Still Higher at Windy Sites • Reduced NIMBYism • By Enabling Greater Participation • By Reducing Concentrations
Standard Offer Contracts in Ontario Ontario adopted SOC for projects <10MW in 2006 Anticipated benefits: • Improved efficiency through reduced line losses • Improved reliability and stability of the electricity system • Increased rural investment • Creation of skilled jobs • Cleaner air • Greater public acceptance of renewable energy
Standard Offer Prices Source: OSEA
Conclusion • Tender model has not delivered in BC • ARTs are the best mechanism for delivering large amounts of RE, • Quick, affordable and distributed • BC Hydro/Utilities Commission need to explore alternatives to CFP.
Thank-you for your time… Questions?