REMOTE COMMUNITY RENEWABLE ENERGY TECHNOLOGY PROJECT IDENTIFICATION INITIATIVE

Transcription

1 REMOTE COMMUNITY RENEWABLE ENERGY TECHNOLOGY PROJECT IDENTIFICATION INITIATIVE FOR MORE INFORMATION CONTACT: Ron Alward, Senior Research Officer Renewable Energy For Remote Communities Program CANMET Energy Diversification Research Laboratory (CEDRL) 1615 Lionel-Boulet Blvd., P.O. Box 4800 Varennes, Quebec J3X 1S6 Tel: Fax: Website: Abstract Natural Resources Canada (NRCan) is working to help increase the renewable energy industry s access to high-value markets. The Renewable Energy for Remote Communities (RERC) Program helps to accelerate the deployment of renewable energy technologies (RETs) in Canada s 300 remote communities by assisting key stakeholders with the identification, selection and implementation of reliable and cost-effective RET projects. To accelerate implementation of RET projects, RERC established an initiative and hired consultants, each expert in a specific technology, in the autumn of 1998 to identify high-potential projects with a reasonable likelihood for near-term implementation in Canada s remote communities. The technologies considered under this initiative are in the following four categories: isolated grid-connected wind energy systems; isolated grid-connected small hydro systems; solar air heating systems and; automated wood-biomass space heating systems. Consultants screened communities to select a limited number of promising potential projects. RETScreen TM analyses were performed to determine if each potential project was financially feasible. A total of 51 likely projects were identified in remote communities scattered across British Columbia, the Prairies, Ontario, Quebec, Nova Scotia and Newfoundland in the south, and the Yukon, Northwest Territories and Nunavut in the north. Of these, 27 potential projects offered reasonable potential.

2 1.0 Background Natural Resources Canada has been working to help increase the renewable energy industry s access to high-value markets throughout the country. NRCan s Renewable Energy for Remote Communities Program helps to accelerate the deployment of renewable energy technologies in Canada s 300 remote communities by assisting key stakeholders with the identification, selection and implementation of reliable and costeffective projects. As a key part of its program, RERC, in collaboration with industry and government organizations, has developed RETScreen TM, a standardized and integrated pre-feasibility analysis tool that helps to quickly identify and evaluate viable opportunities for cost-effective implementation of RETs. This tool comprises software, a comprehensive user manual and a remote communities database in the version released in In the autumn of 1998, the RERC Program initiated a project to identify a number of potential renewable energy projects in Canada s remote communities using RETScreen. Remote communities are listed in the RETScreen database and are classified as such using the following criteria: not presently connected to the North American electrical grid or piped natural gas network and; permanent or long-term settlements (five years or more) with at least 10 permanent residences. 2.0 Project Description Expert consultants were hired to look at potential isolated grid-connected wind energy systems, isolated grid-connected small hydro systems, solar air heating systems and automated wood-biomass space heating systems for single buildings or mini-district heating networks. Consultants were contracted for each technology, one each for Eastern and Western Canada. For the purposes of this initiative only, Eastern and Western Canada and their sub-regions were defined as: Eastern Canada, with sub-regions: - Newfoundland and Labrador (NFL) - Quebec (QC) - Ontario (ON) - Nunavut (NT) Western Canada, with sub-regions: - Prairies - Alberta (AB), Saskatchewan (SK) and Manitoba (MB) - British Columbia (BC) - Yukon (YK) - Northwest Territories (NWT) Prince Edward Island and New Brunswick have not been included since they do not contain remote communities as defined earlier. Nova Scotia (NS) also has no remote communities that fit the above definition, however, Sable Island has been incorporated in the study. An additional community in British Columbia, Kyuquot, was added to the study at a later date. All subcontractors were asked to use Version 98 of RETScreen TM as the analytical tool to undertake the technical and financial analyses. Common financial input parameters (e.g. discount rate, debt term) were used by the consultants to allow for cross-project comparisons. Projects identified by each consultant had to be drawn from remote communities in one or the other of Eastern Canada or Western Canada and had to include projects in at least two of each of these areas four sub-regions. Consultants undertook the work in three distinct phases. The first was a pre-screening of all the remote communities in the consultant s area of study to select 10 communities with high potential for utilizing

3 the technology allocated for the study. Screening criteria for this phase included, but were not limited to: an identified and reasonable need for a near-term future energy system in the proposed community. This need could be demonstrated in any number of ways including the presence of one or more of the following conditions: - new construction imminent - the community is undergoing high population growth - there is demonstrated substantial energy demand growth in the community moderate to high fuel costs availability of local renewable energy resource(s) The second phase included selection of the five projects from within these 10 communities with the highest potential for completion and also identification and determination of the role of all the key stakeholders. Consultants were responsible for identifying, communicating with and working with key stakeholders and/or other knowledgeable persons in or concerned with each community selected. These stakeholders included: Provincial and Territorial governments and their agencies, electric utilities, Public Works and Government Services Canada, Indian and Northern Affairs Canada, tribal councils, municipal governments and others involved in energy decisions for the communities. Screening criteria in this phase included: high degree of interest in the potential project by important stakeholders good matching of potential project to an identified community need. The third phase was the preparation of prefeasibility studies for each of the five highest potential projects identified by each consultant. The consultants were encouraged to use existing studies, when available, to initiate their analyses. 3.0 Results In total, some 51 potential projects were identified in remote communities. The total budget allocated for all the RETScreen studies was approximately $120,000. When the necessary data was collected from community and other sources, then analyzed using RETScreen, slightly more than 50% of the potential projects looked promising to pursue further. Tables 1-4 present major results of the RETScreen studies for these 27 potential projects. For all technologies, except Small Hydro, the minimum threshold established for the Internal Rate of Return () was 10% in order to consider a potential project for further consideration. For electricity projects (i.e. wind and small hydro), it was assumed that the value of the Avoided Cost of Energy (ACE) was based on fuel displacement only and no value was given for capacity. However, to account for capacity and other potential benefits such as increased reliability due to energy diversification and environmental and socio-economic concerns, the was also calculated for an ACE of 50% greater than the base case study. For heating projects (solar air heating and biomass heating), it was assumed that the value of the ACE was based on fuel displacement only and no value was given for capacity. However, to account for potential financial incentives or other contributions, a 25% contribution to the capital cost of the system was also calculated. There may be reasons other than technical and financial to pursue specific projects, however, the focus of this initiative was the

4 identification of likely projects with financial indicators within a range considered acceptable by industry standards. Other factors that might be considered for any specific community include: the local environmental and employment situations the desire for energy independence; sound abatement and aesthetics the leakage of money out of the community to pay for diesel fuel 4.0 Conclusions Several conclusions have become evident as a result of undertaking these studies: Local site conditions have a significant impact on the financial viability of RET projects. There are cost-effective opportunities for RETs in Canada s remote communities. There are financially viable opportunities for each of the four technologies studied, although some are better than others. RETScreen provides significant cost savings for preparing preliminary analysis studies. For this initiative, the average cost per study was only $2,500 (approx.). Similar studies prior to the advent of this software would have cost as much as ten times this amount. A common platform for RETScreen allowed easy comparison between various technologies and communities using many different authors for the studies. 5.0 Acknowledgements The author wishes to acknowledge all the consultants who prepared the studies from which this report is drawn. In alphabetical order, they are Pierre Baillargeon, Kearon Bennett, Mike Bourns, Carl Brothers, Steve Graham, John Juffs, John Kokko, Chris Weyell and Normand Vallieres. Thanks are due to Alexandre Monarque of CEDRL for his diligence in reviewing the data, assisting in developing the information packages that are a major result of this study and ensuring that the information in this summary report was accurate. Special thanks are due to Gilles Jean, André Filion and Greg Leng of CEDRL for their invaluable experience and advice on all matters related to the project. Finally, there are the data providers - the many people from the remote communities, the utilities, the tribal councils, the energy groups and the government agencies. Their patience and assiduity are greatly appreciated. Funding for these studies was provided by NRCan s Renewable Energy for Remote Communities (RERC) Program. The RERC Program receives its funds from CEDRL s A- Base and from NRCan s Renewable Energy Deployment Initiative (REDI).

5 In the tables below, the acronyms used are defined as: ACE = Avoided Cost of Energy = Internal Rate of Return = Net Present Value = Period Table 1 Wind Energy Studies WIND ENERGY ACE ACE + 50% Capacity (kw) ON Peawanuck , , NS Sable Island , , NT Cambridge Bay ,475, , BC Bella Coola ,325,000 1, , NT Rankin Inlet ,250, , ON Fort Severn , , QC Inukjuaq ,495, , Table 2 Small Hydro Studies SMALL HYDRO ACE ACE + 50% Capacity (kw) BC Kyuquot ,782, , BC Atlin ,420, ,728, ON Eabametoong/ Lansdowne House ,489,000 2,000-14,014, ON Armstrong/Gull Bay ,881,000 1,500-7,161, ON Eabametoong ,382,000 1,500-11,447, ON Armstrong/Gull Bay ,688,000 1,500-7,850,

6 In the tables below, the acronyms used are defined as: ACE = Avoided Cost of Energy = Internal Rate of Return = Net Present Value = Period Table 3 Biomass Heating Studies BIOMASS HEATING ACE +25% Cont. Capacity (kw) ON Ogoki , , QC Obedjiwan , , ON Eabamatoong , , NFL Port Hope/Simpson , , ON Eabamatoong , , NWT Fort Resolution , , Table 4 Solar Air Heating Studies SOLAR AIR HEATING ACE +25% Cont. Collector Size (m 2 ) QC Salluit , , YK Mayo , , QC Kuujuaraapik , , NWT Fort Smith , , QC Kuujuaraapik , , NWT Inuvik , , NWT Yellowknife , , QC Akulivik ,