2003 bell 09 espinoza

Vision Quest Windelectric Inc.: Developing Markets for Wind Energy in Alberta, Canada : 

Vision Quest Windelectric Inc.: Developing Markets for Wind Energy in Alberta, Canada By Juan L. Espinoza, Luis Escobar, andamp; Harrie Vredenburg TCPL International Institute for Resource Industries andamp; Sustainability (TCPL - IRIS) 2003 BELL Conference, Fort Lauderdale, FL, July, 17-19

OUTLINE: 

OUTLINE Introduction Background Vision Quest Windelectric Green energy in Alberta Green Power Market andamp; Vision Quest (VQ) Customers Enmax (Greenmax) 'Ride the wind' project How is the future coming for VQ?

Introduction: 

Introduction Objective: To describe the development of a local 'green power' market. It is hoped that the case will provide a framework for national andamp; international application Methodology: Literature review (Secondary data) Personal Interviews (2001-2002) Feedback Outcomes: Teaching case (descriptive); Paper (theoretical) 'Pilot' study for dissertation topic

Introduction: 

Introduction Rapid changes in the electricity sector are moving countries like Canada to consider green/RE alternatives: Economic factors (globalization, diversification, deregulation) Technological factors Environmental/social factors In Alberta, despite its high dependence on plentiful and readily available fossil fuels, the acceptance of wind power appears to be growing This study looks at the different aspects contributing to the creation of a green power market, with special focus on the strategic opportunities that it brings to one of the private wind power producers, Vision Quest.

Background: Vision Quest Windelectric: 

Background: Vision Quest Windelectric Privately-held Canadian company based in Calgary, Alta. Active in wind energy exploration, development and production. It is the biggest owner of wind farms in Alta. 'We were the first utility to put a wind turbine in Alberta on a commercial basis in 1994. And we built Canada’s first wind farm in 1987 in the high Arctic' (Vision Quest executive) VQ has been involved in several governmental and non-governmental task forces focused on electrical industry restructuring, environmental policy, tax and industry changes designed to create an efficient electricity market.

Green energy in Alberta: 

Green energy in Alberta DRIVING FORCES The growing renewable energy/wind power industry Deregulation of the electricity sector (from state monopoly-based to open markets) Government support for green energy development (climate change issue) *BARRIERS Alberta’s strong fossil fuel sector (economic, technological, and institutional forces)

Sources of Power Generation in the electricity system of Alberta: 

Sources of Power Generation in the electricity system of Alberta

Wind Energy Installed Capacity (MW) around the World: 

Wind Energy Installed Capacity (MW) around the World Source: AWEA, Global Wind Energy Market Report-2001 (*) In order to compare with the ‘big five’ wind energy producers Wind power still represents less than 1% of global power production BUT it is the world’s fastest-growing energy source (30% annually)

DEREGULATION:How the Alberta’s electricity market works: 

DEREGULATION: How the Alberta’s electricity market works

The Vision Quest opportunity for developing a Wind Power Market?: 

The Vision Quest opportunity for developing a Wind Power Market? 'In 1996, the Federal Government was looking at recommendations from the national round table on the environment and the economy from the previous year, which suggested that the federal government take the lead in Climate Change and environmental issues by buying something that nobody really had heard very much before, green power' …'we saw it [deregulation] as an opportunity…it was a survey across Canada saying that 70% of the people want wind energy as part of their mix and a large percent (20%-30%) said they’d pay more' (VQ executive)

VISION QUEST’s PRODUCTS: 

VISION QUEST’s PRODUCTS VER: Verified Emissions (CO2) Reduction Efficiency: Reduction of Voltage Losses Electricity only: From wind power GREEN ENERGY ® 'We decided to invent the product (‘Green Energy ®’) that was different and break the rules. And we said it’s different and it’s better...' '...we were able to quantify the green power energy, and because we were through this auditing process we call that the Verified Emissions Reduction (VER). So, that was also one of the first ever domestic reduction trades in Canada too'

VQ Installed Capacity: 

VQ Installed Capacity Some customers: Enmax (Greenmax), TransAlta, Suncor Energy

The retailer: ENMAX: 

The retailer: ENMAX Enmax is an electricity transmission, distribution, and energy supply andamp; services company, and is wholly owned by the City of Calgary. 'Being Enmax a retailer, the company is the ‘middle-man’ between electricity producers and clients. Enmax realized that the environmental impacts from the electricity sector could lead to a carbon tax penalty to either the producer or customers, but not to Enmax itself. However, the company saw a role to play about this environmental problem. They created in 1998 an educational and marketing program as the starting point for Greenmax' (Enmax Executive)

Greenmax Program: 

Greenmax Program It was the first program in Canada offering residential customers the opportunity to support 'green power' 'Greenmax offers customers a choice to support wind-generated electricity production through the payment of premiums ($5, $10, or $ 15 option) to offset the costs associated with sourcing wind power' (Enmax executive) Two ways to encourage clients to pay more: Educational program andamp; 'the green club program' CLIENTS 3,000 residential customers (1% of Enmax’s market) Federal Government (NRCan andamp; Environment Canada) 'Ride the Wind' project AUMA and commercial clients

Clients of the Greenmax Program: 

Clients of the Greenmax Program (*) Others include residential, commercial, and municipal clients 'When in 1998 the program was launched, Environment Canada and Natural Resources Canada facilities were the first clients' (Enmax Executive)

Ride the Wind: 

Ride the Wind Established in September, 2001. It’s a 100 % pollution-free project to power the LRT system (C-Train) First public transit system in North America using wind power Collaborative project: VQ-Enmax-Calgary Transit It contributes significantly toward the City of Calgary’s goal to reduce its CO2 emissions. (It avoids the generation of 26,000 tonnes of CO2 annually). 'The City of Calgary has a particular interest in environmental issues at both corporate and community level...people saying to us: ‘if you do whatever change to be environmentally responsible, we’ll pay for it’' (City of Calgary’s executive)

Ride the Wind…: 

Ride the Wind… Long-term contract (10 years) with a fixed price a b

Alberta power Pool Prices ($/MWh): 

Alberta power Pool Prices ($/MWh) Sources: Power Pool of Alberta Canadian Hydro Developers Inc.

What should VQ’s strategic direction be?: 

What should VQ’s strategic direction be? Toward a ‘sustainable’ green power market (Beyond Greenmax?) Economies of scale (e.g., 'socially responsible' investors) Role of large energy firms such as Shell, BP, Suncor, Transalta Regulation (based on government-subsidies) vs. Deregulation (based on consumer-premium)? Geographical focus (Alberta, Canada, US)? Competition within the wind power industry (e.g., CHD) Competition in the electricity industry: product differentiation and cost leadership at once?

Vision Quest II: The Sequel: 

Vision Quest II: The Sequel October 2002: Vision Quest became a wholly owned, independently operated subsidiary of the TransAlta Corporation, Canada’s largest non-regulated power generation company. 2003: Constructing Canada’s single largest wind farm (75 MW) at McBride Lake. With this, VQ is becoming Canada’s largest wind power producer Vision Quest presently owns and operates 68 wind turbine power plants with over 46 megawatts of total peak capacity (to meet the demand of 21,000 homes)

Slide21: 

THANK YOU MERCI GRACIAS