Community Renewable Energy: Success Despite Challenges
In December 2002, TREC Renewable Energy Co-operative erected a thirty-story tall wind turbine on Toronto’s waterfront, in the downtown core of Canada’s largest city. With a capacity sufficient to power as many as 250 homes, WindShare holds the distinction of being the first urban-sited commercial scale wind turbine in North America and the first large-scale wind energy co-operative in Canada.
WindShare is a technological success and a clear demonstration of the viability of community renewable energy.
Nevertheless, the co-op model, as applied to renewable energy, is not without its challenges. I spoke with James Law, Services Manager with TREC, about those challenges and the potential of community renewable energy.
Jules: Tell us about some of the obstacles you faced with the WindShare project.
James: The intention was always that we would build two or three wind turbines down by the lake shore, and the economics and the project development plan always relied on there being more than one. However, there wasn’t a very strong wind manufacturing sector within Ontario at that time. So we had to order from overseas and there were logistics with that. But the procurement of the actual turbine itself wasn’t what really prevented us from building more.
We had originally planned to build a few turbines more around that first one down by Exhibition Place, and when that wasn’t feasible we tried down by Ashbridge’s Bay and that wasn’t feasible either. There were land access rights that we couldn’t secure within the city of Toronto. A lot of it, particularly around the EX area, had to do with air access rights around Billy Bishop Airport. There were a lot of hazards that we couldn’t overcome. So we ended up being restricted within the city as to where we could build.
Also, Toronto has always been trying to redevelop its waterfront and they had other plans for that area. There were a lot of other uses for that land that the city had in mind and we just didn’t fit into that vision.
Jules: Did TREC consider other options, such as building offshore?
James: Yes. We had always had the thought that if we couldn’t do it on land we could eventually build offshore. But before that could become a reality we noticed some of the tension surrounding the Scarborough bluffs and the moratoriums on offshore wind turbines. So that was also dead in the water.
Even though we only built one turbine as part of that project, there were a lot of lessons learned that we’ve extended to other projects.
Jules: Why are community projects like these important?
James: I think they’re important for a number of reasons. The first is that it really challenges the existing energy ownership model that we have in Ontario. It’s predominately a government-controlled system, really focused on RFPs, with one corporation positioned to provide electricity.
Individuals in Ontario are typically perceived as being just consumers, people that purchase electricity but in no way are they empowered to actually choose which sort of supply source they want to invest in and develop. They’re not really allowed to be part of the development process. We do have a public consultation process built-in in Ontario, environmental assessments and so forth, but that’s a really formulated process; it’s very legislative.
Community power opens the full development side to individuals. So now not only can people invest in the projects they want to see happen — with minimums as low as $1,000 for example in SolarShare — but they’re also actively involved in the development process.
Community members buy bonds in the co-ops who then build projects. They’re also on the boards of the co-ops that develop these projects. So they have an actual stake in the development and in the asset itself which is a different model. They get to learn how these are developed, including the financial feasibility and business plans behind developing one of these projects. It’s an important way to democratize and expand the energy portfolio in Ontario to more residents and more citizens.
There are also passive benefits like local employment, royalties to the municipalities or private leases with the landowners.
Jules: Where do you see community renewable energy heading in the next few years?
James: Renewable energy in Ontario is still perceived as a very novel way of generating electricity. Add on top of that this model of a co-op and community bonds, a model that people are less familiar with, and there’s been slow up take of the model. But we see that changing over time.
For example, TREC’s most recent co-op, SolarShare, has really picked up its sales rates and people are really starting to buy into it. They’re starting to catch on to the co-op model, including renewable energy co-ops, community power, and alternative investments, and they see it can be very secure. So we see a lot of success on that side of things
In terms of the capacity side that’s were I think we face a little bit of a challenge. When FIT 1 was released a lot of co-ops were at an early stage in their development. They weren’t all completely prepared to participate, and some of those that were, that could, got time stamped. As you may recall, FIT 1 got cut early; they put a stop to it to review the process.
Then, the Ontario Power Authority released FIT 2 and everything was capped at 500 kilowatts. Co-ops like LakeWind that were going for a much larger capacity weren’t even allowed to participate in FIT 2 because it was capped.
Still, under FIT 2, some co-ops were very successful. I believe a total of 36 megawatts was allocated to co-ops.
Jules: TREC has also been developing another co-op wind project, LakeWind. How is that progressing?
James: LakeWind was to be a project on the Bruce line. We applied under FIT 1, but we were rejected because of Bruce constraints. The Bruce line. is at max capacity and has been at max capacity for a very long time now.
And then FIT 2 was capped at 500 kilowatts so we couldn’t apply. So in terms of LakeWind being able to participate in the FIT, that’s over because there’s no allocation for us under FIT; we’re too big.
The only option we have at this moment is to consider the Large Renewable Procurement process as soon as it’s released.
Jules: So what role do co-ops have to play under the province’s Large Renewable Procurement process?
James: I believe the government is willing to make some concessions to say that if there is significant community involvement and if we can demonstrate some co-op ownership and community power ownership, a higher bidding price might be accepted. But by nature an RFQ/RFP process does not look kindly on smaller scale organizations.
So, as to where co-ops can go from here in terms of building over 500 kilowatt capacity projects — in wind we’re talking about 15 megawatts, 20 megawatts even — that’s still up in the air until we hear more about what the RFP process is going to look like.
Jules: What can governments do to foster and promote more community renewable energy?
James: There are two sides. There’s definitely the equity ownership side; we’re talking about communities investing directly in a project. With big projects, understandably so, sometimes there’s a lot of skepticism around whether or not a community can take 100 percent equity, 100 percent economic ownership, in a large scale wind farm. These are multimillion dollar projects and there hasn’t been any project similar in scale to that completed as of yet.
But I do think that the government needs to be a little more open to different thinking. For example, SolarShare. We’re going to expand SolarShare to about 5 megawatts with more capacity and more potential to develop, 7.5MW to 10MW.
Government really needs to look at that past experience and be able to say, okay, these co-ops have literally gone from a group of five people back in 2009 to developing 5 megawatts and raising up to 5 or 6 million dollars from their local communities, and then extend that and trust in the power of communities to be able to develop a large wind project.
So I think there needs to be some adjustment to that RFP/RFQ process to really consider the benefits of involving communities as equity owners and then also make the right adjustments, so that when we do compete against large corporations that our context is really adapted for and understood.
We also need to set some baselines, minimal standards as to what community involvement includes, including minority equity ownership models, like 20 percent of the project being owned by co-ops. We can even look at the development of vibrancy funds that are controlled by a local community so they can move that money to were they see the need.
So I think we can push government to move policy forward in order to ensure that there’s a stable future not only for renewable energy but for community power in Ontario.
The success of TREC’s WindShare and SolarShare projects prove that community renewable energy delivers clear benefits, both for the co-op’s members and for the community as a whole. With improved public perception and government legislation, those benefits will continue to grow, despite the challenges encountered thus far.