Lessons from GermanyÂ’s energy renaissance

By Globe and Mail


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Solar power will cost next to nothing. The fuel - the sun - is free. The price of the photovoltaic cells used to covert sunlight into electricity will plummet.

Just give it time.

That's the theory of Ian MacLellan, the founder, vice-chairman and chief technology officer of Arise Technologies, a Canadian photovoltaic (PV) cell company. But there's one small hitch: Arise doesn't have time.

PV cells are still expensive. The solar energy market needs priming. Arise shareholders want profits. Mr. MacLellan is 51 and would like to see his company make a buck before he's a senior citizen.

Enter Germany. The ever-so-generous Germans tracked him down and made him an offer he couldn't refuse - free money, and lots of it - as long as Arise promised to build a PV factory on German soil. The German love-fest even came with flowers for Mr. MacLellan's wife, Cathy.

Today, Arise's first factory is about a month away from completion in Bischofswerda, a pretty eastern German town about 35 kilometres east of Dresden, in the state of Saxony. Covering two storeys and 100,000 square feet, the sleek grey metal building will have some 150 employees and produce enough PV cells each year to power the equivalent of 60,000 houses. The value of the annual output, based on today's prices, will be $375-million, or more than three times the company's current value on the Toronto Stock Exchange.

"I couldn't build this in Canada," Mr. MacLellan said. "Germany is a very high-quality environment for us. I have nothing to worry about."

Arise couldn't build the plant in Canada because the level of financial incentives, engineering and construction expertise and general awareness of the growth potential of renewable energy simply don't exist there.

Those factors are abundant in Germany and it shows: The country has become the world leader in renewable energy technology, manufacturing, sales and employment. The German map is dotted with hundreds of renewable energy companies. They make PV cells, wind turbines, solar thermal panels, biofuels and technology for biomass plants and geothermal energy.

No PV cells are made in Canada. The Canadian solar industry, lured by money and markets, is jumping across the Atlantic and landing in Germany and a few other European countries with generous incentives.

The German and Saxony governments, with a little help from the European Union, offered Arise about €50-million ($80-million) in financing. The package included a 25-million euro grant, which is being used to offset half the cost of building the factory and installing the three assembly lines, and 22.5-million euro of working credit lines and equipment loans at highly attractive rates.

The land was cheap and included a handsome, though abandoned, brick building from 1818 that began life as an army barracks, became a dance hall after the First World War and a Soviet military barracks during the Cold War.

Arise plans to restore the old pile and use it as an office and corporate retreat. "We're turning an old military base into a solar factory - how 21st Century is that?" Mr. MacLellan asked.

Germany has created 240,000 jobs in the renewable energy industry, 140,000 of them since 2001, said Matthias Machnig, State Secretary for the federal Ministry of the Environment. Renewable energy technologies already make up 4 to 5 per cent of Germany's gross domestic product; Mr. Machnig expects the figure to rise to 16 per cent by 2025.

Renewables generated 14 per cent of the country's electricity last year, significantly ahead of the 12.5-per-cent target set for 2010. "We are making a huge investment in the markets of the future," Mr. Machnig said.

How did Germany turn green technology into a leading industry? And is the aggressive effort to attract renewable energy companies, backed by scads of taxpayers' money, a formula that should be imitated in Canada or its provinces? Mr. MacLellan thinks so. "I think Ontario is in a leading position to clone Germany," he said.

GermanyÂ’s vast renewable energy industry is a careful and deliberate blend of industrial, political and green policies. Wind power has been leading the charge. Germany is a windy country and the ubiquitous wind farms generated 7.4 per cent of Germany's electricity last year.

With onshore wind energy growth starting to level off - offshore wind probably will take off once favourable regulations are in place - the Germans are injecting the photovoltaic industry with growth hormones. "In a few years, the PV industry could be bigger than the German car industry," said Thomas Grigoleit, senior manager for renewable energy for Invest In Germany, a government investment agency.

It should come as little surprise that Germany has become green energy's focal point. The country is a natural resources desert. It lacks oil and natural gas and its coal production, which is heavily subsidized, is falling. The country has a moratorium on nuclear energy development. Renewable energy is more than just a feel-good exercise; Germany sees it as securing its energy future in a world of disappearing fossil fuels.

There's more to it than energy security. Germany is both latching onto, and propelling, an industrial trend. It wants to do to renewables what it did to the car industry; that is, create a jobs and export juggernaut. "We are at the beginning of the third industrial revolution," said Mr. Machnig, referring to the growth potential for renewable energy.

Germany is using its political might to ensure it benefits mightily from the green revolution. The country is Europe's biggest economy and the continent's (and the world's) biggest exporter. As the economic heavyweight, it has a lot of political influence over its neighbours, said Paul Dubois, Canada's ambassador to Germany. "This is the key country," he said.

Nineteen of the European Union's 27 countries count Germany as their main trading partner, he noted. The figure for France is only three (Germany, Spain and Malta) and only one (Ireland) for the United Kingdom.

The upshot: If Germany builds green technology such as wind turbines and solar panels, its friendly neighbours will be sure to buy them, or so the German government believes. That translates into the things politicians and economists like - jobs, export earnings, trade surpluses, international prestige.

There's more. As Europe's most influential country, Germany can pretty much guarantee that renewable energies will be the growth machine of the future. How? By insisting on aggressive, EU-wide carbon reduction targets, care of Angela Merkel, the German Chancellor who is no doubt the greenest European leader.

In February, the EU vowed to reduce greenhouse gas emissions by 20 per cent by 2020 and said it would try to raise the target to 30 per cent. "If you take climate change seriously, we have to reduce carbon dioxide emissions by 60 to 80 per cent by 2050," Mr. Machnig said. "This is the biggest industrial change ever. This means reducing emissions [in Germany] from 10 tonnes per capita to two to four tonnes per capita."

Germany doesn't think the reductions are possible without a broad effort that includes renewable energy, the EU emissions trading system and, of course, a fortune in subsidies to kick-start the green technologies and guarantee them a market for many years. The main subsidy for renewable energy generation is the "feed-in tariff," which was established in 2000 under the Renewable Energy Sources Act.

As far as subsidies go, this one is a beauty. The feed-in tariff for solar electricity is about 50 euro cents per kilowatt-hour, or almost 10 times higher than the market price for conventionally produced electricity (the subsidy for wind energy is considerably less, though still well above the market rate).

German utilities must by law buy the renewable electricity. The cost, in turn, is passed on to the consumer and is buried in his electricity bill. "The feed-in tariff has put Germany on the world [renewable energy] map," said Mikael Nielsen, the central European vice-president of sales for Vestas, the Danish wind turbine company that makes turbine blades in Germany. "If it weren't for the tariff, you wouldn't have a market like this."

The subsidy for all forms of green energy, largely wind, with solar just starting to come on strong, costs the government about €3.5-billion a year. The figure is expected to rise to €6-billion by 2015, and then will slowly decline. No wonder the renewable energy industry is on fire in Germany.

But Germany's lunge into renewable energy is not without its critics. The solar industry in particular is sucking up tens of billions of euros of grants and the question is whether taxpayers are getting value for money. "The construction of a solar power plant is currently an almost riskless investment," the German newspaper Berliner Zeitung said in November.

RWI Essen, a German economic research institute, published a paper earlier in March called "Germany's Solar Cell Promotion: Dark Clouds on the Horizon," which concluded the feed-in tariff has not accomplished two of the government's most cherished goals - job creation and carbon reduction.

The subsidies for German solar energy probably rank as the highest in the world, thanks to the feed-in tariff and other subsidies. RWI estimated the total subsidies per job created in the PV industry (based on the subsidies and direct PV employment in 2006) at an astounding €205,000.

The tariff has created more demand than the German PV market can satisfy. In fact, most of the PV cells have been imported, creating jobs abroad, not in Germany (though this may change as Germany attracts manufacturers like Arise). RWI argues that billions of euros in subsidies have crowded out investment in other, perhaps more promising, technologies and has probably made the PV industry less efficient that it might otherwise be.

RWI said "the subsidized market penetration of non-competitive technologies in their early stages of development diminishes the incentives to invest in the research and development necessary to achieve competitiveness."

Finally, RWI says the feed-in tariff "does not imply any additional emission reductions beyond those already achieved" by the EU emissions trading system. Its argument is that reductions under the cap-and-trade system would be made whether or not the feed-in tariff existed.

The indictment is dismissed by the German Environment Ministry and by the PV industry. Mr. MacLellan notes that every form of energy is subsidized to some degree and that the PV subsidies will help Arise's German factory become profitable quickly, allowing the business to pay income taxes within two years. "This is not charity," he said.

For his part, Mr. Machnig said the subsidies will help establish an export market - three-quarters of the wind turbines made in Germany are exported, for example - as the number of technology manufacturers expands. Furthermore, he said, renewable energy can only make Germany more competitive as the price of fossil fuels rises. By 2020, renewables will provide 27 per cent of Germany's electricity production.

Arise Technologies was launched in 1996 by Ian MacLellan, an amiable motormouth and Ryerson electrical engineering graduate who calls himself a "solar geek with a spread sheet." Five years later, it formed a partnership with the University of Toronto to develop a high-efficiency "thin-film-on-silicon-wafer" solar cell.

The company, whose headquarters are in Waterloo, Ont., went public in 2003 in Toronto (it's also listed in Frankfurt) and at times came close to running out of money. Its fortunes reversed in the past couple of years as energy prices soared and Arise displayed a remarkable talent for snagging government freebies. The feds' Sustainable Technology Development Canada fund handed the company $6.4-million in 2006. The general enthusiasm for clean energy technologies allowed Arise to raise $34.5-million in a bought deal last October.

The company's biggest break came entirely by accident. In March, 2006, a German PV magazine called Photon International carried a story on Arise. Two months later, Mr. MacLellan was in Hawaii for the World Photovoltaic Conference. "A guy from Invest In Germany tracked me down," he said. "We met and he said: 'We're very interested in your company and we want all the best companies to build in Germany. We'll give you half the money.'"

Invest In Germany has offices around the world (though not in Canada) and its 80 employees, most of them young, multilingual and highly educated, are considered superb salesmen and women. Its goal is to convince foreign companies to build plants and create employment in Germany and the appeal is quick, one-stop-shopping.

The team offers everything from assistance in site selection and construction engineering to German financing and incentives from the European Union. Boozing even features into the sales pitch. In the "Quality of Life" section of the promotional literature, the agency cheerily notes the country is home to "1,250 breweries with more than 5,000 different kinds of beer" (a statistic not lost on Mr. MacLellan, who loves German beer).

The agency has had particular success in attracting renewable energy companies. Some of the industry's best-known players - among them Shell Solar, EverQ, First Solar, Nanosolar and Signet Solar - have built factories in Germany and created thousands of jobs. "We work hard to find suitable companies," said Mr. Grigoleit of Invest In Germany. "We go to conferences and trade fairs. We open up kiosks and we have offices in Chicago, Boston, Shanghai, Tokyo and other cities. What we can offer is speed of entry into the German market."

Mr. MacLellan was impressed by Invest in Germany's efficiency. Within months of the Hawaii meeting, the financial and engineering machinery for the German plant were in place. The funding package, including the 25-million euro grant, was approved in December, 2006, only seven months after the Hawaii encounter. Construction of the factory started last August and the first cells will roll off the assembly by the end of April. "This is amazing," he said. "We've gone from the first meeting to production in less than two years."

He optimistically predicts PV cells made by Arise and other companies "will hit a wall of infinite demand" and he's evidently not alone. At last count about 55 solar companies had set up in Germany. The majority are in the former East Germany, where the incentives are fatter because the employment rate is lower than in the industrialized western half of the country.

There are a similar number of wind energy companies. More of both are coming. The German government's "GreenTech" environmental technology atlas, which describes the technologies and lists companies that develop and build them, runs 500 pages.

In July, a Quebec company called 5N Plus will open a plant in Eisenhuttenstadt, a town on the German-Polish border southeast of Berlin. The plant, its first foreign operation , will employ 45 and make high-purity metals for thin-film PV panels. Jacques L'Ecuyer, the CEO, said he built there because of the incentives - Germany provided about one-third of the plant's 9.5-million euro cost - and because he wanted guaranteed access to the European market. "If we have a presence in Germany, it will be easier for us to do business in Germany and in Europe," he said.

Canada seems to have taken notice of the German example. Make that parts of Canada.

The West is still obsessed with oil. Quebec has few incentives for wind and solar power, probably because it has so much cheap (and renewable) hydro power, Mr. L'Ecuyer said.

But Ontario, battered by manufacturing job losses and the high dollar, has made renewable energy part of its industrial salvation plane. The province now has its own feed-in tariff for renewable energy and recently announced a five-year $1.15-billion program, called the Next Generation of Jobs Fund, to help finance everything from "green" auto research to pharmaceuticals manufacturing. Arise may tap into the jobs fund to expand in the Waterloo area, where it is building a plant to refine silicon for PV cells.

Ontario's new incentives, Mr. MacLellan said, "are not as attractive as Germany's but they're getting close." With Germany still on top, Arise is already making plans to add a second, and possibly third, PV factory, in Bischofswerda, next to the one opening in April. Arise has more than enough available land and the town, one of eastern Germany's Cold War victims, would welcome the jobs.

More foreign companies are bound to rush to Germany while the financial goodies last. Mr. Grigoleit said Invest In Germany is targeting other Canadian renewable energy companies. He won't say how close they are snagging them but seems confident they will be unable to resist what he calls the "magnet" effect.

Even if Canada decides it wants a renewable energy industry of its own, it will face formidable competition from Germany.

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Key Points

An open-ended Ontario utility moratorium preventing residential power shutoffs and offering bill relief during COVID-19.

✅ No residential disconnections until further notice

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✅ Response to COVID-19 restrictions and extreme heat

 

Ontario's primary electricity provider says it's extending a ban on disconnecting homes from the power grid until further notice.

Hydro One first issued the ban towards the beginning of the province's COVID-19 outbreak, saying self-isolating customers needed to be able to rely on electricity while they were kept at home during the pandemic.

A spokesman for the utility says the ban was initially set to expire at the end of July, but has now been extended in a manner similar to winter disconnection bans without a fixed end-date.

Hydro One says the move is necessary given the ongoing restrictions posed by the pandemic, and notes it has supported provincial COVID-19 efforts in recent months, as well as persistent hot weather across much of the province.

It says it's also planning to extend a financial relief program to help customers struggling to pay their hydro bills, reflecting demand for more choice and flexibility among ratepayers.

The province also extended off-peak electricity rates to provide relief for families, small businesses and farms during this period.

 

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US utilities COVID-19 resilience shows electric utilities maintaining demand stability, reaffirming earnings guidance, and accessing the bond market for low-cost financing, as Dominion, NextEra, and Con Edison manage recession risks.

 

Key Points

It is the sector's capacity to sustain demand, financing access, and guidance despite pandemic recession pressures.

✅ Bond market access locks in low-cost, long-term debt

✅ Stable residential load offsets industrial weakness

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Dominion Energy (D) expects "incremental residential load" gains, consistent with COVID-19 electricity demand patterns, as a result of COVID-19 fallout. Southern Company CEO Tom Fanning says his company is "nowhere near" a need to review earnings guidance because of a potential recession, in a region where efficiency and demand response can help level electricity demand for years.

Sempra Energy (SRE) has reaffirmed earnings per share guidance for 2020 and 2021, as well timing for the sale of assets in Chile and Peru, and peers such as Duke Energy's renewables plan have reaffirmed capital investments to deliver cleaner energy and economic growth. And Xcel Energy (XEL) says it still "hasn’t seen material impact on its business."

Several electric utilities have demonstrated ability to tap the bond market, in line with utility sector trends in recent years, to lock in low-cost financing, as America moves toward broader electrification, despite ongoing turmoil. Their ranks include Dominion Energy, renewable energy leader NextEra Energy (NEE) and Consolidated Edison (ED), which last week sold $1 billion of 30-year bonds at a coupon rate of just 3.95 percent.

It’s still early days for US COVID-19 fallout. And most electric companies have yet to issue guidance. That’s understandable, since so much is still unknown about the virus and the damage it will ultimately do to human health and the global economy. But so far, the US power industry is showing typical resilience in tough times, as it coordinates closely with federal partners to maintain reliability.

Will it last? We won’t know for certain until there’s a lot more data. NextEra is usually first to report its Q1 earnings reports and detailed guidance. But that’s not expected until April 23. And companies may delay financials further, should the virus and efforts to control it impede collection and analysis of data, and as they address electricity shut-off risks affecting customers.

 

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Key Points

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✅ Public consultations across B.C.'s Columbia Basin

✅ First Nations priorities include salmon restoration

✅ U.S. seeks cheaper power; B.C. defends downstream benefits

 

With talks underway between Canada and the U.S. on the future of the Columbia River Treaty, the B.C. New Democrats have launched public consultations in the region most affected by the high-stakes negotiation.

“We want to ensure Columbia basin communities are consulted, kept informed and have their voices heard,” said provincial cabinet minister Katrine Conroy via a press release announcing meetings this month in Castlegar, Golden, Revelstoke, Nakusp, Nelson and other communities.

As well as having cabinet responsibility for the talks, Conroy’s Kootenay West riding includes several places that were inundated under the terms of the 1964 flood control and power generation treaty.

“We will continue to work closely with First Nations affected by the treaty, to ensure Indigenous interests are reflected in the negotiations,” she added by way of consolation to Indigenous people who’ve been excluded from the negotiating teams on both sides of the border.

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The stakes are also significant for the province as a whole. The basics of the treaty saw B.C. build dams to store water on this side of the border, easing the flood risk in the U.S. and allowing the flow to be evened out through the year. In exchange, B.C. was entitled to a share of the additional hydro power that could be generated in dams on the U.S. side.

B.C.’s sale of those downstream benefits to the U.S has poured almost $1.4 billion into provincial coffers over the past 10 years, albeit at a declining rate these days amid scrutiny from a regulator report on BC Hydro that raised concerns, because of depressed prices for cross-border electricity sales.

Politicians on the U.S. side have long sought to reopen the treaty, believing there was now a case for reducing B.C.’s entitlement.

They did not get across the threshold under President Barack Obama.

Then, last fall his successor Donald Trump served notice of intent, initiating the formal negotiations that commenced with a two day session last week in Washington, D.C. The next round is set for mid-August in B.C.

American objectives in the talks include “continued, careful management of flood risk; ensuring a reliable and economical power supply; and better addressing ecosystem concerns,” with recognition of recent BC Hydro demand declines during the pandemic.

“Economical power supply,” being a diplomatic euphemism for “cheaper electricity for consumers in the northwest states,” achievable by clawing back most of B.C.’s treaty entitlement.

On taking office last summer, the NDP inherited a 14-point statement of principles setting out B.C. hopes for negotiations to “continue the treaty” while “seeking improvements within the existing framework” of the 54-year-old agreement.

The New Democrats have endorsed those principles in a spirit of bipartisanship, even as Manitoba Hydro governance disputes play out elsewhere in Canada.

“Those principles were developed with consultation from throughout the region,” as Conroy advised the legislature this spring. “So I was involved, as well, in the process and knew what the issues were, right as they would come up.”

The New Democrats did chose to put additional emphasis on some concerns.

“There is an increase in discussion with Canada and First Nations on the return of salmon to the river,” she advised the house, recalling how construction of the enormous Grand Coulee Dam on the U.S. side in the 1930s wiped out salmon runs on the upper Columbia River.

“There was no consideration then for how incredibly important salmon was, especially to the First Nations people in our region. We have an advisory table that is made up of Indigenous representation from our region, and also we are discussing with Canada that we need to see if there’s feasibility here.”

As to feasibility, the obstacles to salmon migration in the upper reaches of the Columbia include the 168-metre high Grand Coulee and the 72-metre Chief Joseph dams on the U.S. side, plus the Keenleyside (52 metres), Revelstoke (175 metres) and Mica (240 metres) dams on the Canadian side.

Still, says Conroy “the First Nations from Canada and the tribes from the United States, have been working on scientific and technical documents and research to see if, first of all, the salmon can come up, how they can come up, and what the things are that have to be done to ensure that happens.”

The New Democrats also put more emphasis on preserving the ecosystem, aligning with clean-energy efforts with First Nations that support regional sustainability.

“I know that certainly didn’t happen in 1964, but that is something that’s very much on the minds of people in the Columbia basin,” said Conroy. “If we are going to tweak the treaty, what can we do to make sure the voices of the basin are heard and that things that were under no consideration in the ’60s are now a topic for consideration?”

With those new considerations, there’s still the status quo concern of preserving the downstream benefits as a trade off for the flooding and other impacts on this side of the border.

The B.C. position on that score is the same under the New Democrats as it was under the Liberals, despite a B.C. auditor general report on deferred BC Hydro costs.

“The level of benefits to B.C., which is currently solely in the form of the (electricity) entitlement, does not account for the full range of benefits in the U.S. or the impacts in B.C.,” says the statement of principle.

“All downstream U.S. benefits such as flood risk management, hydropower, ecosystems, water supply (including municipal, industrial and agricultural uses), recreation, navigation and other related benefits should be accounted for and such value created should be shared equitably between the two countries.”

No surprise if the Americans do not see it the same way.  But that is a topic for another day.

 

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For 40 years, through the most vicious interprovincial battles, even as proposals for bridging the Alberta-B.C. gap aimed to improve grid resilience, Canadians could agree on one way Quebec is undeniably superior to the rest of the country.

It’s hydropower, and specifically the mammoth dam system in Northern Quebec that has been paying dividends since it was first built in the 70s. “Quebec continues to boast North America’s lowest electricity prices,” was last year’s business-as-usual update in one trade publication, even as Newfoundland's rate strategy seeks relief for consumers.

With climate crisis looming, that long-ago decision earns even more envy and reflects Canada's electricity progress across the grid today. Not only do they pay less, but Quebeckers also emit the least carbon per capita of any province.

It may surprise most Canadians, then, to hear how most of New England has reacted to the idea of being able to buy permanently into Quebec’s power grid.

​​​​​​Hydro-Québec’s efforts to strike major export deals have been rebuffed in the U.S., by environmentalists more than anyone. They question everything about Quebec hydropower, including asking “is it really low-carbon?”

These doubts may sound nonsensical to regular Quebeckers. But airing them has, in fact, pushed Hydro-Québec to learn more about itself and adopt new technology.

We know far more about hydropower than we knew 40 years ago, including whether it’s really zero-emission (it’s not), how to make it as close to zero-emission as possible, and how to account for it as precisely as new clean energies like solar and wind, underscoring how cleaning up Canada's electricity is vital to meeting climate pledges.

The export deals haven’t gone through yet, but they’ve already helped drag Hydro-Québec—roughly the fourth-biggest hydropower system on the planet—into the climate era.

Fighting to export
One of the first signs of trouble for Quebec hydro was in New Hampshire, almost 10 years ago. People there began pasting protest signs on their barns and buildings. One citizens’ group accused Hydro of planning a “monstrous extension cord” across the state.

Similar accusations have since come from Maine, Massachusetts and New York.

The criticism isn’t coming from state governments, which mostly want a more permanent relationship with Hydro-Québec. They already rely on Quebec power, but in a piecemeal way, topping up their own power grid when needed (with the exception of Vermont, which has a small permanent contract for Quebec hydropower).

Last year, Quebec provided about 15 percent of New England’s total power, plus another substantial amount to New York, which is officially not considered to be part of New England, and has its own energy market separate from the New England grid.

Now, northeastern states need an energy lynch pin, rather than a top-up, with existing power plants nearing the end of their lifespans. In Massachusetts, for example, one major nuclear plant shut down this year and another will be retired in 2021. State authorities want a hydro-based energy plan that would send $10 billion to Hydro-Québec over 20 years.

New England has some of North America’s most ambitious climate goals, with every state in the region pledging to cut emissions by at least 80 percent over the next 30 years.

What’s the downside? Ask the citizens’ groups and nonprofits that have written countless op-eds, organized petitions and staged protests. They argue that hydropower isn’t as clean as cutting-edge clean energy such as solar and wind power, and that Hydro-Québec isn’t trying hard enough to integrate itself into the most innovative carbon-counting energy system. Right as these other energy sources finally become viable, they say, it’s a step backwards to commit to hydro.

As Hydro-Québec will point out, many of these critics are legitimate nonprofits, but others may have questionable connections. The Portland Press Herald in Maine reported in September 2018 that a supposedly grassroot citizens’ group called “Stand Up For Maine” was actually funded by the New England Power Generators Association, which is based in Boston and represents such power plant owners as Calpine Corp., Vistra Energy and NextEra Energy.

But in the end, that may not matter. Arguably the biggest motivator to strike these deals comes not from New England’s needs, but from within Quebec. The province has spent more than $10 billion in the last 15 years to expand its dam and reservoir system, and in order to stay financially healthy, it needs to double its revenue in the next 10 years—a plan that relies largely on exports.

With so much at stake, it has spent the last decade trying to prove it can be an energy of the future.

“Learning as you go”
American critics, justified or not, have been forcing advances at Hydro for a long time.

When the famously huge northern Quebec hydro dams were built at James Bay—construction began in the early 1970s—the logic was purely economic. The term “climate change” didn’t exist. The province didn’t even have an environment department.

The only reason Quebec scientists started trying to measure carbon emissions from hydro reservoirs was “basically because of the U.S.,” said Alain Tremblay, a senior environmental advisor at Hydro Quebec.


Alain Tremblay, senior environmental advisor at Hydro-Québec. Photograph courtesy of Hydro-Québec
In the early 1990s, Hydro began to export power to the U.S., and “because we were a good company in terms of cost and efficiency, some Americans didn't like that,” he said—mainly competitors, though he couldn’t say specifically who. “They said our reservoirs were emitting a lot of greenhouse gases.”

The detractors had no research to back up that claim, but Hydro-Québec had none to refute it, either, said Tremblay. “At that time we didn’t have any information, but from back-of-the envelope calculations, it was impossible to have the emissions the Americans were expecting we have.”

So research began, first to design methods to take the measurements, and then to carry them out. Hydro began a five-year project with a Quebec university.

It took about 10 years to develop a solid methodology, Tremblay said, with “a lot of error and learning-as-you-go.” There have been major strides since then.

“Twenty years ago we were taking a sample of water, bringing it back to the lab and analyzing that with what we call a gas chromatograph,” said Tremblay. “Now, we have an automated system that can measure directly in the water,” reading concentrations of CO2 and methane every three hours and sending its data to a processing centre.

The tools Hydro-Québec uses are built in California. Researchers around the world now follow the same standard methods.

At this point, it’s common knowledge that hydropower does emit greenhouse gases. Experts know these emissions are much higher than previously thought.

Workers on the Eastmain-1 project environmental monitoring program. Photography courtesy of Alain Tremblay.
​But Hydro-Québec now has the evidence, also, to rebut the original accusations from the early 1990s and many similar ones today.

“All our research from Université Laval [found] that it’s about a thousand years before trees decompose in cold Canadian waters,” said Tremblay.

Hydro reservoirs emit greenhouse gases because vegetation and sometimes other biological materials, like soil runoff, decay under the surface.

But that decay depends partly on the warmth of the water. In tropical regions, including the southern U.S., hydro dams can have very high emissions. But in boreal zones like northern Quebec (or Manitoba, Labrador and most other Canadian locations with massive hydro dams), the cold, well-oxygenated water vastly slows the process.

Hydro emissions have “a huge range,” said Laura Scherer, an industrial ecology professor at Leiden University in the Netherlands who led a study of almost 1,500 hydro dams around the world.

“It can be as low as other renewable energy sources, but it can also be as high as fossil fuel energy,” in rare cases, she said.

While her study found that climate was important, the single biggest factor was “sizing and design” of each dam, and specifically its shape, she said. Ideally, hydro dams should be deep and narrow to minimize surface area, perhaps using a natural valley.

Hydro-Québec’s first generation of dams, the ones around James Bay, were built the opposite way—they’re wide and shallow, infamously flooding giant tracts of land.


Alain Tremblay, senior environmental advisor at Hydro-Québec testing emission levels. Photography courtesy of Alain Tremblay
Newly built ones take that new information into account, said Tremblay. Its most recent project is the Romaine River complex, which will eventually include four reservoirs near Quebec’s northeastern border with Labrador. Construction began in 2016.

The site was picked partly for its topography, said Tremblay.

“It’s a valley-type reservoir, so large volume, small surface area, and because of that there’s a pretty limited amount of vegetation that’s going to be flooded,” he said.

There’s a dramatic emissions difference with the project built just before that, commissioned in 2006. Called Eastmain, it’s built near James Bay.

“The preliminary results indicate with the same amount of energy generated [by Romaine] as with Eastmain, you’re going to have about 10 times less emissions,” said Tremblay.

Tracing energy to its source
These signs of progress likely won’t satisfy the critics, who have publicly argued back and forth with Hydro about exactly how emissions should be tallied up.

But Hydro-Québec also faces a different kind of growing gap when it comes to accounting publicly for its product. In the New England energy market, a sophisticated system “tags” all the energy in order to delineate exactly how much comes from which source—nuclear, wind, solar, and others—and allows buyers to single out clean power, or at least the bragging rights to say they bought only clean power.

Really, of course, it’s all the same mix of energy—you can’t pick what you consume. But creating certificates prevents energy producers from, in worst-case scenarios, being able to launder regular power through their clean-power facilities. Wind farms, for example, can’t oversell what their own turbines have produced.

What started out as a fraud prevention tool has “evolved to make it possible to also track carbon emissions,” said Deborah Donovan, Massachusetts director at the Acadia Center, a climate-focused nonprofit.

But Hydro-Québec isn’t doing enough to integrate itself into this system, she says.

It’s “the tool that all of our regulators in New England rely on when we are confirming to ourselves that we’ve met our clean energy and our carbon goals. And…New York has a tool just like that,” said Donovan. “There isn’t a tracking system in Canada that’s comparable, though provinces like Nova Scotia are tapping the Western Climate Initiative for technical support.”

Hydro Quebec Chénier-Vignan transmission line crossing the Outaouais river. Photography courtesy of Hydro-Québec
Developing this system is more a question of Canadian climate policy than technology.

Energy companies have long had the same basic tracking device—a meter, said Tanya Bodell, a consultant and expert in New England’s energy market. But in New England, on top of measuring “every time there’s a physical flow of electricity” from a given source, said Bodell, a meter “generates an attribute or a GIS certificate,” which certifies exactly where it’s from. The certificate can show the owner, the location, type of power and its average emissions.

Since 2006, Hydro-Québec has had the ability to attach the same certificates to its exports, and it sometimes does.

“It could be wind farm generation, even large hydro these days—we can do it,” said Louis Guilbault, who works in regulatory affairs at Hydro-Québec. For Quebec-produced wind energy, for example, “I can trade those to whoever’s willing to buy it,” he said.

But, despite having the ability, he also has the choice not to attach a detailed code—which Hydro doesn’t do for most of its hydropower—and to have it counted instead under the generic term of “system mix.”

Once that hydropower hits the New England market, the administrators there have their own way of packaging it. The market perhaps “tries to determine emissions, GHG content,” Guilbault said. “They have their own rules; they do their own calculations.”

This is the crux of what bothers people like Donovan and Bodell. Hydro-Québec is fully meeting its contractual obligations, since it’s not required to attach a code to every export. But the critics wish it would, whether by future obligation or on its own volition.

Quebec wants it both ways, Donovan argued; it wants the benefits of selling low-emission energy without joining the New England system of checks and balances.

“We could just buy undifferentiated power and be done with it, but we want carbon-free power,” Donovan said. “We’re buying it because of its carbon content—that’s the reason.”

Still, the requirements are slowly increasing. Under Hydro-Québec’s future contract with Massachusetts (which still has several regulatory steps to go through before it’s approved) it’s asked to sell the power’s attributes, not just the power itself. That means that, at least on paper, Massachusetts wants to be able to trace the energy back to a single location in Quebec.

“It’s part of the contract we just signed with them,” said Guilbault. “We’re going to deliver those attributes. I’m going to select a specific hydro facility, put the number in...and transfer that to the buyers.”

Hydro-Québec says it’s voluntarily increasing its accounting in other ways. “Even though this is not strictly required,” said spokeswoman Lynn St. Laurent, Hydro is tracking its entire output with a continent-wide registry, the North American Renewables Registry.

That registry is separate from New England’s, so as far as Bodell is concerned, the measure doesn’t really help. But she and others also expect the entire tracking system to grow and mature, perhaps integrating into one. If it had been created today, in fact, rather than in the 1990s, maybe it would use blockchain technology rather than a varied set of administrators, she said.

Counting emissions through tracking still has a long way to go, as well, said Donovan, and it will increasingly matter in Canada's race to net-zero as standards tighten. For example, natural gas is assigned an emissions number that’s meant to reflect the emissions when it’s consumed. But “we do not take into account what the upstream carbon emissions are through the pipeline leakage, methane releases during fracking, any of that,” she said.

Now that the search for exactitude has begun, Hydro-Québec won’t be exempt, whether or not Quebeckers share that curiosity. “We don’t know what Hydro-Québec is doing on the other side of the border,” said Donovan.

 

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Opinion: Germany's drive for renewable energy is a cautionary tale

Germany Energiewende Lessons highlight climate policy tradeoffs, as renewables, wind and solar face grid constraints, coal phase-out delays, rising electricity prices, and public opposition, informing Canada on diversification, hydro, oil and gas, and balanced transition.

 

Key Points

Insights from Germany's renewable shift on costs, grid limits, and emissions to guide Canada's balanced energy policy.

✅ Evidence: high power prices, delayed coal exit, limited grid buildout

✅ Land, materials, and wildlife impacts challenge wind and solar scale-up

✅ Diversification: hydro, nuclear, gas, and storage balance reliability

 

News that Greta Thunberg is visiting Alberta should be welcomed by all Canadians.

The teenaged Swedish environmentalist has focused global attention on the climate change debate like never before. So as she tours our province, where selling renewable energy could be Alberta's next big thing, what better time for a reality check than to look at a country that is furthest ahead in already adapting steps that Greta is advocating.

That country is Germany. And it’s not a pretty sight.

Germany embraced the shift toward renewable energy before anyone else, and did so with gusto. The result?

Germany’s largest newsmagazine Der Spiegel published an article on May 3 of this year entitled “A Botched Job in Germany.” The cover showed broken wind turbines and half-finished transition towers against a dark silhouette of Berlin.

Germany’s renewable energy transition, Energiewende, is a bust. After spending and committing a total of US$580 billion to it from 2000 to 2025.

Why is that? Because it’s been a nightmare of foolish dreams based on hope rather than fact, resulting in stalled projects and dreadfully poor returns.

Last year Germany admitted it had to delay its phase-out of coal and would not meet its 2020 greenhouse gas emissions reduction commitment. Only eight per cent of the transmission lines needed to support this new approach to powering Germany have been built.

Opposition to renewables is growing due to electricity prices rising to the point they are now among the highest in the world. Wind energy projects in Germany are now facing the same opposition that pipelines are here in Canada. 

Opposition to renewables in Germany, reports Forbes, is coming from people who live in rural or suburban areas, in opposition to the “urbane, cosmopolitan elites who fetishize their solar roofs and Teslas as a sign of virtue.” Sound familiar?

So, if renewables cannot successfully power Germany, one of the richest and most technologically advanced countries in the world, who can do it better?

The biggest problem with using wind and solar power on a large scale is that the physics just don’t work. They need too much land and equipment to produce sufficient amounts of electricity.

Solar farms take 450 times more land than nuclear power plants to produce the same amount of electricity. Wind farms take 700 times more land than natural gas wells.

The amount of metal required to build these sites is enormous, requiring new mines. Wind farms are killing hundreds of endangered birds.

No amount of marketing or spin can change the poor physics of resource-intensive and land-intensive renewables.

But, wait. Isn’t Norway, Greta’s neighbour, dumping its energy investments and moving into alternative energy like wind farms in a big way?

No, not really. Fact is only 0.8 per cent of Norway’s power comes from wind turbines. The country is blessed with a lot of hydroelectric power, but that’s a historical strength owing to the country’s geography, nothing new.

And yet we’re being told the US$1-trillion Oslo-based Government Pension Fund Global is moving out of the energy sector to instead invest in wind, solar and other alternative energy technologies. According to 350.org activist Nicolo Wojewoda this is “yet another nail in the coffin of the coal, oil, and gas industry.”

Well, no.

Norway’s pension fund is indeed investing in new energy forms, but not while pulling out of traditional investments in oil and gas. Rather, as any prudent fund manager will, they are diversifying by making modest investments in emerging industries such as Alberta's renewable energy surge that will likely pay off down the road while maintaining existing investments, spreading their investments around to reduce risk. Unfortunately for climate alarmists, the reality is far more nuanced and not nearly as explosive as they’d like us to think.

Yet, that’s enough for them to spin this tale to argue Canada should exit oil and gas investment and put all of our money into wind and solar, even as Canada remains a solar power laggard according to experts.

That is not to say renewable energy projects like wind and solar don’t have a place. They do, and we must continue to innovate and research lower-polluting ways to power our societies on the path to zero-emissions electricity by 2035 in Canada.

But like it actually is in Norway, investment in renewables should supplement — not replace — fossil fuel energy systems if we aim for zero-emission electricity in Canada by 2035 without undermining reliability. We need both.

And that’s the message that Greta should hear when she arrives in Canada.

Rick Peterson is the Edmonton-based founder and Beth Bailey is a Calgary-based supporter of Suits and Boots, a national not-for-profit group of investment industry professionals that supports resource sector workers and their families.

 

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Electrification Of Vehicles Prompts BC Hydro's First Call For Power In 15 Years

BC Hydro Clean Power Call 2024 seeks utility-scale renewable energy, including wind and solar, to meet rising electricity demand, advance clean goals, expand grid, and support Indigenous participation through competitive procurement and equity opportunities.

 

Key Points

BC Hydro's 2024 bid to add zero-emission wind and solar to meet rising demand and support Indigenous equity.

✅ Competitive procurement for utility-scale wind and solar

✅ Targets 3,000 GWh new greenfield by fiscal 2029

✅ Encourages Indigenous ownership and equity stakes

 

The Government of British Columbia (the Government or Province) has announced that BC Hydro would be moving forward with a call for new sources of 100 percent clean, renewable emission-free electricity, notably including wind and solar, even as nuclear power remains a divisive option among residents. The call, expected to launch in spring 2024, is BC Hydro's first call for power in 15 years and will seek power from larger scale projects.

Over the past decade, British Columbia has experienced a growing economy and population as well as a move by the housing, business and transportation sectors towards electrification, with industrial demand from LNG facilities also influencing load growth. As the Government highlighted in their recent announcement, the number of registered light-duty electric vehicles in British Columbia increased from 5,000 in 2016 to more than 100,000 in 2023. Zero-emission vehicles represented 18.1 percent of new light-duty passenger vehicles sold in British Columbia in 2022, the highest percentage for any province or territory.

Ultimately, the Province now expects electricity demand in British Columbia to increase by 15 percent by 2030. BC Hydro elaborated on the growing need for electricity in their recent Signposts Update to the British Columbia Utilities Commission (BCUC), and noted additions such as new generating stations coming online to support capacity. BC Hydro implemented its Signposts Update process to monitor whether the "Near-term actions" established in its 2021 Integrated Resource Plan continue to be appropriate and align with the changing circumstances in electricity demand. Those actions outline how BC Hydro will meet the electricity needs of its customers over the next 20 years. The original Near-term actions focused on demand-side management and not incremental electricity production.

In its Update, BC Hydro emphasized that increased use of electricity and decreased supply, along with episodes of importing out-of-province fossil power during tight periods, has advanced the forecast of the province's need for additional renewable energy by three years. Accordingly, BC Hydro has updated its 2021 Integrated Resource Plan to, among other things:

accelerate the timing of several Near-term actions on energy efficiency, demand response, industrial load curtailment, electricity purchase agreement renewals and utility-scale batteries; and
add new Near-term actions for BC Hydro to acquire an additional 3,000 GWh per year of new clean, renewable energy from greenfield facilities in the province able to achieve commercial operation as early as fiscal 2029, as well as approximately 700 GWh per year of new clean, renewable energy from existing facilities prior to fiscal 2029.
The Province's predictions align with Canada Energy Regulator's (CER) "Canada's Energy Future 2023" flagship report (Report) released on June 20, 2023. The Report, which looks at Canadians' possible energy futures, includes two long-term scenarios modelled on Canada reaching net-zero by 2050. Under either scenario, the electricity sector is predicted to serve as the cornerstone of the net-zero energy system, with examples such as Hydro-Quebec's decarbonization strategy illustrating this shift as it transforms and expands to accommodate increasing electricity use.

Key Details of the Call
Though not finalized, the call for power will be a competitive process, with the exact details to be designed by BC Hydro and the Province, incorporating input from the recently-formed BC Hydro Task Force made up of Indigenous communities, industry and stakeholders. This is a shift from previous calls for power, which operated as a continuous-intake program with a standing offer at a fixed rate, after projects like the Siwash Creek project were left in limbo.

Drawing on advice from Indigenous and external energy experts, the Province seeks to advance Indigenous ownership and equity interest opportunities in the electricity sector, potentially with minimum requirements for Indigenous participation in new projects to be a condition of the competitive process. The Province has also committed $140 million to the B.C. Indigenous Clean Energy Initiative (BCICEI) to support Indigenous-led power projects and their ability to respond to future electricity demand, facilitating their ability to compete in the call for power, despite their smaller size.

BC Hydro expects to initiate the call in spring 2024, with the goal of acquiring new sources of electricity as early as 2028, even as clean electricity affordability features prominently in Ontario's election discourse.

 

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