Invest in Canada - WIND ENERGY
CANADIAN WIND ENERGY SECTOR
RECENT INVESTMENTS IN CANADA
- Mainstream Renewable Power announced in 2009 an $840 million joint venture with Alberta Wind Energy Corporation (AWEC) to build over 400 MW of wind energy plants in Alberta by 2013.
- The Spanish company Acciona Wind Energy, in partnership with Suncor Energy Products, invested $165 million in the construction of a 76 MW wind farm in Ontario in 2007.
- In 2007, Enel SpA of Italy signed a power purchase agreement to build, operate and sell power from a 27 MW wind project in Newfoundland and Labrador.
MAJOR GLOBAL INVESTORS IN CANADA
- GE Energy
- Iberdrola Renewables
- Invenergy Canada
- LM Glassfiber
- Siemens
- SkyPower
- Windtechnics
LEADING CANADIAN COMPANIES
- AAER
- Brookfield Renewable Power
- Hydro Québec
- Marmen
- TransAlta Wind
With a huge landmass, lengthy coastlines, and quality wind resources, Canada has enormous potential as a generator of wind energy. Canada is one of the world’s largest exporters of electricity, and neighbours the world’s largest consumer of electricity, which has a strong and increasing appetite for green power.
Approximately 430 companies are active in Canada’s wind energy sector, with a workforce that has grown from less than 1,000 in 2004, to over 4,000 today. Estimates indicate that employment in this sector could increase to more than 13,000 by 2012.
The Canadian wind energy industry consists mainly of developers backed by large energy firms, industrial corporations, and income funds that bring with them financial resources and commercial credibility. The rapid growth of Canada’s wind energy industry has resulted in a growing number of manufacturing firms entering the market. Recent studies estimate that public and private investors worldwide will inject between $800 billion and $1 trillion into wind power from 2008 to 2020. [Note 1]
Key Capabilities
- Wind power development is the largest segment of Canada’s wind energy Wind power development is the largest segment of Canada’s wind energy industry. It includes project development, project operation and independent power generation. More than 40 percent of wind energy companies are active in this industry segment. Among the leaders are Brookfield Renewable Power, Invenergy Canada, SkyPower and TransAlta Wind.
- Manufacturing is the focus of 16 percent of wind energy firms. The main Manufacturing is the focus of 16 percent of wind energy firms. The main products manufactured in Canada are wind-related components such as rotor blades, control systems, turbines, inverters, nacelles, towers and meteorological towers. Major firms in this industry segment include AAER, GE Wind Energy, LM Glassfiber, Composites VCI, DMI Industries and Hitachi Canadian Industries.
With 430 companies, a rapidly growing workforce, and quality wind resources, Canada has enormous potential as a generator of wind energy.
Unless otherwise noted, all values are in Canadian dollars.
KEY CANADIAN CLUSTERS
Alberta
Alberta was the first Canadian jurisdiction to achieve an installed wind energy capacity exceeding 500 MW. Its current installed capacity is approximately 540 MW, representing approximately 28 percent of Canada’s large wind turbine capacity. In the pipeline are wind generation projects with a capacity of more than 11,000 MW. Transmission upgrades are being designed to connect 3,000 MW of wind power to the grid in southern Alberta.
Manitoba
The Manitoba government is pursuing a strategy to encourage the private development of 1,000 MW of wind-generated electricity capacity over the next decade and is currently considering proposals for the development of 300 MW of wind power as the first phase of the plan. Manitoba offers a tax incentive for the production and purchase of equipment for generating renewable energy, including wind energy systems. Manitoba-based St. Leon Wind Energy LP operates one of Canada’s largest wind farms, with 63 turbines that can generate up to 99 MW.
British Columbia
British Columbia has significant wind resources and over 300 potential wind farm sites currently under investigation. More than $1 billion worth of wind projects are on the drawing board or under construction. The impetus behind the drive to develop clean energy resources, including wind energy, stems from the province’s goals of reducing greenhouse gas emissions by 33 percent by 2020 and becoming self-sufficient in electricity by 2016, with clean sources accounting for 90 percent of electricity supply.
Ontario
Ontario is centrally located in North America, has long-term government support for wind energy generation, and has advanced and diverse manufacturing capabilities. These factors position the province as an ideal choice for manufacturers of wind turbines and related components, service providers, and project developers. Ontario’s advanced manufacturing and machinery industry employs more than 60,000 highly skilled people. The province has implemented large-scale wind energy projects, which will help increase Ontario’s wind energy supply to 4,600 MW by 2020. Ontario offers tax incentives for the deployment of renewable energy systems, plus government funding for the commercialization of new energy technologies. Ontario’s recently introduced Green Energy Act is expected to contribute heavily to the growth of the province’s wind energy sector.
Quebec
Wind energy production and the manufacturing of wind turbines is a priority for Quebec. In 2008, Hydro-Québec announced it had accepted bids to supply it with 2,004 MW of Quebec-generated wind energy to reach its goal of 4,000 MW before 2015. These projects represent investments of approximately $5.5 billion. The leading German wind turbine manufacturers, Enercon and RE Power, were awarded contracts for many projects in Quebec and will be opening facilities in the region. These projects sustain the development of a wind energy supply chain with the creation and integration of subcontractors. Quebec also boasts the Corus Centre, a research centre specializing in wind energy.
Prince Edward Island
Prince Edward Island (PEI) is a world leader in developing and commercializing renewable energy. All levels of government are playing a significant role to establish the strategic infrastructure for environmental technologies. Renewable energy projects have attracted an estimated $200 million in investments and provide 18 percent of the province’s electricity needs. The provincial government has developed a 10-point plan to ensure that PEI generates 500 MW of wind energy by 2013. The province is home to the Wind Energy Institute of Canada as well as an energy-from-waste facility.
INVESTMENT LOCATION BENCHMARKING
METHODOLOGY
This benchmarking study assesses the competitiveness of a number of Canadian clusters against competing international business locations. Based on an investor’s perspective, the research and analysis uses a representative investment project prototype (an operation that manufactures turbines or components for on- and offshore wind farms—see profile on page 5) to assess criteria that corporate decision makers typically examine when evaluating location alternatives for foreign investment.
This international location benchmarking exercise was conducted by IBM-Plant Location International (IBM-PLI), a renowned global location consultancy. IBM-PLI performed objective research to assess the comparative cost and quality of doing business in various locations, simulating the approach used by investors when screening candidates for corporate investment projects. The benchmarking study examined 250 to 300 financial and qualitative location indicators in the assessment of each industry subsector.
To assess the quality of a location’s operating business environment, data were collected from a variety of sources for the different subfactors in each of the categories featured in the operating environment table (page 5). Data for the qualitative assessment were translated into comparable scorings (zero to 10) for each category and subfactor using a weighted scoreboard approach. Weights were assigned to each location category and subfactor to demonstrate their relative importance in the location selection process. These weights are specific to each industry subsector and are based on IBM-PLI’s experience in helping investors make strategic decisions when choosing locations.
A high-level financial analysis was also conducted to take into account major location- sensitive investment and operating costs and revenues for each representative project profile. Cash flow projections have been calculated and discounted over a 10-year period, incorporating anticipated inflation rates, to determine their net present value, and to assess the profitability of the project in each of the benchmarked locations.
benchmarking the comparative cost and quality of doing business in global locations
REPRESENTATIVE PROJECT PROFILE
GENERAL DESCRIPTION OF OPERATIONS
Manufacturing turbines or components for on- and offshore wind farms.
KEY PROJECT DRIVERS
- Presence of upstream and downstream industry cluster, including steel industry and turbine and component manufacturers
- Local access to a strong pool of relevant manufacturing as well as engineering profiles
- Strong regional transportation network
- Proximity to market including presence of wind farms and power capacity
OPERATING COST ANALYSIS PROJECT REQUIREMENTS FOR FINANCIAL MODELLING
LABOUR
(HEADCOUNT = 125)
Electro-Mechanical
Assemblers: 50
CNC Operators: 20
Production and
Shipping Clerks: 16
Engineers: 16
Purchasing Agents : 7
Mechanical Drafters: 9
Supervisors: 7
MACHINERY AND EQUIPMENT
C$ 12,500,000
SALES
C$ 25,000,000
PROPERTY
Land: 6 acres
Building: 75,000 sq. ft.
UTILITIES
Power:
(Monthly Consumption)
250,000 kWh
Gas:
(Monthly Consumption)
1,500 Mcf
Water:
(Daily Consumption)
15,000 gal
OPERATING ENVIRONMENT
| GENERAL BUSINESS ENVIRONMENT » 5%* |
|
|---|---|
| LOCAL POTENTIAL TO RECRUIT SKILLED STAFF » 20%* |
|
| PRESENCE OF INDUSTRY/CLUSTER » 30%* |
|
| FLEXIBILITY OF LABOUR & REGULATIONS » 5%* |
|
| INFRASTRUCTURE & COMMUNICATIONS » 30%* |
|
| REAL ESTATE » 5%* |
|
| LIVING ENVIRONMENT » 5%* |
|
*Factor category weight; corresponding location factors are ranked in order of importance.
CANADA’S VALUE PROPOSITION
Canadian locations offer appealing cost-competitive alternatives combined with some of the best operating environments for the manufacturing of wind farm turbines and components.
A better return on your investment
Canadian cities provide strong investment options with high profitability. All Canadian locations benchmarked rank highly among North American alternatives, with Winnipeg, Charlottetown, Calgary, Montréal, Windsor and Waterloo Region providing some of the most cost-competitive propositions. Although a location such as Monterrey in Mexico may offer a higher level of cost competitiveness, the qualitative environment should also be taken into consideration.
*Unless otherwise noted, graphs represent IBM-PLI assessment scores.
A wealth of options to choose from
From an operating environment perspective, Canadian cities provide a wide variety of viable options. Montréal, Waterloo Region, Windsor, Calgary and Vancouver offer excellent value propositions to businesses involved in the manufacturing of wind farm turbines and components, when assessing the trade-off between cost and qualitative factors. These hubs score well on several key qualitative investment drivers, including general business environment, presence of industry and the local potential to recruit skilled labour.
*Unless otherwise noted, graphs represent IBM-PLI assessment scores.
Growing business opportunities
The wind energy capacity planned in Quebec is higher than that of any state or province in North America with projects totalling an additional 1794.1 MW currently under construction or to be completed by 2012. Ontario is also pursuing many such projects with an additional 1618.4 MW planned by 2012. This province also has guaranteed feed and tariff programs to assist new renewable energy sources generate revenue.
Alberta and British Columbia are currently involved in various wind energy projects, set to be completed by 2009 or 2010 while Manitoba is developing a wind farm with a 300 MW capacity that is set for completion by 2011.
**Sources include American Wind Energy Association (AWEA) and Canadian Wind Energy Association (CanWEA) statistics. Awea figures refer to projects currently under construction. CanWEA figures refer to projects with a signed power purchase agreement and/or already under construction, to be completed by 2012.
Thriving wind energy clusters
The number of installed wind turbines, planned and established wind energy capacity, presence of companies related to wind energy, and wind power growth rates are all key considerations when assessing the cluster strength of various locations.
Several Canadian locations have a strong industry base for wind generator components, reflecting their comparative strength in attracting wind energy companies and machinery manufacturing operations. During the period 2003-2007, Ontario attracted the highest number of contestable wind energy-related projects among regions included in this study. Alberta and Quebec also secured significant foreign investment projects in the same period.
*Unless otherwise noted, graphs represent IBM-PLI assessment scores.
A skilled and motivated workforce
Manufacturing of wind turbines and components requires the same skills that are found in other manufacturing activities such as transportation equipment, fabricated metals and related areas.
Several Canadian cities boast strong machinery manufacturing hubs. Workers with experience in activities related to the manufacturing of turbines are a potential source of labour for investment projects in this sector.
*Unless otherwise noted, graphs represent IBM-PLI assessment scores.
Advantageous labour costs
Canada offers competitive labour costs for employees such as assemblers, electrical engineers and mechanical engineers. Several Canadian locations, including Charlottetown, Winnipeg, Calgary, Montréal and Waterloo Region, rank among the top benchmarked locations in North America on this dimension.
An important component of Canada’s cost-competitiveness comes from the lower costs of providing employee benefits. Canada’s national healthcare system implies that most medical insurance costs are publicly funded rather than paid by the employer, leading to potential savings.
*Unless otherwise noted, graphs represent IBM-PLI assessment scores.
A conducive business environment
Economic stability, support from government and local economic development agencies, R&D incentives, business permitting procedures, financial support available to business, privacy regulations, information security and intellectual property rights, are important considerations for businesses when investing or expanding their operations.
As the leader in GDP growth among G7 countries over the last decade, and with the world’s strongest banking system, [Note 2] Canada has created an advantageous business environment for companies to invest. In fact, all Canadian cities evaluated offer a strong business environment, as based on measures published by the IMD, the Economist Intelligence Unit and the World Economic Forum. The Canadian city of Charlottetown is top-ranked due to its very supportive local development network.
*Unless otherwise noted, graphs represent IBM-PLI assessment scores.
World-class infrastructure
Highway and road access, road congestion, airport and port access, public transportation, and power and telecommunications reliability are important factors when establishing or expanding manufacturing operations.
Canada offers unparalleled connectivity with reliable, high-quality telecommunications and broadband infrastructure, as well as one of the lowest business telephone charge rates among G7 economies. Canadian cities also offer the very best in transportation infrastructure. Montréal ranks high among North American locations due to its strong public transport network and its accessibility and connectivity by air and water. The new EU-Canada aviation agreement will further support Canada’s growing transatlantic trade, facilitating the efficient flow of people and valuable goods.
*Unless otherwise noted, graphs represent IBM-PLI assessment scores.
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Catalogue Number FR5-38/14-2009E-PDF
ISBN Number 978-1-100-12056-0
This publication was prepared by Invest In Canada in cooperation with IBN-PLI. The document covers a wide range of issues and is not intended to be a detailed nor an exhaustive reference. Accordingly, before relying on the material herein, readers should independently verify its accuracy, currency and relevance for their purposes and should seek appropriate professional advice. Any reference to companies or investments is for illustrative purposes only and does not constitute an endorsement of those companies or investments. Details of sources for all quoted facts and figures are available upon request. The Government of Canada does not accept any liability in relation to the contents of this work. This publication is printed on recycled paper and is available in multiple languages including French. © Her Majesty the Queen in Right of Canada, as represented by the Minister of International Trade, 2009.
Footnotes
- Emerging Energy Research, Press Release “Wind Turbine Industry Steps Up to Global Demand”, June 19, 2008. (return to source paragraph)
- World Economic Forum Global Competitiveness Report 2008-2009, October 2008. (return to source paragraph)
