Prince Edward Island Energy Strategy Discussion Document: April 2008

Public Consultation Document
Prince Edward Island Energy Strategy Discussion Document

April 2008
CONTENTS
i i ii ii Preface Submissions Premiers Message Ministers Message
SECTION I- INTRODUCTION 1 Background 1 Energy Strategy Vision 1 Energy Strategy Objectives 2 Energy Strategy Consultative Process SECTION II- ENERGY OVERVIEW 2 World Energy Markets 2 Canadian Context 2 Regional Perspective 3 PEIs Current Energy Profile 4 Energy Prices and Trends 4 Projected Supply and Demand SECTION III- ENERGY EFFICIENCY 4 Overview 5 Why Energy Efficiency? 5 The Potential for Energy Efficiency on PEI 6 Energy Efficiency Challenges 6 Leadership 7 Program Delivery 7 Demand Side Management 8 Space Heating Efficiency 8 Transportation Efficiency 9 Financial and Institutional Support SECTION IV- RENEWABLE ENERGY 10 Overview 11 Wind 12 Role of Government 12 Solar Technologies 13 Earth Energy SECTION V- BIOFUELS 13 Overview 14 The Biofuel Potential in Prince Edward Island 14 Biomass 15 Biomass Challenges 15 Liquid Biofuels 15 Pure Plant Oils 16 Biodiesel 16 Ethanol 16 Liquid Biofuel Challenges 17 Biogas 17 Leadership
SECTION VI- GOVERNMENT POLICY AND ECONOMIC DEVELOPMENT 18 Overview 18 Energy Efficiency 18 Renewable Energy / Biofuels 18 Distributed Generation: Community-Based Energy Projects 19 Green Power 19 Net Billing 19 Feed-in Tariffs 19 Renewable Portfolio Standards 20 Green Heat 20 Green Fuels 20 Renewable Fuel Standards 21 Green Technology Cluster SECTION VII- THE PATH FORWARD 21 Public Consultation 22 Final Strategy SECTION VIII- APPENDICES 23 Submissions Received 24 Reference Materials 26 Glossary of Terms
PEI ENERGY STRATEGY- DISCUSSION DOCUMENT Preface

This document is intended to stimulate public discussion and help shape Prince Edward Islands energy future. With rising energy costs, decreasing supply and increasing demand, it is important for provinces and the country to implement effective energy policies that focus on energy efficiency and conservation, renewable energy alternatives, biofuels and economic development. Feedback received through public consultations and written submissions will be collected and considered in the development of a Provincial Energy Strategy for Prince Edward Island for the next decade. The revised strategy will build and expand on the Energy Framework and Renewable Energy Strategy released by the Provincial Government in 2004. This discussion document outlines the current energy situation on PEI and presents information on various opportunities that could be pursued relating to energy efficiency, renewable energy alternatives, biofuels and economic development. A central theme of this discussion document is the role of the Provincial Government in implementing and promoting measures that will increase PEIs energy security, ensure environmental sustainability and strengthen the economy. Throughout the document, a series of questions is posed to the reader to stimulate discussion and solicit feedback on these important issues. The input received will then form the basis for the development of a flexible Provincial Energy Strategy that focuses on the issues that are important to Islanders.
Submissions
We welcome and appreciate all feedback concerning the information contained in this discussion document. A public consultation process will take place with meetings held in communities, cities, and towns across the province. During the public meetings, a facilitator will present the highlights of this discussion document and pose questions to encourage discussion and solicit feedback from the attendees. The public consultations are expected to take place in mid-May; times and locations to be announced. In addition to feedback received at the public consultations, written and electronic submissions will be accepted. Written Submissions Written submissions can be mailed to the following address: Prince Edward Island Department of Environment, Energy & Forestry Jones Building, 4th floor 11 Kent Street P.O. Box 2000 Charlottetown Prince Edward Island C1A 7N8 Electronic Submissions Electronic submissions can be sent to the following email address: energystrategy@gov.pe.ca All submissions will be considered public documents and may be published on the government website. Any submission that contains confidential information should clearly indicate which sections of the submission are to be treated as confidential. The deadline for written and electronic submissions is 5:00 pm, Friday, May 30th, 2008.
PEI ENERGY STRATEGY- DISCUSSION DOCUMENT PREMIERS MESSAGE

Energy is a vital component to our everyday lives, be it providing heat and lighting for our homes, businesses and institutions or fuel for transportation vehicles and industrial applications. For a very long time, Islanders have relied on imported petroleum products to deliver an overwhelming amount of this energy. As the world price of oil continues to hover near historical highs, resulting in increased costs for acquiring petroleum products, it is time to rethink how we acquire and utilize our energy resources. We can no longer continue with our dependence on oil and must search for answers near home in terms of exploiting local renewable resources and being more efficient with our energy consumption. It is my pleasure to provide you with the PEI Energy Strategy Discussion Document. This publication is the result of input from a wide cross section of stakeholders who took the time and effort to propose a variety of initiatives that will improve PEIs energy security. The Discussion Document had also been deigned to stimulate focused dialogue about the possibilities of pursuing an energy future that is considerably less reliant on fossil fuels. It is your turn. Public consultation will be an integral component in formulating the final PEI Energy Strategy that will be released later this year. I invite all Islanders to express their opinion at the upcoming consultation sessions or through other forms of written correspondence.
Premier Robert Ghiz
MINISTERS MESSAGE
As Minister of Environment, Energy and Forestry, I recognize the link between energy consumption and the environment. Our heavy dependence on petroleum products to heat our homes and power our vehicles has consequences on the health of our air, soil and water. Greater utilization of renewable resources, with attention to the efficient use of all energy fuels, will enable a sustainable energy system for Prince Edward Island and improve our economic prosperity. Within this Discussion Document are possible initiatives for utilizing biofuels created from forest and agricultural operations, increasing the development of renewable energy resources for heat and electricity, and reducing consumption through enhanced energy efficient initiatives. These strategies can provide much needed economic development opportunities, greater energy security and improved environmental sustainability. I look forward to the upcoming public consultation sessions and invite all Islanders to participate in the discussions or provide comments that will lead to a renewed PEI Energy Strategy.
George Webster Minister of Energy, Environment and Forestry
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PEI ENERGY STRATEGY- DISCUSSION DOCUMENT SECTION I- INTRODUCTION

Background PEI has always been viewed as an innovator in developing, demonstrating and deploying renewable energy systems with due regard for the environment. From the days of the Institute of Man and Resources, which led to the PEI Energy Corporation, there has been a progressive approach to energy policy and the Corporation has become a critical agent of change over the years. In June 2004, the Prince Edward Island Department of Environment and Energy released its Energy Framework and Renewable Energy Strategy. Integral to the production of this document was input received from interested stakeholders and the general public. The outcome of this consultative approach to the Islands energy policy development was a list of 19 action items for the government to pursue. Today, nearly all of these items have been accomplished with significant advancements made towards the incorporation of renewable energy (wind power) into the provincial energy mix. General comments and feedback surrounding the 2004 strategy were positive: The previous Energy Framework and Renewable Energy Strategy for Prince Edward Island contained much strength as a provincial energy strategy. It is a comprehensive document which provided a wide array of opportunities for PEI to consider when looking towards a more sustainable energy system on the Island. Its strong focus on wind energy has been important to initiate renewable energy development and deployment on PEI. Stakeholder submission, 2008 The 2004 strategy outlined a commitment for the province to have 15 percent of its electricity needs met by renewable sources by 2010. The province met this target in 2007, three years ahead of time. With this strategy, PEI became the first North American jurisdiction to introduce a feed-in tariff in more than 20 years. The PEI government is now seeking to build and expand on the success of the 2004 strategy. This discussion document was developed to stimulate discussion and solicit feedback from the general public. It will help identify the role of the PEI government in implementing energy efficiency and conservation measures, promoting renewable energy, encouraging new economic and development opportunities, raising public awareness and education, as well as outlining key recommendations for a flexible policy framework that is capable of adapting and reacting to market and technological changes. Energy Strategy Vision To ensure a prosperous future for residents and businesses of Prince Edward Island based on the objectives of energy security, environmental sustainability and economic development. Energy Strategy Objectives 1. Energy Security a. Greater self-sufficiency b. Improved price stability c. Diversity of supply 2. Environmental Sustainability a. Increased energy efficiency and reduced consumption b. Renewable energy development c. Reduced GHG emissions and other pollutants
PEI ENERGY STRATEGY- DISCUSSION DOCUMENT

3. Economic Development a. Support growth of local industries and new job opportunities b. Research, development & demonstration of new technologies c. Strengthen and diversify local economy Energy Strategy Consultative Process Primary research, in the form of several customized questionnaires, was conducted with 10 identified energy stakeholder groups, with a total of 31 submissions. The purpose was to solicit input and initial guidance on the direction for a comprehensive and coordinated Energy Strategy for PEI that will serve to guide the provinces efforts over the next decade. Secondary research revealed successful elements of energy policy and program development in other jurisdictions in North America and around the world, which has been incorporated into this document.
SECTION II- ENERGY OVERVIEW

World Energy Markets World energy markets are facing three unfavorable conditions: increasing demand, dwindling supply, and rising costs. As economies develop and populations grow, particularly in countries such as China and India, energy supply is struggling to keep pace with rising demand. This, along with global terrorism, instability of the Middle East, geopolitical pressures, and commodity speculation, has resulted in rising energy prices. Large consumers such as Canada are especially vulnerable to the effects of rising costs and decreasing supply. Canadian Context Energy is an important part of the Canadian economy in terms of both production and consumption. Canada is one of the largest users of energy per capita in the world and ranks second in the world in terms of oil reserves, behind Saudi Arabia. Like other countries around the world, Canada is experiencing a number of energy challenges including high and volatile energy prices; decreasing conventional reserves; the need to diversify supply; an ageing and constrained delivery infrastructure; and growing environmental concerns. Despite the challenges and a recent decrease in Canadas total energy demand, the latest projections indicate that total future energy demand in Canada will grow by 1.3 percent each year until 2020. Regional Perspective Through the Council of Atlantic Premiers (CAP), the Atlantic Energy Ministers Forum (AEMF) and the Conference of New England Governors and Eastern Canadian Premiers (NEG/ECP), the Atlantic provinces have been working together on energy issues for several years. Most recently, in January 2008, the Atlantic Premiers released the Atlantic Energy Framework for Collaboration. The document highlights three priority areas for regional collaboration: Enhancing energy efficiency programming Increasing renewable energy development Assessing biofuel potential
The Atlantic Energy Ministers will guide the implementation of this framework, with a progress report expected later in 2008. The NEG/ECP have expressed increased emphasis on energy in recent years and in June of 2007 adopted a series of recommendations for the promotion and development of energy efficiency, energy trade, renewable resources, and improved transportation initiatives.
PEIs Current Energy Profile Without a local supply of natural gas and oil resources, Prince Edward Island is heavily reliant on imported sources of energy. Imported oil accounts for 76 percent of PEIs total energy supply, with the transportation sector being entirely dependent on this fuel source. The economic impacts of the provinces reliance on imported energy are significant considering that more than $440 million is spent on off-Island energy resources annually. As shown in Figure 1, the current energy supply in Prince Edward Island consists of four sources: petroleum products, imported electricity, wind-powered electricity, and biomass.
Figure 1: Prince Edward Island Current Energy Sources
18% Wind 76% Petroleum Products 14% Electricity 82% Imported Electricity
10% Biomass
Wind resources meet approximately 18 percent of the provinces electricity supply with the remainder tied primarily to oil and nuclear power. Most of PEIs electricity needs are supplied by the New Brunswick Power Corporation and imported via two submarine cables connected to the mainland. Figure 2 shows Prince Edward Islands current electricity mix. Figure 2: Prince Edward Island Electricity Mix
NB System 49%
Nuclear 19%
1% Maritime Electric Company Ltd.
13% Dalhousie
18% Wind

Ten percent of energy in PEI is supplied by biomass, which includes fuel wood, sawmill residue and municipal waste. PEI Energy Systems in Charlottetown uses municipal waste and wood biomass to supply thermal energy to commercial, residential and institutional buildings in the city. Developed in the 1980s and early 1990s by the PEI Energy Corporation, the Charlottetown District Heating System is another example of the Province of PEI leading in the development of renewable energy. Energy Prices and Trends As shown in Figure 3, energy prices have steadily increased in recent years. Electricity prices have increased 37 percent from 2000 to 2007 while gasoline prices and home heating costs increased 48 percent and 53 percent, respectively, over this time period. Much of the increase in fuel costs can be attributed to increasing oil prices, which more than doubled over this time period, and a combination of increasing demand and decreasing supply of conventional energy resources. At present, there does not seem to be any relief in sight as oil prices hit a record high of $100 per barrel in January of this year. In addition, Maritime Electric Company, Ltd. is forecasting price increases of 9 percent for Island residents and 19 percent for Island businesses in 2008-2009. Figure 3: Prince Edward Island Energy Costs, 2000 2007
115 105 95 cents/litre 85 75 65 55 45 35 2000 2001 2002 2003 2004 2005 2006 2007 13 12 11 10 17 16 cents/kWh 15 14
Gasoline prices
Home heating costs
Electricity prices
Projected Supply and Demand Total energy demand in Prince Edward Island over the next decade is projected to increase 8 percent. However, all of this projected growth in energy demand can be offset by aggressively pursuing cost-effective energy efficiency options and the further development of renewable energy and biofuel resources.
SECTION III- ENERGY EFFICIENCY

The least costly energy is the energy we don't use. Overview A central feature of sound energy planning is to ensure that there is a balance between energy demand and supply. A lack of balance and heavy reliance on imported fossil fuels on the Island can lead to high prices, lack of energy stability, and uncertainty throughout the economy. While PEI is a recognized leader in the use of renewable energy, the province has yet to aggressively pursue energy efficiency opportunities.

Energy efficiency refers to programs, initiatives, products, technologies and systems all with the same goal in mind: to reduce the amount of electricity and/or fuel required to perform the same job or better than conventional means. Energy efficiency is considered to be the least costly, most reliable, locally abundant energy resource with the greatest potential to reduce greenhouse gas (GHG) emissions and protect the environment. Improving the efficiency in the way energy is consumed on the Island will have direct benefits to individuals, businesses, governments, institutions and the environment. Energy efficiency covers a very broad spectrum of improvements in: Building practices- residential, commercial and institutional Energy-saving appliances Lighting & space heating Industrial & agricultural processes Transportation
Why Energy Efficiency? The potential benefits for energy savings through increased energy efficiency have far-reaching impacts for all Islanders: Reduces residential, commercial and institutional energy bills and in particular, reduces the impact of high energy prices on low-income families and individuals Reduces environmental impact- lowers emissions of GHGs and other pollutants associated with energy production and consumption Stimulates the PEI economy by reducing outflow of consumer energy dollars Increases local economic development opportunities and employment creation Enhances the reliability of our energy system Improves energy supply security and helps mitigate fluctuating energy prices Avoids or defers capital expenditures for upgrades to the electrical transmission and distribution infrastructure Increases the percentage of energy use met by on-Island renewables by decreasing energy demand
The Potential for Energy Efficiency on PEI In 2007, PEIs Department of Energy, Environment and Forestry commissioned a report by the Vermont Energy Investment Corporation (VEIC) to examine the potential of cost-effective energy efficiency initiatives that would substantially reduce energy use and lower greenhouse gas emissions in PEI by 2017. The study examined the potential in the following sectors: Residential Commercial and Institutional (C&I) Transportation
The analysis of achievable potential, defined as the amount of energy cost savings that could be attained through energy efficiency initiatives, was the primary objective of this study. By 2017, if implemented, the proposed programs in the Residential and C&I sectors would reduce forecasted electricity use by 11 percent and non-electric use by 8 percent. This translates into a cost savings of $148 million over the ten-year implementation timeframe and would reduce GHG emissions by nearly 145,000 tons by 2017. There is considerable cost-effective energy savings potential that could be pursued on PEI. Several programs have been recommended for consideration in PEI and developed with the following considerations:

Promote the benefits of energy efficiency to all Islanders Provide opportunity for all residential customers to participate Minimize barriers to participation for low income customers Include all fuels initiative- electricity, transportation and home heating fuels Strengthen relationships with on-Island product retailers, builders and contractors
Energy Efficiency Challenges While there are clear benefits to pursuing energy efficiency and conservation, achieving these gains has its challenges. Energy is consumed to produce a huge variety of products and services, heat homes and businesses, generate electricity, and power the transportation sector. Therefore any energy efficiency initiatives, to be successful, must be directed at addressing some of these challenges: The required coordination among diverse stakeholders- energy suppliers, utilities, governments, regulators, builders, equipment suppliers, and consumers (individuals and businesses) The associated costs for implementing energy efficient products and services The lack of energy efficiency information available to individuals and businesses The availability of energy efficient products and services in the PEI marketplace The lack of experienced and qualified trades persons and professionals
Despite these apparent obstacles, it has been demonstrated in many other leading North American jurisdictions that to save a unit of energy is still more cost effective than purchasing that same unit of energy. Questions 1. Should the Provincial Government direct the Island Regulatory and Appeals Commission (IRAC) to consider energy efficiency as a supply option or an alternative to traditional supply options? 2. Should utilities be compensated for incorporating energy efficiency options if they are cheaper than traditional supply options? Leadership Demonstrating leadership by the Provincial Government in recognizing energy efficiency as a priority resource in the development of energy policy is a crucial step. There has been some criticism of the 2004 Energy Framework and Renewable Energy Strategys lack of in-depth consideration for the value in pursuing energy efficiency options. The government is in a unique position to develop closer ties between the diverse stakeholders involved in the administration and implementation of energy efficiency in PEI. Since 2004, the Provincial Government has demonstrated some leadership in this area by: 1. Introducing transportation efficiency standards for new or replacement vehicles in its government fleet 2. Implementing electricity efficiency programs within its public buildings 3. Initiating residential energy efficiency programs 4. Introducing a hybrid vehicle tax incentive Questions Should the Province be leading by example? How? 1. Enhance green procurement standards? (e.g. ENERGY STAR, EcoLogoTM etc.) 2. Use advanced energy/environmental codes for publicly funded buildings? 3. Install/demonstrate leading-edge technologies? Other methods? 6

Program Delivery Developing comprehensive programs to address the different market and non-market barriers to adopting energy efficient products and services has lead to the formation of dedicated agencies for program delivery with regular review cycles to quantify the resource and update its contribution. Dedicated agencies are able to provide a one-stop-shop for energy efficiency information and programs. In August 2007, Premier Ghiz announced the establishment of the Office of Energy Efficiency (OEE), demonstrating the commitment of the new government to this important local resource. The OEEs mission is to provide Islanders with advice and programs that will promote sustainable energy use and reinforce the importance of sound energy management for the economic, social and environmental well being of Island residents and businesses. Questions 1. What direct role should the Provincial Government play in promoting energy efficiency in PEI? 2. Should the Province, through the OEE, attempt to increase awareness through educational and public awareness campaigns? 3. Should the Province implement regulations/legislation (i.e. building and appliance energy codes) to improve energy efficiency in PEI? 4. Should the Province provide programming/financial incentives to help Islanders reduce their energy consumption? 5. Should the Province coordinate training for energy efficiency providers in PEI? Through the OEE, industry associations, educational institutions? Others? 6. Should the Province, through the OEE, do all of the above?
Demand Side Management The Renewable Energy Act required Maritime Electric Company, Ltd (MECL) to file an electrical energy efficiency plan and demand side management strategy with the Island Regulatory and Appeals Commission (IRAC). Demand Side Management (DSM) refers to the planning, implementation, and monitoring of utility activities designed to encourage consumers to modify patterns of electricity usage, including the time of day and level of electricity demand. MECLs Demand Side Management and Energy Conservation Plan was first filed in 2006 and now consists of six programs with elements designed to address barriers limiting market transformation, public education and awareness, community-based initiatives, energy efficient product retailers, and research and evaluation of program effectiveness: 1. Winter Challenge Program- challenges residential customers to reduce electricity consumption during the month of December by 10% through energy conservation 2. Energy Efficient Lighting Rebates- offers rebate coupons on selected energy efficient lighting products 3. Community Partnership Program- community partnerships and tradeshows will be pursued with organizations to deliver energy efficiency initiatives across PEI 4. Town Hall Energy Efficiency Community Workshops- a series of workshops conducted in partnership with community groups and/or the Office of Energy Efficiency 5. Education Curriculum Development- multi-year educational materials developed for the public school curriculum 6. Research and Evaluation- a comprehensive protocol to help monitor and measure the effectiveness of the above programs

In addition to the above programs, other utilities in North America are pursuing initiatives with incentives to shift a households electric use from peak to off-peak hours. This requires a smart meter that tracks how much electricity you use and when you use it. This empowers consumers with this knowledge to switch electric use and take advantage of less expensive off-peak hoursespecially for large appliances like dishwashers, air conditioners, electric heating systems, ovens and clothes dryers. Due to the relatively small differential between on-peak and off-peak prices (1.5-2.0 cents per kWh), MECL believes this difference is insufficient to justify the cost of infrastructure needed to implement time-of-use rates. However, for large industrial consumers this differential may present cost-effective savings by diverting significant energy intensive processes to off-peak hours. Questions 1. Are utilities doing enough to address energy efficiency in PEI? Can more be done? 2. Should the Province direct electrical utilities, through the Island Regulatory and Appeals Commission, to implement proper market signals through appropriate rate structures? I.e. time-of-use rates, eliminate the declining block rate structure, etc. Space Heating Efficiency Next to the transportation sector, space heating is the largest user of energy in the province, consuming approximately 30 percent of our total energy requirements. Improvements to existing homes and buildings to reduce energy consumption for space heating include: Improved efficiency of the heating source (furnaces, boilers, etc.) Improved efficiency of the home or building structure (insulation, windows, etc.)
It is important for Island residents and businesses to understand the most cost-effective approach to increase space heating efficiency. Increasing the efficiency of the heating source does not necessarily lead to energy savings if the structure is drafty and poorly insulated. Often greater savings can be achieved by reducing the energy demand of the building and maintaining the existing heating system- i.e. sealing drafts, adding more insulation, replacing inefficient systems and equipment, etc. Residential and commercial energy audits, performed by qualified professionals, can provide valuable information to consumers on the best and most cost-effective solutions for space heating efficiency. The incorporation of energy efficient practices and technologies in all new construction on PEI would ensure savings over the entire lifespan of the building. There are numerous obstacles to achieving this end that include up front capital costs and educating consumers, contractors and realtors. PEI does not have a province-wide building code. The municipalities of Charlottetown and Summerside do require new buildings to comply with the National Building Code, but they do not attach an energy standard to it. The implementation of a province-wide building and energy code would ensure that all new buildings meet minimum standards for energy efficiency. Question Should the Provincial Government introduce a province-wide building and energy code that sets minimum requirements for energy efficiency in all new construction in PEI? Transportation Efficiency Historically, Prince Edward Island has been more dependent on automobiles than any other province. The Island has the most extensive network of roads and highways, limited urban transit, an automobile dependent tourism industry and a heavy reliance on the trucking industry to move goods in, out and around the province. As such, the transportation sector consumes 43 percent of

our energy and is the single largest source of greenhouse gas emissions. Over 80 percent of registered vehicles on the road in PEI are considered light duty vehicles. Despite the rising costs of gasoline and diesel, more Islanders are purchasing trucks, vans and sport utility vehicles (SUVs). In addition, the number of annual kilometers traveled has increased by nearly 20 percent since 1990. As mentioned previously, the Provincial Government introduced a hybrid tax incentive in 2004 to encourage the purchase of hybrid vehicles. The Government of PEI operates hundreds of vehicles in their fleet and purchasing more fuel-efficient vehicles has been part of their strategy to reduce fuel costs and cut greenhouse gas emissions for the past several years. The Provincial Governments Transportation Efficiency Standard requires that fuel efficiency be part of vehicle procurement considerations for all future leased or purchased vehicles. Public transportation, in some jurisdictions, has been shown to be an effective means to improve air quality, relieve traffic congestion, and reduce fuel consumption and greenhouse gas emissions. A public transit system was launched in Charlottetown in 2005 and currently operates seven different routes across the city with plans to expand into Stratford this year. Two hydrogenpowered buses were added to the fleet in 2007. Invariably, transit systems are a highly subsidized public service. The costs of implementation and ongoing annual operation can be significant. In the absence of a critical mass of transit users in PEI and relevant market research data concerning the number of daily users, it is difficult to quantify what effect, if any, the transit system is having on meeting the Islands energy and environmental objectives. In addition to the efforts outlined above, there are many initiatives that could be implemented to reduce our energy consumption in the transportation sector: Anti-idling and speed reduction campaigns Telecommuting and compressed work weeks Traffic signal synchronization Efficient traffic signal and highway lighting technologies Public outreach and education Ride sharing/car pooling
Questions 1. Should the Provincial Government continue to offer a hybrid tax incentive? 2. What additional efforts should the Provincial Government consider to encourage Islanders to purchase more fuel-efficient vehicles? 3. Should the Provincial Government consider implementing disincentives (i.e. levies, gas-guzzler tax, or increased registration fees) for vehicles that achieve poor fuel efficiency? 4. What should the Provincial Government do to encourage more fuel-efficient driving practices? Anti-idling legislation? Speed reductions? Driver training? Etc. 5. What other methods should the Province pursue to decrease the number of vehicles on the road? And to decrease the amount of vehicle miles traveled? Financial and Institutional Support While recognizing the potential for energy efficiency as the most cost effective energy resource and setting aggressive targets for the future are essential elements of any energy strategy, to effectively utilize this resource requires permanent long-term funding. There are several key elements for successful energy efficiency programs:

Long-term funding Dedicated agencies for program delivery Regular review cycles Clear measurement and verification to assess program effectiveness
Historically, energy efficiency programming in North America has suffered from inconsistent levels of funding and attention. To address this issue, nearly 20 states in the U.S. have developed public benefits funds (PBFs) also commonly referred to as systems benefit charges. A small charge is added to consumers electricity bills- it is collected by the utility for the government department or agency responsible for the delivery of energy efficiency programs. It provides a consistent source of funds to support energy efficiency and renewable energy development. The annual amount collected is relatively consistent and therefore enables delivery agencies to better develop programs with longer-term implementation plans. Questions 1. How should the Province or utilities provide stable and long-term funding for energy efficiency? 2. Are Islanders willing to pay a fee to develop and implement the types of programming required to increase energy efficiency? And if so, how much? 3. Where and how should this public benefit fee be applied? To electric bills? Oil? Gasoline tax? Carbon tax?
SECTION IV- RENEWABLE ENERGY

Overview Prince Edward Island is the only Canadian province without substantial resources in fossil fuels, hydroelectric or nuclear energy. As a result, the province imports nearly 85 percent of its energy needs from mostly petroleum-based off-Island resources. This heavy reliance on out-of-province suppliers makes PEI consumers and residents particularly vulnerable to fossil fuel price volatility and supply disruptions. Pursuing renewable energy development offers an alternative to conventional sources and will provide greater control on the Island of energy prices, security, and diversity of supply. Promoting renewable energy development will address many environmental issues- particularly climate change and the reduction of greenhouse gases. For the purposes of this discussion document, the renewable energy sources considered in this section include wind, solar and earth energy. Biofuels will be addressed separately in the subsequent section. Despite being surrounded by water, there is currently little potential for wave and ocean energy technology applications in PEI and were therefore not considered within the scope of this document. In 2004, the Department of Environment, Energy and Forestry oversaw the development and implementation of the Renewable Energy Act, which provided a number of policy instruments (e.g. net metering, feed-in tariffs, designated development zones, and a renewable portfolio standard) to increase the development of renewable energy. A Renewable Portfolio Standard (RPS) was introduced requiring utilities to acquire at least 15 percent of electrical energy from renewable sources by 2010.
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Wind As a percentage of domestic use, PEI is a North American leader in the development of wind energy. The Provincial Government, through the PEI Energy Corporation, developed Atlantic Canadas first utility-grade wind farm in 2001 at North Cape before the economic feasibility of these projects was proven for this region. Since that time, the PEI Energy Corporation has expanded its North Cape facility and developed the East Point Wind Farm that has resulted in the Province owning and operating 40.56 MW of wind power. Now that electrical generation from wind has been demonstrated to be competitive with non-renewable sources, there are private wind developments that have been completed. Several more private wind farms are in the planning stages. In addition to proving the economic feasibility of utility-grade turbines, the Province has promoted wind development through regulatory measures. Under the Renewable Energy Act, utilities on PEI must meet at least 15 percent of their electrical energy sales from procuring power from renewable resources by 2010. Presently, almost 18 percent of the electricity on PEI is acquired from wind power and the renewable portfolio standard has been met. The electrical utilities on PEI have met their regulatory requirements in terms of incorporating renewable energy into their supply mix. Because wind power is an intermittent resource, there is a limit as to how much of this energy may be incorporated into the provincial grid. However, there remains an opportunity for smaller wind projects, of less than 100 kW, that will not impact the ability of the utilities to adjust. Question Is there further need for regulatory initiatives to further promote small wind developments? Prince Edward Island has a world-class wind resource and there continues to be strong interest in locating wind farms in the province. Most of the future development of wind must be marketed offIsland and may be sold at a premium to offset electricity from traditional sources that release harmful air and greenhouse gas emissions. The benefits to PEI for exported wind power are mainly accruing from lease payments for landowners where the turbines are situated, the economic stimulus from short-term construction opportunities, a limited number of operations and maintenance jobs, and provincial revenues from the environmental attributes associated with green power production. There is an opportunity to maximize these benefits through the promotion of additional large-scale wind farm developments. Questions 1. Do Islanders wish to limit the amount of wind development, given that future projects will mainly provide electricity for export markets? 2. Should the Government limit the number of turbines in PEI, given that each turbine occupies between 15-20 acres of land? Maritime Electric Company, Ltd. has drafted an Open Access Transmission Tariff (OATT) that is before the regulator, Island Regulatory and Appeals Commission. The OATT will provide nondiscriminatory access for wind developers and other potential users at a regulated rate for service. MECL has proceeded with a process to determine transmission requirements for future large-scale wind projects in PEI that may lead to increased transmission capacity for wind power developers. Both these initiatives will enable future wind developers transmission capacity for their exported power but there remains a constriction to off-Island transmission via the 200 MW undersea connection with New Brunswick. Question Is there a role for the Provincial Government to assist Island utilities and other wind developers by improving transmission infrastructure for wind development, particularly through expanding the interconnection facilities for exported power? 11
Wind energy is PEIs most prospective renewable energy resource. Given its intermittent nature, it is a challenge to incorporate a high percentage of wind into the electricity grid. The scheduling of wind energy is also problematic due to the intrinsic variables of weather forecasting. Research and development (R&D) groups, particularly the Wind Energy Institute of Canada (WEICan, formerly the Atlantic Wind Test Site) at North Cape, advance wind technology through various projects and initiatives with other private and government agencies. Pursuing a high integration of wind on PEI provides R&D opportunities for WEICan that have application in other provinces, remote parts of Canada and other parts of the world. Given our unique situation in PEI, energy storage R&D initiatives involving hydrogen fuel are also being developed to address the intermittent nature of wind power generation. Question Should the Province be taking a lead role in the promotion of R&D opportunities relative to wind integration and energy storage systems?
Role of Government The PEI Energy Corporations ownership of the North Cape and East Point wind farms is an invaluable asset to WEICan. Provincial ownership means that data for research and development is accessible to WEICan and has enabled the Corporation to be an active partner in understanding and promoting wind energy developments in PEI. Having access to actual public assets in the field is an important element to the success of research and development opportunities for WEICan and PEI. In addition to the above, significant revenues are now being generated by the PEI Energy Corporation and flowing back to the province, thereby contributing to the diversification of supply and stabilization of the cost of electricity. Questions 1. Should the Province, through the PEI Energy Corporation, continue its role as developer and operator of wind projects? 2. Should the Province divest itself of its existing wind operations? 3. If it is determined that governments role is not as developer or owner, should the Province assist private developers? What form of assistance should be provided?
Solar Technologies Solar energy technologies capture the sun's energy for practical applications. There are many modern technologies for harnessing solar energy to produce food, heat, light and electricity. Applications span the residential, commercial, industrial, agricultural and transportation sectors. The pervasive use of solar technologies peaked in the 1970s and early 80s during the first fuel crisis- government grants, incentives, and demonstration systems caused an explosion of growth in Canada. PEI at one time, had the highest per capita residential use of solar hot water units in the country. Passive solar design in new construction can provide practical lighting, comfortable temperatures, and improved air quality by tailoring building orientation, proportion, window placement, and material components to the local climate and environment. Solar thermal applications make up the most widely used category of solar energy technology. These technologies use heat from the sun for water and space heating, industrial process heat, cooking, water distillation and disinfection.
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Electricity can be generated from the sun by photovoltaic technology (PV). The primary obstacle to increased use of photovoltaic systems is their high initial cost. Continuous price reductions have been occurring. In some off-grid locations photovoltaic systems can be cost effective versus the costs of running power lines. With many jurisdictions now providing tax and rebate incentives, PV installations make up the largest part of the solar residential market worldwide. With increased public concern over escalating fuel prices and regard for the environment, the use of solar technologies as a renewable fuel source will no doubt regain momentum. Solar technology maturation and the rising cost of fossil fuels are making solar systems a more attractive alternative to conventional sources of energy. Earth Energy Earth energy systems, or geothermal systems, are terms used to describe a renewable energy alternative to traditional oil-, gas- or coal-fired heating, ventilation and air conditioning (HVAC) systems. This technology transfers the heat located immediately under the Earth's surface into a residence or building in winter, and is able to provide cooling functions in the summer when the outside temperature is higher than ground temperature (8-12 0C). Twenty percent of the average energy demand in a residential home is for water heating, and most geothermal units include a component to heat water for potable or sanitary use. Earth energy systems are ideally suited to meet the HVAC needs of commercial, industrial and institutional (e.g. schools and post-secondary) users. Natural Resources Canada (NRCan) and the US Environmental Protection Agency state that earth energy systems are the most energyefficient, environmentally clean, and cost-effective space conditioning systems available in the market today. Questions 1. What role should the Provincial Government play in demonstrating solar and earth energy systems? 2. Given that the price of crude oil has just hit record highs, should the Province be taking a closer look at the economic viability of these systems?
SECTION V- BIOFUELS
Overview Growing crises in the agricultural and forest sectors, rising fuel prices, concerns about the security and supply of energy resources, and growing awareness of the impact of traditional energy resources on the environment (e.g. climate change) have greatly increased interest in renewable and sustainable energy technologies, and in particular, biofuels. Biofuels represent a potential opportunity to transition to a sustainable bio-economy in which agricultural and forestry products, co-products and waste materials are used to produce energy. An aggressive biofuels portfolio, incorporating less carbon intensive fuels into the current energy mix could complement Prince Edward Islands efforts to further renewable energy development, reduce greenhouse gas emissions, and provide an additional revenue source for the agricultural and forestry communities. Fuels made from renewable resources are referred to as biofuels or renewable fuels. Primary sources of feedstock for biofuels include: agricultural crops and crop residues, residues from food processing industries, livestock and deadstock, trees, logging and forestry products, industry
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residues, organic portion of municipal solid waste, sewage sludge, and industrial, commercial and institutional waste. Common biofuels include wood, crop by-products like cereal straw or perennial grasses, pure plant oils, ethanol, biodiesel, waste cooking oil, and biogas. Biofuels can be used for space heating (Green Heat), electricity generation (Green Power), and transportation (Green Fuel). Pure plant oils are processed from biomass or field crops (e.g. canola). Biodiesel can be made from seeds or animal fat, while ethanol can be made from high starch crops, such as corn, wheat, sugar cane or sugar beets. All liquid biofuels can be blended with fossil fuels and used in traditional applications to reduce our reliance on petroleum products and reduce greenhouse gas emissions. The Biofuel Potential in Prince Edward Island In September 2007, Executive Council established and directed the Environmental and Renewable Industries Committee (ERIC) to examine the potential for local biofuel development. With members from eight government departments and agencies, ERIC was mandated to collect relevant data on the quantity and quality of available feedstocks from primary resource sectors and submit policy recommendations regarding the sustainable development of these resources. In determining the potential for biofuel development in Prince Edward Island, a number of factors need to be considered. Specifically: Availability of and/or potential to grow feedstocks for biofuel development Local and/or regional markets for biofuels Benefits to Islanders (economic, environmental and social) from local biofuel development Evaluate biofuel potential based on full life-cycle sustainability criteria
Biomass Ten percent of energy in PEI is currently supplied by biomass, which includes fuel wood, sawmill residue and municipal waste. PEI Energy Systems in Charlottetown uses municipal waste and wood biomass to supply thermal energy to commercial, residential and institutional buildings in the city. There are many biomass resources in PEI that, if developed properly, could contribute to additional incorporation of renewable energy into the provinces overall energy mix. Biomass from forest and agricultural sectors are the most readily available feedstock for biofuel development in Prince Edward Island. Wood supplies from Island forests (softwood, hardwood, post-harvest material, plantation thinnings, roadside material etc.) could represent a significant feedstock for space and water heating. Agricultural crops such as straw and hay could be further developed as potential feedstocks. Markets for biomass systems include the residential, commercial and institutional sectors. In 2006, 38 percent of Island homes had wood burning units, but only half of these homes used wood as their primary heating fuel. Tax exemptions for wood heat systems (wood and wood pellets) has increased the popularity of these systems and resulted in a larger market for wood pellets. However, unlike other small-scale renewable systems, the current tax exemption for wood st combustion systems expires March 31 , 2008. Question Should the Province extend the exemption on small-scale biomass systems?
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Biomass fired district-heating systems for municipalities or small communities could represent a viable market and provide long-term employment to many rural Islanders. With sustainable forest management systems and practices, larger-scale forest biomass production could facilitate improvements in the productivity, quality and value of PEIs struggling forestry sector. The development of markets for agricultural biomass could also help strengthen the farming community. Biomass Challenges There are a number of perceived obstacles to further the development of biomass fuel in PEI: The need for a clearly defined policy and strategy to further biomass development The need to modernize labour regulations for the staffing of small heating plants Grid access with fair market prices for the production of green power from biomass fuel sources Environmental and health concerns associated with biomass emissions (i.e. wood smoke)
Questions 1. How should the Provincial Government be actively promoting the use of biomass? 2. What types of support should the Government be providing? 3. Should the Province be setting aggressive targets for solid biomass production & use? 4. If yes, then how? A Renewable Portfolio Standard? Other incentives? 5. What role should government play to create a suitable biomass fuel supply infrastructure? Liquid Biofuels The Federal and most Provincial Governments outside of Atlantic Canada have supported the growth of liquid biofuels to mitigate the environmental impacts of fossil fuel combustion and create new markets for the agricultural sector. More than half of Canadian provinces have existing policies relating to the production and/or consumption of biofuels. The Federal Government recently announced a regulation requiring a 5 percent and 2 percent average renewable content in Canadian gasoline and diesel fuel by 2010 and 2012 respectively. The 2007 Federal Budget indicates an investment of $1.5 billion over seven years as an operating incentive to producers of renewable alternatives to gasoline and diesel, i.e. ethanol and biodiesel respectively. While policies have yet to develop in Atlantic Canada, there has been clear direction from the New England Governors and Eastern Canadian Premiers (NEG/ECP) and the Council of Atlantic Premiers (CAP) regarding the need to assess and develop local biofuel opportunities. In order for PEI to achieve its environment goals and greenhouse gas objectives, the introduction of a biofuel policy is imperative given that 43 percent of energy consumption in PEI is from the transportation sector. Pure Plant Oils Canola and soybeans are currently grown on just over 2 percent of Prince Edward Islands cropland or improved pasture. Canola is particularly well suited for our climate, and has high energy content. Acreage of canola and soybeans are currently not sufficient for broad-scale use of pure plant oils, but could support pilot initiatives and be further developed once market demand is demonstrated. Pure plant oils have a number of applications and potential markets. Pure plant oil can displace light fuel oil for space and water heating applications and diesel in transportation applications,
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however modifications to combustion equipment may be required. Major manufacturers of agricultural machinery are on the leading edge of liquid biofuel development for application in onfarm machinery. Large commercial, institutional, and industrial users of oil may also represent a suitable market for pure plant oils. Canola and waste vegetable oil are already being used in some commercial fleets in Prince Edward Island. Biodiesel Currently, there are limited feedstocks available for the production of biodiesel. Oil-seed crops, such as canola, could be further developed on Prince Edward Island provided enough agricultural land is available. Biodiesel is more likely to be compatible with residential and commercial heating applications than pure plant oils as its use requires little or no modification to existing combustion equipment. Biodiesel markets are rapidly expanding in the Maritime provinces. The potential market for biodiesel for heating is significant, with 76 million litres used each year in Island homes and 62 million litres used in commercial and institutional facilities. Demand for diesel and light fuel oil in the region exceeded 3 billion litres in 2006. At blends of 5 to 20 percent, regional demand for biodiesel could exceed 600 million litres. From a life-cycle sustainability perspective, biodiesel (depending on the feedstock) can produce 60 to 100 percent fewer greenhouse gas emissions than diesel or light fuel oil. The use of biodiesel, produced domestically or imported, will help the Province to meet its renewable energy and environmental goals. Ethanol Ethanol is a transportation fuel, suitable for use in vehicles in blends of up to 10 percent, without the need for any engine modifications. The current availability of local feedstocks (e.g. corn, wheat, sugar beets) to produce ethanol is limited on PEI. Similar to biodiesel crops, concerns exist around the type of feedstocks for ethanol production and the availability and effect on agricultural land. However, many sectors of the Islands agricultural industry are facing serious challenges from declining revenues- switching to the cultivation and production of energy crops could help mitigate and improve this downward trend. Current annual gasoline demand in PEI is 234 million litres with regional demand at 2.5 billion litres. At a 10 percent ethanol blend, provincial demand for ethanol would be approximately 23 million litres with regional demand potentially exceeding 250 million litres. An Island-based commercially viable ethanol production facility would likely require a broader market outside of PEI and may require imported supplementary feedstock. Like biodiesel, ethanol can reduce greenhouse gas emissions, depending on the feedstock and technology platform. Concerns regarding the environmental sustainability of ethanol production have been directed primarily at older first generation facilities in the corn-based industry in the United States. Second generation technologies, new plant designs and the advent of cellulosic ethanol have addressed these concerns resulting in substantially lessened environmental impacts. Liquid Biofuel Challenges Biofuels produced from energy crops grown on Prince Edward Island could reduce our dependence on imported fossil fuels, reduce the emission of greenhouse gases and other air pollutants, and potentially provide the agricultural and forestry sectors with alternative sources of revenue.
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There are, however, challenges to be considered in the development of liquid biofuels in PEI: Availability of locally grown feedstocks to meet market demand Potential displacement of agricultural land for food production Consideration of the full environmental, social and economic impacts of individual feedstocks and technology platforms for the production of liquid biofuels
Questions 1. Should the Province implement policies relating to the production and consumption of biofuels in PEI? 2. How important is it to Islanders to have feedstocks produced and consumed on PEI? 3. Are Islanders prepared to support, through tax dollars, a local biofuels industry? Biogas Biogas is a type of biofuel, in the form of a gas that is produced by the anaerobic digestion or fermentation of organic matter. Agricultural and marine byproducts, sewage sludge, municipal solid waste or any other biodegradable feedstock, under anaerobic conditions, can produce methane and carbon dioxide. The production of biogas could represent a significant biofuel for space heating applications or electricity generation. Despite the considerable sources of raw material for the production of biogas on PEI from agricultural, marine-based and waste resources, the potential for this biofuel may be limited to specific and localized applications. While large quantities of manure are generated on Island farms, 90 percent is used for on-farm nutrient management. Fish processing waste from the mussel, lobster and crab industry could be used as a feedstock to produce methane. However, the logistics and necessity of removing shell from the feedstock have proved challenging and the potential for nutraceutical and pharmaceutical uses may represent a competing market. Biogas production is occurring in Prince Edward Island. Methane is being used on site at wastewater treatment facilities and industrial operations. Cavendish Farms is currently building a large bio-digester fuelled by food processing waste. The Central Composting Facility may also represent a significant source of untapped material for the production of biogas. Whether it is in existing markets, isolated industrial users, or as part of other biogas initiatives, the most appropriate and economic use of these feedstocks requires further assessment. Question Given the limited opportunities for biogas, is there a role for Government in promoting its use in PEI?
Leadership Government has traditionally played a role in the development and implementation of renewable energy initiatives. As a significant energy consumer, government could lead by example and demonstrate the use of biofuels at public facilities (offices, schools, hospitals, etc.) and in government fleets. The Provincial Government alone uses more than 10 million litres of light fuel oil and 2.5 million litres of diesel in fleets and facilities. Biodiesel was piloted in select vehicles in the Department of Transportation and Public Works (B10 blend) fleet in 2006 and 2007. As a major energy consumer on the Island, government could contribute to the development of biofuel markets. Question Given the potential environmental, social and economic benefits of pursuing biofuel development, should Government be demonstrating biofuel applications within its operations? 17
PEI ENERGY STRATEGY- DISCUSSION DOCUMENT SECTION VI- GOVERNMENT POLICY & ECONOMIC DEVELOPMENT
Overview Aggressively pursuing energy efficiency and renewable energy development will not only contribute to a sustainable energy future but will also help transition the Island to a prosperous knowledge-based economy. There is broad recognition that PEI has already begun to make this shift and is evidenced in the growth of the aerospace, bioscience and information technology clusters. These industries have experienced rapid success in part because of the Provincial Governments support and attention to prioritizing these high growth economic opportunities. Energy Efficiency There are many simple and inexpensive ways for all Islanders to help contribute to a more sustainable energy future while increasing the strength of PEIs economy. The economic benefits to decreasing energy consumption and increasing efficiency will have a positive impact on the competitiveness of the Islands economy in many ways: Puts more money back in the pockets of consumers Lowers operating costs and improves bottom line for commercial and industrial sectors Contributes to the local economy in the purchase of energy efficient equipment Presents new opportunities for local trade contractors and professionals Creates new jobs
Renewable Energy / Biofuels Government policy approaches to support renewable energy development are normally distinguished based on each major use of green energy: 1. Green Power- wind, solar, biomass & biogas for electrical generation 2. Green Heat- thermal energy from biomass, solar or earth energy systems 3. Green Fuels- ethanol, biodiesel & home heating fuel blends The PEI Government can play a primary role in building new local markets for clean renewable power technologies through selective financial incentives, rebate programs, regional collaboration and strategic community-based economic policies. Distributed Generation: Community-Based Energy Projects Strong, diverse, local economies are the backbone of a vibrant Island community. Realizing the advantages that can accrue through local ownership of distributed or community-based energy projects has resulted in the most accelerated and successful growth of renewable energy in other jurisdictions around the world. This model is designed and implemented to accomplish the complementary goals of environmental and regional economic sustainability resulting in the local control and retention of substantial revenues from the sale of power back to the grid operator (local utilities). When the revenues generated by these community-owned projects flow back into the local municipalities, the whole community benefits from the economic spin-off. Long-term fixed price contracts for the various forms of renewable energy sources (wind, solar, biomass & earth energy) are a key economic policy mechanism that benefits the broadest spectrum of local communities and residents.
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Questions 1. Should the Province support and promote community-based energy projects? How? 2. If yes, which types of projects require support? Wind? Solar? Biomass? Earth energy systems? Others?
Green Power The 2004 Renewable Energy Strategy introduced three progressive and substantial policy mechanisms to support the growth and use of renewable energy for electricity generation in PEI: Net Billing The terms net-billing and net-metering are often used interchangeably when referring to the practice of enabling a small generation system being operated in parallel with the electrical distribution facilities of a public utility and receiving the value of the retail rate for any power supplied to the grid. In Prince Edward Island small renewable energy generators, those with a nominal capacity of 100 kilowatts or less, may be eligible for the benefits of net-metering. In the context of community-based energy, a net-billing system does not have to be configured in parallel to the electrical utilitys network and may be directly wired to the grid. Power generated from the renewable energy generator is thus eligible to offset the electrical energy from one or several billing accounts that are held by a municipality or cooperative. For example, a small wind turbine owned by a community could be utilized to offset the power bills of several end users, including recreation facilities, street lighting and water and sewer infrastructure. The turbine could be situated in a location that was most favourable for generating power and away from the loads that it was offsetting. The existing legislation in Prince Edward Island does not enable net-billing applications. Feed-in Tariffs Feed-in tariffs, also known as advanced renewable tariffs or standard offer contracts were introduced in PEI following the 2004 Strategy. The Government of PEI mandated Maritime Electric, through the Island Regulatory and Appeals Commission, to provide a long-term commitment to the purchase of green power from locally distributed power generation projects. Most leading jurisdictions are providing different pricing strategies for each technology i.e. wind, solar technologies, earth energy and biomass. Fees can be adjusted if it becomes apparent that a particular technology appears to be lagging in development and use, providing a flexible means to react to market and technology developments. Innovative feed-in tariffs can promote the uptake of decentralized power generation employing a greater use of more diverse technologies and having a greater effect on local economic development. A community-based renewable energy sector has yet to be established in PEI. Farmers, rural landowners, First Nations, co-ops, municipalities, small businesses and individuals can benefit from renewable energy development with smaller decentralized community-based initiatives. Renewable Portfolio Standards (RPS) A Renewable Portfolio Standard or RPS is another successful policy mechanism that defines the percentage of energy to be accessed on the Island by local utilities from green energy sources. Prince Edward Island was the first province in Canada to commit to an RPS for electricity of at least 15 percent by 2010, and met this target three years ahead of schedule in 2007. Most RPS approaches around the world set escalating targets for utilities to reach. Due to the intermittent nature of wind, the possibility of incorporating more than 20 percent of the total
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electricity supply from wind may not be feasible. However, co-generation facilities involving biomass or other renewable energy sources may provide alternatives to wind energy and contribute to a higher percentage of green power and greater diversity of supply in the overall provincial energy mix. Questions 1. Given the limitations of wind, what actions should the government take to incorporate other renewable energy sources into the provincial energy mix? 2. Should the Province consider introducing an RPS and feed-in regulatory requirement for base-load generation from renewable energy resources?
Green Heat Water and space heating requirements make up the greatest proportion of energy use in buildings and residences. There are few examples of government policies that focus on increasing the use of renewables to meet these thermal energy requirements. Solar hot water, earth energy systems, and biomass district heating systems have been the focus of specific fiscal incentives in several European countries. Providing tax incentives or implementing a renewable heating obligation (similar to an RPS for heat) with specific targets has helped other jurisdictions mitigate environmental impacts and has served to increase the overall percentage of renewable energy use. Questions 1. Should the Province consider an RPS for home heating? 2. What other incentives should Government pursue? Green Fuels There are several policy mechanisms available to government to encourage the use of green fuels in the transportation sector and for home heating. In both cases, as discussed above, it will be important to establish clear sustainability criteria for the further development of the biofuels industry here in PEI. Whether it is to invoke new sustainable forest management practices for biomass harvesting or agricultural policies for sustainable energy crop management, the introduction of new government policies will require further investigation and research. Renewable Fuel Standards A similar concept to Renewable Portfolio Standards is the notion of Renewable Fuel Standards (RFS). RFSs set targets for a percentage of transport fuel to be acquired from domestic renewable sources such as ethanol or biodiesel. The introduction of RFSs in other countries has lead to the rapid development and growth of the biofuel market and has produced significant economic benefits. The Federal Government recently announced a regulation requiring a 5 percent average renewable content, such as ethanol, in Canadian gasoline by 2010. There are however no assurances that renewable fuels will be available in all Canadian jurisdictions. There are also many tax exemption policies for biofuel development that have been implemented in other jurisdictions aimed at offsetting the price difference with conventional fossil fuels. Questions 1. Should PEI introduce its own biofuel mandate? 2. Should the Provincial Government consider tax incentives for biofuel production and consumption in PEI? 3. What other policies could Government consider to promote consumption and/or production of biofuels in PEI? 20
Green Technology Cluster A business cluster is simply a geographic concentration of interconnected businesses, suppliers, and associated institutions in a particular field. While agriculture, fisheries and tourism have historically been the drivers of the Island economy, emerging sectors like aerospace, bioscience and IT are now contributing more to the overall shift to a knowledge-based economy. A critical capacity, a North American reputation and a firm track record in renewable energy development already exists on PEI. A strategic plan could be designed and implemented to leverage the strengths of the Islands current resources to guide the growth and development of a Green Technology Cluster (GTC). The Wind Energy Institute of Canada (WEICan) is a leader in the development of this local renewable resource and has attracted international collaborations between academic institutions, researchers and the private sector. Holland Colleges strong focus in applied education makes it ideally positioned to assist this industry initiative by graduating skilled technicians in efficient technologies and renewable energy. The University of Prince Edward Island has been a leader in greening its campus and supporting research and development. PEI Energy Corporation, PEI Energy Systems, local utilities, the agricultural and forestry sectors can all work together in strengthening a Green industry and promoting economic development on the Island. Several private sector companies have established or are interested in establishing renewable energy industries and technologies in PEI. Policy incentives and the support of a made-in-PEI GTC could greatly enhance the economic benefits and opportunities for Islanders: Attract investment dollars for companies, institutions and governments Forge relationships and collaborations locally, regionally and internationally Accelerate technology transfer and commercialization Build capacity - new industries will attract experts from various fields Contribute to the creation of new jobs Lead to export opportunities
The key to success for the growth of Technology Clusters are governmental policies and mechanisms that stimulate capacity building, research and development, technology commercialization (proof of concept) and transfer, small business support, and public outreach and education. There is a key opportunity for PEI that should not be overlooked- the potential for this region to become a world-renowned hub or cluster for green tech companies, R&D activities, and showcases for the Island itself to walk the walk in its use of energy efficiency and conservation, renewable energy resources and biofuel development. The payoffs can be substantial in terms of overall economic growth and provides additional opportunity to overhaul a regions image into a place that attracts more conventions, more tourism and more people who want to live in Prince Edward Island. All conventional energy industries are highly governed sectors. Coal, natural gas, nuclear, and oil, to the transmission and distribution of electricity, are guided and impacted by government policies and regulations. The issue for green technologies is not if they should get support, but how rapidly governments will shift their focus from conventional fossil fuel industries to emerging, highgrowth green technology sectors. Questions 1. Should the Province support the notion of creating a Green Technology Cluster on PEI? 2. How important is it to Islanders to be seen as leaders in the development and use of renewable energy technology?
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PEI ENERGY STRATEGY- DISCUSSION DOCUMENT SECTION VII- THE PATH FORWARD
Public Consultation The Province of PEI has developed a North American, if not global, reputation as leader in the development of renewable energy. The purpose of this discussion document is to solicit the input of Islanders on the direction of future energy developments in the Province. Since the implementation of the Renewable Energy Strategy released in 2004, the Province has made significant progress incorporating wind energy into the provincial energy portfolio and has decreased our reliance on imported fossil fuels. The intent of this document has been to present new action in areas such as energy efficiency and conservation as well as other policy mechanisms to promote the use of renewable energy and economic development. The Government of PEI would like to hear from the public on the ideas and information presented in this paper before developing a final Energy Strategy that will guide their efforts over the next decade. Final Strategy All of the stated objectives of (1) energy security, (2) environmental sustainability and (3) economic development will require Government action in the form of support, incentives, legislation or regulations. With input from the public, the Province will be able to gauge the interest and support of Islanders in the different areas affecting energy use in PEI to produce a Provincial Energy Strategy. Following this public consultation exercise, all feedback received will be analyzed and incorporated into a detailed document that will serve as a framework for future policy decisions and action.
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PEI ENERGY STRATEGY- DISCUSSION DOCUMENT SECTION VIII- APPENDICES Submissions Received From:
Bedeque Bay Environmental Management Association (BBEMA) Canadian Bioenergy Association Cavendish Farms Eastern School Board Environmental Coalition of Prince Edward Island (ECO-PEI) Environmental and Renewable Industries Committee Environment Northeast Holland College Institute for Bioregional Studies Ltd. Island Regulatory and Appeals Commission Maritime Electric Natural Resources Canada New Brunswick System Operator Noonan Petroleum PEI Business Development PEI Department of Agriculture PEI Department of Development and Technology PEI Department of Environment, Energy and Forestry PEI Department of Fisheries and Aquaculture PEI Department of Provincial Treasury PEI Department of Transportation and Public Works PEI Federation of Agriculture PetroWorth Resources Provincial Office of Biosciences and Economic Innovation Queen Elizabeth Hospital Sky Power Southeast Environment Association Summerside Electric University of Prince Edward Island Western School Board Wind Energy Institute of Canada Wind-works.org
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PEI ENERGY STRATEGY- DISCUSSION DOCUMENT Reference Materials

Reports/Documents 33rd Annual Statistical Review 2006. Prince Edward Island Provincial Treasury. June 2007. Available at: http://www.gov.pe.ca/photos/original/pt_annualreview.pdf Assessing the Opportunities in Renewable and Alternative Energy for Prince Edward Island. Jacques Whitford. February 2007. Atlantic Energy Framework for Collaboration. Work Plan Document. 2007. Canadas Energy Outlook: The Reference Case 2006. Natural Resources Canada Analysis and Modeling Division. Canadian Bioenergy Association and Maritime Bioenergy Working Group. Submission to the Province of Prince Edward Island. December 2007. Canadian Attitudes Towards Energy Efficiency. Canadian Electricity Association. www.canelect.ca Climate Change in Nova Scotia. A Background Paper to Guide Nova Scotias Climate Change Action Plan. Nova Scotia Department of Energy. October 2007. Consultation Paper: Nova Scotias Renewed Energy Strategy and Climate Change Action Plan. Nova Scotia Department of Energy. 2007. e.Catalog Product Acceptance Criteria. BC Hydro. November 2006. Economic impact study for a canola-based biodiesel industry in Canada. BBI Biofuels Canada Report for the Canola Council of Canada. July 2006. The Efficiency Paradox. Jeff Rubin. CIBC World Markets StrategEcon. November 2007. Electricity and Climate Change. Canadian Electricity Association. October 2002. www.canelect.ca Energy Efficiency Initiative Designs and Achievable Potential for Prince Edward Island. Vermont Energy Investment Corporation et al. September 2007. Energy Framework and Renewable Energy Strategy. Government of Prince Edward Island. 2004. Available at: http://www.gov.pe.ca/infopei/index.php3?number=1001539 Energy supply and demand 2006. The Daily. Statistics Canada. December 20, 2007. Environmental and Renewable Industries Committee Biofuels Report. January 2008. Focusing Our Energy. Newfoundland and Labrador Provincial Energy Plan 2007. Available at www.nr.gov.nl.ca/nr New Brunswick Energy Policy White Paper 2001. New Brunswick Department of Natural Resources and Energy. New England Governors and Eastern Canadian Premiers Ministerial Forum on Energy and the Environment. Recommendations and Outcomes. June 2007.
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Pathways to Sustainable Energy Prosperity on Prince Edward Island. Leslie Malone, Environmental Coalition of PEI. 2007. Power Generation in Canada: A Guide. Canadian Electricity Association. 2006. Prince Edward Island Electric Power Act. PEI Legislative Counsel Office. Prince Edward Island Fuel Wood Survey 2006 Prince Edward Island Oil and Natural Gas Act. PEI Legislative Counsel Office. Prince Edward Island Renewable Energy Act. PEI Legislative Counsel Office. Promoting Wind Development on Prince Edward Island. Request for Expressions of Interest. Maritime Electric Company, Ltd. December 2007. Report on Energy Supply-demand in Canada. Statistics Canada. Catalogue no. 57-003-XIE. 2005 Roadmap to a Self-Sufficient Energy Future. Toby Couture and David Coon. Conservation Council of New Brunswick. November 2007. Standard Offer Program Renewable Energy For Small Electricity Generators, An Introductory Guide. Ontario Power Authority. www.powerauthority.on.ca/SOP Successful Strategies for Energy Efficiency. A Review of Approaches in Other Jurisdictions and Recommendations for Canada. Alison Bailie et al. August 2006. The Clean Tech Revolution. Ron Pernick and Clint Wilder. 2007 White Paper on an Energy Efficiency System for New Brunswick. New Brunswick Department of Energy. September 2004.
Websites National Energy Board. www.neb.gc.ca Natural Resources Canada. www.nrcan.gc.ca
Presentations Advancing world-leading energy efficiency policies, practices and technologies in BC. Presentation by Markus Zeller, BC Hydro Power Smart. November 28, 2007. Environmental and Renewable Industries Committee Presentation: Energy Strategy Considerations. Presentation by Wayne MacQuarrie, PEI Energy Corporation. November 2, 2007.
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PEI ENERGY STRATEGY- DISCUSSION DOCUMENT Glossary of Terms

Achievable potential the amount of energy cost savings that could be obtained through energy efficiency initiatives. Anaerobic digestion the process in which micro-organisms break down biodegradable matter in the absence of oxygen. Atlantic Energy Ministers Forum (AEMF) a committee consisting of the four Atlantic Canada energy ministers formed to strengthen the level of co-operation throughout the Atlantic region. More specifically, the AEMF was asked to identify where the four provinces should focus their collective efforts to ensure that the energy sector in Atlantic Canada continues to grow into the future to the benefit of all Atlantic Canadians. Base-load generation - a base load power plant (or base load power station) is one that provides a steady flow of power regardless of total power demand by the grid. These plants run at all times through the year except in the case of repairs or scheduled maintenance. Examples include nuclear and coal-fired power generation. Typically these plants are large enough to provide a majority of the power used by a grid- fluctuations, peaks or spikes in customer power demand are handled by smaller and more responsive types of power plants. Biodegradable organic matter such as plant and animal matter and other substances originating from living organisms. Biodiesel a type of liquid biofuel. Biodiesel is typically created through a chemical reaction of oils or greases with methanol to create methyl ester (also known as biodiesel). It can be used directly in internal combustion engines at full concentration, or blended with petroleum diesel. It reduces atmospheric emissions in conventional applications. Biofuels fuels (solid, liquid or gaseous) made from renewable resources. Primary sources of biofuels include: agricultural crops and crop residues, residues from food processing industries, livestock and deadstock, trees, logging and forestry products, industry residues, organic portion of municipal solid waste, sewage sludge and industrial, commercial and institutional waste. Biogas a type of biofuel generated by the anaerobic digestion (no oxygen) or fermentation of organic matter such as manure, sewage sludge, municipal solid waste, biodegradable waste or any other biodegradable feedstock. Biogas can be burned to produce steam or used directly in some internal combustion engines or turbines to generate electricity. Biomass forms of energy derived from living things - heat produced by burning wood, biofuels made from canola or sugar beets, biogas extracted from sewage sludge and animal and vegetable waste in landfill sites. Cellulosic ethanol - is an alternative fuel that can help reduce reliance on fossil fuels. While conventional ethanol is derived from soft starches (corn for example), cellulosic ethanol is derived from a wide variety of sources of cellulose (cell wall) plant fiber. These range from stalks and grain straw to switchgrass and quick-growing trees (poplar and willow)and even municipal waste. Co-generation the process in which an industrial facility uses its waste energy to produce heat or electricity. Community-based energy projects renewable economic development projects implemented in rural areas for the benefit of the community as a whole.
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Conference of New England Governors and Eastern Canadian Premiers (NEG/ECP) Established in 1973, the Conference assembles meetings of state and provincial officials, organizes roundtables and workshops, and prepares reports and studies of issues of regional importance. At their annual conferences, the Governors and Premiers discuss issues of common interest and concern, and enact policy resolutions that call on actions by the state and provincial governments, as well as by the two national governments. Council of Atlantic Premiers (CAP) Established in 2000, the Council is committed to working together on behalf of Atlantic Canadians to: strengthen the economic competitiveness of the region; improve the quality of public services to Atlantic Canadians; and improve the cost effectiveness of delivering public services to Atlantic Canadians. Demand Side Management (DSM) using electricity efficiently and scheduling some energy intensive activities away from the peak consumption times of day. These initiatives can make a huge difference in electricity pricing and reducing environmental impacts. It involves the planning, implementation and monitoring of utility activities designed to encourage consumers to modify patterns of electricity usage, including the time of day and level of electricity demand. Designated development zones specific areas in which wind energy developments are permitted. Distributed generation the generation of electricity from many small energy sources such as solar panels or small wind turbines. It reduces the amount of energy lost in transmitting electricity because the electricity is generated very near where it is used. Earth energy systems this technology transfers the heat located immediately under the Earth's surface into a residence or building in winter, and is able to provide cooling functions in 0 the summer when the outside temperature is higher than ground temperature (8-12 C). EcoLogoTM North Americas most widely recognized and respected certification of environmental leadership. By setting standards and certifying products in more than 120 categories, EcoLogoTM helps consumers identify, trust, buy, and sell environmentally preferable green goods and services. Energy efficiency programs, initiatives, products, technologies and systems that reduce the amount of energy used to do the same or better job than conventional means. ENERGY STAR - a United States government program to promote energy efficient consumer products. The international ENERGY STAR symbol is a simple way for consumers to identify products that are among the most energy-efficient on the market. Only manufacturers and retailers whose products meet the ENERGY STAR criteria can label their products with this symbol. Environmental attributes environmental premiums or tradable credits that are recognized in Canada or elsewhere as being derived from the generation of an amount of electric energy from a renewable energy source. Ethanol the most widely used liquid biofuel. Ethanol is made by converting starch crops into sugars, which are then fermented into ethanol and distilled to fuel grade. It is mainly used as a fuel oxygenate to improve combustion and reduce tailpipe emissions. Feed-in tariff the price per unit of electricity that a utility or supplier has to pay for renewable electricity from private generators. Feedstock a raw material required for a use or process. It includes agricultural crops and crop residues, residues from food processing industries, livestock and deadstock, trees, logging and
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forestry products, industry residues, organic portion of municipal solid waste, sewage sludge, and industrial, commercial and institutional waste. Fermentation the process by which complex organic compounds, such as glucose, are broken down by the action of enzymes into simpler compounds without the use of oxygen. Green fuels includes ethanol, biodiesel and home heating fuel blends. Green heat thermal energy from biomass, solar or earth energy systems. Green power the use of wind, solar, biomass and biogas for electrical generation. Green technology cluster a geographic concentration of businesses, suppliers, and associated institutions involved in the growth, development and support of energy efficiency and renewable energy technologies and services. Greenhouse gases gases in the atmosphere that give rise to the greenhouse effect a phenomenon that insulates the planet from heat loss. Greenhouse gases are produced through a variety of natural and human activities, but namely the burning of fossil fuels (coal, oil and natural gas) in our vehicles, homes, and businesses. An increase of greenhouse gases is contributing to climate change. Island Regulatory and Appeals Commission (IRAC) an independent tribunal that hears appeals on issues relating to land use, property and revenue (sales) tax and unsightly premises. It administers land ownership legislation in Prince Edward Island and regulates the petroleum industry and automobile insurance rates. Life-cycle sustainability criteria a set of measures to determine the overall environmental impact of the processes associated with the production of biofuels- this includes everything from the planting and harvesting of feedstocks to the industrial processes of extraction and purification to the blending and distribution of the final product Net-billing - is one billing method that is used when an energy generator sells energy back to the utility. Unlike net metering, in net billing applications power produced from the renewable energy generator is eligible to offset one or more billing accounts that are held by a municipality, community or cooperative. The siting of power generator can be placed in the most favorable location for generating power and physically away from the loads that it is offsetting. Net metering an electricity policy for consumers who own small renewable energy facilities such as wind or solar power. Net refers to the deduction of any energy outflows from metered energy inflows. Under net metering, a system owner receives retail credit for at least a portion of the electricity they generate. The ideal system has the existing electricity meter spinning backwards, effectively banking excess electricity production for future credit. Open Access Transmission Tariff defines the proposed terms, conditions and price for wholesale access to Maritime Electrics transmission system and is required to set out the arrangements between Maritime Electric and others who wish to directly access the transmission system. It is intended to provide for third party use of the transmission system on the same basis as the utility and the utilitys franchise area load. Passive solar design the use of the suns energy for the heating, cooling and lighting of living spaces. The building, or some element of it, takes advantage of natural energy characteristics in materials and air created by exposure to the sun. PEI Energy Corporation the successor of the Institute of Man and Resources, the PEI Energy Corporation is a provincial government entity responsible for pursuing and promoting the
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development of energy systems and the generation, production, transmission and distribution of energy on an economic and efficient basis. Photovoltaic technology a solar power technology that uses solar cells or solar photovoltaic arrays to convert light from the sun directly into electricity. Public benefits fund a fund dedicated to supporting energy efficiency and renewable energy projects. Funds are collected either through a small charge on the bill of every electric customer or through specified contributions from utilities. The charge ensures that money is available to fund these projects. Pure plant oil a non-chemically extracted vegetable oil obtained by pressing and filtering oilbased crops such as canola, soybeans or other vegetable seeds or nuts that contain a high oil content. Renewable energy energy that can be naturally recycled or replenished within a relatively short period of time. Renewable energy resources include biomass, hydro, geothermal, solar, wind, ocean thermal, wave action, and tidal action. Renewable Fuel Standard (RFS) establishes a minimum content of renewable fuel that must be incorporated into petroleum blends (e.g. gasoline, diesel, light fuel oil). Renewable Portfolio Standard (RPS) establishes a minimum content of energy from renewable sources for electricity generation or consumption. Solar thermal a technology for harnessing solar energy for heat. System benefit charges a small charge on the bill of every electric customer used to fund energy efficiency and renewable energy projects through a public benefits fund. Trades electrical, carpentry, plumbing, construction, heating, ventilating and air conditioning (HVAC), environmental technology, architectural technology, power engineering and automotive technology.
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Prince Edward Island Energy Strategy Discussion Document: April 2008

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Prince Edward Island Energy Strategy Discussion Document: April 2008

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Public Consultation Document

Prince Edward Island Energy Strategy Discussion Document

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT Preface

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT PREMIERS MESSAGE

Premier Robert Ghiz

George Webster Minister of Energy, Environment and Forestry

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT SECTION I- INTRODUCTION

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT

SECTION II- ENERGY OVERVIEW

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT

Figure 1: Prince Edward Island Current Energy Sources

1% Maritime Electric Company Ltd.

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT

Home heating costs

SECTION III- ENERGY EFFICIENCY

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT

SECTION IV- RENEWABLE ENERGY

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT Reference Materials

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT

Websites National Energy Board. www.neb.gc.ca Natural Resources Canada. www.nrcan.gc.ca

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT Glossary of Terms

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT

PEI ENERGY STRATEGY- DISCUSSION DOCUMENT

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