September 5-12, 2005

Paper discusses initial elements of renewable power incentive program

Natural Resources Canada (NRCan) has released a discussion paper on its planned Renewable Power Production Incentive (RPPI) and is seeking comments from interested parties on the selection criteria to determine which renewable technologies will be eligible for an incentive and how co-ordination with provincial and territorial activities will occur.

First introduced by the federal government of Canada in its 2004 Speech from the Throne, the RPPI aims to provide an incentive for renewable power developers to accelerate the development and market introduction of renewable energy technology. In the 2005 budget, the government set aside $97 million over the next five years and a total of $886 million over 15 years for the RPPI.

Eligible projects under the initiative would receive an incentive payment of one cent per kilowatt-hour of renewable energy production for the first ten years of operation for projects commissioned between April 1, 2006, and March 31, 2011. The program has set an initial target of 1,500 megawatts of new, electricity-generating capacity from renewable energy.

As noted in the discussion paper, the design of the RPPI will be based on a series of principles, among them economic efficiency, environmental responsibility, technological innovation, regional participation and program efficiency and transparency.

Decisions about which renewable energy technologies will be eligible under the program would be based on three main criteria. The electricity generated must be from a renewable energy source; must utilize emerging technologies; and must have a low environmental impact. The paper provides details on which renewable energy technologies would be deemed "emerging," along with specifics about the meaning of "low environmental impact" and how it would be determined and measured.

One of NRCan's proposals calls for inclusion of certification under Environment Canada's Environmental Choice Program as a requirement for RPPI eligibility. NRCan will also work with the provinces and territories to streamline project-level environmental assessments, with a view to establishing a one-process harmonization.

Other sections of the paper deal with accommodating provincial and territorial activities in the area of renewable energy, and incremental generation (focusing on new generation facilities and upgraded or expanded faclities).

The discussion paper may be viewed on NRCan's Web site, www.nrcan.gc.ca/rppi.

Plans call for this first phase of consultation on the RPPI to be completed by the end of September. A second phase will determine the detailed program design elements and the terms and conditions for participation in the program. At this stage, issues such as eligibility of projects for GHG offset credits, ownership of environmental attributes, capacity factors and project caps will be discussed. The government hopes to complete the second phase by the end of 2005 and to have the program ready for implementation by April 1, 2006.

Through the RPPI, the federal government is seeking to stimulate the installation of electricity-generating capacity from renewable energy sources other than wind, and produce long-term and enduring results while maintaining a stable, growing economy.

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