Green Power Program

Green power premiums are a way of paying for the extra cost of renewable energy when that cost is higher than the other sources of electricity supply that have normally been available to a utility. In the case of Maritime Electric’s Green Power Program, the green power premiums are for Phase 1 of the North Cape Wind Farm. Maritime Electric forwards the premiums to the PEI Energy Corporation, which uses them to help pay for the 8 wind turbines that make up Phase 1 of the North Cape Wind Farm.

Phase 1 of the North Cape Wind Farm began operation in October 2001. Initially the output of Phase 1 was estimated to 16.6 million kWh annually. Since the avoided cost payments from Maritime Electric were not expected to be enough to pay for the full cost of Phase 1 in the early years, the balance of the cost was provided for through green power premiums, as follows:

• The Government of Canada agreed to pay green power premiums for 13 million kWh annually for the first 10 years, with the understanding that the 13 million kWh is used for federal government facilities in PEI.
• The Government of PEI agreed to pay green power premiums for 3 million kWh annually for the first 10 years, with the understanding that the 3 million kWh is used for provincial government facilities.
• Maritime Electric was asked to develop a green power program under which the remaining 0.6 million kWh annually would be offered on a voluntary basis to residential and small non-residential customers.

Maritime Electric’s Green Power Program was launched late in 2001. Within a few months the available 0.6 million kWh annually was fully subscribed, and has remained largely fully subscribed since then. The successful response to Maritime Electric’s Green Power Program has been seen as a sign of support by Islanders for the concept of using wind power as a source of renewable energy.

Maritime Electric’s Green Power Program has not been expanded beyond the 0.6 million kWh annually for Phase 1 at North Cape because subsequent wind power developments for supplying PEI load are being paid for without the need for green power premiums.

• The PEI Energy Corporation installed an additional eight wind turbines at North Cape in 2003 (Phase 2). The cost for Phase 2 was significantly less than for Phase 1 because the substation and the 30 km transmission line installed for Phase 1 were adequate to accommodate Phase 2 at no additional cost. The result was that green power premiums were not needed to help pay for Phase 2.
• In December 2005 the Renewable Energy Act and associated Regulations came into effect. One of the requirements of the Act is that Maritime Electric must pay a minimum of 7.75 cents per kWh for wind power purchased as part of having 15 % of its electricity supply come from renewables by 2010.
• Based on receiving 7.75 cents per kWh from Maritime Electric and a 1.0 cent per kWh Wind Power Production Incentive Credit from the federal government, the PEI Energy Corporation did not need green power premiums to help pay for its 30 MW Eastern Kings wind farm, which began operation early in 2007.

Green power premiums have been a useful mechanism for furthering the development and implementation of wind power in PEI and elsewhere in the world. Now, however, in PEI the effect of the minimum purchase price mandated under the Renewable Energy Act is that all Islanders will pay for the full cost of wind power through their electricity bills, thus doing away with the need for green power premiums. An exception is Phase 1 at North Cape. Because the minimum purchase price mandated under the Act does not apply to Phase 1 at North Cape, Maritime Electric expects to continue its Green Power Program until Fall of 2011, which is when the green power premiums from the federal and PEI governments for Phase 1 will also end.