Business Opportunity
WFWE EXCLUSIVE
The use of wind energy in Canada is relatively new compared to other regions in the world and is creating opportunities for a variety of business types. Based on information gathered from the Canadian Wind Energy Association, a wind industry labour forecast, recent news articles, federal and provincial government representatives and businesses engaged locally in wind energy activity, the wind energy industry is growing now and expected to continue to grow in the future in Canada, Ontario and the Windsor Essex area.
Business opportunity for wind energy technology is benefiting significantly from Ontario’s Green Energy Act. The Green Energy Act enables the Feed-in Tariff (FIT) program which provides standardized program rules, prices and contracts as well as domestic content requirements. The Ontario Power Authority is responsible for implementing the FIT program.
To learn more about the Green Energy Act click here
The Feed-in Tariff program is divided into two streams (FIT) and microFIT. To learn about the FIT & microFIT programs click here
Ontario Power Authority Announcement
- On April 8, 2010, the Ontario Power Authority announced approval of 184 large-scale renewable energy projects in Ontario with almost 2,500 megawatts of generating capacity including approximately 1,500 megawatts of wind energy projects. For more information click here
- On March 10, 2010, the Ontario Power Authority announced approval of 510 renewable energy projects in Ontario with a total generating capacity of 112 megawatts including a 500 kilowatt wind farm project in Essex County. For more information click here
Examples of Local Business Activity
- Kruger Energy’s 101MW Port Alma wind farm started producing electricity in 2009 and is expected to add more turbines to the location
- International Power Canada’s 40MW Harrow wind farm expects to be producing electricity by June 2010. They have received approval in the April 8, 2010 Ontario Power Authority announcement for its 48.6MW project in Lakeshore
- Brookfield Renewable Power is currently developing its 50MW Gosfield wind project and received approval in the April 8, 2010 Ontario Power Authority announcement for its 165 MW Comber wind projects
- WindTronics, a manufacturer of small residential and commercial wind turbines, is expected to begin production soon at its recently established Windsor location
Business Opportunity
- Many sources describe the wind industry sector as new and evolving therefore, information is sometimes uncertain and subject to change
- Wind energy offers business opportunity in producing electricity and manufacturing equipment
Producing Electricity
Large Wind
Research suggests most current business activity is in producing larger amounts of electricity through wind farms. There are many steps involved in planning, building and operating a wind farm. These steps can be loosely grouped into three phases each creating potential business opportunities for existing firms or potential new firms.
Phase One: Planning, Engineering and Design
This phase can create business opportunities for:
- Developers of the wind farms – often a large power utility company that owns and operates the wind farm. The developer’s main location is often not located near their wind farms
- Turbine manufacturers – manufacture and sell turbines to developers
- Large general contractors – who developers commonly partner with to manage a variety of development activities
- Engineering firms – for environmental, geological or civil services
- Surveying companies
- Businesses or individuals involved in legal, sales and public relations work
Individual wind farm developers may structure their business organizations differently varying on the degree to which activities are completed by their own internal resources or by outsourcing services. Research suggests that a lot of the business activity in this phase is often conducted by organizations not local to the wind farm.
Phase Two: Construction and Installation
This phase can create business opportunity for:
- Construction Contractors – often contracted by the general contractor to build roads and tower foundations
- Electrical Contractors – often contracted by the general contractor to lay cable and install transformers and substations
- Construction equipment companies
- Trucking companies
- Crane and special transport companies
Research suggests that most of this business activity is usually conducted by organizations local to the wind farm.
“Currently in Canada, the construction phase presents the best opportunities for local business and jobs. Other activities related to logistics, travel, lodging and material supply generate significant additional local revenue.” Source: CanWEA website
Phase Three: Operations and Maintenance
This phase can create business opportunity for:
- The developer to operate and maintain the wind farm to produce and sell electricity
- Possibly for technical service companies who can provide repair and maintenance services on wind turbines
- Possibly for environmental service companies completing ongoing assessments requirements
Research suggests that most of this business activity is usually conducted local to the wind farm.
Small Wind
Information provided by the Canadian Wind Energy Association indicates:
- The market for small wind turbines is much smaller in Canada when compared to larger sized turbines
- There is a lack of government incentives, there are no FIT prices for small wind
- Market potential for small wind is uncertain
- Examples of small wind system ranges include:
- Battery Charging – less than 1 kilowatt
- Residential grid-tie – between 1 and 10 kilowatts
- Farm & Commercial – between 10 and 100 kilowatts
- Challenges can include:
- Difficulty in obtaining permitting and approvals
- Connection costs can sometimes equal system purchase cost
- ROI is uncertain, initial costs can be high
- Examples of businesses involved include developers, installers and service providers
- Job creation potential includes installation and maintenance
- There is tremendous interest from the general public
Manufacturing Opportunities
Larger Wind Turbines
- Research indicates the growing wind energy industry offers potential business opportunities for Ontario manufacturers
- The April 8, 2010 Ontario Power Authority Feed in Tariff Program (FIT) announcement creates significant demand for wind turbines
- The domestic content requirements of the FIT program for wind energy shifts from 25% to 50% in 2012 and should benefit manufacturing opportunity
- Many components are used in manufacturing a large wind turbine. Major components include tower, blades and nacelle
- It is not yet clear which components present the most opportunity and for how long
The Ontario Ministry of Economic Development and Trade website provides a Directory of Ontario Wind Energy Manufacturers and Suppliers. This directory offers a list of equipment used. See Appendix 1 at the end of this document.
Key Informant Interviews – Comments from sources interviewed include:
- The province of Ontario’s Green Energy Act is a game changer
- General agreement that there is market potential especially in the next 5 years but beyond that it is unknown
- The supply chain for large wind turbines is well established. Currently large wind turbines are primarily manufactured in Europe and the U.S.
- Ontario manufacturers possess extensive engineering and production knowledge, experience and capability but would need to acquire various forms of wind turbine specific knowledge depending on the component manufactured
- The Samsung agreement with the Ontario government should contribute to manufacturing opportunities but it is currently too soon to know how and to what degree
- Businesses would need to assess the short and long term demand through financial due diligence to determine if there is support for a business case. They would need to determine if this is the right business model and if they can get the financing they may need to enter this market. In short, the key is to have the right business model assessing how entering the large wind turbine market fits with the business’s existing business model
- Compared to the automotive industry with its high volume production runs, large wind turbine manufacturing requires much smaller production runs
- Innovation in wind turbine technology is creating larger turbines both in physical size and output, turbines were less than 1 megawatt – through innovation they are moving to 5.5 megawatts
- For some components such as towers and blades larger production facilities are required
- Given the size of towers and blades transportation cost is a factor, proximity to wind farm locations and proximity to water and rail is beneficial
- The domestic content requirements include assembly and this may be the significant opportunity for Ontario manufactures
Comments about components from sources interviewed include:
- Tower – a few companies in Ontario are involved in manufacturing towers. It is not as technically demanding as other components, but is a very large component
- Blades – it does not appear that blades are manufactured in Ontario currently. They are a very large component and innovation is causing them to increase in size even more. The manufacture of blades involves the use of composite materials which Ontario manufacturers have experience with
- Hub, shafts and gears – require larger pieces of steel which requires specialized machining capacity
- Nacelle – combines electrical and mechanical technologies as well as other standard and customized components
The Canadian Wind Energy Association website offers a member’s directory which manufactures may find helpful. Click here to view
Small Wind Turbines
Information provided by the Canadian Wind Energy Association includes:
- The market for small wind turbines is much smaller in Canada when compared to the larger sized turbines
- There are at least six small wind manufactures in Canada, exporting most of their product
- Regions have expressed great interest in developing the small wind supply chain
- There is job creation potential in manufacturing
- There is an opportunity not to “miss the boat” on manufacturing
Other sources suggested local (Windsor Essex) manufacturing capabilities and capacities are better suited to manufacturing small wind turbines versus large wind turbines.
Appendix 1
List of Equipment of Wind Energy Manufacturers and Suppliers
- Rotor
- Blade
- Blade extender
- Hub
- Pitch drive
- Nacelle and controls
- Anemometer
- Braking systems
- Computer controller
- Cooling fan
- Nacelle case
- Nacelle frame
- Sensors
- Yaw drive
- Gearbox and drive train
- Bearings
- Couple
- Gearbox
- High and low speed shafts
- Generator and power electronics
- Alternator
- Generator
- Electronic systems
- Tower
- Tower flange
- Tower structure
