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State of Domestic Energy Provision in the Arctic.Docx Report on the State of Alternative Energy in the Arctic Report on the State of Alternative Energy in the Arctic Presented to: Polar Knowledge Canada By: David Cherniak Vincent Dufresne Lawrence Keyte Alexandra Mallett, Assistant Professor, and Stephan Schott, Associate Professor School of Public Policy and Administration, Carleton University, Ottawa Final version: September 21, 2015 School of Public Policy and Administration, Carleton University, Ottawa Report on the State of Alternative Energy in the Arctic Acknowledgments The research team at Carleton University is indebted to the individuals who provided their time and expertise in ensuring the accuracy of our research and who helped us to understand the complexities and nuances of alternative energy in Canada’s Arctic. We would like to thank all of our telephone and focus group interviewees as well as our Northern partners group, including those who provided us with feedback, for taking the time to help us understand the Arctic context for energy policy and decision- making and for helping to develop and refine the scope of this report. A number of individuals have provided valuable input and continuous support throughout our research and we would like to thank, amongst others, Minister J. Michael Miltenberger of the Government of the Northwest Territories (NWT), Geraldine Byrne, Wade Carpenter, Catalyna Correa, Celiane Dorval, Burkhardt Fink, Remi Gervais, Christina Goldhar, Chris Henderson, Ryan Hennessey, Johnny Kay, Agatha Laboucan, Sean Magee, Rick McKenzie, Stephen Mooney, Bryan Pelkey, Jean Paul Pinard, Andrew Pye, John Streicker and Linda Todd as well our contacts at the Canadian High Arctic Research Station (CHARS), now known as Polar Knowledge Canada (PKC), for their time and assistance. We would also like to thank David Nightingale and Kelly Lange-Knox for affording our team the opportunity to attend the 2014 Energy Charrette by the Government of NWT in Yellowknife. Finally, we would like to thank Jessica Wang and the staff at the Yellowknife Inn for assisting us with our focus group sessions in Yellowknife. School of Public Policy and Administration, Carleton University, Ottawa Report on the State of Alternative Energy in the Arctic Executive Summary This report provides a contemporary snapshot of domestic energy usage in Canada’s Arctic (spanning Yukon in the west to Nunatsiavut in the east) with a focus on how Northern jurisdictions meet their electricity and space heating needs. Specifically, the research team investigated the role of alternative energy options, including the governance, policies and financial analysis of these sectors. The team also examined the emerging field of energy conservation and efficiency measures, which have featured prominently in recent years. In the electricity sector, Arctic jurisdictions each have very different regulatory, resource endowment and operational landscapes. This is especially true in Yukon and Northwest Territories where legacy hydroelectric facilities and extended grid systems have been developed, while Nunavut, Nunavik and Nunatsiavut rely almost exclusively upon fossil fuels to power isolated community-scale generation facilities. Each jurisdiction is currently grappling with the high costs of reliably supplying electricity services to its citizens in remote communities. In the case of electricity, a number of policies including net metering and support for distributed generation exist at the territorial / regional level to support alternative energy options, conservation and demand management. Concurrently, increasing usage of renewable sources of electricity in the form of solar photovoltaic technologies, wind turbine installations and biomass generators, among others, is found throughout Canada’s Arctic. Successful development and deployment of initial renewable energy technologies has often relied upon a few key individual proponents or energy NGOs, coupled with supportive policy levers, which have helped to overcome inertia to change established ways of generating electricity. The efficient use of electricity and space heating resources has become a critical policy component in Arctic jurisdictions. Retirement and rebate programs targeting energy efficient appliances, space heating equipment, and building envelope upgrades are common across the Arctic. Governments are also leading by example by undertaking ambitious efficiency upgrades in commercial and residential properties that are publicly-owned. Fuel switching policies have featured prominently, ranging from the promotion of biomass substitution in institutional and government-owned buildings, to developing residual heat School of Public Policy and Administration, Carleton University, Ottawa Report on the State of Alternative Energy in the Arctic applications that utilize the waste heat produced during electricity generation. Additionally, passive solar thermal designs for new buildings and solar water heating technologies have been deployed in a number of buildings and communities across the Arctic. Municipal governments have proven to be crucial actors in supporting alternative energy and energy efficiency initiatives as they developed by-laws that mandate new buildings to achieve stricter energy efficiency standards, assisted in the development of long-term community energy strategies. However, the high prevalence of people renting (whether through public housing or through private proprietors) in many jurisdictions in Canada’s Arctic has presented the problem of split-incentives whereby tenants may not see the value in conserving energy in buildings they do not own. Arctic territorial/provincial governments make decisions on energy supply and demand management based on a number of criteria that can be divided into five broad categories: (1) Reliability of supply and quality of service, (2) Affordability in the short and long run, (3) Jurisdictional energy security, (4) Environmental impact reduction, and (5) Local economic benefits. Typically, reliability of supply is perceived as a minimal requirement to be attained. Affordability or cost minimization is a criterion favoured by most participants in public consultations in the Arctic as being a top priority. The techniques used in energy project financial analysis align with the governance framework built around the energy sector. This framework has, over time, culminated in a number of government subsidies or cross- subsidies between energy users, which prevent some Arctic energy users from paying the true cost of energy. Policies need to be crafted in an integrated manner, which includes improvement in rate design, power sector regulation, supply chains, and priorities delineated through public consultations. There are three broad categories of methodological approaches used in financial analysis of electricity supply-side projects: levelized cost of energy (LCOE), cost-benefit analysis, and resource portfolio analysis. Each approach has its benefits, its drawbacks, and its specific uses. There is wide variation in methods used for financial analyses in Arctic jurisdictions. These discrepancies are due to the resources and timeframes available to perform the analysis, the availability of data and the level of qualification and/or availability of qualified personnel to perform the analysis. A full harmonization of methods is probably impractical as different circumstances call for different methods used in energy financial analyses. However, increased pan-Arctic communication, collaboration and a common core set of tools School of Public Policy and Administration, Carleton University, Ottawa Report on the State of Alternative Energy in the Arctic might be useful in strengthening financial analysis practices and its transparency. Demand-side energy options (energy conservation, load curtailment and embedded generation) are often more cost-efficient solutions than supply-side options. Studying the financial performance of demand-side options and comparing these to supply-side options would improve decision-making. Heating projects (such as biomass boilers, furnace efficiency upgrades, insulation and weatherization, dual-energy houses, cold-climate heat pumps and waste heat recovery) are of critical importance due to the magnitude of their potential beneficial impact on the environment, community well-being and on energy costs in the Arctic. Notwithstanding, we found that fewer financial analyses were performed for heating projects. The analyses that were conducted are not as easily comparable because a wider variety of indicators were used for these studies. Indicators include: simple payback period, savings per year or per month (disregarding the capital expenditures), levelized cost of energy and greenhouse gas reduction. Generally, analyses are conducted from the perspective of the participant only; and not from the perspective of the program administrator or from the perspective of the society. From the financial and qualitative analyses consulted for this research, the following technologies and solutions looked promising: hydro and wind-diesel where the circumstances are favourable, photovoltaic- diesel in Thermal Communities (communities which rely on isolated fossil fuel-fired gensets and isolated distribution systems for power), liquefied natural gas as a potential short to medium-term replacement for diesel, grid optimization solutions such as electric thermal storage, biomass-fired single-dwelling heating and district heating (either imported, or locally-harvested from living
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