Analysis: Small Canadian province flexes green energy muscle

(Reuters) - Nova Scotia is a small, picturesque province on Canada's Atlantic Coast but its appetite for green energy is big and aggressive as it moves to wean itself away from coal, and wins plaudits for its efforts.

Last month, the province, Canada's second-smallest, unveiled the highest tariff in North America for developers of small wind energy projects as well as the highest in the world for small power plants driven by ocean tides.

The so-called feed-in tariffs are part of a blueprint unveiled by the provincial government last year to switch a quarter of Nova Scotia's power generation to renewable sources such as wind, tides and biomass by 2015.

Nearly 90 percent of Nova Scotia's electricity is now fired by coal, something it is keen to change, and not only for environmental reasons. There was a time when its own prolific mines supplied the coal but most of the mines have shut down and coal has become expensive to import.

"We have set some of the most aggressive targets in North America," Nova Scotia Energy Minister Charlie Parker told Reuters in an interview last week. "I am pretty confident we will meet them."

Several Canadian provinces have committed to meeting a variety of renewable energy targets but Nova Scotia stands out. Its goal is the only one written into law and the only one with fines attached if it's missed.

"They are the only province that has what I will call a renewable portfolio standard with teeth," said Jeff Jenner, chief executive of Sprott Power Corp, which has built wind projects in Nova Scotia and is bidding for more.

By 2020, Nova Scotia wants 40 percent of its electricity to be renewable, enough power for more than 500,000 homes.

COMMUNITY POWER

Nova Scotia's most generous tariffs are open only to small community-based projects owned by municipalities, First Nations and co-operatives under its ComFIT program, and not to big developers.

Ontario, Canada's most populous province, launched a much bigger and broader feed-in tariff program two years ago that pays lucrative rates. The Ontario program, however, has resulted in higher electricity prices, and has become a major issue in this week's provincial election.

What Nova Scotia has going for it are its relatively small power needs. To meet its 2015 target of 25 percent renewable energy, the province needs only about 300 megawatts (MW) of newly installed wind energy capacity, said Jean-Francois Nolet, a policy manager at the Canadian Wind Energy Association.

That is less than half the size of some single, large wind farms in the United States.

"Nova Scotia's program is a very good example to follow especially in the Atlantic region. But it would be difficult to replicate in a province such as Ontario, where the scale is too great," Nolet said.

In total, Nova Scotia is awarding just 100 MW of power under its ComFIT program. Communities developing small wind projects qualify for 20-year tariffs of 49.9 Canadian cents per kilowatt hour (kWh), nearly four times the Ontario rate.

For small-scale, in-stream tidal power the province will pay a steep 65.2 Canadian cents per kWh.

For bigger developers, Nova Scotia will open a competitive bidding process this month for another 100 MW of power. Rates for wind will be slightly below those paid in Ontario. The provincial utility, Nova Scotia Power, is developing another 100 MW of renewable power.

Developers are positive, but there are problems.

"Finding land masses with solid wind regimes that are attached to significant transmission build-out is very challenging," said Mike Magnus, CEO of Shear Wind, which owns Nova Scotia's biggest wind energy farm, Glen Dhu.

(Reporting by Nicole Mordant in Vancouver; Editing by Peter Galloway)