Smoke from Stelco’s Lake Erie steel mill belches into a light breeze on Friday, beyond a crest where a sign marks a wind monitoring station assessing the site’s suitability.
Stelco partnership would harness Lake Erie breezes
TYLER HAMILTON
Canada's largest steelmaker is also exploring the idea of luring a foreign wind-turbine manufacturer to an industrial park adjacent to the Nanticoke facility, with the goal of establishing a local industry that could benefit from a steady and nearby supply of Stelco steel.
The plan is unique in Canada and details what could become one of the best examples of "industrial ecology" in North America, experts say.
Tim Huxley, vice-president of corporate affairs at Stelco, confirmed that the Hamilton-based steel giant has partnered with Georgian Windpower Corp., which has set up a weather station on the shores of Lake Erie and is conducting tests of the site to determine wind potential.
"It turns out we may have a pretty windy site," said Huxley, who emphasized that the company is still in early stages of the plan. "We've got to walk before we run. We'll see where it takes us."
The initiative comes as Stelco, which is legally insolvent and has been operating for more than a year under creditors' protection, pores over acquisition bids as part of a court-ordered auction of the company.
Throughout the restructuring process, chief executive Courtney Pratt has talked openly about the need for Stelco to improve energy efficiency and insulate itself against volatile electricity prices. Stelco's Hamilton and Lake Erie plants have a combined electricity bill of $100 million a year.
"The Great Lakes area is viewed as a natural location for wind turbines and it is something for us to consider seriously," Pratt, who served as chair of the province's Electricity Conservation and Supply Task Force, told attendees at an energy conference in September.
The project under consideration is called Nanticoke 80WP, with "80" representing the number of megawatts Stelco would need to power its energy-intensive Lake Erie facility. Subsequent phases, including plans for offshore turbines in Lake Erie, would work toward generating far more power -- about 2,200 megawatts within seven years.
The electricity wouldn't be fed directly into the plant, but would go into the grid and offset Stelco's consumption from Ontario Power Generation's coal-burning station, located a few kilometres down the road.
Michael Monette, president of Georgian Windpower, said the 20-year plan would contribute to a number of public policy objectives, including the federal government's Kyoto commitments and Ontario's plan to wean itself from coal-generated electricity.
It's also meant to spark the beginnings of a wind-manufacturing industry in the province, creating thousands of jobs and "greening" an otherwise gritty part of southern Ontario.
Monette, a professional engineer and expert in thermodynamics, has spent the past two years assembling an industry consortium — including Stelco — that could bring credibility and financial resources to the project.
"The commitment is deep and strong," said Monette. "It's about how you make sure those jobs come into place not just for construction, but for a long-term infrastructure where we start building these turbines locally."
The plan also includes training and hiring programs in collaboration with community colleges and universities in the region, with the emphasis on developing a skilled workforce that can support the local industry.
One source close to the project said Stelco's role is vital. "Nothing gets done if it doesn't have their permission ... Stelco is the beginning and the end of the whole deal."
Robert Hornung, president of the Canadian Wind Energy Association, said the country stands to see a 14-fold increase in the size of its wind-energy industry over the next seven years if Ottawa and the provinces make good on policy promises.
"If Canada can convince wind manufacturers it's serious about these sorts of targets, we're convinced they will come," said Hornung, adding that the Stelco initiative is one of many project blueprints coming forward as momentum builds.
But observers say the Stelco plan may be particularly alluring for a European manufacturer such as Denmark-based Vestas Wind Systems or Enercon GmbH of Germany, both of which could see Nanticoke — with its close proximity to the United States and access to Stelco's world-class port facilities — as an ideal site for tapping the burgeoning North American wind market.
Hornung said the rising Euro is making it more expensive for companies such as Vestas and Enercon to export to North America. That's on top of trans-Atlantic shipping fees, which can add 5 to 15 per cent to the final cost of products.
"For Stelco, it's an interesting possibility, because it also provides a mechanism for finding a market for their product," said Hornung, adding that the steel factor shouldn't be shrugged off. "In Germany, wind turbines are the second-largest user of steel in the country" behind its auto sector.
But many hurdles remain. A lack of federal-provincial co-ordination could hamper efforts, and Ottawa has failed so far to provide incentives that put Canada on equal footing with the United States.
South of the border, wind-energy producers can take advantage of a Production Tax Credit, which provides an after-tax rebate of 1.8 cents for each kilowatt/hour of electricity produced from a renewable energy system, including wind.
One hole in the U.S. system — and something Canada can exploit — is that U.S. legislators have let the credit expire several times. This has resulted over the years in a boom-bust cycle of development, creating the kind of instability and uncertainty that foreign manufacturers tend to avoid.
Currently, Ottawa offers a pre-tax incentive of 1 cent, but only for the first 1,000 megawatts of power that's built. Another hang-up is the 1.7 cents that the province charges to connect to the grid.
Those associated with the Nanticoke project have been heavily lobbying the Prime Minister's Office in hopes the federal incentive will be doubled and the cap of 1,000 megawatts be significantly raised. Such a move would signal to foreign manufacturers and investors that Canada is serious about building an industry.
"They've been lobbying everybody on the Hill," said one staffer in the PMO.
Hornung said lifting the cap to 4,000 megawatts or more — an announcement that could come in Wednesday's federal budget — would be a "huge boost" for the industry. But other observers say the cap should be lifted much higher. NDP leader Jack Layton is among them, and says his party's Kyoto plan calls for a commitment of 10,000 megawatts by 2010.
"We'll be looking at the budget to see if that's happened," said Layton. "If there's not that level of commitment we will be very concerned and won't be in a position to support the budget."
Layton, who has been briefed on the Nanticoke project, said the concept is "exactly what we need."
"The connection of a traditional industry in Canada with an emerging industry — the renewable power industry — is exciting," he added. "My hope is that the federal government won't have us achieve Kyoto by going and buying this sort of work in other countries — let's do it here.
"Will it take a Herculean effort? Yes. But Canadians are up to it."
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