Testing times

17 November 2006

As the momentum behind sustainable energy ramps up around the world, one small Canadian province is marketing itself as a live test bed for international clean tech companies

If you're in the business of renewable energy, the next time you cross the Atlantic you might want to make your way to Prince Edward Island in Canada. Assuming you've got a serious business proposition, chances are you'll find it easier than you'd expect to talk it through with senior government figures, including cabinet ministers or even the Premier. You shouldn't struggle to get access to the right people in the utilities either, or at the local university. In fact, with its population of just 138,000 people, you can probably speak to pretty much anyone you choose.

With a proven commitment to renewable energy, PEI is an interesting case study for the clean tech movement. Situated on Canada's east coast in the Gulf of St Lawrence and connected to the mainland by a nine mile bridge, Canada's smallest province has been home to the Atlantic Wind Test Site, the centrepiece of Canada's wind research programme, for the last 25 years. In 2004, it launched a Renewable Energy Strategy, dictating that electricity utilities acquire 15 per cent of their electricity from renewable sources by 2010 - a target it expects to hit next year. This September, it upped the ante, with Premier Pat Binns committing to producing 30 per cent of the province's total energy needs from local renewable sources by 2016.

The province's initiatives - driven by its desire to reduce the C$440m that leaves the province each year in exchange for fossil fuel imports - span a broad cross-section of renewable technologies. With transportation eating up around 40 per cent of the island's total energy, fuels such as biodiesel and ethanol are a key part of its plans, while wind power plays a growing role in electricity generation. All of this is reinforced by a focus on the other side of the renewable energy equation - improving energy efficiency.

Aside from the scale of its commitment to sustainability, what's particularly interesting about PEI to entrepreneurs is the province's willingness to work with international companies and effectively become a test bed for new technologies. While governments of larger clean tech-friendly states have sprawling bureaucracies designed to cater for tens of millions of people, PEI's small size means it's relatively easy to get access to decision-makers. Jamie Ballem, minister of environment, energy and forestry, told 'g2i Insider' that the island's size was one of its main differentiators. 'We feel we're in a great position for companies that have a technology ready to come out of the labs,' he said, as well as for companies that have done a small pilot and want to push ahead on a commercial footing. The province is already in negotiations with several European wind turbine manufacturers, including a UK and two Dutch companies, as well as solar energy manufacturers.

While that's good news for entrepreneurs, PEI's initiatives also demonstrate one of the truisms of renewable energy - great technology only goes so far, and future adoption will depend on a combination of technical prowess, political will and citizen buy-in. To date, Ballem says, there hasn't been a great deal of opposition to its initiatives - questions might have been asked about why a province of PEI's size should be taking the lead in this field, but they were largely brushed aside by the public. But some pushback is inevitable going forward, particularly as the province ramps up adoption of more intrusive renewable energy sources such as wind turbines and takes them into more populated areas.

That's why PEI has adopted some creative techniques to encourage its residents and businesses to embrace alternative energy sources. A provincial sales tax exemption is offered for small scale renewable energy equipment, for example. In addition, the province pays rent to residents who house a wind turbine on their land, based on a percentage of the net revenue for each structure. The rent payment takes account of the impact turbines will have on neighbouring properties - so 70 per cent of the proceeds are allocated to the property owner, while the person next door receives 20 per cent and the next person along gets the balance.

PEI has also taken numerous steps to open up communications channels and host public meetings. At last month's International Sustainable Energy Forum in San Francisco - which was hosted by the UK, Dutch and Canadian governments - Ballem warned that initiatives have to be meaningful to people in their homes. Otherwise, the province will see a repeat of what happened in the last oil crisis when the momentum behind renewable energy sources slowed as soon as the oil price fell. 'If we're going to make this work, we have to get the population engaged,' he said. 'They can't get their heads round billions of dollars, so you have to bring it down to the individual level.'

By Keith Rodgers, Webster Buchanan Research