Summary of the Impact Evaluation of the Renewable Energy Deployment (RED) Program

Objective of the Evaluation

The objective of the evaluation was to assess the impact and the lessons learned of the Natural Resources Canada (NRCan) Renewable Energy Deployment (RED) Program.

Program Description

The RED program assists in the development of a sustainable market in Canada for reliable and cost-effective renewable energy systems through the stimulation of demand and the development of enabling policy frameworks.

Program expenditures for RED totalled $1.45 billion (B) between 2002 and 2019. Further breakdowns of these expenditures are provided in the report (See Table 2). It is comprised of three components:

• Wind Power Production Incentive (WPPI): $285.2 million (M);
• ecoEnergy for Renewable Power (ecoERP): $1.16B; and
• Marine Renewable Energy Enabling Measures (MREEM): $2.8M.

The WPPI program ended in March 31, 2007, and was replaced by the ecoERP program which expanded wind energy generation technology to hydro, biomass, and solar energy projects.

Evaluation findings

Performance

Overall, the evaluation found that the RED program played a key role in supporting the wind and solar power sectors in their early years of development in Canada. Between 2001 and 2007, WPPI and ecoERP combined supported the development of 4,442 megawatts or 84% of the total Canadian Wind energy capacity at that time.

The evaluation concluded that the RED program contributed to the reduction of a total of 85.7 megatonnes of greenhouse gas (GHG) emissions over a 12-year period (between 2008 and 2019). Overall benefits associated with the projects supported by RED equate to more than $12B when accounting for direct investments and social benefits. This amount combines the direct impacts on the gross domestic product (GDP) and the social benefits associated with lower GHG.

With respect to the impacts on GDP, the evaluation found that the investments and other expenditures involved in the projects funded by the RED program totaled $8.86B. In total 80,824 job-years were dedicated to developing and building the projects between 2006 and 2012 (or an average of 11,500 annual jobs for the period). Unfortunately, jobs created by the projects are not equally distributed among various social groups: women and Indigenous workers represent a relatively low share of the workforce employed, 18% and 5% respectively.

With respect to the social benefits associated with lower GHG, the conversion of the value of GHG reduced in dollars equates to $4.7B in benefits.

There is also evidence of significant impact on local economies. In addition to the job-creation, local businesses benefited from the construction and maintenance activities. In many cases, RED funded projects have led to direct revenues for local governments or entities. Many of the facilities are owned in total or in part by the municipalities. In some cases, owners of the facilities have negotiated agreements with local governments or land owners to share revenues. Case study evidence also demonstrates that some funded projects were instrumental for First Nations in developing their communities and investing in other renewable energy projects. About 40% of the case studies showed significant involvement and/or positive impacts for an Indigenous community.

Apart from the electrical power provided to the provincial grids (all projects were connected to provincial grids), many projects had positive impacts on policies and programs of the provincial/local power grid administrators.

The evaluation found that there are no significant negative impacts of funded projects on the natural environment and the fauna. All projects have been subject to an environmental impact assessment in accordance with the laws and regulations in force in the host province. No major negative impacts on the natural environment and fauna were reported.

With respect to MREEM, the evaluation found that it was successful in supporting the development of a legal framework for Canada’s offshore renewable energy projects. There is an ongoing need for MREEM as regulations supporting legislation remain to be implemented and ongoing land tenure work continues.

The administration costs of the grants and contributions component of RED is deemed very low at less than 2% of the overall program costs.

Relevance

Overall, RED is aligned with government priorities, the need for new energy sources, and Canada’s international commitments with respect to GHG emission reductions. RED is also in line with NRCan’s mandate, which includes encouraging the sustainable development and responsible use of natural resources. There was also a need for the program to kick-start projects, reduce the financial risk for investors, and grow the sectors. Overall, RED was deemed complementary to provincial and territorial measures to support alternative renewable energy sources.

Lessons Learned

• The program’s funding model based on performance ($ per KW/h) is appreciated by users.
• Program needs appear greater in some provinces, e.g., where no government support is available or where there is extensive use of fossil fuels to generate electricity. Future similar programs could further target these areas where the net impact is greatest. Regions where renewable energy sources are well established could host research projects funded by the program instead of support for production.
• The program clearly addresses a market failure: although most projects would not have been financially viable without RED, the benefits calculated largely exceed the program costs (and operators’ costs).
• Employment impacts are not distributed equally between men, women and Indigenous populations. Although there are good examples of projects involving Indigenous communities and workers, future programming should incorporate Gender-based Analysis Plus targets and plans.
• MREEM project helped to develop a legislative framework. There remains an opportunity to further support the development of regulations for offshore renewable projects.