The Remote Frontier

Exploring beneficial investment opportunities for SMEs in Canadas emerging remote community market.

March

2013

a world with an increasing hunger for natural resources, In the economic potential of Canadas remote communities is very much on the minds of Canadas businesses, governments and community leaders. The Canadian Chamber of Commerce (2011)
The CleanTech Community Gateway (CTCG) is engaging with rural and remote communities across Canada, to assist them in achieving their social, economic, and environmental goals through innovative clean technologies. By empowering remote communities to deploy clean technology projects, CTCG hopes to not only improve their standard of living and increase the opportunities available to them, but also to elevate the profile and expertise of Canadas cleantech industry. Those enterprises willing to adapt to the unique circumstances and challenges of remote communities will find a market at the gateway to Canadas resource wealthone in need of innovative solutions that are sensitive to local context and culture.

CTCG is a neutral, not-for-profit organization comprised of public and private sector partners who are collaborating to develop and deploy clean energy solutions within remote communities. info@ctcg.org | +1.778.866.9433

Acknowledgements
The authors wish to thank all of those who donated their time, ideas, and opinions to the creation of this report. In particular, the following individuals were able to provide valuable insights into the unique context of rural and remote communities and the potential value to Canadian cleantech SMEs. Their assistance is greatly appreciated. Aaron Rodgers Amber Zirnhelt Andrew Moore April Goffic Chris Down Diana Nacer Jako Krushnisky Jeff Ragsdale Jerry Sucharyna Jim Vanderwal John Castle Lori Law Scott Stanners Shannon Mallory Sophie Valle Urs Thomas District of Tofino City of Campbell River TSou-ke Nation Quesnel City Economic Development Corporation Energy Secretariat of Nunavut NRC IRAP Gitxsan Energy Village of Burns Lake Municipality of Lillooet Fraser Basin Council Seymour Arm Community Association NRC IRAP British Columbia Bioenergy Network Yukon Energy Corporation EcoENERGY for Aboriginal and Northern Communities Village of Port Clements

Disclaimer
This document is an independent report prepared by the CleanTech Community Gateway (CTCG). The views and opinions expressed in this report are those of the author(s). The information, statements, statistics and commentary (together the information) contained in this report have been prepared by CTCG from publicly available material. CTCG does not express an opinion as to the accuracy or completeness of the information provided, the assumptions made by the parties that provided the information, or any conclusions reached by those parties. CTCG has based this report on information received or obtained, on the basis that such information is accurate and, where it is represented to CTCG as such, complete.

The Remote Frontier

Table of Contents
Acknowledgements .............................................................................................................. 2 Disclaimer ............................................................................................................................... 2 1 Introduction ...................................................................................................................... 4 1.1 Scope of Report ........................................................................................................ 5 1.2 Who are Canadas Remote Communities? .......................................................... 6 1.3 Remote Community Energy Demand .................................................................... 8 1.4 Remote Community Power Supply ......................................................................... 8 2 Identifying the Opportunity .......................................................................................... 10 2.1 The Opportunity for RET in Remote Canada ....................................................... 10 2.2 Resource & Technology Specific Opportunities.................................................. 11 2.3 Identifying Entrepreneurial Communities ............................................................. 12 3 Demonstrating Benefit .................................................................................................. 14 3.1 Community Champions ......................................................................................... 14 3.2 Neutral Scientific Evaluation .................................................................................. 16 3.3 Unique Value Proposition ....................................................................................... 17 4 Creating Value............................................................................................................... 19 4.1 Determining Technical & Financial Viability ........................................................ 19 4.2 Establishing Business Structure & Ownership ........................................................ 21 4.3 Developing Strategic Partnerships ........................................................................ 22 5 Conclusion ...................................................................................................................... 24 Appendix A List of Resources .......................................................................................... 26 Appendix B Rapid Community Assessment................................................................... 29

The Remote Frontier

Introduction
Communities] need to be regarded for what [Remote many of them are; generators of the wealth that will make it possible for us to maintaineven enhanceour standard of living and the incubators of the new technologies and business practices to make us more internationally competitive. The Canadian Chamber of Commerce (2011)

It is fitting to begin this briefing paper with two reminders: 1. Canada was once entirely a disparate network of remote communities built, by and large, by private sector interests who recognized the economic potential of the land and its resources; and 2. In a global geopolitical landscape dominated by concerns of resource abundance, areas of resource wealth will play an important role in shifting power dynamics and the economic prosperity of nations. More than 90 percent of Canadian business stakeholders believe that remote communities will play an important or very important role in the future of Canadas economy (General Electric Company 2011). This belief is substantiated by the fact that many of Canadas greatest wealth assets are distributed across the countrys vast remote and wild areas. In 2010, foreign direct investment in Canadas natural resources sector was approximately $185.7 billion, up $10 billion from 2009 and $56.5 billion since 2005 (The Canadian Chamber of Commerce 2011). However, critical challenges lie ahead; these communities are largely reliant on diesel power generation, an unreliable and expensive energy source that is a significant contributor to both poor air quality and climate change. The high cost of electricity in these remote off-grid communities has been identified as a significant deterrent to economic development opportunities for any industry consuming even a moderate amount of electricity. These expenditures also add to the cost of living for remote populations, many of which struggle with high rates of unemployment and poverty (Komarnicki 2012). Canadas cleantech industry currently generates $9 billion in revenue annually, a paltry sum in comparison to the $60 billion a year industry that Analytica Advisors has indicated as a reasonable goal for the sector (Analytica Advisors 2011). In its 2011 Canadian Clean Technology Industry Report, Analytica suggested that the development of a domestic market for clean technologies is critical to achieving this

The Remote Frontier

goal. Specifically, they suggested that Canada should foster access to public and private domestic markets by globally competitive SMEs, and that providing opportunities for domestic deployments and referrals [would] make it possible to convert the worlds openness to Canadian clean technology into export sales (ibid). In 2010, global clean energy investment surged to a new record of US $243 billion (Bloomberg New Energy Finance 2011). For Canadian cleantech small to medium size enterprises (SME), the path to this global market could begin by addressing the countrys own emerging cleantech needs. With diesel-generated electricity costs as much as $1.75/kWh in remote communities, a compelling business case can be made for renewable energy technology (CTCG 2012).

1.1 Scope of Report

The following report is intended as a tool to help Canadian cleantech SMEs to better understand the needs and realities of the domestic remote community energy market. In particular, the report aims to help Canadian SMEs to better assess the fit of this market with their commercialization strategies, and to assist them in better marketing their technologies and services to this unique demographic. The insights and conversations described in the report are admittedly anecdotal and qualitative1. The intent was not to provide statistics and data analysis, but rather to describe the on-the-ground needs and insights that may sometimes be missed in quantitative assessments. The report highlights the necessity of more holistic approaches to remote community planning, and the benefit that could be derived from integrated technology solutions to address remote needs around energy, housing, heat, food, water, and waste. Therefore, while the report focuses primarily on the market for renewable energy technologies (RET) in remote communities, the lessons are broadly applicable to other clean technology industries interested in collaboration.

Perhaps the most authoritative quantitative assessment of remote communities in Canada is the 2011 NRCan report Status of Remote/Off-Grid Communities in Canada. It is important to understand that there is no single authoritative entity serving these communities or collecting comprehensive data. All quantitative descriptions in this and other reports should be used with caution and an awareness of their potential shortcomings.

The Remote Frontier

1.2 Who are Canadas Remote Communities?

communities] include Aboriginal and non-Aboriginal [Remote settlements, villages or cities as well as long-term commercial outposts and camps for mining, fishing and forestry activities170 sites are identified as Aboriginal communities (First Nations, Innu, Inuit or Mtis) with approximately 126,861 people122 communities are cities, villages or commercial outposts that are predominately non-Aboriginals or under non-Aboriginal governments, with approximately 67,420 people living in them. Natural Resources Canada (2011)
Traditionally remote communities was used as a catchall term with various meanings depending on context. Recently, the accepted definition has come to be associated with a Natural Resources Canada (NRCan) report on the status of remote communities in Canada. This 2011 report used the term off-grid community and remote community interchangeably to describe any Canadian community meeting the following two criteria: 1. Not currently connected to the North-American electrical grid nor to the piped natural gas network; and 2. A permanent or long-term (5 years or more) settlement with at least 10 dwellings. The NRCan report identified 292 Canadian remote communities with a total population of approximately 194,281 people (see Table 1). Over the past twenty-five years, the number of remote Canadian communities has decreased from 380 to 292, primarily as a result of grid extension and abandonment of communities due to relocation to larger villages or cities. However, while the number of total communities has decreased, the populations of existing communities have increased marginally, resulting in a stable overall population (Natural Resources Canada 2011). When reviewing the energy supply and demand characteristics of remote communities, it is important to note that estimates include three large communities of more than 10,000 people. The communities of Yellowknife (18,700), Whitehorse (22,900) and Magdalene Islands (13,180), represent about 28% of all people living in remote communities (Natural Resources Canada 2011). Figure 1.1 shows the locations of Canadas remote communities. Green dots show Aboriginal communities while yellow dots show non-Aboriginal sites (ibid).

The Remote Frontier

Table 1 Remote Communities in Canada & Population Province or Territory British Columbia Aboriginal Non-Aboriginal Alberta Aboriginal Non-Aboriginal Manitoba Aboriginal Non-Aboriginal Saskatchewan Aboriginal Non-Aboriginal Ontario Aboriginal Non-Aboriginal Quebec Aboriginal Non-Aboriginal Newfoundland & Labrador Aboriginal Non-Aboriginal Yukon Aboriginal Non-Aboriginal Northwest Territories Aboriginal Non-Aboriginal Nunavut Aboriginal Non-Aboriginal Grand Total Aboriginal Non-Aboriginal Type # Sites 86 25 61 2 0 2 7 4 3 1 1 0 38 25 13 44 19 25 28 16 12 22 21 1 38 33 5 26 26 0 292 170 122 Population 24,068 7,619 16,449 533 0 533 3,063 2,160 903 57 57 0 21,342 14,236 7,106 34,729 15,452 19,277 8,910 5,634 3,276 30,176 29,840 336 41,950 22,410 19,540 29,453 29,453 0 194,281 126,861 67,420

As would be expected, remote communities are as varied in their energy requirements as they are in their geographies and cultures. They extend from over 20 degrees of latitude and 90 degrees of longitude, from arctic to coast, and from mountains to plains. Their populations range from 10 permanent residents to more than 20,000, and accordingly, their energy demand varies dramatically between communities. Some smaller communities require little more than 70 MWh annually, and others upwards of 270,000 MWh (Natural Resources Canada 2011). One element that unites these communities is the importance of energy generation, and the high price of maintaining a reliable power supply.

The Remote Frontier

Figure 1.1 Remote communities and 65 kV grid lines and above.

1.3 Remote Community Energy Demand

As previously noted, while total energy demand in Canadas remote communities is significant1,477,415 MWh yearlythere is considerable variability between remote communities, ranging from approximately 70 MWh annually to in excess of 270,000 MWh (Natural Resources Canada 2011). Residential retail energy rates in remote communities are generally subsidized to varying degrees, yet despite subsidization, the ultimate price for electricity paid by consumers is on average $0.32/kWh approximately two to three times that paid by on-grid customers (ibid). Given the differing rates and levels of subsidies from electric utilities, regional governments, and Aboriginal Affairs and Northern Development Canada (AANDC), it can be challenging to identify the real cost of electricity or energy service.

1.4 Remote Community Power Supply

Remote community power plants are operated by a number of bodies across the country, ranging from provincial or territorial utilities, to independent service providers, to regional governmental organisations, and, in some cases, to Aboriginal bands themselves. The vast majority of remote communities across Canada rely on diesel generation for the production of electricity. Thus, most of these communities are characterised by a high degree of dependence on imported fuel, high energy

The Remote Frontier

costs, and higher than average per capita greenhouse gas emissions (Natural Resources Canada 2011). Of the communities with reported data, a total of 251 communities have their own fossil fuel power plants totalling approximately 453 MW. Of these, 176 are diesel fuelled, two are natural gas powered and 73 are from unknown sources but most Figure 1.2 Elhlateese generator and battery bank likely diesel power plants or Source: BC Hydro gasoline gensets (Natural Resources Canada 2011). Many of these systems are typified by aging infrastructure in critical need of upgrades and replacement. To date, relatively little has been done to integrate local resources into the energy mix of these communities; yet, most remote communities have access to abundant renewable energy resources. The NRCan report identified Quebec, NWT and the Yukon as the only areas using hydroelectricity on a large scale to provide electricity to a number of remote communities. BC demonstrated a small number of communities relying on hydroelectricity on an individual basis. The report highlighted a noticeable dearth of successful solar, wind and biomass projects in remote communities.

The Remote Frontier

Identifying the Opportunity

that move quickly down a clean energy pathway will Countries be the economic powerhouses of the 21st century. Their citizens will also enjoy cleaner air, better health, greater market competitiveness, and enhanced security. Ban Ki Moon, U.N. Secretary General
The market for renewable energy technologies in remote communities, just as in urban communities, is dependent on a number of shifting political and market influences. The future policy landscape and competing fossil fuel prices will invariably impact the desirability of renewable energy technologies in Canada. However, alternative energy sources can present a persuasive business case in remote communities, given the high costs of supplying power, the expectation that these costs will likely continue to increase, and the desire to develop local green economies. To this end, Canadian remote communities have the potential to become showcases for Canadian clean technologies and facilitate their export to fast-growing international markets.

2.1 The Opportunity for RET in Remote Canada

The International Renewable Energy Agency has noted that the global deployment of renewables has historically been hampered by high up-front capital costs. This trend is changing and in remote communities renewable energy technologies have now become the most economic option for off-grid electrification (IRENA 2012). Groups like the Canadian Chamber of Commerce, Sustainable Development Technology Canada, Natural Figure 2.1 Fuel Storage Tanks in Iqaluit Resources Canada, and AANDC, (Indian and Northern Affairs Canada 2010) through the EcoENERGY program, have all indicated a commitment to strengthening the capacity of Canadas remote communities through a focus on renewable energy. Many branches of Canadian federal, provincial and territorial governments are providing grantbased support and loan programs that can be used to help fund renewable energy projects in rural and remote Photo by Daniel Van Vilet communities. Increasingly, these

The Remote Frontier

10

government agencies accept that not only are there significant cost savings achievable through the adoption of renewable energy, but that the retention of such savings in the communities could lead to job creation, local skills development and increased community self reliance. NRCan suggests that there are four main renewable energy alternatives to diesel generation in off-grid communities that could generate substantial economic development benefits: small hydro; biomass; wind; and solar energy (Natural Resources Canada 2011). Conversations with various levels of government indicate that projects of these types will be more common in the future, and will likely roll out with greater government participation. In the case of emerging, pre-commercial technologies, opportunities may exist for partnerships to develop small-scale pilot and demonstration projects in remote communities.

2.2 Resource & Technology Specific Opportunities

While variable by location, most remote communities in Canada have access to natural resources capable of contributing to their local energy mix. Cleantech firms interested in identifying areas most relevant to their technologies can access a number of publically available sources. Interactive resource inventory maps are provided by various federal government departments, and give useful insights into where resource potential exists. Such maps are available for Wind, Solar and Biomass resources. 2 Provincial and territorial governments also provide tools to assess the resource potential within their boundaries. An illustrative example is the BC Clean Energy Map3, which plots data provided from a host of public departments, and includes resource opportunities including wind, run-of-river, municipal solid waste, and ocean waves and tides. Interest among community stakeholders in particular resources and technologies tends to vary by community, dependent on their perceptions of resource availability. Generally speaking, many communities express an understanding that they likely have renewable energy resources available to them, although issues around financing the preliminary investigation stages, and the capacity to undertake the work remained a roadblock. Some communities expressed a preference for those technologies that they believed would create the most jobs in the community, although their job creation estimates for particular technologies at times seemed to be overestimated.

2The

Biomass Inventory Mapping and Analysis Tool (BIMAT) http://www4.agr.gc.ca/AAFCAAC/display-afficher.do?id=1226509218872&lang=eng; Photovoltaic potential and solar resource maps of Canada: http://pv.nrcan.gc.ca/; Canadian Wind Atlas: http://www.windatlas.ca http://www.ruralbc.gov.bc.ca/MapTools/BCEnergymaptool.html

The Remote Frontier

11

Figure 2.2 Example of a map showing distribution of geothermal potential in Canada based on end use (Grasby, et al. 2012).

2.3 Identifying Entrepreneurial Communities

Few remote communities in Canada rely on alternatives to tried-and-true diesel powered generators (Natural Resources Canada 2011). Despite a relatively mature market for renewable energy technologies throughout much of Europe and the United States, Canada demonstrates a comparative inexperience with many RETs. There is a common belief that, given the risks associated with newer renewable energy technologies, remote communities will demonstrate an aversion to their adoption. In conversations with several cleantech stakeholders, the sentiment that remote communities should not be guinea pigs for innovation was frequently expressed. However, conversations with remote community stakeholders substantiated a diversity of opinions about innovation and risk. Communitieslike people and businessesare diverse in their willingness to incur risk. While one smaller community expressed very little interest in participating at any level in the provision of its energy

The Remote Frontier

12

services (renewable or otherwise), several other communities expressed a desire to look outside the status quo for potential benefits to their community. These communities demonstrated a keen interest in managing risk, rather than eliminating it. Thus, SMEs interested in partnering to deploy clean energy solutions should aim to identify those communities with an entrepreneurial spirit and a willingness to explore innovative collaborations. One potential characteristic of an entrepreneurial community could be the presence of an economic development corporation (EDC). In particular, many remote First Nations groups have been proactive champions of creating opportunities for local capacity building and economic development through formalized corporate structures. Several participants also noted that the ancillary benefit of working with an EDC could be that, given their arms length from local government, the EDC remain somewhat insulated from changes to the communitys political leadership. This can prevent disruptions to the project during future community election cycles. The presence of an EDC also points to the existence of organized decision-making structures and a familiarity with business planning. Another approach to identify entrepreneurial communities could be to seek out those communities who have already demonstrated an interest in clean energy planning and deployment. Public agencies offering funding support in favour of renewable energy will often make successful applications publically known. These applications may also provide insight into where community interests lie and how much progress has already been made (i.e. planning versus deployment stage.) Many of these funding agencies also publish lessons learned and best practices from previous funding rounds. Table 2 indicates three examples of funding sources relevant to remote Canadian communities, and the information available.
Table 2 Relevant Funding Sources & Information Available Funding Source ecoENERGY for Aboriginal and Northern Communities Program BC Innovative Clean Energy (ICE) Fund First Nation Clean Energy Business Fund Description Focused exclusively on providing funding support to Aboriginal and northern communities for clean energy projects. The ICE Fund encourages the development of new sources of clean energy and technologies to help support local economies in communities across B.C. The FNCEBF aims to promote increased First Nation participation in clean energy. Information Available Previous recipients4, list of successful projects and best practices5. Approved list of rural and remote ICE projects6 Previous recipients and projects7

4 5

http://www.aadnc-aandc.gc.ca/eng/1334855478224/1334856305920

http://www.aadnc-aandc.gc.ca/eng/1312212959922/1312213056686 and http://www.aadncaandc.gc.ca/eng/1312222759090/1312222864232 http://www.empr.gov.bc.ca/EAED/ICEFund/Pages/ApprovedProjects.aspx

The Remote Frontier

13

Many of the communities spoken with expressed an understanding that in some cases their unique needs will necessitate innovative solutions. Rather than equating this position to that of guinea pigs, partnerships with technology suppliers, universities, and funding agencies can mitigate the technical and financial risk to communities. Further, by participating in demonstration projects and small-scale trials, some participants expressed a belief that the potential existed to incorporate innovation into the long-term energy planning and economic development of the community.

Demonstrating Benefit
as important as clean energy, new jobs, and training, is the Just need to integrate this technology with our own sustainable culturelanguage, art, values and traditions.

T'Sou-ke First Nation, 2010

Demonstrating benefit to community stakeholders will require an understanding of their unique characteristics and priorities. For the cleantech SME this will entail: identifying a project champion who is trusted within the community; encouraging a neutral and scientific approach to community energy planning; and demonstrating a unique value proposition.

3.1 Community Champions

Time and again, the presence of community champions has been identified as a critical factor to the success of all stages of clean energy projects. As noted in a recent Pembina report, communities often lack the staff time needed to devote to early stage project development (Gibson, Thibault and Beckstead 2012). Therefore, the presence of community champions with the capacity to lead the preliminary organizational aspects of the project, and provide insight into community decisionmaking structures and priorities, will facilitate project momentum. Conversations with remote community stakeholders indicate that these community champions can come from local leadership (one community described a past mayor with a passion for innovative business opportunities), community members (a First Nation group benefited from the herculean efforts of a community member to secure funding and manage projects), and the economic development corporation or local businesses (in some communities, local saw mills have been champions of successful bioenergy projects).

http://www2.news.gov.bc.ca/news_releases_2009-2013/2012ARR0021-001010.htm & http://www2.news.gov.bc.ca/news_releases_2009-2013/2012ARR0029-001796.htm

The Remote Frontier

14

Demonstrating benefit to the community is contingent on understanding the local cultures and norms, hence the onus is on the SME to consider the importance of community consultation and oral communications, and factor this into their planning (The Canadian Chamber of Commerce 2011). During early conversations, SMEs should be sure to explain how initial engagement is expected to relate to long-term relationship building. Consistently demonstrating deference for local values will go a long way towards earning the trust of the community. Unfortunately there is no roadmap on how an SME should initially approach communities or community champions. Project participants indicated a number of potential forums for engagement on clean energy issues that varied by community. To name a few, the forums listed included: The Economic Development Corporation; BC Hydro; The Chief Administrative Officer and Mayoral Office; The Elected Chief in Council; and The Regional District.

The authors believe that it is noteworthy that in attempting to contact rural and remote community stakeholders for this project, it became apparent how difficult this task would be for cleantech SMEs. The author estimates that only 30 percent of the rural and remote community stakeholders who were contacted by email or phone ultimately responded, or were engaged with. Unlike larger municipalities, many remote communities do not have websites, reliable email addresses, or employees tasked with responding to inquiries. Those communities with more established infrastructure and communication channels will likely be more appealing to SMEs interested in pursuing potential projects. Engagement and collaboration with community champions should be viewed as a long-term investment in the project. As the Canadian Chamber of Commerce has noted, SMEs can smooth the road for successful projects in remote communities by taking the time and making the effort to do more than what is legally required to consult with and engage local communities when planning, constructing and operating projects. The return on this investment is that the knowledge gained from local communities can help projects proceed more quickly and inexpensively, while accessing the potential of a local workforce (2011). Community champions can also assist in improving the early-stage economics of projects by leveraging government grants, existing public resources, and volunteer hours (Gibson, Thibault and Beckstead 2012).

The Remote Frontier

15

3.2 Neutral Scientific Evaluation

While community opposition to renewable energy is sometimes explained as a Not-In-My-Backyard (NIMBY) reaction to technologies that are widely considered beneficial at a societal level, lack of community acceptance can be also be based on community members concerns with how the project is implemented, who it is implemented by, and how the positive effects (e.g., jobs, income, learning opportunities) and negative effects (e.g., noise, disruption of views) of the project are distributed. Gibson, Thibault, Beckstead (2012)

The long-term success of business partnerships is predicated upon an alignment between partner goals and expectations. In addition to meaningful engagement, transparency and science-based methods should be adopted to ensure the mutual desirability and applicability of the partnership. The ancillary benefit is that funders will reward project developers with a demonstrated commitment to long-term planning and due diligence. CTCG advocates for a preliminary assessment of the communitys features, resources and demand profile prior to any project beginning in earnest. These evaluations need not be lengthy or costly, but should be designed to ensure that the broad spectrum of community needs and resources are considered (an example is provided in Appendix B). Conversations with large established cleantech firms have indicated that often the firm itself will cover the costs of such an evaluation. Their interest in the evaluation is twofold: 1. It is intended as a good-faith gesture to the community to demonstrate their commitment to the partnership; and 2. The assessment collects and confirms the information required to validate their business case for the project and allows for preliminary design considerations to be accounted for. Given the value of such an assessment to the community it may be possible to secure financial or technical assistance from funding agencies, utilities, or non-profit organisations. The benefits of a neutral and science-based approach to community energy planning can be seen as both strategic and financial. Strategic o Initiates and promotes engagement with the community o Resource inventory identifies most viable options o Neutral evaluator adds credibility to the process o Provides an early opportunity to outline stakeholder financial and technical requirements (e.g. communitys desired ownership models or utilitys definition of proven technologies)

The Remote Frontier

16

Ensures all stakeholders are working from the same set of assumptions Financial o Financial modeling identifies business case for various projects o Evaluation is aligned to the requirements of future funding applications o Clarifying the communitys resource and demand profile will allow SMEs to verify their business case for the project o Holistic evaluation saves future costs by considering various externalities and potential roadblocks o

Time and care must also be taken to present the results of the assessment to the community through a narrative that they can understand and relate to. Remote communities place a strong emphasis on personal rapport and trust. Learning to communicate complex scientific and technical concepts in simple and engaging language is a talent that SMEs will need to quickly adapt to. Conversations with remote community stakeholders also indicated the divergent beliefs that access to relevant information was a challenge, and conversely, that there was too much valuable information to synthesize effectively. The Pembina Institute has found that most aboriginal communities are unaware or only vaguely aware of similar renewable energy projects completed or underway in other aboriginal communities in Canada (Gibson, Thibault and Beckstead 2012). If SMEs can help to identify useful information or identify opportunities for community mentorship8, it will serve to enhance their rapport and trust-level with the community.

3.3 Unique Value Proposition

Despite recent advances, at 0.9 percent of global market share, Canada is not considered a leading global presence in the cleantech industry (Analytica Advisors 2011). Conversations with remote community stakeholders has indicated the general sentiment amongst respondents that all other things being equal, made in Canada is appealing, but will not trump more pressing concerns like cost and reliability. Accordingly, conversations with large multi-national clean technology suppliers indicated that their value proposition to communities often emphasizes cost savings and reliability versus diesel. Canadian SMEs may not be able to compete with larger foreign firms on cost or experience, but they can demonstrate value to communities in other meaningful areas. Community respondents indicated that they saw value in domestic firms who could demonstrate a deep understanding of their local context, climate, and culture. They

As an example, the Fraser Basin Council in BC offers a community-to-community mentorship program for remote communities. Encouraging a community champion to join the program would better equip them to identify potential roadblocks, and keeps the project moving efficiently.

The Remote Frontier

17

also suggested that the innovation level of the technology might be less critical if it was better at addressing their unique challenges. Further, if Canadian firms were able to offer enhanced value around technology support and project development, this would factor favourably into an evaluation. A respondent indicated that one of the communitys most pressing concerns was their poor air quality. They suggested that a supplier who explained the benefit of their technology through this particular lens, could be at an advantage over those suppliers who did not. Identifying community priority areas could be as simple as reviewing their Official Community Plan or website. Natural Resources Canada is also developing an online database that will provide detailed information on the energy profile and infrastructure of each remote community across Canada. Once launched, the intent is to create a hub where remote community information can be readily updated and accessible to all (Natural Resources Canada 2011). Many rural and remote municipalities rely on Canadas Gas Tax Funds to help them build and revitalize public infrastructure. The availability of these funds is contingent on local governments demonstrating that they are applying the Integrated Community Sustainability Planning (ICSP)9 principles to all forms of planning at the local level. SMEs can improve the value proposition of their technology offerings by demonstrating how they can be integrated into local economic development. Cleantech SMEs should endeavour to demonstrate linkages between renewable energy and the local economy by highlighting the benefits to peripheral sectors and industries. For example, from the bioenergy sector there are new business opportunities for forestry operators in relation to woody biomass (NORDREGIO 2012). These opportunities can include incremental revenue from heat or wood waste sales, or providing feedstock collection and processing services. In Albertas wind power industry, farmland is one of the most favourable landscapes for wind projects. Wind project developers agree to compensate farmers for the use of their land, adding a second cash crop to farmers revenue streams. In addition to creating high-skill local jobs, taxes from wind farms provide vast revenue to rural municipalitiesnearly 27% of all tax revenue in Pincher Creek, Alberta (Bell and Weis 2009). Finally, Canadian SMEs may be able to offer improved value to remote communities by engaging in strategic partnerships. Given the importance of holistic community planning, there may be opportunities to partner with other cleantech suppliers to create more impactful solutions. The emerging industry of autonomous community technology solutionsintegrated packages that combine renewable energy, intelligent grid and waste-to-energy technologieshave potentially vast international markets, from island nations, to military forward operating bases, to resource extraction operations in remote locations. Strategic partnerships to develop

A description of ICSP can be found here: http://www.toolkit.bc.ca/icsp

The Remote Frontier

18

innovative applications in remote Canadian communities, could find much larger audiences globally once they have been demonstrated domestically.

Creating Value

Figure 4.1 Northwest Territories Ice Road (AANDC 2010)

Advancing Canadas economic prosperity through the development of its resource sectors will necessitate critical infrastructure upgrades throughout many of Canadas remote communities. To attract investment, remote communities will require at a minimum: water that is clean and safe; affordable housing; health care; energy that is economical and environmentally-sound; transportation links; and broadband telecommunications (General Electric Company 2011). Each of these requirements can be linked with various clean technology applications, and Canadian SMEs should attempt to position themselves as integral facets of remote community strategic investment plans. Creating value for communities will also include demonstrating the economic viability of the venture, and establishing mutually beneficial ownership and business structures from the onset.

4.1 Determining Technical & Financial Viability

There is a general perception in Canada that public finances directed toward remote communities are subsidies rather than investments (The Canadian Chamber of Commerce 2011). This is further complicated by the fact that conversations with some remote communities indicated a tendency to overlook or delay important business considerations like their desired level of ownership, details of a long-term business plan, and technical evaluations of the energy resources magnitude, supply, and access. Other important issues that could impact the scale and nature of the projectfor example demand-side management, capacity building needs, and additional requirements around heat, food security, waste and wastewater treatmentare sometimes not receiving the early attention that they merit.

The Remote Frontier

19

Given that strong business planning, and a clear path to sustainable operations will attract participants and funding, SMEs should work with communities to ensure that this due diligence is accomplished at the earliest project stages. It may be tempting for communities to focus on the additional environmental or social Figure 4.2 District heating system in Iqaluit, Nunavut. benefits that can be Source: (Indian and Northern Affairs Canada 2010) demonstrated with renewable energy projects, however as Pembina has recently noted, successful projects demonstrate cost competitiveness or a positive return on investment prior to being able to secure financing and move the project forward (Gibson, Thibault and Beckstead 2012). Validating business model inputs is also critical to early planning stages and will ultimately lessen the risk of project failure. Conversations with remote community stakeholders noted at least two examples where a lack of alignment in business expectations between the utility, project developer, and community resulted in wasted time and costs. Its important to consider that even when grid connections are technically present, utility companies may not be willing to purchase power from the new or proposed energy project, or they may be limited in their ability to do so by regulations or inadequate smart grid infrastructure (Gibson, Thibault and Beckstead 2012). A well-designed business proposition will confirm the technical and financial requirements of all potential partners including the utility, the community, and the various government bodies that will be involved. Remote communities may not have the capacity or resources to lead the initial business planning efforts. SMEs should be prepared to offer assistance and referrals to where the community can find potential funding and business planning support.10

10 The 269 Community Futures offices across Canada are a good place to start for communities requiring business planning assistance (http://www.communityfuturescanada.ca/)

The Remote Frontier

20

4.2 Establishing Business Structure & Ownership

Conversations with various remote communities indicated no unified perspective on their desired ownership and involvement in energy projects. While some communities expressed a strong interest in ownership and management, other communities indicated that they would rather the utility completely manage their power supply. A further subset of communities were unsure, and felt that the proposition would be dependent on context. It is noteworthy that several communities in the early planning stages of projects had still not come to any conclusions about what their desired business involvement in the project would be.

Community involvement in a project will impact a number of critical project elementspotential funding, required capacity building, training initiatives, contracts and legal requirementsand should be first and foremost in the minds of project proponents. There are a wide range of business structures and ownership models available to project participants, each allowing for various levels of involvement and flexibility. Depending on the will of the community and its capacity, there are eight potential business models that could be used for renewable energy projects in rural or remote communities (Gibson, Thibault and Beckstead 2012): 1. 2. 3. 4. 5. 6. 7. 8. Ownership by a Public Institution; Ownership by a Business Corporation; Limited Partnership; Sole Proprietor; Co-operative; Joint Venture; Renewable Energy Services Company; and Bulk Purchase Model

Figure 4.3 TSou-ke Nation, Gordon Planes looks over an array of photo-voltaic panels on the roof of the Nations administrative building. (Source: http://www.turtleisland.org)

Each of these business models has potential advantages and disadvantages for participants that must be weighed on a case-by-case basis. It is important to

The Remote Frontier

21

remember when demonstrating benefit to the community, that any of the business models could be designed to work within the culture, capacity and context of a remote community. Even the wholly-owned corporation model could allow for significant community involvement through consultations, employment opportunities and other forms of engagement. With a goal of mitigating risk to the community, this model allows the corporation to adopt most of the risk in developing the project. As Pembina have observed from similar case studies, while this also likely means that most of the financial rewards are incurred by the corporation communities can still share in the economic gains. For example, in Alberta, the Municipal District of Pincher Creek receives 27 percent of its revenues from wind farms (Gibson, Thibault and Beckstead 2012).

4.3 Developing Strategic Partnerships

For communities, the best business and ownership options will be those that add expertise, capital, and equity to the project, build on partners strengths, and create environmental, social and economic benefit. For SMEs, the opportunity exists to develop partnerships around the deployment of innovative solutions to remote community challenges, while simultaneously creating highly marketable innovations for export. A host of interacting forces are currently driving a global transition away from centralized energy generation and delivery, towards autonomous, selfsustaining systems. Creative partnerships in remote communities should aim to address the growing demand for autonomous community technology solutions (ACTS). Strategic partnerships in remote communities should aspire to offer: Hybrid Design: accommodating all generation and storage options, with energy seamlessly drawn from a variety of conventional and renewable sources; Advanced Power Storage: Energy generated during peak times can be stored for potential future use to ensure minimal wastage and add firmness to intermittent resources; Quality of Supply: Stable power to meet exacting consumer energy requirements; Self Healing Networks: automatically detecting and responding to grid problems; Security: Enabling cyber and physical security; and Reliability: Near 100 percent uptime for critical loads.

ACTS and advanced microgrid systems can offer a quality and diversity of services that incumbent utilities have previously been unable to offer to consumers. Subsequently the global demand for such systems reaches across a host of market segments including, emerging energy markets in the developing world, campus environments, and military stationary bases. The microgrid market is expected to

The Remote Frontier

22

follow an adoption trend analogous to exponential growth over the next 5 years (Pike Research 2012). Given that North America and especially the United States are expected to represent the best overall market for advanced microgrid applications (ibid), projects deployed in Canadian remote communities are well-positioned to access this export potential. Figure 4.4 identifies the features of the leading remote microgrid market subsegments globally.

Source: Helen Pidd for the Guardian

Source: MeridianEnergy Sam Shepherd

Source: energydigital.com

Source: Spencer Ackerman for WIRED.com

Remote Village Power Systems The average village power system has a capacity of 10 kW. Typically provides power to a medical clinic, school, and/or community centre Expected to grow to CAGR of 21.7%, by 2017 and revenue of $4.7B.

Weak Grid Island Systems T ypically largescale microgrids that have linkages to a larger grid, designed and operated as if the larger grid is not there. E xpected CAGR of 16.2%, representing revenue of $3.7B by 2017.

Industrial Remote Mine Systems L east mature market, but the highest growth rates. G lobally, nearly 75% of existing mines are remote operations, though few deploy renewables. E xpected to achieve 40% CAGR and revenue of $1.8B by 2017.

U.S. Mobile Military Microgrids Mobile military microgrids are expected to show a robust 2011-2017 CAGR of 49.2%. Total capacity will still be modest at 20 MW and revenue will reach just over $32M by 2017 (limited to U.S. DOD).

Figure 4.4 Leading remote microgrid market subsegments globally (Pike Research 2012)

Strategic partnership opportunities that should be explored by SMEs through remote community projects include: Microgrid management software; Power system design and modeling; Hardware for connecting to grids; Renewable energy project development and financing; End user change management programs; and Integration of ancillary community critical infrastructure including food, water, waste, and building technologies.

The Remote Frontier

23

Conclusion

The term emerging markets naturally calls to mind the rapidly growing energy and resource management needs of the developing world. However, as Canadas resource economy expands, the demand placed on remote communities for reliable services and infrastructure will necessitate rapid investment in these areas. The opportunity exists to facilitate Canadas participation in the competitive global cleantech marketplace by addressing domestic market needs for innovative technologies. Policy and investment should focus on identifying those places that have the greatest potential to benefit from renewable energy, rather than adopting centrally guided policies that arbitrarily spread renewable energy projects across the national landscape (NORDREGIO 2012). Of course the federal government should take the lead in developing a long-term strategy to allow Canada and remote communities to benefit from investment in the resource sectors, but sustained SME investment will ensure that a business lens is applied to these opportunities. Canadian SMEs should look to remote communities for opportunities to demonstrate, deploy, and commercialize their innovative technology solutions. Strategic collaborations between SMEs, remote communities, and public institutions, should play to participants strengths to reimagine remote communities as centers of social, environmental, and economic prosperity for Canada.

The Remote Frontier

24

Bibliography
Analytica Advisors. "The 2011 Canadian Clean Technology Industry Report." 2011. Arriaga , Mariano, Claudio A. Caizares, and Mehrdad Kazerani. "Renewable Energy Alternatives for Remote Communities in Northern Ontario, Canada." IEEE Transactions on Sustainable Energy, November 2012. Bell, Jeff, and Tim Weis. Greening the Grid. The Pembina Institute, 2009. Bloomberg New Energy Finance. Clean energy investment storms to new record in 2010. January 11, 2011. https://bnef.com/PressReleases/view/134 (accessed 2013). Centre for Indigenous Environmental Resources . "Reflections on Success - A Sustainable Future in a Changing Climate." 2007. Chess, Joan. "Integrated Community Sustainability Planning-Implications for Rural British Columbia." Smart Planning for Communities, Fraser Basin Council, 2012. CTCG. Renewable Energy Systems Business Case Analysis for Remote Communities Project . Industry Canada, 2012. General Electric Company. "Towards a Remote Communities Investment Strategy for Canada Shaping Economic Growth in Canadas Remote Communities." 2011. Gibson , Sachi, Ben Thibault, and Claire Beckstead . "DRAFT Community Renewable Energy Projects in Rural and Remote Canada." 2012. Grasby, S.E., et al. "Geothermal Energy Resource Potential of Canada." GeoGratis . Natural Resources Canada. 2012. http://geogratis.cgdi.gc.ca/nationalatlas/download/part6/ess_pubs/291/291488/of_ 6914.pdf (accessed 2013). Indian and Northern Affairs Canada. "Sharing Knowledge for a Better Future: Adaptation and Clean Energy Experiences in a Changing Climate ." 2010. IRENA. "Summary for Policy Makers: Renewable Power Generation Costs ." 2012. Komarnicki, Ed. Skills Development in Remote Rurual Communities in an Era of Fiscal Restraint. House of Commons, 2012. Natural Resources Canada. Status of Remote/Off-Grid Communities in Canada. Renewable and Electrical Energy Division, Energy Policy Sector, Natural Resources Canada, 2011. NORDREGIO. "OECD Renewable Energy ." NORDREGIO. October 2012. www.nordregio.se/oecdrenewableenergy (accessed 2013). Pike Research. "Total Microgrid Capacity by Segment." Market Report, 2012. The Canadian Chamber of Commerce. "The Business Case for Investing in Canadas Remote Communities." 2011.
The Remote Frontier

25

Appendix A List of Resources

In addition to the sources cited in the bibliography and footnotes of this report, the following documents may be of interest to those interested in remote Canadian communities. As links sometimes change and new materials are constantly being released, please contact CTCG if you have any questions. 1. The Business Case for Investing in Canadas Remote Communities The Canadian Chamber of Commerce 2011 http://www.chamber.ca/images/uploads/Reports/2011/The_Business_Case_for_Inve sting_in_Canadas_Remote_Communities0911.pdf Presents a state of the nation summary of Canadas remote communities, and introduces how proper investment can spur economic development, and build capacity to tap Canadian natural resources situated near these communities. 2. Community Renewable Energy Projects in Rural and Remote Canada - Literature Review and Case Study Analysis [Pending publication] The Pembina Institute April 2012 Success factors for renewable energy development in Canadian remote communities. Also includes business ownership models specific to rural/remote communities. Lastly, a case study review of known renewable energy projects in rural and remote communities in Canada. 3. Exploring Ownership Communities Options for Farmers, Rural Landowners, and Rural

The Ontario Rural Council 2007 http://ruralontarioinstitute.ca/file.aspx?id=d3c5ae30-a984-4672-8990-be20ff9b0dff Highlights key factors for building renewable energy infrastructure, particularly grid connection and connectivity, while also highlighting the importance of community ownership, and other socioeconomic benefits. 4. Guide to Best Energy Practices for Remote Facilities Arctic Energy Alliance - 2011 http://aea.nt.ca/files/download/99 Specific energy optimization, efficiency, and technology systems for electricity, heating, water, and vehicle energy use considerations for small to medium sized remote facilities (lodges, exploration camps, and traditional camps with up to 50 people on site at one time).

The Remote Frontier

26

5. Powering Communities: An Analysis of the Clean Energy Business and Workforce Opportunities in British Columbia GLOBE Advisors May 2012 http://www.toolkit.bc.ca/News/New-Report-Powering-our-Province Overview of opportunities and barriers for clean energy development in BC, discussion on necessary skills and capacity building, and strategy enabling within rural communities. Analyzes insights and opinions from 34 BC IPP projects and 8 different renewable technologies. Walkthrough of business and labour needs for clean energy project and technology developers. 6. Renewable Energies for Remote Areas and Islands (Remote) IEA Renewable Energy Technology Development April 2012 http://iea-retd.org/wp-content/uploads/2012/06/IEA-RETD-REMOTE.pdf Detailed energy considerations in remote areas, particularly the increasing cost of diesel electricity, demographic trends, local capacity, and community acceptance. Communities are split into climate type (i.e. long winters, temperate, warm). Highlights lessons learned and challenges in several Canadian case studies. 7. Renewable Energy Alternatives for Remote Communities in Northern Ontario, Canada IEEE TRANSACTIONS ON SUSTAINABLE ENERGY November 2012 https://ece.uwaterloo.ca/~ccanizar/papers/mariano_TSG1.pdf Contains updated energy output data from Northern Ontario community-based and utility-owned remote communities. Examination of remote microgrid operation and challenges of integrating renewablesparticularly the impacts on existing diesel generatorsand a model of wind + battery and solar + battery scenarios. 8. Renewable Energy Policies for Remote and Rural Communities Energy Policy Assessment (Final Report) Canadas Rural Partnership (Government of Canada) August 2009 http://www.rural.gc.ca/RURAL/display-afficher.do?id=1290792790023&lang=eng Summary of renewable energy policy and challenges in Canadian rural and remote communities. Suggestions for policies supporting renewable energy development including the reduction of capital costs, on-going financial support, technical assistance, and requirements for renewable energy. 9. Renewable Energy Systems - Business Case Analysis for Remote Communities Clean Technology Community Gateway March 2012 [Draft available upon request from CTCG] This report analyzes four northern Canadian remote communities for the business case potential of introducing renewable energy technologies to displace diesel

The Remote Frontier

27

power. Systems modeled included biomass, biomass/hydro, and wind/fuel cell. Financial analysis included net present value, internal rate of return, and payback period. 10. Status of Remote/Off-Grid Communities in Canada Aboriginal Affairs and Northern Development Canada/Natural Resources Canada August 2011 [Available upon request from CTCG] Highly comprehensive breakdown of all 292 Canadian remote communities by population, aboriginal/non-aboriginal ownership, fossil or renewable fuel type used, per capita power capacity, and energy demand.

The Remote Frontier

28

Appendix B

Rapid Community Assessment

1. Demand Profile
Profile of community energy use and sources. Electricity Heat Current Supply & Demand Profile Transport Fuels Associated Costs Technology Characteristics Age, specifications, expected replacement of various existing systems

2. Resource Inventory

High-level resource inventories outlining the availability and magnitude of local renewable resources. Micro-hydro Solar Wind Biomass Harvestable & Waste Sources Other Energy Project Modelling e.g. HOMER, RETScreen

3. Logistical Considerations

Identification of current or potential access concerns. Geography Access Current means of access for various products and services. Surrounding Area Other communities/populations within [100 km]. May be useful for combining resources, pooling talent, and expanding market catchments for various products and services. Telecommunications

4. Community Profile

Overview of community features and unique considerations. Population/Demographics Primary Community Contacts Basic Decision Making Structures High-Level Skills Inventory Yes/No on likelihood of labour availability Drinking Water Water Waste Water & Sewage Technology
The Remote Frontier

29

Waste

Food

Infrastructure Waste Streams Disposal/Landfill Waste Diversion Access Local production Costs Demand

Industry Identification of any major industrial activity (e.g. forestry, mining) Other Relevant Considerations e.g. forest fire risk

The Remote Frontier

30