Lamèque Renewable Energy Co-operative

Case Study

Prepared on behalf of the
Cooperatives Secretariat, AAC

Written by
Le Groupe Éconov Développement/
New Economy Development Group
with
Le Coopérative - La Clé

July 2005

Summary

The Lamèque Renewable Energy Co-operative is located on the Acadian Peninsula of Northeast New Brunswick, where its windmill project is currently in development. This project provides some useful lessons about the capacity and the limitations of rural communities when pursuing renewable energy initiatives. The case study focuses on the planning and development process. It highlights the leadership role of this community co-operative in a complex project, and it demonstrates how such an experience can enhance a community's capacity to pursue innovation and new development for the benefit of its people.

Co-operatives are an economic mainstay of the Lamèque community and of the entire Northeast region of New Brunswick, and this initiative was led by three existing co-operatives in Lamèque—the consumers' co-operative, the caisse populaire, and the fishermen's co-operative—working in conjunction with their municipality.

The renewable energy project was begun in 1999 with a view to developing a new economic activity that would provide jobs and energy self-sufficiency in this part of New Brunswick, where the economy is based on fishing and peat extraction. However, energy development proved to be a complex undertaking that requires solid expertise and considerable capital. The absence of these resources locally made it necessary to seek outside partners, and this has significantly influenced the direction of the project. The wind energy project has since evolved into a commercial partnership, where the co-operative is a minority shareholder. Yet, it continues to play a leadership role in the project, by supporting the search for partners, monitoring progress and facilitating key steps in the development process, serving as the liaison with the local population, and representing the community's interests in order to maximize local spin-offs.

The Lamèque project will produce 32 MW of energy in its initial stages, at a development cost of $38 million. The windmill site has shown potential for up to 100 MW, but development of this level of capacity will require significantly more capital.

Within the Acadian co-operative movement, this initiative is seen as a pilot project for other windmills on the Atlantic coast of New Brunswick, where the potential for this type of economic activity is generally good. The lessons learned here are expected to guide any similar developments in the region.

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List of acronyms and abbreviations used in this document

NB Power - New Brunswick Power (Crown corporation responsible for power generation and distribution)
FCM — Federation of Canadian Municipalities
MW — Megawatts
N.B. - New Brunswick
NPO - Non-Profit Organization
GMF - Green Municipal Fund

Table of Contents

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Foreword

The present case study is one in a series of seven independent case studies commissioned by the co-operatives Secretariat, which comes under Agriculture and Agri-Food Canada.

The co-operatives included in this series are located across Canada and involved in six priority sectors, namely:

  • adding value to agriculture
  • access to health care and home care
  • economic development in rural, remote or northern communities
  • development of Aboriginal communities
  • integration of immigrants into Canadian communities
  • community solutions to environmental challenges

The overall objective of the series is to examine and understand the co-operatives' special administrative practices and the responses to specific challenges or opportunities. The case study series will enable those in charge of the co-operatives to better understand the problems faced by today's co-operatives. In addition, the co-operatives themselves will be better positioned to deal with the challenges and take advantage of the opportunities that arise by observing how the other co-operatives respond. Collectively and individually, these case studies will provide strategies that can serve as tools for building and innovating within the co-operative movement.

The case study series was developed in cooperation with an advisory management committee struck by the Co-operatives Secretariat. It is composed of individuals from a variety of fields associated with co-operative development, such as the business and community economic development sectors, and possessing a range of expertise.

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Introduction

The present case study concerns the Coopérative d'énergie renouvelable de Lamèque (Lamèquerenewable energy co-operative) located on Lamèque Island on the Acadian Peninsula in Northeast New Brunswick. The subject has links with the following priority sectors: "community solutions to environmental challenges" and "economic development in remote, rural communities".

We chose the Coopérative d'énergie renouvelable de Lamèque project for its innovativeness, in terms of both its activity sector and the strategies followed during the project development process. We must stress, however, that the project remains in the development phase and that the study focuses on the analysis of the process underway, from the original idea right through to the actual installation of the power-generating windmills.

In this case study we will attempt to understand why the proponents decided to embark on this wind energy adventure and what their strategies were to amass the necessary resources for a successful undertaking.

Co-operatives are an economic mainstay of the Lamèque community and of the entire Northeast region of New Brunswick. This is very much a community project. A number of references are made to the community in this document in order to properly recognize its importance as an enabling environment.

The Coopérative d'énergie renouvelable de Lamèque was founded in 1999 with a view to developing a new economic activity that would create jobs and wealth in this part of Northeast New Brunswick, where the economy is based on fishing and peat extraction. That this new enterprise adopted the co-operative formula is due in part to the co-operative tradition in this part of the province. However, energy is a complex sector requiring solid expertise and considerable capital. The absence of these resources made it necessary to seek outside partners, and this had a significant influence on the direction the project has taken. Furthermore, hydro distribution is centralized by a Crown corporation, which prevents the co-operative from selling hydro production directly to its members and, consequently, makes the use link with its members less direct. Thus, the mission of the co-operative has changed over time to that of a special tool for monitoring the progress of the windmill project in order to maximize local spin-offs. In the eyes of the Acadian co-operative movement, this co-operative project serves as a pilot project for other windmill projects on the Atlantic coast of New Brunswick, where the potential for this type of economic activity is generally good.

Methodology

The information for this case study comes mainly from the following sources: interviews with the co-operative project proponents; documents from the Coopérative d'énergie renouvelable de Lamèque ltée and from the proponents; and documentation on the themes addressed.

Stakeholders include representatives of the co-operatives that founded the new co-operative entity, a representative from the municipality, a co-operative development consultant and an individual associated with the TechnoCentre éolien Gaspésie-les-Îles.

A questionnaire was submitted to the first four stakeholders, i.e. a representative from each of the three co-operatives and the municipal representative, sounding them out on the following themes:

  1. What motivated them in the first place and how they transformed their vision into action.
  2. The economic and social context of this Northeast N.B. community.
  3. Interest in this project on the part of the Acadian co-operative community.
  4. Innovative aspects, issues and questions encountered can serve as food for thought for other projects in a comparable sector.
  5. Strengths and opportunities, as well as challenges and obstacles faced.
  6. Co-operative life, commitment and the evolution of the project.

With the co-operative development consultant, we looked at questions having more to do with the specifics of the co-operative formula in the evolution of the project. And the interview with the TechnoCentre éolien Gaspésie-les-Îles stakeholder was to verify the existence of co-operative entrepreneurial activities in a region that is currently the scene of strong windmill development and that served as the original inspiration for the proponents of the present project.

In addition to the interviews carried out with these stakeholders, we examined several document sources dealing with group initiatives concerning wind power production in Canada and elsewhere in the world. We reviewed a number of media articles reporting on the progress of the Coopérative d'énergie renouvelable de Lamèque. Lastly, the proponents provided us with a few documents on the co-operative (presentation document, financial statements, feasibility study and general by-laws) and on their respective founding co-operative (annual reports, minutes and background).

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General context surrounding the Projet coopératif d'énergie renouvelable de Lamèque

Lamèque Island and the regional context

Local and regional context

The City of Lamèqueis located on the island of the same name, which is home to two municipalities. The island's rural territory comes under the province's jurisdiction, except where municipal zones are concerned.

The City of Lamèque had a population of 1,580 as of the 2001 Census, down 5.5% from 1996 and reflective of the overall trend for the Acadian Peninsula. The population is very heavily Francophone and native to the region. There is very little immigration (Statistics Canada, 2001).

The region's economy is characterized by high unemployment, a recovery whose effects have been slow to take hold, and an exodus of young people to urban centres (2004 Annual Report, Caisse populaire des Îles). The median total income of persons aged 15 and up is 18% below that of the N.B. province as a whole (Statistics Canada, 2001).

The main economic activities are fishing (including processing plants), aquaculture and peat extraction - seasonal activities, one and all.

Co-operatives' strong presence locally and regionally

Co-operatives are an economic mainstay of Lamèque Island and of the Acadian Peninsula. Everyone either belongs to or is employed by a co-operative. "There is a culture of cooperation in Lamèque," states Paul Lanteigne, Director of the Société co-operative de Lamèque and President of the Coopérative d'énergie renouvelable de Lamèque.

The three founding co-operatives

The founding of the Coopérative d'énergie renouvelable de Lamèque ltée was made possible mainly by the support of the three co-operative organizations established in Lamèque, namely the Société coopérative de Lamèque, the Caisse populaire des Îles and the Association coopérative des pêcheurs de l'Île.

Société coopérative de Lamèque

The Société coopérative de Lamèque was founded on May 15, 1938 when a purchasing club was converted into a consumer co-operative. It provides a full range of food services, a gas station and a hardware store. It had a 4,353-strong membership and posted sales of over $13 M in 2004, up 6% from 2003. The co-operative serves a population of 12,891 drawn from Lamèque Island, Miscou Island and the Shippagan region.

The Société coopérative de Lamèque is part of Co-op Atlantic, a network of 135 agri-food and household consumption co-operatives (groceries, hardware, petroleum and miscellaneous items). Co-op Atlantic is Canada's second largest regional wholesaler, with sales in excess of a half billion dollars in 2002 (Co-op Atlantic, 2005).

Caisse populaire des Îles

The Caisse populaire des Îleswas born of the merger in January 2003 of the Caisse populaire de Lamèque (est. 1937) and the Caisse populaire de Saint-Raphaël-sur-Mer (est. 1937). It is affiliated with the Mouvement des caisses populaires acadiennes, comprising 33 credit unions with total assets of over $2 billion and 200,000 members (Acadie.net, November 04).

In 2004 the Caisse posted assets of over $99 million, had 6,625 members, employed 31 people, had a payroll of $1.2 million and returned $350,000 to its members. It was also a good corporate citizen, contributing $58,000 to various local groups in the community (Caisse populaire des Îles; 2004 Annual Report). It draws its membership from Lamèque and Miscou Islands as well as the city of Shippagan.

Association coopérative des pêcheurs de l'Île

The Association coopérative des pêcheurs de l'Île was formed in 1943 from the pooling of five small fishers' co-operatives on Lamèque Island. As the decades went by, the enterprise evolved with the economic and social times. Its fortunes took a turn for the worse in the mid-1990s with the decline in the groundfish population, but it managed to diversify by developing a wider range of seafood and fish products (Chiasson,1994). Lamèque and Miscou Island fishers comprise its membership.

Contribution by the three co-operatives

The three co-operatives' combined assets totalled $130 M in 2004. They employ upwards of 600 people, form an integral part of the local community and are major actors in the local economy.

History of cooperation and the Habitat des pionniers

The three Lamèque co-operatives have a culture of cooperation. Indeed, every year as part of Cooperation Week, the Caisse populaire des Îles, Société coopérative de Lamèque ltée and Association coopérative des pêcheurs de l'île de Lamèque ltée jointly give out 15 scholarships worth $500 each.

But their biggest project dates back 15 years ago: the creation of a seniors' residence in Lamèque. This large-scale project helped solidify the spirit of local cooperation. According to the proponents of the Coopérative d'énergie renouvelable de Lamèque ltée, the current project likely would not have gotten off the ground had this earlier project not been carried out.

During the 1980s, the three local co-operatives wanted to provide their members and retirees with adapted accommodation. They took advantage of the sale in 1987 of the Catholic presbytery and an adjacent lot to launch the project. Once the property had been acquired, the search for financing and the project development phase lasted over three years. In 1990, the not-for-profit corporation "Habitat des pionniers inc." was officially created. In 1991, the ten-unit residence was completed at a cost of $641,500, with the three co-operatives each chipping in $105,000. The cooperation of the municipality in all of this must not be overlooked.

This undertaking was significant in that it demonstrated the capacity of these three organizations, with support from the municipality, to work together and successfully carry out major projects for the good of the community. The representatives we spoke to were unanimous in stating that this experience left them supremely confident in their ability to work together. What's more, it helped make Lamèque a more cohesive community. Réginald Larocque, director general of the Association coopérative des pêcheurs de l'Île, put it this way: "We belong to a co-operative movement, and we are not necessarily in search of pure profit. What we did for Habitat des pionniers is a perfect example. The social aspect is an important value, unlike what one sees under the private enterprise formula."

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Genesis of the project

The idea behind the Coopérative d'énergie renouvelable dates back to 1999.

Idea behind the project / project history

Paul Lanteigne, director general of the Société coopérative de Lamèque, was thinking of ways to help stimulate the local and regional economy. One day, he read about the Cap-Chat windmill project in Gaspésie, which got him to thinking that his island was very windy all year long and that this resource could make the island a very good site for a wind farm. He shared his idea with his friend Melvin Doiron, a co-operative development consultant working at the time for the Conseil acadien de la cooperation. After Mr. Doiron expressed interest in the idea, it was passed along to people in the city of Lamèque and in the Acadian Peninsula co-operatives community, where it was warmly received. An interim committee was struck, composed of ten representatives from the following institutions: Société coopérative de Lamèque, Association coopérative des pêcheurs de l'Île, Caisse populaire des Îles, the city of Lamèque and Mr. Doiron as consultant and resource person.

Job one for the committee was to organize a fact-finding mission to Cap-Chat in Gaspésie, Quebec, in order to gain a better understanding of what a project of this nature might represent. Mr. Doiron played a key role in organizing this activity and devising strategies for the committee. His involvement diminished following the creation of the co-operative.

This mission provided the committee with a wealth of information on the wind sector and convinced it that the project held significant potential. The committee began the search for financing to conduct a feasibility study aimed at verifying the island's true wind potential and the creation of a co-operative that would formally assume the role of project manager and developer.

Context of public debate on renewable energy

While the project was germinating in the minds of Acadian Peninsula developers, a public debate was underway in N.B. on the province's energy future. This debate had been triggered by the fact that NB Power needed to refurbish its only nuclear power station at a cost of $1,400 million, according to the latest official estimates (Hachey, March 15, 2005). According to Energy Probe, a Canadian environmental organization, the work could cost twice that amount, judging by previous refurbishments of nuclear power plants (Hachey, December 20, 2004). The wisdom of continuing along the nuclear path was being questioned. The province would favour the refurbishment option if Ottawa contributed $200-400 M.

In the meantime, Irving Inc. proposed the construction of a gas plant that would cost less than it would to retrofit the Point Lepreu nuclear generating station. But the project raised pollution emission concerns (Hachey, December 20, 2004).

In the context of the Kyoto accords and of the need to go ahead with greenhouse gas reduction initiatives, the project proponents were convinced that their undertaking was a concrete way of contributing to the overall effort. With the issue of whether to invest in the Point Lepreu retrofit making headlines in New Brunswick, public interest in investing in renewable energy products was on the rise, as was the interest of the N.B. government, which in June 2004 announced the construction of a 20-MW-capacity wind farm on Grand Manan Island, at the southern tip of the province.

Initial objectives

In the beginning, the priority objective of the interim committee was to develop a new activity that could leverage economic development. Paul Lanteigne explains: "Given the decline in certain sectors such as fisheries, job losses in the peat industry and the seasonal nature of tourism, ways had to be found to stimulate and diversify the local economy. This part of N.B. is considered a have-not region. There was also a lack of value added and thus a drop in employment […] Windmills could represent part of the solution, while generating hydro-electric power that will help meet local needs, ensure energy security, generate royalties on the sale of electricity and create jobs—not just through the project itself but via the creation of a wind power interpretation centre that could create from five to ten jobs." When they visited the Cap-Chat wind farm, the proponents noted that in addition to being functional, it had been visited by thousands of tourists (Ma Tante Pénélope, May 2000).

At the beginning of the project, the proponents were thinking in terms of producing electricity that would allow a degree of energy independence, since Lamèque Island experiences supply difficulties during weather disturbances. The Lamèque city manager explains: "We're on an island, and we have self-sufficiency and independence concerns. We have had a lot of outages in the past and are hoping to secure the island's network."

The promoters also thought they stood to gain from lower hydro supply costs. This factor was significant for, among others, the Association coopérative des pêcheurs de l'Île, which operates a processing plant.

Lastly, the project was attracting interest from co-operatives in the Acadian coastal region. Initially, efforts were made to involve partners from the Acadian Peninsula. Subsequently, there were hopes of expanding this to the Acadian coast, which has good wind power potential.

To sum up, the initial objectives were to:

  • Create an economic activity that would generate revenue and employment spin-offs;
  • Secure the hydro supply network on Lamèque Island;
  • Impose a preferential tariff on hydro consumption;
  • Stimulate tourism by creating an interpretation centre;
  • Contribute to greenhouse gas reduction efforts;
  • Expand the project to the Acadian coast.
City of Lamèque plays major role from day one

The municipality of Lamèque has played - and continues to play—an important role in this renewable energy co-operative project. It seeks to "ensure that local spin-offs are maximized, plan the establishment of a wind power interpretation centre and keep the public well informed", according to H.P. Guignard. More tangibly, the municipality has assumed a significant role from a financing standpoint by applying to the Federation of Canadian Municipalities (FCM) under the Green Municipal Fund (GMF).

Feasibility study

The feasibility study was carried out between 2001 and 2002 by the Montreal firm Hélimax in conjunction with NB Power and the Université de Moncton. The study cost $230,000 to complete, as against the initial estimate of $180,000. Financing was therefore sought beforehand. Hélimax took a proactive role, helping its future client prepare an application for funding under the FCM's GMF. Evidently, they did a good job, because the application was selected from among hundreds of others, and the amount awarded was the maximum allowed.

Table 1: Financial package for the feasibility study, in dollars.

Federation of Canadian Municipalities (Green Municipal Fund): 100,000
Co-op Atlantic: 25,000
Power NB Local contribution in cash: 7,500
Local contribution in kind: 57,500
Total: 230,000

Ref: H.P. Guignard.

The contributions in kind mainly took the form of time devoted to the project by local members, either during local member co-operatives' working hours or on a voluntary basis.

The feasibility study analysed limitations on the generation of wind power on Lamèque Island, identified the best sites, determined the optimum configuration for the 20-MW farm, assessed the methods (and constraints) of hooking the farm up to the power grid, and calculated the annual hydro-electric power generation potential. From a financial standpoint, it identified funding sources, prepared investment and operating budgets and determined the project's cost-effectiveness (Hélimax, Website).

The findings cast the potential in a positive light, deeming it sufficient to ensure the cost-effectiveness of the project. Indeed, with winds projected sales at over 8 metres/second, the potential is considered very good, and the site's overall wind potential is felt to be upwards of 100 MW. With a selling price of about 6.6¢/ kwh, the project is seen as cost-effective (Hélimax 2004).

However, the current hook-up to the distribution grid allows 45 MW, meaning that beyond this threshold, the capacity of the powerline will need to be increased. The study assessed the cost of this first 20 MW section at $32 million, an amount that will subsequently be adjusted upward.

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Establishment of the Coopérative d'énergie renouvelable de Lamèque

While the feasibility study was being carried out, the interim committee proceeded with the creation of the new co-operative charged with developing the wind-generated power.

The Coopérative d'énergie renouvelable de Lamèque was registered early in 2002. Its first general meeting took place in June of that year. The members of the new co-operative are co-operatives (consumers, credit unions, producers) and municipalities. Other types of organizations were solicited but failed to respond. The qualifying share is $1,000. Membership is not open to the general public, but consideration is being given to this for the future. The board of directors has seven members. The by-laws provide that the board can have between three and nine members.

The co-operative currently comprises 14 corporate members. Over time, the members represented on the interim committee have been joined by:

  • Co-op Atlantic
  • Caisse populaire de Caraquet
  • Coopérative Régionale de la Baie
  • City of Shippagan
  • Caisse populaire de Tracadie
  • Village of Ste-Marie-St-Raphaël
  • Société coopérative de Paquetville
  • Village of Neguac
  • Caisse populaire Neguac
  • Société coopérative de Caraquet

Thus, the co-operative boasts four municipalities among its members. Since these municipalities are corporations, they are not legally prevented from being members of a co-operative in New Brunswick, as is often the case elsewhere in Canada.

Choice of co-operative formula

The co-operative formula was a natural choice, in that the project is supported by the Lamèque co-operative movement, which has been in place for 60 years and has a demonstrated capacity for cooperation. In addition, the Acadian co-operative movement has provided its support, and administrative support has been readily accessible, notably through the contribution of Melvin Doiron, a co-operative development consultant, with his expertise in drafting the rules and by-laws.

Mission of the co-operative

Since day one, the project has been in sync with the Acadian co-operative movement, and this connection can be found in the development process. The co-operative has nonetheless taken the name Lamèque because the project is promoting development on the island of the same name. However, in the minds of the proponents and their partners in the co-operative community, this project represented—and continues to represent—an experiment and a pilot project that will eventually allow the creation of several other co-operatives of the same type. This concern is reflected in the mission:

The Mouvement coopératif de l'Île de Lamèque seeks to eventually create a network of wind farms in New Brunswick by developing, on a trial basis, the island's abundant, renewable and environmentally-friendly energy source while at the same time generating significant economic spin-offs for the community.

How the initial idea has evolved since the feasibility study

On the basis of the feasibility study, the proponents made three important observations:

  • First, in view of the regulations governing hydro-electric distribution currently in effect in N.B. and the structure of the network, it is not possible to get around this factor and, thus, to generate electricity for the benefit of the members of the co-operative.
  • Second, the project's financiers will have to have very deep pockets, so the project will not be able to be financed locally.
  • Third, the wind power generation sector is far more complex than originally thought, which means that experienced partners will have to be solicited for their expertise.

These three observations are important for the project to be able to proceed, and they led to some fine-tuning of the initial ideas.

The former director of the Caisse populaire des Îles, Marcel Lanteigne, notes: "Originally, the thinking was that electricity could be produced for local use, and that as many people as possible could be invited to join, with everyone receiving rebates on their hydro bill. But we came to realize that it wasn't so simple. The reality is quite different. The investments required are very large: in the order of $32 million for the first 20-MW section, or $1.6 million per MW. For a 100 MW project, that means an investment of $160 million. […] For a small municipality like ours, that is one heck of a lot of money."

The proponents unanimously concluded that they needed to look outside the co-operative movement for partners who could give them both the necessary expertise and the financial capital to develop this project. The Hélimax consultant played a key role in this, since he was the partner most familiar with the wind power field. Accordingly, the business strategy was adjusted and re-jigged. The idea now was to find private partners that the co-operative could hook up with to develop the project. In the search for these partners, Hélimax helped put the various parties in contact with one another.

Consideration was not given to seeking capital within the co-operative community because the amounts required for the investment seemed too high for the Acadian co-operative community.

After that, the co-operative confined its activities mainly to meeting with potential partners, negotiating, liaising with the local population and safeguarding the project's original objectives at a time when financial high-rollers were arriving on the scene.

In addition, the co-operative bid on an initial 20 MW tender call issued by Power NB in 2004. The winning bid was submitted by a competitor with a project on Grand-Manan Island in the Bay of Fundy.

Co-operative—private enterprise partnership

The co-operative became a partnership on a number of levels. First, it has its special partners from the Acadian co-operative community. The co-operative community is also closely linked with the municipal sector.

The innovative aspect of this project's partnership is that private firms from outside the area have been tapped as partners. And they have much deeper pockets than the local partners. Mr. Guignard tells us how this partnership has taken shape:

Following the negotiations that led to the choice of the partners, the co-operative decided to do business with two outside firms: the first a public works firm from N.B. and the second a California outfit that specializes in wind power development. The three partners agreed to form a commercial corporate enterprise that would go by the name of the Lamèque Wind Project. When the windmills are commissioned, the enterprise will be called the Wind Energy Park of Lameque Ltd.

Redefinition of the co-operative's role

In this partnership, the co-operative becomes a minority shareholder. Nevertheless, it continues to play a leadership role in all matters involving its local installation, as well as in relations with the population of Lamèque Island. It was the co-operative that was the driving force behind the project, that commissioned the feasibility study, that negotiated the agreements with the property owners and that has earned the trust of the public at large. Mr. Guignard explains: "In the partnership, the co-operative acts as go-between with the local population on behalf of the private partners. The co-operative keeps the peace, so long as the partners abide by the agreement."

In the eyes of the project proponents, the co-operative is there to stay and will continue to play a leadership role. The private partners have exerted pressure to eliminate it, but the proponents are determined not to bend on this point. The outside partners are obliged to go through the co-operative. It is the co-operative that concluded agreements with the owners, and there is no getting round it if windmills are to be put up on the island.

The co-operative did not sign an exclusivity agreement. It can eventually restructure its partnership for the subsequent development phases. Through this wind power co-operative, the proponents maintain control over windmill development and its benefits for the local community.

Basic financing

The co-operative's operations have been modest to date, given that the feasibility study was commissioned before the co-operative was even created and that it was the City of Lamèque that submitted the official application. Indeed, only municipalities may apply for funding under the GMF. However, the co-operative made $75,000 from the sale to the private partners of part of the rights to the feasibility study.

Currently, the co-operative is working with its partners and the City of Lamèque to secure $430,000 in financing for phase two of the project, which follows on the heels of the feasibility study. Half of this funding is being sought via a grant application submitted by the municipality to the GMF, with the remaining half coming from the project partners' contribution. This amount will cover the cost of developing and preparing proposals to obtain a contract with NB Power.

Work is also proceeding on a financial package for phase three of the project, namely an initial series of windmills with 20 turbines capable of generating a total of 32 MW, valued at $38 million.

The basic financing includes a 53% stake on the part of the private partners. A further $7.8 million will be paid by the GMF half in the form of a loan and half in the form of a grant to the City of Lamèque, which also represents the contribution by the co-operative. The rest of the financing will be borrowed by the Lamèque Wind Project consortium.

The co-operative's revenues, once the project is up and running, will come from annual royalties of $4,000/ megawatt.

Co-operative's new role

The co-operative has thus become a local development entity and not the producer. Its role consists in maximizing the local and regional spin-offs from the project, liaising between the local community and the outside investors and ensuring that the interests of the island's population are respected. Mr. Guignard has this to say: "The co-operative's role is to maximize positive spin-offs for the local community. This aspect caused difficulties in the negotiations with the private partners, whose aim is to maximize the return on their investment. The role of the co-operative was very important in this negotiating phase. The co-operative acts as a wall between the private sector and the community and ensures that our community will not be left in the dark."

The main activities in which the co-operative is currently engaged can be summed up as follows:

  • Searching for partners and negotiation of partnership clauses.
  • Searching for financing in cooperation with its partners.
  • Representation activities with governments.
  • Participating in NB Power tender calls in conjunction with its partners.
  • Meeting with owners and negotiating contract clauses.
  • Information activities: media, population, regional co-operative community, etc.
  • Working meetings with private partners.
  • Lobbying political officials.

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Issues

Support programs

The co-operative obtained the bulk of its support from the GMF, thanks to intervention by the municipality.

The Green Municipal Fund (GMF) was established by the Government of Canada in its 2000 budget to stimulate investment in innovative municipal infrastructure projects. The Fund supports partnerships, leveraging both public and private sector funding to encourage municipal actions to improve air, water and soil quality, and to reduce greenhouse gas emissions (FCM, 2005).

The GMF helped pay for the feasibility study with a grant of $100,000. A second round of financing in the form of a grant and guaranteed loans is imminent, making it possible to bid on a second tender call. This financing is considered to be very helpful by the proponents.

In 2002 the Lamèque Wind Project also received $40,000 in support from Power NB to assist it in wind-measuring activities.

Innovation, creativity and human capacity building

The development process for this project shows that the proponents took an innovative approach to a little-known sector. Over time, the challenge proved to be much bigger than expected. Far from backing off, they forged ahead in search of the missing resources. Mr. Guignard allows that he learned a great deal in this process. He played a major role in acquiring the technical data associated with the project. His engineering background served him in good stead during this process. He is the one with the capacity to analyse the technical information and command respect from the partners, who see the proponents as novices. He played an important role in the negotiations.

But the area where the proponents learned the most was in the negotiations with the energy players. Representation and negotiations were the co-operative's main activities. Mr. Larocque feels that "the proponents were very strong negotiators. […] You have to know how to position yourself and take the time to consider a number of options."

To a person, the proponents express great satisfaction with the process. It is felt that the synergy among the local co-operatives makes for a more cohesive approach. The proponents are also very satisfied with the experience they have acquired in a field that was completely new to them, experience that can be shared with the co-operative community with an eye to developing other wind farm projects.

Local leadership

Right from the project's earliest days, Paul Lanteigne has been leading the way. His initiative, persuasiveness, infectious enthusiasm, steadfastness, representations and willingness to answer queries and give generously of his time have characterized his leadership role. He has been ably assisted by Henri-Paul Guignard of the City of Lamèque, who has lent his enthusiasm and professionalism to the co-operative.

This leadership has been aided by the tireless support of the three local co-operatives and by the crucial assistance of the municipality. By and large, the population has confidence in its local co-operatives.

Membership

That the local co-operatives and the municipality are on board goes without saying, but the motivation of the members outside Lamèque Island is a bit different. According to Melvin Doiron, who is linked to the project through the Coopérative Régionale de La Baie, the Acadian co-operative community has a keen interest in this project, would like to see it expanded and is waiting to see how things go before committing itself one way or another. He states: "In my co-operative in La Baie, we see ourselves more as an auxiliary member, an observer member." That is the case of members outside Lamèque Island, who are supporting the project out of a sense of co-operative solidarity and interest in the possibility of expanding the undertaking to other communities.

Expanding the membership, in fact, has to do with opening the project up to individuals and households, and, thus, with the use link question. Since the member co-operatives and municipalities outside Lamèque Island are on board out of co-operative solidarity and an interest in developing a project in their own neck of the woods, it is unlikely that the membership will expand much in this direction.

Economic development spin-offs

In addition to the royalties of $4,000 per MW per year and its share of the profits on the stocks it owns, the Lamèque community will benefit from the spin-offs from the contracts to be awarded for site maintenance. The property owners will receive from $2,000 to $2,200 a year over 25 years for leasing their site. The municipality will receive taxes on the production of electricity, and jobs will be created in connection with the windmill interpretation centre (if it gets off the ground, that is).

Potential for reproducing the model

The Lamèque experience is of significant interest to the co-operative community. Mr. Guignard has this to say: "There are other co-operatives that are very interested in the project and that could develop their own renewable energy co-operative project. Our expertise could be of use to them."

Given Power NB's growing interest in developing its policy on producing electricity from renewable sources and the unveiling of a wind map by the Université de Moncton (the map indicates the wind potential for the entire Atlantic coast) (Hachey, February 3, 2005), the Lamèque experience is taking on strategic importance for NB's Acadian communities.

During an address before the members of the Coopérative de développement régional Acadie in March 2005, Paul Lanteigne gave this explanation: "Wind power is growing rapidly. Everyone wants their piece of the pie. We will need to be careful. […]Wind power is a homegrown resource and energy source. We are capable of taking care of our own affairs." (Dalhousie, 2005).

The co-operative model and how it has taken shape as the project evolves

The rules governing the distribution of electricity and the partnership with private enterprise are leaving a special stamp on the co-operative project. The members' current link with the co-operative is mainly at the investment level. If there is to be a genuine, use-oriented link, the co-operative must be at once the developer and producer of wind-generated energy in order to be able to resell its output to its members.

The way things are evolving at the moment, the co-operative formula is taking on a special dimension. First, the co-operative cannot sell the product it plans to develop directly to (and for the benefit of) its members, and second, it is joining a partnership that has taken the form of an investor-owned business, in which it holds a minority stake. In this configuration, the co-operative has shifted away from an authentic co-operative model. Thought will have to be given as to how the co-operative community can oversee the development of this output from a financial standpoint and in relation to the distribution rules.

The process is seen as a pilot project by the proponents and by the partners in the Acadian co-operative communities. Questions are being raised concerning the appropriateness of the co-operative option, given how the project is evolving. Marcel Lanteigne explains: "Where things stand now, it is hard to say whether it was the best formula. The future will tell us whether or not it was the best choice. An NPO could just as easily have done the trick. On the other hand, since several members are co-operatives, it's a more familiar formula from a management standpoint. The "one member, one vote" rule necessarily makes for a more democratic process than one would find under a private enterprise formula, where it is "one share, one vote" and there are no limits on the number of shares."

The use link

Initially, the plan was to pro-rate the member royalties to their consumption of electricity. A member such as the Association coopérative des pêcheurs de l'Île de Lamèque ltée, whose processing plant consumes a great deal of power, would have received royalties proportional to its consumption. Individual members, in households, also could have belonged to the co-operative according to this formula.

The way things stand today, there is no opportunity for a use link between the production and consumption of electricity. The link lies in promoting the project for economic development and the production of green energy. More specifically, the link stems from the royalties to be pocketed by the co-operative, for which the modes of redistribution have yet to be specified in the general by-laws. For the members, the use link is something that needs to be debated during future meetings, because it has not yet been clearly defined. In some respects, the current modus operandi is more akin to that of an NPO.

The Toronto Renewable Energy Co-op encountered the same obstacle and decided that its members would be entitled not only to vote and take part in meetings, but also to receive dividends. The motivation to become a member stems from the desire to promote renewable, environmentally-conscious energy production (TREC, 2002).

Keeping the public informed

In the beginning, the interim committee sought to inform the population about the project before it even began work on the feasibility study. The residents of Lamèque were invited to an information session. There have been no public meetings since. The information has been disseminated informally in various ways and at various meetings.

The windmill project has yet to face any direct opposition, but the proponents believe that the size of the project will elicit fears. This type of project generally encounters opposition once it has been announced, and the opposition comes from residents living near the site.

In Lamèque, the proponents have made sure to find more remote sites in the centre of the island. Facilities will be at least 400 metres away from the closest home. What's more, the owners of the lots where the towers are to be erected have each been consulted individually.

The strategy to manage the fallout from any social concerns will consist in providing good information. A while ago, the municipality had to manage a conflict that arose when citizens raised concerns over an odour problem. It saw its way through by giving out objective and sufficient information and making itself available to respond to any request or question concerning developments in the matter.

Financial capacity

Initially, the proponents felt that they needed to seek financing from the private sector. The financial capacity of the Acadian co-operative network was not explored, but it may yet be for another project or a subsequent phase involving expansion on Lamèque Island. Melvin Doiron is confident in the possibilities surrounding the co-operative community and the Acadian community in general: "There is strength in numbers, but it is still surprising to see how relatively easy it can be to secure an initial investment to finance 25% of such a project. […] Expanding the project on an Acadian and Francophone basis could be done in a spirit of solidarity and through the network of co-operative organizations already in place. This strategy would be based on a use link, which could be defined for an expanded and diversified membership."

Financial prudence

The project is seen as high-risk by its proponents. It carries with it solid potential and a high risk because this is a new field, the expertise is external and the required investment is considerable. The members of the co-operative did not want to commit sums that could leave their respective organizations in a precarious position. However, this risk is being mitigated by the government through the GMF.

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Lessons Learned

Search for expertise

The local community and co-operatives in Lamèque did not initially have any expertise in the field of wind power production. They did have the necessary organizational capacity as well as a very cohesive relationship among the individuals, municipal institutions and co-operatives involved. They went out and got the information and expertise they needed. They taught themselves about the wind power sector and how to negotiate with private-sector partners who are active in areas where they had not had the opportunity to work previously. And the expertise they acquired can now be used to help others develop wind power projects. In this regard, Marcel Lanteigne has this to say: "We have assumed a leadership role in the Acadian coast co-operative community along with expertise that can contribute to other projects or other development phases of the current project. We have developed a degree of expertise and a network of contacts that can be put to good use in other projects."

The experience has demonstrated the proponent's capacity to tackle a new field in which they previously had no frame of reference and no prior experience, and to succeed in moving ahead with a large-scale project despite their relatively modest means.

Strategic role played by City of Lamèque

In Lamèque, the three founding co-operatives figure prominently in the economic life of the municipality, in that they are the main source of employment. The collaborative ties between the co-operatives and the municipality are close and go back a long way. In addition, individuals can belong to one or more co-operatives and be involved in the municipality. Municipal representatives can also belong to the co-operatives and be involved in running them. In view of these links and the economic importance of the co-operatives, it is natural for the City of Lamèque to support co-operative initiatives within its territory.

According to Mr. Guignard, the project has had a snowball effect on the municipality, which has prepared applications for funding under the FCM's GMF. It sees this project as a generator of economic spin-offs. It also has an interest in a strategic file having to do with municipal reforms underway in N.B. This file is also an opportunity to call on the provincial government to annex the territory where the windmills are to be erected. The municipality can thus have better control over windmill development on Lamèque Island. In fact, wind power represents an opportunity for local communities. Technology advances in the field of wind power have made it possible to develop this energy in a large number of regions that have sufficient wind resources. Many wind power projects—commercial in nature but often small in size (less than 20 MW)—are supported by their local community and organized along the lines of a co-operative, an NPO or privately-owned wind farms (Gipe). Such projects are found in parts of the United States and in certain European countries. In Canada, there is just one project in Ontario.

Lastly, the municipality would like to develop a wind power interpretation centre on Lamèque Island. It has experience in this type of operation (it already runs Lamèque Eco-Park, an interpretation centre that showcases the Island's rich natural environment).

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Conclusion

In recent years, the strategic directions pursued by NB Power did not seem to include the development of renewable energy sources. However, public debate upped the political pressure on the Crown corporation, which announced in a press release on June 29, 2005 that it would be purchasing up to 400 MW of wind power by the year 2016. The press release was issued on the same day as the one issued by Hydro-Québec, announcing a new objective of 2,000 additional MW for a total of 3,500 by 2013. These simultaneous announcements confirm Canada's growing interest in wind power.

Wind power has the wind in its sails and is becoming an energy source to be reckoned with. In New Brunswick, the Lamèque project is being seen as breaking new ground, although no towers have been erected as of the writing of this report. The Coopérative d'énergie renouvelable de Lamèque is well positioned to be able to respond to future tender calls in conjunction with its partners.

The process carried out to date has been worthwhile, because the experience has enabled the proponents to significantly develop their capacities in a field that had been unfamiliar to them. They have learned a lot, and their experience may prove beneficial to others interested in developing similar wind power projects.

The initial objectives were to develop activities that could spur the local economy. Wind power is seen as an opportunity, as a way of taking advantage of an abundant local resource that has gone unused. The original idea had been to use the output locally while remaining linked to the public network, but the regulations governing distribution and organisation at the provincial level prohibits such a link. Accordingly, this direct relationship with users belonging to the co-operative is less likely to develop. What we are seeing, though, is the link stemming from the economic spin-offs and rebates. That said, the issue of how the profits are to be redistributed has yet to be resolved. The question remains open, and will be considered once the windmills have been commissioned and the royalties start coming in.

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Bibliography

Internal documents of the Coopérative d'énergie renouvelable de Lamèque

Financial statements, at June 30, 2003.

Financial statements, at June 30, 2004.

Lamèque Wind Power Project, electronic slide presentation.

Administrative by-laws, February 26, 2002.

Membership list, March 31, 2005.

Interviews

Melvin Doiron, President, Coopérative de développement régional- Acadie, interviewed on June 21, 2005.

Henri-Paul Guignard, Lamèquecity manager and member of the board of directors of the Coopérative d'énergie renouvelable de Lamèque, interviewed on June 21, 2005.

Caroline Farley, Communications Coordinator, TechnoCentre éolien Gaspésie-les-Îles, interviewed by phone on July 5, 2005.

Marcel Lanteigne, former Director of the Caisse populaire des Îles and member of the board of directors of the Coopérative d'énergie renouvelable de Lamèque, interviewed on June 20, 2005.

Paul Lanteigne, Director of the Société coopérative de Lamèque and President of the Coopérative d'énergie renouvelable de Lamèque, interviewed on June 20, 2005.

Réginald Larocque, Director General of the Association coopérative des pêcheurs de l'Île and member of the board of directors of the Coopérative d'énergie renouvelable de Lamèque, interviewed on June 22, 2005.

References on the founding co-operatives

Acadie.net, Le Mouvement des caisses populaires acadiennes dévoile sa nouvelle signature corporative, November 8, 2004, [On line], (June 30, 2005).

Caisse populaire des Îles; 2004 Annual Report.

Chiasson, Zénon and Martin Paulin (1994). Un demi-siècle d'effort collectif, Association coopérative des pêcheurs de l'île Lamèque, 178 pages.

Co-op Atlantic, Coop Atlantique en bref, [On line] (July 2, 2005).

Conseil Canadien de la Coopération (2005). "Une coopérative de développement régional acadienne voit le jour", Cooppresse, vol. 27, no 3, 9.

Habitat des pionniers inc., Board of directors report, March 9, 1990.

Martin J. Légère. Le mouvement des caisses populaires acadiennes du Nouveau-Brunswick, Acadie.net, (October 22, 2003). [On line], (July 2005).

Société Coopérative de Lamèque, Annual report, as at December 25, 2004.

Société Coopérative de Lamèque, Historique, [On line], (June 30, 2005).

General references

Danish Wind Industry Association, Did you know?, [On line], (July 4, 2005).

Lamèque Eco-Park, Home page, [On line], (July 11, 2005).

Federation of Canadian Municipalities (FCM), "Green Municipal Fund", [On line], (July 11, 2005).

Gipe, Paul. Community Wind Slide Show, [section >Articles>Feeds Laws], [On line], (July 4, 2005).

Hélimax, Environmental Feasibility Study on LamèqueIsland, Financial Analysis for a Wind Power Project on Lamèque Island, Projects and Achievements, no 051 and 052, 2002 [On line] (July 10, 2005).

Lyrette, Étienne and Lyrette Trépanier. « Les dynamiques sociales engendrées par l'implantation du parc éolien le nordais », VertigO - La revue en sciences de l'environnement sur le WEB, Vol 5, No 1 , May 2004, [On line] (July 2005).

New Brunswick, Acts and Regulations, Chapter C-22.1, Co-operative Associations Act, section "Definitions", Acts consolidated to June 29, 2005, 52 pages.

New Brunswick, Acts and Regulations, Chapter M-22, Municipalities Act, Acts consolidated to January 18, 2005, 200 pages.

Peace Energy Cooperative, About Peace Energy, [On line], (July 5, 2005).

Statistics Canada, Community Profile 2001, Demographic statistics for City of Lamèque, New Brunswick, [On line], (June 30, 2005).

TREC, Offering Statement of TREC, June 15, 2002 [On line] (July 4, 2005).

Vallillee, André. 2003; Canadian Energy Co-ops, BC Institute for cooperative studies, Energy Co-op, Summer 2003, [On line] (July 5, 2005).

Vallillee, André, 2003; What is an energy co-operative?, BC Institute for cooperative studies, Energy Co-op, Summer 2003, [On line] (July 5, 2005).

Media review

Canadian Wind Energy Association (CanWEA), Canada's Wind Farms, [On line] (July 6, 2005).

Dalhousie, March 14, 2005, "Le potentiel éolien du N.-B. attire la convoitise étrangère", L'Acadie Nouvelle, Actualités, page 3.

New Brunswick Power, Press Release (05/06/29); NB Power seeking up to 400 MW of wind energy, [On line] (June 30, 05).

Hachey, Steve, February 3, 2005; "Dévoilement de l'Atlas des vents", Acadie Nouvelle, page 5.

Hachey, Steve, December 20, 2004, "Une décision de plusieurs milliards $"; Acadie Nouvelle, Nouvelles provinciales.

Hachey, Steve, March 15, 2005; "Avenir de la centrale nucléaire de Pointe Lepreau", Acadie Nouvelle, Nouvelles générales, p. 8.

Hydro-Québec, Press Release NB 824 (05/06/29);  Hydro-Québec lancera un appel d'offres pour l'acquisition de 2000 MW additionnels d'énergie éolienne au Québec, [On line] (June 30, 05)

Ma Tante Pénélope, May 2000, "Énergie éolienne : Les coopératives de la péninsule y croient", Le Coopérateur, page 12.

Paulin, Sylvie, June 12, 2002, "Paulin, Sylvie, June 12, 2002, "Naissance d'une coopérative d'énergie éolienne à Lamèque", Acadie Nouvelle, Nouvelles générales.

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