Evaluation of the ecoENERGY for Aboriginal and Northern Communities Program

1.2.1 Background and Description

AANDC has a long history of supporting the development of renewable energy and energy efficiency for on-reserve Aboriginal and northern communities.

The ecoENERGY program, introduced in 2007, grew out of the previous 2003-2006 Aboriginal and Northern Community Action Program. From 2007-2011, the ecoENERGY program supported over 96 communities and funded over 110 projects. Within the 110 funded projects, 41 were undertaken in remote "off-grid" communities that are not connected to a larger, region-wide grid, but rather have small micro-grids that disperse energy from a power source (usually a diesel generator) to buildings in the community. It is anticipated that the 110 projects will result in the displacement of a minimum of 1.3 megatonnes (Mt or million tonnes) of greenhouse gas (GHG) emissions over their 20-year lifecycle.

The 2010 Clean Energy Review, led by Natural Resources Canada, supported the continuation of the ecoENERGY program, finding that it had successfully enabled the identification of local energy resources to deliver economic and environmental benefits within Aboriginal and northern communities. The program was subsequently renewed from 2011-2016. Its primary objective was to reduce GHG emissions by over 1.5 megatonnes. The program intended to do so by supporting the development and implementation of renewable energy projects that reduced or displaced the natural gas, coal and diesel generation of electricity and heat.

The renewed program was intended to address major energy challenges for Aboriginal and northern communities, including high and fluctuating costs of energy, occasional brown-outs, aging and inefficient infrastructure, and off-grid isolated communities reliant upon emissions-intensive diesel fuel systems. To address these challenges, ecoENERGY has supported Aboriginal and northern communities in their attempt to reduce greenhouse gas emissions by funding the integration of proven renewable energy technologies such as residual heat recovery, biomass, geothermal, wind, solar and small hydro. The program provides two streams of funding support, including:

• Stream A: Funding to support feasibility studies of larger renewable energy projects (up to $250,000 funding for projects that result in greater than 4000 tonnes of GHG reductions over the projects' lifecycle).
• Stream B: Funding to support the design and construction of renewable energy projects integrated with new and existing community buildings (up to $100,000 per project).

The program is delivered centrally in the National Capital Region by staff in the Environment and Renewable Resources Directorate, within AANDC's Northern Affairs Organization. Public Servants review applications using eligibility criteria and then fund a third party technical review of eligible projects to determine potential GHG reductions. Following these assessments, a Project Review Committee comprised of representatives from Northern Affairs Organization, other departmental sectors, and external advisors consider all eligible projects and recommend the most appropriate projects for funding. The Director of the Climate Change Division then approves projects for completion, based on funding levels available.

1.2.2 Objectives and Expected Outcomes

At the departmental level, ecoENERGY is one of six sub-programs^{Footnote 2} under AANDC's broader Infrastructure and Capacity program area. These six sub-programs have a collective expected result that "First Nations communities have a base of infrastructure that protects the health and safety and enables engagement in the economy". The programs support the Land and Economy Strategic Outcome: "Full participation of First Nations, Métis, Non-Status Indians and Inuit individuals and communities in the economy".

The ecoENERGY program seeks to achieve the following results:

  Immediate Outcomes:

1. Aboriginal and northern communities have viable renewable energy projects that are under development (Stream A)
2. Aboriginal and northern communities have energy projects integrated with new and existing community buildings (Stream B)
   
   Intermediate Outcomes:
3. Reduced greenhouse gas emissions in Aboriginal and northern communities
   
   Ultimate Outcome:
4. First Nations communities have a base of infrastructure that protects the health and safety and enables engagement in the economy
   
   Strategic Outcome:
5. Full participation of First Nations, Métis, Non-Status Indians and Inuit individuals and communities in the economy.

This evaluation assessed the extent to which the ecoENERGY program is achieving these results.

1.2.3 Program Resources

Through the Aboriginal and Northern Community Action Program, AANDC provided $30 million over three years (2003-04 to 2005-06) to build the capacity of Aboriginal and northern communities to undertake energy efficiency and renewable energy projects. In 2007, through Government of Canada's Clean Air Agenda, AANDC received $15 million over four years (2007-08 to 2010-11) to implement the ecoENERGY for Aboriginal and Northern Communities Program. The program funded community energy planning, integration of small renewable technologies into community buildings and feasibility work for larger renewable energy projects.

The current ecoENERGY program was renewed in 2011, and received $20 million over five years (2011-12 to 2015-16). The program funds the integration of small renewable technologies into community buildings and feasibility work for larger renewable energy projects. As the ecoENERGY program has developed, it has increasingly focused on funding off-grid Aboriginal and northern communities.

From 2011 to 2014, the program spent an average of $850,000 per year on salaries and employee benefits, and $330,000 on operation and maintenance,^{Footnote 3} in order to distribute $2.8 million in grants and contributions to approved recipient communities.

As of April 1, 2014, program activities are supported by the Terms and Conditions of two Transfer Payment Program Authorities:

• Contribution for promoting the safe use, development, conservation and protection of the North's natural resources and promoting scientific development; and
• Contributions to support the construction and maintenance of community infrastructure.^{Footnote 4}

Project funding is allocated to approved recipients using Contribution Agreements. Any ecoENERGY-funded project is included in existing agreements. Contribution Agreements are prepared by the program staff at Headquarters for any recipient community that does not already have one in place.

2.2.1 Considerations, Strengths and Limitations

The program tracked the necessary data to support its Performance Measurement Strategy. This allowed evaluators to assess the program's performance over the last three years. Recent evaluation work completed for AANDC's First Nation Infrastructure Fund, the Strategic Partnership Initiative, and Investments in Economic Development also allowed evaluators to utilize additional interview notes and case study notes where the ecoENERGY program was specifically mentioned to support this evaluation.

Finding 1: There is a continued need for the Government of Canada to reduce GHG emissions.

The ecoENERGY for Aboriginal and Northern Communities program was developed to facilitate the integration of proven renewable energy technologies in Aboriginal and northern communities in order to reduce GHG emissions.

Renewable energy is secured from natural resources that are perpetually replenished: it is inexhaustible, sustainable energy that comes in many forms such as moving water (e.g., rivers and tides), wind, the earth and sunshine.^{Footnote 5} Some of the more recognizable forms of renewable energy include:

• Solar: solar photovoltaic, solar heating and concentrated solar power;
• Wind: on- and off-shore;
• Hydro: run-of-the-river and reservoir;
• Ocean/marine: including wave and tidal energy^{Footnote 6};
• Geothermal; and
• Bioenergy: includes biofuels and biomass that can be open-loop (i.e., generated from forests and wastes) or closed loop (i.e., generated from dedicated energy crops); biofuels and biomass are renewable resources only if the rate of their consumption does not exceed the rate of their regeneration.^{Footnote 7},^{Footnote 8}

The ultimate objective of the ecoENERGY program is to harness the above mentioned renewable energy technologies in order to decrease GHG emissions. This objective is consistent with the internationally accepted conclusion that GHG emissions negatively impact global climates and therefore need to be reduced. According to the most recent Climate Change Performance Index (2014) published by GermanWatch and the Climate Action Network in Europe, no single country is on track to prevent dangerous climate change.^{Footnote 9} Despite significant investments in renewable energy, Canada, China and the United States rank poorly on the Index, with Canada faring the worst of western industrialized states.^{Footnote 10}

According to Canada's Emissions Trends 2014 report, Canada's emissions of CO2 have been steadily increasing since 1990 and, if no regulated action is taken, are expected to reach 727 megatonnes by 2020.^{Footnote 11} The remaining gap between the projection for 2020 and Canada's GHG emissions target under the 2009 Copenhagen Accord is estimated to be 116 Mt CO2 eq as demonstrated in the following historical graph.^{Footnote 12}

The following consequences are highlighted as potentially impacting Canadian communities if GHG emissions are not curtailed:^{Footnote 14}

Environmental impacts

• Overall average annual temperatures are expected to increase.
• Global warming will decrease snow, sea ice and glacier coverage, resulting in rising sea levels and increased coastal flooding. Rising temperatures will also thaw permafrost in the Arctic.
• Storms and heat waves are likely to increase in frequency and severity.
• Many wild species will have difficulty adapting to a warmer climate and will likely experience greater stress from diseases and invasive species.

Human health impacts

• People living in Canada's northern communities, and vulnerable populations such as children and the elderly, are expected to be the most affected by the changes.
• Increased temperatures and more frequent and severe extreme weather events could lead to increased risks of death from dehydration and heat stroke, and injuries from intense local weather changes.
• There may be an increased risk of respiratory and cardiovascular problems and certain types of cancers, as temperatures rise and exacerbate air pollution.
• The risk of water-, food-, vector- and rodent-borne diseases may increase.

Economic impacts

• Agriculture, forestry, tourism and recreation could be affected by changing weather patterns.
• Human health impacts are expected to place additional economic stress on health and social support systems.
• Damage to infrastructure (e.g., roads and bridges) from extreme weather events is expected to increase.

As such, at a national level, there is a definite need for programs like ecoENERGY that contribute towards the reduction of GHG emissions in Canadian communities.

Finding 2: There is a continued need to fund renewable energy and energy efficient projects in Aboriginal and northern communities that: 1) replace diesel systems; 2) off-set high energy costs; and 3) support economic development.

Although the main objective of the ecoENERGY program has been to reduce GHG emissions, for communities that have submitted project proposals, the need for developing renewable energy technology is more personal. Communities are less concerned about an overall reduction of GHG emissions and instead are highlighting that there is a need for renewable energy solutions that reduce their dependence on diesel systems, that off-sets their high energy costs and that supports economic development.

1) Off-grid communities undertaking renewable energy projects to reduce their reliance on diesel generators

As reported by the Department, there are 292 off-grid communities in Canada, and more than half (167) are Aboriginal or northern communities, with 77 off-grid communities and diesel dependent communities^{Footnote 15} above the 60th parallel and 90 off-grid communities south of the 60th parallel.^{Footnote 16} For these communities, renewable energy technology is being harnessed to reduce their dependence on diesel as the transportation, storage and consumption of diesel is expensive, poses risks for contamination, creates noise pollution and negatively impacts local air quality. The costs are well beyond what most Canadians pay for a kilowatt hour of electricity. Additionally, Aboriginal and northern off-grid communities are particularly vulnerable to climate change. Their incomes tend to rely on the land, water and other natural resources, and rising temperatures have increased the cost and difficulty of diesel generation for communities who use ice roads as the primary method of diesel transportation.^{Footnote 17 Footnote 18 Footnote 19 Footnote 20 Footnote 21 Footnote 22}

AANDC funds the supply of diesel to off-grid reserves to support electricity and heat generation. Although the exact numbers could not be calculated due to financial coding restraints, these costs are estimated to be high due to the need for transporting fuel by air, sea and winter roads. For example, the Ontario regional office estimates that since 2005-06 the fuel freight differential, provided to communities to address fuel pressures related to remote electricity generation, totaled $46.8 million dispersed to 25 off-grid communities. Although the price of fuel has fluctuated over the years, AANDC has experienced a particularly large funding pressure from 2006 to 2009 when off-grid communities needed to request additional funds to support the rising cost of diesel fuel. These funding pressures may continue into the future as the cost of diesel in northern Ontario is projected to increase by 40 percent in the next 10 years.^{Footnote 23}

In addition, provincial/territorial utilities also experience high costs to provide power to off-grid communities within their service area. These costs are particularly high in the North. According to the National Energy Board, "the North accounts for only about 0.3 percent of Canada's population and energy use," but "with a population of just over 100,000 dispersed over 3.5 million square kilometers, the costs and logistics of energy distribution is a major issue."^{Footnote 24} For example, Nunavut is completely dependent on imported diesel to support everyday living. The Nunavut power utility, Qulliq Energy Corporation, provides power to over 33,000 people in 25 communities, all of which are serviced by isolated diesel grids spread out across approximately two million square kilometers.^{Footnote 25} In 2009-10, in order to provide energy to its customers, Qulliq Energy Corporation utilized 45 million litres of diesel fuel at a cost of $39 million, or $1,181 per person.^{Footnote 26} The significant volume and cost of diesel fuel consumed in the generation of energy for Aboriginal and northern off-grid communities demonstrate a continued need to fund renewable energy projects that have the potential to dramatically reduce communities' use of diesel generators.

Diesel fuel is shipped to remote off-grid communities in the summer months and stored in tank farms for distribution and use throughout the year. The transportation and storage of diesel in communities also creates significant environmental issues as spills and leaks can cause contamination and impact local water sources and waterways.^{Footnote 27} Although the purchase and maintenance of fuel tanks are the responsibility of each community, when fuel tanks leak the contaminated site and potential environmental and health risks associated with the leak, it becomes the responsibility of AANDC. As a result of this risk, AANDC supports fuel tank upgrades and has provided an additional $80 million over the last five years to support the upgrade of older fuel tanks on-reserve and an additional $75 million will be allocated over the next four years.

Further compounding the energy issues facing off-grid communities is the growth in their electricity demand. Natural Resources Canada estimates that electricity demand in Canada's northern regions is growing at 1.5-2.0 percent per capita per year.^{Footnote 28} Increasing demand for electricity results in larger quantities of diesel being required by diesel-dependent communities in order to meet the needs of the community. Difficulties transporting diesel to remote diesel-dependent communities impact the ability of communities to meet increasing electricity demands and can result in power outages.^{Footnote 29} In many communities, the diesel-powered system cannot meet the demand placed on it, and fails, resulting in power outages. These power outages can last for a few hours or a few weeks and make the operation of community infrastructure such as schools, band offices and health centres very challenging.^{Footnote 30} Such power outages also restrict economic development in off-grid Aboriginal and northern communities as high energy costs and unreliable provision of power limits the effective operation of businesses and makes attracting investors particularly difficult.^{Footnote 31}

2) On-grid communities undertaking renewable energy projects to reduce electricity costs

Electricity prices for residential customers vary significantly across Canada. In regions such as Alberta, Saskatchewan and Atlantic Canada, residential electricity rates can be approximately double the cost charged in regions with significant hydro-electric resources, such as British Columbia, Manitoba and Quebec. For example, the average prices for residential customers for a monthly consumption of 1,000 kWh from 2010-2014 was 6.88⊄/kWh provided by Hydro Quebec, 7.47 ⊄/kWh provided by Manitoba Hydro and 8.57⊄/kWh provided by BC Hydro.^{Footnote 32} In contrast, the average price for residential customers over the same period and with the same usage was 13.32 ⊄/kWh provided by SaskPower, 14.60⊄/kWh provided by Nova Scotia Power and 15.06 ⊄/kWh provided by Maritime Electric in Prince Edward Island.^{Footnote 33} In addition, both SaskPower and Maritime Electric have higher service charges and/or energy charges for rural customers, making costs higher for rural customers, including many First Nations.^{Footnote 34}

These higher costs are consistent with information provided by case study interviewees, particularly those from Atlantic Canada who were able to significantly reduce their energy bills by utilizing solar panel technology. Interviewees identified that a key reason for communities to participate in the ecoENERGY program was to use renewable energy systems to reduce their electricity and heating costs. It became evident to evaluators that even on-grid Aboriginal and northern communities struggle with significant electricity and heating costs for band-owned and operated buildings. Many of these buildings are used extensively by community members and therefore draw electricity and heat for a substantial number of hours annually. For some communities, the high electricity costs in certain regions have severely impacted the community's operating budget limiting their ability to address other community priorities. Therefore, for some on-grid communities in regions with higher energy costs, there is a need for renewable energy systems to help off-set energy costs.

3) On-grid communities who are undertaking renewable energy projects as an economic development opportunity

The ecoENERGY program also provided a valuable opportunity for Aboriginal and northern communities who possess territory, or have access to crown land, that has the natural features necessary for larger renewable energy projects. For example, several large renewable energy projects, such as micro-hydro facilities and solar/wind farms, have been developed by communities with funding from ecoENERGY. These projects often provide on-grid communities with an opportunity to develop power purchase agreements with provincial/territorial utilities to sell the power they produce to the grid. These projects can provide significant income for communities that can be reinvested into other economic development opportunities or used to address other community needs. According to a Lumos Energy report completed for AANDC in 2012, "Large hydro also represents one of the most substantive types of economic development opportunity for First Nation, Métis and Inuit communities, during construction and in operation. Such developments tend to kick-start a range of spinoff economic activities, often in more remote and rural regions of the country. For [these reasons] it is timely and important for AANDC to study large hydro developments across Canada."^{Footnote 35}

However, these projects require significant funding to complete. The early stages of developing large renewable energy projects are particularly challenging as a large number of studies are required to establish the viability of the project. Communities often struggle to find funding sources for the exploratory phase, which is integral, as it produces the results that are used to attract additional funding partners.

Overall, the evaluation has found that there is a continued need for ecoENERGY funding for renewable energy projects to support the provision of energy and heat to reduce GHG emissions as well as to reduce diesel consumption and associated risks, to reduce costs and as an opportunity for economic development.

Finding 3: International examples demonstrate that there is a continued need for an ecoENERGY program that focuses on off-grid and northern communities.

Interviews with program management made it clear that the ecoENERGY program needs to shift its focus from funding a wide variety of projects across Canada to instead targeting communities with the greatest need for renewable energy solutions. As such, the program has been moving toward prioritizing project proposals received from remote, off-grid, diesel-dependent communities, which are located both in the northern portions of provinces and north of the 60th parallel. In order to identify whether this program evolution meets a need that the program should continue to address, evaluators relied on the literature review to provide best practices and lessons learned from the international arena.

The literature review found that since 2008, the United States government has made it a priority to develop a substantial renewable energy environment in the northern state of Alaska. It has infused significant financial and human resources, including $202.5 million for 227 projects since 2008 into the Alaskan state to advance renewable energy technology.^{Footnote 36} The Government completed a full assessment of each community, with a high-level snapshot of the least-cost options for electricity, space heating, and transportation for each community.^{Footnote 37} Additionally, in June 2008, a Diesel Efficiency Workgroup was formed to focus on reducing diesel fuel consumption in rural communities through generation and distribution efficiency measures.^{Footnote 38} A third-party evaluation of Alaska's Renewable Energy Fund in 2012 estimated that the first 62 projects funded will ultimately provide a net present value benefit of more than $1 billion over their lifetime. These projects cost $508 million.^{Footnote 39}

The key area to note from Alaska's experience is that the coordination of research and projects was completed on-location, by Alaska Energy Authority personnel. This was done to develop the capacity and accountability of the staff on-site, and to ensure that "Alaskans have access to energy information and a single location they can work with to resolve their energy challenges and opportunities." The intent of the Alaskan State government is to use the information collected by Alaska Energy Authority staff to inform future decision making. By encouraging the development of on-site staff, the Alaska Energy Authority "…concentrate[d] expertise in the governing bodies to allow years of well-informed policy and programming development."^{Footnote 40} A major partner in this work was the United States Office of Indian Energy, which focuses exclusively on the advancement of energy security in Indigenous American communities. The partnership of these stakeholders at the community-level allowed tribal governments to improve energy efficiency and facilitated their transition to renewable energy systems.^{Footnote 41}

The Alaskan government also forged strong partnerships with academic institutions and research centers, such as the Alaska Building Science Network,^{Footnote 42} to advance its renewable energy agenda. ^{Footnote 43} The Alaska Center for Energy and Power at the University of Alaska in particular developed a comparative database that identifies technologies options and limitations for each identified resource. Going forward, AANDC may be able to develop a similar database to identify appropriate technology options for Canada's northern communities in order to provide recommendations to communities seeking support.

Parallel to the Alaska experience, AANDC's remote and northern communities have had many high-quality energy plans developed over the years, but few have come to fruition. For Alaska, the answer was to "engage Alaskans in the solution and invite their active participation in the selection and ownership of their alternative energy sources."^{Footnote 44} Although AANDC has a significantly smaller budget than Alaska ($20 million over five years for all of Canada compared to $50 million per year for the state of Alaska alone), Canada could use the lessons learned from Alaska's experience, and better engage local stakeholders in the research and investments in targeted northern communities.

The literature review also confirmed that a focus on off-grid or rural communities for renewable energy system development is an international best practice, which has been followed by Australia, China, and Germany. In Australia, renewable energy programming^{Footnote 45} is predominately focused on off-grid communities that include indigenous communities.^{Footnote 46 Footnote 47 Footnote 48}

Historically China has preferred grid extensions, but has more recently focused on stand-alone (i.e. not grid-connected) systems that have gained favour as their reliability and affordability have improved. A particular focus has been on targeting remote and poverty-stricken minority settlements with a combination of hydro, solar, wind, geothermal, biomass and other technologies. China's reported key to success (99 percent of rural residents with electricity) is the Government's commitment to community-based planning and long-term funding.^{Footnote 49 Footnote 50}

In 2010, Germany developed the Renewable Energy Sources Act that provided for a full suite of incentives and subsidies supporting the deployment of renewable energy; this made Germany a leader in the transition to renewable energy. Although none of Germany's communities are "remote", the country's reported key to successful policy implementation was a focus on community ownership through cooperative initiatives.^{Footnote 51} Profits from community-owned renewable energy systems were directed into kindergartens, sport facilities, and gathering places.^{Footnote 52} Germany's experience affirms the utility for AANDC to continue to invest in supporting the development of renewable energy systems in community buildings as cost savings from public expenditures can be leveraged to provide additional community programs and services.

Further, the International Energy Agency highlighted that a successful renewable energy strategy must include a stable and enabling policy framework that allows for community engagement and ownership, favourable markets, including providing subsidies to encourage use, building community capacity and facilitating understanding and awareness of renewable energy.

Finding 4: The ecoENERGY program is aligned with roles and responsibilities of the federal government, and specifically, the mandate of the Department of Aboriginal Affairs and Northern Development Canada.

This evaluation found that the roles and responsibilities of the federal government and AANDC are complex and interconnected with provincial and territorial responsibilities. Numerous federal, provincial and territorial funding programs have existed and continue to evolve to facilitate the development of technologies, adapt technologies to northern conditions, increase capacity related to renewable energy generation in communities, and to implement renewable energy projects.

Provinces and territories have the predominant role and responsibility to provide energy to communities while the federal government supports the integration of the renewable energy sector nationally.

"Diesel energy is preferred in the North, because it is consistent. This is the concern: Consistency. Spending money on feasibility studies is what helps move the mindset and give confidence in pursuing renewable energy technology. People are afraid to take the risk to switch from diesel to a less confident source. There needs to be a gradual switching over of technologies. It’s going to take a lot of time to get out of diesel completely… that’s why [the government] needs to demonstrate results." – Interviewee

To date, the provinces and territories have been the primary promoters of energy conservation, while the federal government has tended to provide support to the provinces and territories in identifying and then promoting proven renewable energy technologies through a consistent national approach. The role of the federal government in supporting provincial and territorial governments in developing renewable energy powers is supported in the literature. Specifically, according to the International Energy Agency, a national renewable energy policy thrives when there is a government framework to facilitate industry-led research and development, until the renewable energy sector expands to become predictable, nimble, and credible. Efforts must also include actions to reduce economic barriers to facilitate the implementation of renewable energy technology. Once renewable energy policies are developed, and renewable technology is both publically accepted and highly integrated into the existing infrastructure, the federal government may phase out its targeted government support.^{Footnote 53} At this stage, AANDC's role is therefore to facilitate the visibility and viability of renewable energy technologies in on-reserve and northern communities until the time comes when these technologies are easily accessible and accepted as mainstream public investments as well as when provincial and territorial policy frameworks can ensure the sustainability of such systems.

Having a federal program that is aimed at promoting the adoption of renewable energy technologies to reduce GHG emissions is also aligned with international trends. The percentage of countries in every income bracket with national renewable energy policies has steadily increased over the past decade. The United Nations General Assembly declared the upcoming decade (i.e., 2014-2024) as the "Decade of Sustainable Energy for All,"^{Footnote 54} the Intergovernmental Panel on Climate Change has warned that an immediate transition to cleaner energy is imperative to mitigating catastrophic consequences;^{Footnote 55} and the world's largest economies and most intensive GHG emitters (accounting for more than a third of all global GHG emissions), China and the United States have announced plans to dramatically reduce carbon emissions. The United States has pledged to cut GHG emissions to 26-28 percent below 2005 levels by 2025, while China targets to peak CO2 emissions around 2030 or earlier by increasing non-fossil fuel emitting energy production to 20 percent of total production by 2030. These commitments are recognized as foundational to more rigorous efforts world-wide. More formalized commitments are expected to be negotiated in advance of the 2015 United Nation's Climate Change Conference (COP 21) in Paris, France.^{Footnote 56}

Provincial and territorial governments have jurisdiction and regulation over electrical production, transmission and distribution. Each province and territory also has a Public Utilities Act establishing a board or council to provide decisions and recommendations with respect to the operation of public or private utilities that are responsible for power generation and distribution. This evaluation found that each province and territory has been implementing a spectrum of energy efficiency/conservation investments as well as providing incentives for encouraging the introduction of renewable energy systems. The following graph identifies the total number of incentives, initiatives or programs (not the total investment) in each province and territory.

Text alternative for Figure 2 Energy Incentives in Canadian Provinces and Territories

This bar graph portrays the energy incentives in Canadian provinces and territories. The Y-axis states all of the provinces and territories. In order from top to bottom, they are: PEI, NFLD, NS, NB, Quebec, Ontario, Manitoba, Saskatchewan, Alberta, BC, NWT, Yukon, and Nunavut. The X-axis represents the number of incentives, initiatives, or programs (IIP) in each province, marked from 0 to 60, in increments of 20. A colour-based legend states four various stages of, and approaches to, energy use: Efficiency/conservation; oil; gas; and potential for renewable.

Only four provinces have more than 20 incentives, initiatives, or programs (IIP) in place. They are Quebec, Ontario, Manitoba, and BC. Of those four, Ontario and BC have over 40 IIPs in place. These four provinces all deal with the same three issues: efficiency/conservation, gas, and potential for renewable energy.

Nunavut is the only province or territory that has no IIPs at all.

PEI and NFLD only have IIPs focused on the issue of efficiency/conservation. NS, NB, Saskatchewan, and Yukon have IIPs that deal with two issues: efficiency/conservation and the potential for renewable energy.

Alberta’s IIPs deal almost equally with three issues: efficiency/conservations, oil, and gas. Northwest Territories deals with three issues: efficiency/conservation, oil, and potential for renewable energy.

Alberta and NB target efficiency/conservation least often. Quebec and NWT spend about half of their IIPs on efficiency/conservation. Every other province uses the majority of their IIPs to target efficiency/conservation.

 

As demonstrated in the above graph, the main focus for provincial and territorial governments has been to support energy conservation and improve efficiency of existing energy technology. Beyond programs and incentives, provincial and territorial governments across Canada also have a variety of regulatory instruments to promote the use of renewable energy systems, including:

• offset programs where a premium rate can be paid on your utility bill to create new renewable energy systems that would replace or ';off set' your home or building consumption with renewable sources;
• procurement through requests for proposals or actually seeking to amplify the amount of renewable energy by requesting bids from renewable energy suppliers;
• standard offering, feed in tariff and subsidy programs that offer a premium rate for renewable energy;
• legislated renewable portfolio standards or an obligation for utilities to produce a set amount of renewable energy;
• net billing that allows producers of renewable energy to sell their excess energy to the utility grid; and
• net metering that provides consumers who are also generating renewable energy the option to connect to the utility grid to offset their consumption, stay connected to the utility and meet their energy needs with their own systems if the utility is unable to provide.

Alberta has an off-set program and all other provinces have requests for proposals. Nova Scotia, New Brunswick and Prince Edward Island have legislated renewable portfolio standards. Ontario, Nova Scotia, Prince Edward Island and British Columbia have standard offer and subsidy programs. The following table highlights the suite of renewable energy policies by province and territory.

Table 1: Renewable Energy Policy by Province and Territory^{Footnote 58},^{Footnote 59},^{Footnote 60}

Province	Renewable Energy target	Off Set	Procurement of Renewable Energy	Standard offer and Feed in Tariff	Renewable Portfolio Standards	Net bill	Net meter
British Columbia			Yes	Yes
Alberta	Yes	Yes				Yes
Saskatchewan	Yes		Yes				Yes
Manitoba			Yes
Ontario	Yes		Yes	Yes			Yes
Québec	Yes		Yes				Yes
New Brunswick	Yes		Yes		Yes		Yes
Nova Scotia			Yes	Yes	Yes		Yes
Prince Edward Island	Yes		Yes	Yes (Wind only)	Yes		Yes
Yukon	Energy Strategy, a commitment to increase the supply and use of renewable energy 20% by 2020
Northwest Territories	Renewable Energy Fund to subsidize renewable energy generation: Hydro, biomass and solar energy strategies
Nunavut	Ikummatiit, a territorial energy strategy that focuses on alternative energy sources and efficient use of energy was planned but never implemented

As many as one hundred Canadian municipalities also have GHG emission reduction plans.^{Footnote 61 Footnote 62}

Although these provincial and territorial programs are often made available to on-reserve communities, they are primarily implemented in off-reserve communities. AANDC provides similar programming to on-reserve communities.

It is evident from these examples that there is a clear role for the federal government to advance the adoption of renewable energy technologies while provincial and territorial governments focus on increasing the efficiencies of existing energy infrastructure and developing a supportive investment environment. However, it is also evident that the roles and responsibilities of various federal departments can overlap, especially in the North where AANDC is less bound by its Indian Act commitments and where other federal departments provide significant support.

Although, as shown above, AANDC does not have a direct mandate to invest in supporting renewable energy technologies, the Department has made the policy decision to invest in renewable energy technologies in Aboriginal and northern communities across Canada in order to further its social and economic mandate. The Literature Review confirmed that there are social, political and economic reasons to advance the use of renewable energy technology beyond reducing greenhouse gas emissions. Renewable energy technology can have far-reaching impacts on community health, education, and the environment. It can also provide improved energy access and security, assist with poverty reduction, tackle gender equality, and provide job creation and rural economic development.^{Footnote 63},^{Footnote 64},^{Footnote 65} The Aboriginal and northern communities that fall under AANDC's mandate, require sustainable and reliable energy to enable them to participate fully in Canada's political, social and economic development. By focusing on integrating renewable energy technologies into off-grid communities, AANDC can reduce diesel operating costs, prolong the life of existing energy production assets, support community growth, and build sustainable communities.^{Footnote 66}

In addition, there are economic, social, and environmental programming areas that fall under AANDC's mandate that are impacted by energy challenges. Challenges from underperforming energy infrastructure and disruptions in energy supply limit the impacts of AANDC's economic development programming. The fluctuating costs of fuel, the increasing cost of transporting fuel and increasing demand from a rapidly increasing population are putting pressure on AANDC's budget while also increasing air pollutants from the burning of diesel. Environmental challenges also include fuel spills associated with transportation, local storage and fuel transfers resulting in environmental damage to sensitive habitats where clean-up responsibilities falls under AANDC's mandate. By resolving these energy challenges through sustainable energy solutions, AANDC programming areas can flourish. Thus, AANDC's role in the support for renewable energy technology projects is multi-dimensional.

By choosing to invest in renewable energy technologies, AANDC is contributing to greater energy security and sustainability for Aboriginal and northern communities in Canada.^{Footnote 67} Once established and operational, locally-managed energy systems will promote local economic development opportunities, facilitate private sector partnerships, increase employment and skills development, and meet the demands of growing populations. Increasing renewable energy supply will reduce air pollutants and reduce fuel spills and contamination, thus improving human health and preserving the local environment. A reduced reliance on imported fossil fuels coupled with improved energy efficiency reduces energy costs. In general, improved energy infrastructure will result in more sustainable and secure energy sources, diversified economic opportunities and stronger, more self-sufficient communities, fulfilling AANDC's mandate.

Finding 5: The ecoENERGY program is aligned with federal priorities, AANDC's priorities and the needs and priorities of Aboriginal and northern Communities.

The ecoENERGY program is aligned with and supports the priorities of the Government of Canada, Aboriginal Affairs and Northern Development Canada as well as Aboriginal and northern communities. Specifically, the Government of Canada has demonstrated its commitment to combating global warming by signing the United Nations Framework Convention on Climate Change, and participating in the United States-Canada Clean Energy Dialogue.^{Footnote 77} Canada is also a signatory to the Copenhagen Accord, for which it has a goal of reducing national GHG emissions by 17 percent below 2005 levels by 2020.^{Footnote 78}

The Government of Canada has established the development of renewable energy technology and the implementation of this technology in Aboriginal and northern communities as a priority through critical documents and public statements. Specifically, in the 2011 Speech from the Throne, the Government stated that it will support "the deployment of clean energy technology in Aboriginal and northern communities."^{Footnote 79} Additionally, in the 2011 Economic Action Plan, it was noted that "the Next Phase of Canada's Economic Action Plan advances Canadian leadership in the development and promotion of clean energy technologies."^{Footnote 80} In August 2011, then Minister of Aboriginal Affairs and Northern Development, John Duncan, noted that investments in clean energy projects "reinforces Canada's commitment to working with communities to address the effects of climate change;" and the Minister of Foreign Affairs John Baird stated that "the Government of Canada is committed to improving energy efficiency across the country."^{Footnote 81} These statements clearly show that promoting renewable energy projects in Aboriginal and northern communities has been a priority for the Government of Canada.

Promoting renewable energy technology and improving the reliability and sustainability of energy provided to Aboriginal and northern communities are also a clear priority for AANDC. The ecoENERGY program aligns with the Land and Economy Strategic Outcome by supporting First Nation communities in acquiring, constructing, owning, operating and maintaining a base of infrastructure that protects their health and safety and enables their engagement in the economy.^{Footnote 82} Additionally, the 2010-11, 2011-12, 2012-13 and 2013-14 AANDC Reports on Plans and Priorities identify a commitment to reducing greenhouse gas emissions in Aboriginal and northern communities by supporting the development of renewable energy and energy efficiency projects. The ecoENERGY program also directly supports the goal of addressing Climate Change and Air Quality, reflected in the 2013-2016 Federal Sustainable Development Strategy, as well as the goals of the Federal Framework on Aboriginal Economic Development and AANDC's Northern Strategy.

Investing in renewable energy systems is also a priority for many Aboriginal and northern communities who want to reduce their reliance on diesel (in the case of off-grid communities), decrease their energy costs and promote economic development opportunities. For example, according to Chief Mathieye Alatini from the Kluane First Nation, their wind-diesel project, "fits with everything that a First Nation embodies…low footprint; always making decisions for future generations; taking care of the earth…responsible energy is common sense."^{Footnote 83}

Other communities' leaders have affirmed that renewable energy projects that reduce the use of diesel and provide a source of economic development are "game changing" projects for communities. One Chief interviewed during the evaluation noted that the community wanted its project to be an example for other communities and to show that green energy is worth the investment. This evaluation has found that Aboriginal and northern communities are committed to the successful implementation of renewable energy projects in their communities and in this respect the ecoENERGY program strongly aligns with the priorities of the program's recipients.

Finding 6: ecoENERGY is delivering on its expected results of developing and constructing viable renewable energy projects.

Through Stream A of ecoENERGY's funding AANDC is contributing to projects with substantial capacity to reduce greenhouse gas emissions

From April 2011 to March 2014, the ecoENERGY program funded 111 projects across Canada; these included 57 Stream A projects (feasibility studies) in 43 communities, and 54 Stream B projects (renewable energy projects integrated with new and existing community buildings). Since April 2014, the program has also approved the funding of an additional 14 Stream A projects and 18 Stream B projects.

Through follow-ups of Stream A projects conducted by the ecoENERGY program, it is reported that as of November 2014, of the 43 communities that completed feasibility studies, 12 percent have progressed to implementation, with three projects under construction and three projects now in operation. Operational projects include the Alderville First Nation Solar Farm, and Behdzi Ahda First Nation's (Colville Lake) solar and battery storage project integrated into their diesel generator.

The evaluation found that 65 percent of funded studies are still undergoing additional assessments and project development. Only 23 percent of completed Stream A studies were found to either not be feasible, terminated or of unknown project status. Of the 43 communities that received funding for feasibility studies, the majority were in British Columbia (51 percent of projects) and in Ontario (23 percent of projects). Most of the projects funded (42 percent of projects) were feasibility assessments of hydro projects.

 

"Most funders are too risk adverse. It’s really important to have that seed funding [for feasibility studies]." – Project Contracto

Interviewees and project leaders noted that the feasibility and design stage of a renewable energy project presented the greatest investment risk as the risk of a project not coming to fruition is high. Despite AANDC choosing to engage in this high risk investment, the program is still realizing its expected result of developing and constructing viable renewable energy projects. Twelve percent of stream A projects are now completed and another 65 percent of projects are still moving towards implementation. However, challenges persist for those communities that received ecoENERGY funding for the feasibility stage of larger scale renewable energy projects. In order to construct large scale projects, such as micro hydro facilities and solar/wind farms, without further ecoENERGY support, challenges include:

• Locating the necessary funding to finish any additional studies and environmental assessments required to make the project attractive to investors/ commercially viable.
• Securing capital funding to build the energy technology. This is especially difficult for off-grid communities when the business case may not be strong enough if costs exceed current diesel prices and there is a low possibility of private investment. Even when some projects are found to be feasible, they may not be economically viable.^{Footnote 84}
• Lack of supporting provincial policies and programs.
• Lack of administrative capacity in the community to manage the project and work through the myriad of permits and approvals required to begin construction, especially in communities with frequent changes in leadership.
• Lack of operational capacity in the community to operate and maintain large projects if they are implemented.

Finding 7: ecoENERGY is delivering on its expected result of reducing greenhouse gas emissions in Aboriginal and northern communities.

The reduction of greenhouse gas emissions is the ultimate expected outcome of the ecoENERGY program. It is also the primary goal of the Clean Energy suite of programs under the Clean Air Agenda, led by Natural Resources Canada. In order to assess the extent of GHG reductions in Stream A and B projects, project proposals required a calculation utilizing NRCAN's Renewable Energy Technology Screen (RETScreen). A third-party analysis was then conducted to verify potential reductions. Based on the third-party analyses for each of ecoENERGY's approved projects, funded projects are expected to off-set GHG emissions as follows:

According to these calculations, completed Stream A projects will yield approximately 60 times the GHG reductions of completed Stream B projects. However, Stream A typically funds just the feasibility studies for large scale renewable energy systems with budgets that far exceed the funding available from ecoENERGY to complete.^{Footnote 86} As such, it is difficult to properly compare Stream A and B projects, because only a portion of Stream A funded projects will be developed and completed. As a result, Stream A projects' GHG reductions are expected and rarely realized at this early stage, whereas, the projected Stream B GHG reductions are comparable to actual reductions.

The number of projects funded and dollar amount funded are roughly equal for both streams, but Stream A seems to present the potential for drastically higher returns on GHG reductions per dollar funded by ecoENERGY than Stream B. In order to calculate the likely actual reductions of funded Stream A projects, given the challenges stated above for large scale projects, each of the funded studies was reviewed to identify the current construction stage of the project. Evaluators then calculated the expected GHG reductions of funded studies that are now operational or under construction as of November 2014. These figures are compared to the GHG reductions for the lifecycle of projects at each stage of completion, in the table below.

In order to contextualize what these reductions mean for Canadians, evaluators used the United States Environmental Protection Agency's Greenhouse Gas Equivalencies Calculator to calculate comparable scenarios. Assuming that projected GHG reductions are correct, Stream B projects funded from 2011-12 to 2013-14 will contribute to annual GHG reductions equivalent to removing approximately 640 passenger vehicles from the road each year for 20 years (i.e. the estimated life cycle of the systems).^{Footnote 87} When evaluators calculated the cost of Stream B projects compared to the GHG reductions, the result is a total dollar value of spending approximately $329.50 per car taken off the road per year.^{Footnote 88}

Of the funded Stream A projects that are now operational, two large renewable energy projects alone will reduce GHG emissions by over a third of all Stream B projects combined. Although the majority of Stream A reductions cannot be calculated, because most of the funded projects are not yet at the construction stage, a number of probable projects to be completed should yield significant GHG reductions. For example, the Kluane First Nation Wind-Diesel Project, which is still at the feasibility/development stage, is projected to result in 504 tonnes in annual GHG reductions, which is equivalent to removing approximately 106 passenger vehicles from the road each year for 20 years (i.e. the estimated life cycle of the wind project) for a total of 2120 vehicles.^{Footnote 89}

While AANDC's funding of the feasibility studies for large renewable energy systems will yield exponentially more GHG reductions if these projects are able to come to fruition, contractors and construction experts noted that projected GHG reductions should not be the main criterion for funding. Many other important factors such as upfront construction costs, operation and maintenance expertise and funding, environmental considerations such as bird migration paths, and the costs per kilowatt hour to produce energy compared to efficient diesel systems need to be considered first to ensure that projects are ultimately economically viable. Additionally, project interviewees noted that the by-products of reducing GHGs, including increased energy reliability, reduced costs and economic development potential were in fact the most important outcomes of funded projects.

Finding 8: ecoENERGY is delivering on its expected result that communities have a base of infrastructure that protects the health and safety and enables engagement in the economy

In addition to the main goal of reducing greenhouse gas emissions, the program was also found to have the following impacts upon recipient communities:

Economic Impacts

Renewable energy projects can significantly reduce energy costs for communities

Aboriginal communities in Canada, both on-grid and off-grid, experience significant costs related to heating and electricity for band-owned buildings. For example, Nunavut is completely dependent on imported fuels to provide energy for communities and as a result imports extremely large amounts of fuel at a significant cost.^{Footnote 101} In addition, some on-grid communities also struggle with high energy bills, particularly for large band-owned buildings such as schools and band offices.

"Most buildings are run by electric here costing about $2,500 to $3,000 a month for a small band office." – Atlantic Case Study Interviewee

The ecoENERGY program has funded renewable energy projects that will reduce diesel fuel use for electricity generation; reduce heating fuel use; lower operating costs; and improve energy efficiency for many different communities. For example, in Abegweit First Nation, solar panels installed on the band office reduced energy bills for the office by 35 percent in the first month of operation (April), by 23 percent in the second month (May) and 35 percent in the third month (June). This reduction in energy costs allowed administrators to contribute a larger amount of money towards high residential heating bills. The experiences of Abegweit First Nation show that projects undertaken through Stream B have small but immediate positive impacts on a community.

Additionally, one community visited during the evaluation was struggling to pay heating bills for its school that exceeded $30,000 dollars annually. As a result, the community undertook a geothermal heating project, funded by ecoENERGY, which was projected to reduce the school's energy cost by 40 percent (approximately $12,000). Another community visited during the evaluation installed a biomass boiler that in its first six months of use, from January 2014 until the summer months, reduced heating costs for buildings serviced by the boiler by approximately 50 percent.

 

In the Yukon, the Kluane First Nation is undertaking a wind-diesel project that it plans to commission in 2015. The project will produce 650 MWH per year and displace approximately 27 percent of the diesel fuel consumed by two communities, resulting in an estimated savings of over $200,000 dollars per year in fuel costs.^{Footnote 102},^{Footnote 103} Finally, a solar project partially supported by ecoENERGY for the Deer Lake First Nation, is reportedly resulted is savings of $10,000 per month by the Keewaytinook Okimakanak Tribal Council.

Some communities were inspired by the cost savings to undertake additional renewable energy projects. For example, one community visited during the evaluation received funding to install solar panels for their band office and after seeing the resultant cost savings, installed additional solar panels on other community buildings (without ecoENERGY funding) to reduce energy costs for the community.

Social Impacts

Health and Safety Impacts

Finding 9: The current proposal-based design encourages a vendor-driven funding model instead of targeting communities with the greatest needs.

The ecoENERGY program accepts applications from communities between February and March each year. The program announces this request for proposals on AANDC's website and through letters sent to band offices. To apply for project funding, proponents must submit a Funding Application, a Project Budget, a Letter of Support (such as a Band Council Resolution showing a quorum of support for the project), and a RETScreen analysis, which provides an assessment of the proposed renewable energy system, including a cost analysis and emissions analysis.

In the current funding model, communities present an application for a project and if approved, are provided the funding to complete the project with no requirements to engage in a tendering process. Of the site visits completed by evaluators, it was evident that proposals for ecoENERGY projects were often developed by the vendors themselves rather than the recipient communities. In many instances, a vendor who was knowledgeable about AANDC's ecoENERGY program approached a First Nations or northern community with an idea for a specific renewable energy project that it thought would be suitable. Upon gaining the community's support, the vendor then applied for ecoENERGY funding on behalf of the Band Council. Although evaluators were originally concerned that this environment would be conducive for vendors to take advantage of communities and the federal funding available, site visits demonstrated that the opposite was true. Even where project ideas and the project proposal were developed by a vendor who specialized in a particular area of renewable energy technology, evaluators noted that contractors were extremely invested in the projects. Smaller companies were particularly concerned with ensuring a positive experience for the recipient First Nation community in order to promote their businesses to other First Nation communities. Evaluators saw examples of training and mentorships being provided to community members as well as contractors arranging for community meetings in order to engage all stakeholders in the projects. In one large scale project, the contractor even became a project share-holder.

In one particular region, it was evident that the same contractor was seeking to complete the same type of renewable energy project in all First Nation communities in the area utilizing ecoENERGY funding. In reaction, program management carefully screened the similar project proposals and implemented a new policy that requires all contractors to let communities know when they are working with several communities at the same time. Evaluators interviewed multiple contractors who were currently providing services to First Nation communities and were satisfied that they were genuinely passionate about renewable energy technologies and respectfully engaged with the communities. However, the proposal-based design could be vulnerable to manipulation by contractors in the future. In one community visited by evaluators, it was clear that a particular type of renewable energy technology was being pushed by the interested contractor without considerations of alternative designs. In such instances, the best-fit technology may not always be provided to communities, especially if the contractor that completed the proposal on behalf of the community is invested in one particular kind of renewable energy.

Due to the technical aspect of the ecoENERGY program, band office interviewees indicated that they often feel isolated and vulnerable when trying to choose the right contractor and the right project for their community due to their lack of technical expertise. Similarly, since the ecoENERGY program is centralized at Headquarters, AANDC regional staff have not been involved in providing advice in this area. For this reason, many communities have utilized a third party project management firm to complete project proposals. This reality arguably discourages low-capacity communities from applying for projects. One First Nation Economic Development Officer interviewee went into great detail to explain the research he needed to complete to understand the renewable energy technology available, the firms in the area, the costs associated with construction and the return on investment in order to select the right project for his community. For him, the research and knowledge that was necessary for completing a project proposal was overwhelming. Other interviewees also noted that communities with the greatest need (typically remote, off-grid communities), may not have the capacity to complete a RETscreen analysis and may not have access to third party project management firms or renewable energy construction companies to take-on the project. This feedback suggests that small and more remote communities with less access to contractors and equipment would find the ecoENERGY application process challenging to complete, putting them at a disadvantage.

Furthermore, the proposal-based design of the ecoENERGY program limits the ability of the program to fund multiple components or phases of larger scale projects. Instead, different project components or phases must be submitted as separate projects with no guarantee all will be funded. When only one project is considered at a time, within restrictive funding criteria, it does not allow for more efficient funding allocations, such as funding multiple project stages. For example, in one community, only a small portion of the school could be heated by the geothermal project because the project proposal was tailored to meet the funding cap of the program. Although the project will provide substantial cost savings for the school, a larger investment would have secured a much greater return on investment if the entire school was heated by the geothermal design. The ecoENERGY program does encourage communities to seek funding from other sources in order to increase the funding available for renewable energy projects, however, in this case, the community was either unable or unwilling to find other funding. Similarly, after speaking with the contractors on-site, evaluators were informed that although the geothermal project was an excellent investment, the return on investment would have been higher if options such as a more efficient boiler and the installment of new windows had been considered instead. Although the contractors wanted to provide the community with the best option to decrease their school's heating costs, this was the only funding source they could find and the use of renewable energy technology was required. In this instance, the contractors picked the more expensive construction option in order to fit within the funding available and the associated funding criteria.

For one community visited by evaluators, the project management firm that has been working with the community for years on multiple construction initiatives was able to manage a Request for Proposals process for the construction of a school that included a geothermal heating component funded by the ecoENERGY program. In this instance, the project management firm was able to pick the highest-ranked proposal instead of the cheapest proposal, which allowed for a large mentoring component as well as the training and certification of hired community members. As noted in a previous evaluation of AANDC's First Nation Infrastructure Fund, the ability to incorporate a project ranking tendering process based on the quality of the contractor and the additional benefits available to the community is a best practice for maximizing project outcomes. However, such a best practice can only be applied to larger scale projects to ensure that it does not become a tedious and bureaucratic funding mechanism.

Based on these insights and best practices, evaluators recommend that the current proposal-based design be reviewed and modified to allow for a targeted funding strategy, and assistance be provided to communities to undertake a purposeful selection of projects and contractors that will provide training and mentoring for community members. Similar to best practice noted in the 2010 impact evaluation that developing community energy plans before embarking on large renewable energy and energy efficiency projects allows for more effective projects,^{Footnote 112} this evaluation encourages an even greater breadth of coordination. Specifically, the ecoENERGY program may benefit from moving away from funding ad hoc projects to funding communities to move along an energy development continuum that first ensures existing infrastructure is as efficient as possible, to completing studies and related assessments for choosing a renewable energy system to finally implementing the most viable renewable energy option.

Recommendation 3: It is recommended that the ecoENERGY program consider the following in any future program re-design:

1. Remove restrictive funding streams and maximum project allotments.
2. Review the proposal based approach.
3. Develop an approach for targeting communities with the greatest need.
4. Support projects that integrate renewable energy systems into existing diesel systems to reduce the consumption of diesel fuel.
5. Provide the needed support to communities in assessing and advancing the suitable renewable energy and/ or efficiency project.

Finding 10: Although some work to align ecoENERGY with existing AANDC, Natural Resources Canada and Canadian Northern Economic Development Agency programming is occurring, there is a need for partners to better coordinate their renewable energy investments and support provided to off-grid Aboriginal and northern communities.

AANDC has acknowledged for years that "What is needed for [renewable energy projects] to be successful in Canada is for Natural Resources Canada, ecoENERGY for Aboriginal and northern communities, the federal government, northern governments, northern utilities, and the communities themselves to have clearly defined roles in the process."^{Footnote 113} Previous evaluations of ecoENERGY and similar targeted energy funding programs such as AANDC's First Nation Infrastructure Fund have noted the necessity for infrastructure programs within AANDC and across the federal government to be better coordinated to achieve common objectives.^{Footnote 114}

Departmental interviewees acknowledged that the Department has made an effort to better align its programming through the creation of working groups, which share and discuss approved projects. However, some interviewees and experts in the field indicated that information sharing is not enough, and that a practical approach to coordinating the various stakeholders, programs and funding sources is necessary.

Similarly, evaluators noted that there are many stakeholders working in remote Canadian communities to complete research and to develop innovative renewable energy technologies. The challenge is that although activities and efforts are overlapping, the need remains high, the funding available is comparatively low, and the coordination between stakeholders is typically limited to merely sharing information. To demonstrate this finding, evaluators developed a chart to highlight related stakeholders and programming and to identify practical opportunities to further align activities to promote the development and use of renewable energy technology in Canada. This chart is included in Appendix A.

In addition to the various renewable energy government research and funding programs available, Canada's academic institutions are also highly focused on researching renewable energy technologies and how to adapt proven technology to Canada's northern environment. Evaluators came across a number of educational institutions and research centers, which are noteworthy for the ways in which their networks and partnerships with other academics, private industry, and government programs encourage innovative research projects and provoke momentum in the field of renewable resource technologies across Canada. A chart detailing the work of these institutions is included in Appendix A.

Through its three iterations, the ecoENERGY program at AANDC was found to not only have longevity but to have attracted highly-qualified staff that are engaged in pursuing partnerships with many of the above-mentioned stakeholders. Similarly, many of the above-mentioned programs have used the lessons learned and best practices modeled by the ecoENERGY program to identify their own objectives and formulate their own programming. Over time, the ecoENERGY program has worked with and supported other stakeholders in developing a coordinated approach to providing programming.

Unfortunately, despite valiant efforts, practical coordination of programming has been ad-hoc and predominately focused on information sharing. Evaluators were made aware of AANDC's long history of trying to bring partners together to solidify a departmental strategy for off-grid communities; this history is summarized in the following historical timeline:

As demonstrated in the above table, AANDC has been working both internally and with key federal partners since 2005 to define a strategy for targeting funding in off-grid Aboriginal and northern communities. However, initiatives have been led by multiple stakeholders, including the ecoENERGY program, the Environment and Renewable Resources Directorate, the Strategic Initiatives and Program Integrity Directorate and the Community Infrastructure Branch. The most recent work to formalize an Off-Grid First Nation Communities Energy Infrastructure Strategy remains in draft form, and there is little momentum left to finalize the strategy. Similarly, interviewees stated that the renewable energy industry, especially in off-grid communities, is crowded with stakeholders that have minimal funding, and are unable to coordinate funding, capacity and knowledge to bolster more efficient joint projects. Evaluators have noted that AANDC has struggled to develop a practical action plan on how to support and fund energy projects in the 175 off-grid communities under its mandate.

In light of these findings, evaluators recommend that the ecoENERGY program, in partnership with the off-grid infrastructure team in AANDC's Community Infrastructure Branch, develop a rubric for ranking the 175 off-grid communities under AANDC's mandate. Based on the results of this ranking exercise, the highest priority communities could be targeted to develop a practical five-year work plan that brings together the expertise and investments of previous planning exercises and all current stakeholders. The intended result would be a strategically-staged research and funding approach involving relevant federal funding sources, such as Natural Resources Canada and Canadian High Arctic Research Station (CHARS), to support communities so that they can move seamlessly from research, to pilot project, to the operation of a renewable energy system.

Evaluators recognize that this recommendation is neither new nor is it a simple undertaking. However, a manageable and practical approach with sustained momentum is necessary to gain traction in these communities. Evaluators are particularly keen to encourage a strategic action plan, because AANDC's ecoENERGY program has limited funding and a small team. The program's large mandate will only become more daunting as the program looks to focus on more projects in off-grid communities, which due to their geographic remoteness require greater resources, especially those situated in the North. Industry experts confirm that completing renewable energy projects in the North will be at least three times the cost of typical southern projects because experts and necessary equipment are rarely available up North. Experience has demonstrated that it is extremely difficult to implement renewable energy technologies in off-grid First Nation communities. There is the need for technologies to be adapted to the northern climate, and the need to cultivate a high level of expertise in the community so that the new energy system can be maintained or fixed, if it should malfunction or fail. Similarly, each project will need a different approach and a more hands-on role from program staff.^{Footnote 115} As the program shifts to target off-grid communities often located in severe northern climates, it will be even more essential to rely on partnerships and a highly coordinated approach that is supported by senior management, to ensure momentum in finalizing a sustainable work plan.

Recommendation 4: It is recommended that ecoENERGY establish a process for developing an Engagement and Collaboration Strategy for each off-grid community it targets, ensuring that activities and investments by AANDC, federal partners (e.g., Canadian Northern Economic Development Agency, Natural Resources Canada, CHARS) and other levels of government, are coordinated to allow for communities to seamlessly go from research, to pilot project, to final, completed project.

Considerations for Operations Committee 1: The Department, in partnership with federal partners (e.g., Canadian Northern Economic Development Agency, Natural Resources Canada, CHARS) and other levels of governments, explore developing a central five year tracking system to identify activities and investments in all off-grid Aboriginal and northern communities to increase strategic collaboration.

Considerations for Operations Committee 2: The Department explore developing a departmental Sustainable Energy Policy that:

1. Supports the design, construction and implementation of renewable energy systems that supply energy to communities within AANDC's mandate; and
2. Promote the funding of small-scale infrastructure projects that increase energy efficiency in order to decrease energy demand (i.e. replacing windows, boiler systems, insulation, etc.)

Considerations for Operations Committee 3: The Department explore developing a system for tracking and organizing funded community planning documents and feasibility studies (e.g. Energy Audits, Infrastructure Plans, Emergency Management Plans, Climate Change Adaptation studies, Comprehensive Community Plans, etc.) in order to better preserve funded work and support future infrastructure development decisions. AANDC's Strategic Research Branch may be in a position to develop such a centralized database as one of their departmental Research Tools.

Finding 11: The Headquarters centralized program delivery approach could be improved by coordinating the development and implementation of targeted projects with regional staff in the Community Infrastructure Branch.

Under the ecoENERGY program's current design, ecoENERGY staff at AANDC Headquarters review community applications and make funding decisions, with contribution amendments made by a network of contacts in AANDC's regional offices. ecoENERGY regional contacts work in a variety of branches throughout the Department, including Lands and Economic Development and the Community Infrastructure Branch. The relationship between ecoENERGY Headquarters staff and their regional contacts varies; some regional contacts are very involved with ecoENERGY projects and others focus solely on transferring program funds. Where strong relationships exist, Headquarters staff often consult with regional contacts on potential projects and seek their opinions on which projects offer the greatest potential for success.

Ultimately, the inconsistency of regional involvement results in a lack of detailed regional knowledge being taken into consideration during the project approval stage; this can impact the management of funding agreements in the affected region. The ecoENERGY Program Risk Profile from 2011 identified this lack of consistency as a Risk Driver, noting that "consistent processes do not exist for the regions to manage their flow-through funding and make related decisions to release funds. Lag times are evident between project approval and the signing of the formal funding agreements."^{Footnote 116} The potential consequences of this risk could be "delays in setting up funding agreements, as well as making any required adjustments" and it "may cause project delays and could result in cash management issues for those recipients without sufficient cash flow."^{Footnote 117} This issue was also noted by a project management consultant involved with multiple ecoENERGY projects who felt that the disjointed process between Ottawa and the regions was a real hindrance to the success of renewable energy projects because they are time sensitive.

This evaluation found that the regional contacts in the Community Infrastructure Branch were most involved in the regional delivery of ecoENERGY projects. The natural linkages between the construction of renewable energy projects in communities and the work of the CIB meant that the regional contacts were able to make effective linkages between current infrastructure developments and ecoENERGY projects. Additionally, the technical expertise residing in the CIB allowed regional contacts to provide effective support to communities undertaking renewable energy projects through ecoENERGY. By solidifying and expanding this approach of providing regional support in the development of ecoENERGY projects, AANDC would be able to maximize its return on investments by ensuring projects received the right guidance. In order to capitalize on this capacity, evaluators note two possible courses of action: 1) develop an agreement with Regional Operations so that CIB staff will formally support ecoENERGY project development; or 2) relocate the ecoENERGY program under the Regional Operations Sector as already articulated in AANDC's Program Alignment Architecture.

In support of the first option, multiple regional coordinators expressed that while their current role was simply to transfer funds to projects, they would be interested in a greater role and greater communication with Headquarters staff regarding the project approval stage. In their view, greater communication and coordination between Headquarters and the regions would lead to better project selection and more tailored support to recipient communities. The Aboriginal and Northern Community Action Program, which operated from 2003 - 2006 and preceded the development of the ecoENERGY program, had dedicated program staff in regional offices. However, this system was determined to be inefficient and unsustainable, considering limited program funding, and was eliminated in the current iteration of the ecoENERGY program. To address these concerns, the ecoENERGY program could develop a hybrid model of regional participation with CIB, by formalizing a regional network of CIB staff members, including existing engineers and infrastructure project management specialists, to support ecoENERGY project designs.

Alternatively, the coordination between ecoENERGY Headquarters staff and their regional contacts could be dramatically improved by relocating the ecoENERGY program from the Northern Affairs Office to the Regional Operations Sector under the CIB while maintaining funding authorities that allow the program to still operate both north and south of the 60th parallel. ecoENERGY's current location in the Northern Affairs Organization isolates it from other sectors in the Department as well as the regional offices, limiting its ability to partner with other sectors and leverage additional funding. In contrast, the CIB undertakes infrastructure projects and has the technical expertise at the regional level that could facilitate the incorporation of renewable energy technology into a greater number of priority infrastructure projects already approved for funding. Further, the CIB has regional staff throughout Canada who could play a vital role in promoting the ecoENERGY program to communities and supporting project management on-location.

If this second option was pursued, it must also be noted that the CIB only operates south of the 60th parallel and the ecoENERGY program would need to rely heavily on the Canadian Northern Economic Development Agency to support the administration of the northern portion of the ecoENERGY program. Canadian Northern Economic Development Agency would be an appropriate partner for the ecoENERGY program because the Terms and Conditions of Canadian Northern Economic Development Agency's Strategic Investments In Northern Economic Development Program allows for communities to access funding for studying and constructing renewable energy projects.

Recommendation 5: It is recommended that the Assistant Deputy Minister of Northern Affairs work with the Assistant Deputy Minister of Regional Operations to improve coordination of funding renewable energy projects in Aboriginal communities occurring within the Community Infrastructure Branch and the ecoENERGY program.

Finding 12: Streams A and B provided funding for necessary studies and projects; however, opportunities exist to move away from rigid funding categories to funding the right stage on the renewable energy development continuum that promotes the movement from studies to tangible infrastructure.

AANDC's first iteration of the ecoENERGY program commenced in April 2003 and since that time, recipient communities have implemented various types of projects, including Community Energy Plans, feasibility studies, and the installation of small scale renewable energy projects to support a portion of a community building's electricity or heating needs. Site visits to numerous ecoENERGY- supported communities demonstrated to evaluators that the renewable energy field of study is vast, and with regards to Stream A projects many preliminary studies and environmental assessments are necessary to get a project from conception to implementation. Communities have little guarantee that a project will ever be completed and provide the energy and cost savings desired.

The small ecoENERGY Headquarters staff working within the set one-year funding parameters, have carefully distributed funding agreements to a wide breadth of projects across Canada. At the same time, they have recognized that some communities need multi-year funding to secure the success of a large scale renewable energy project.

However, despite these efforts, the substantial number of studies and assessments that are necessary to develop a large scale renewable energy project means that communities can become stuck and lose momentum in the project development phase.^{Footnote 118} Of the 43 communities that received Stream A funding between April 2011 and November 2014, three communities have operational projects, three have projects under construction, three are intending to begin construction imminently, and 28 communities are still conducting further assessments or waiting for another funding source. Stream A projects commonly take approximately five to ten years to develop and as a result, the 28 communities, without sustained funding sources, are at risk of losing momentum and stalling at the pre-assessment phase. In some cases, the renewable energy technology proposed for these communities may not be the most economical solution; in others, the additional costs associated with getting a project ready for securing private financial investment for construction presents a significant challenge.

Similarly, for communities that complete a feasibility study, only to discover that the project they envisioned is not feasible, the results can be discouraging. In one of the communities visited by evaluators, the ecoENERGY funded project was found to not be feasible. As a result, the community was discouraged and ceased its pursuit of a renewable energy system, including other viable options. After discussions with the Chief, evaluators noted that the ecoENERGY program is in need of a risk mitigation strategy for when projects are found to not be feasible, in order to maintain positive departmental relationships with those affected communities. Evaluators have also noted that a potential program re-design that focuses on supporting communities to move along a renewable energy continuum may help to mitigate these difficult scenarios.

According to the International Energy Agency, a renewable energy program can only thrive if it is operating within a policy environment that promotes a full spectrum of support from the research stage through to project implementation.^{Footnote 119} Yet, ecoENERGY's current proposal-based approach, as well as a lack of capital funding for large project construction, does not allow for the Department to support communities in moving along this continuum. AANDC's British Columbia region's emerging Community Development Strategy and AANDC's commitment to the Indigenous Community Development Framework should encourage ecoENERGY to consider the benefits of moving away from a project-focused design to a community-focused approach that supports communities' movement along the renewable energy development continuum. A targeted community-based approach may also help to mitigate the current relationship risks involved when a feasibility study finds a project not feasible, because it would ensure that the program remains involved in identifying alternative solutions for the affected community. Using a greatest-need ranking rubric that would take into consideration communities' remoteness, energy costs, dependence on diesel, age and quality of current diesel infrastructure, potential economic development opportunities, and how favorable provincial policies are for renewable energy development, the program could provide larger investments to fewer communities each year. This more strategic approach could kindle project development while coordinating other federal and provincial partners to ensure that a successful renewable energy solution is underway before funding the next community with the greatest need and a desire to pursue renewable energy solutions.

Although some interviewees argued that small investments across Canada through a proposal-based design program allow motivated communities to access funding and a larger number of communities to participate in the program, evaluators noted that there are many small funding opportunities for communities to take advantage of at the provincial level, as demonstrated in Appendix B. A targeted niche approach would ensure clearer roles and responsibilities between the main active players in the field and reduce the potential for program duplication (as demonstrated in Appendix A).

Additionally, the current proposal-based design forces a community to first determine what type of project they would like to pursue before completing a proposal to secure funding.^{Footnote 120} This can be problematic as interviews with community members demonstrated that project managers in band offices can often feel overwhelmed by the choices available, which include: solar, wind, micro hydro, geothermal, biomass, heat recovery systems, fuel cells, energy storage devices, smart meters etc. Due to the availability of resources, technology costs, potential cost-savings and the experiences of other communities, a particular renewable energy technology may appeal to a community. However, as demonstrated by the literature review (refer to Appendix C: Cost Benefits of Renewable Energy Technologies), the best choice often depends on a wide spectrum of considerations that are unique to each community, and may also involve a combination of technologies. Additionally, the best solution may be to first engage a funding partner to monitor the recipient community's energy usage through the installation of smart meters, and then consider small building upgrades to address energy wastage and maximize energy conservation before commencing the development of a renewable energy project.

The ecoENERGY program may benefit from moving away from specific streams to a three step process: first, determining priority communities; second, fund the assessment of best-fit renewable energy options for those targeted communities; and finally implement the most viable renewable energy option. A similar program design was utilized by Alaska's Energy Authority. The first step was to complete an assessment that considered various renewable technologies and how different combinations of technology and storage sources might be combined to maximize the energy potential according to each community's unique environmental and economic conditions. A number of scenarios were evaluated for each community to determine the highest renewable energy penetration level that would be technically and economically viable. If ecoENERGY were to emulate this approach, it would have to move away from funding studies that determine the viability and cost of a single particular renewable technology option, and instead fund an assessment of different technology scenarios to determine the optimal technical and economic solution for each community. The availability of proven computer modeling such as HOMER software^{Footnote 121} allows communities to design hybrid renewable micro-grids whether remote or attached to a larger grid.

By promoting a community-focused approach and funding the assessment of the best-fit technology for a targeted community, the ecoENERGY program would be able to support communities in moving from studies to operational renewable energy projects. During these stages of support, the program could also provide additional community-enhancing benefits such as educational information to spread awareness of renewable energy technologies and engaging community members in the design and development of projects. For example, education initiatives like those undertaken by the Nakzadil First Nation, which allowed elementary school students to participate in the collection of solar and wind data, or the training and mentoring of community workers, as seen in Eel Ground and T'Souke First Nations, could be expanded to all ecoENERGY projects. Using the development of renewable energy technologies as a springboard for job and knowledge creation was also highlighted in the literature review.^{Footnote 122},^{Footnote 123}

Finding 13: Opportunities exist to increase communities' knowledge, capacity and confidence to undertake projects by promoting knowledge-sharing initiatives and mentorships.

As communities undertake renewable energy projects, with the current limited support from AANDC's regional office staff, they can encounter significant challenges related to managing such large and technical projects. Case study interviewees revealed that they felt nervous and isolated when undertaking renewable energy projects, particularly at key steps in the process such as: finding contractors, identifying the right renewable energy technology to fit their needs and overseeing project management.

In the case of many renewable energy projects, such as micro-hydro or large wind/solar farms, communities have to navigate the challenging environment of pre-feasibility/feasibility studies, obtaining environmental regulatory approval, facility engineering/design and securing private sector financing for the construction of the project. Communities who have achieved success in developing such projects have, in many cases, gone through a long and intensive process of learning on the job. The project leaders have often worked tirelessly to continually champion the development of the projects and manage the projects through the many steps and hurdles of project fulfillment. As many communities are interested in pursuing projects using similar renewable energy technologies, the experience and knowledge developed by communities who have completed such projects could be extremely valuable in assisting communities throughout the project development process to benefit from lessons learned and avoid common mistakes.

There is an opportunity for ecoENERGY to develop a mentorship component that connects previous ecoENERGY project managers with communities starting to develop similar projects. A mentorship component could enable the transfer of information and experience regarding the development of renewable energy projects. Investments in mentoring should be made where community interest and readiness is apparent and where uptake is strong to magnify the success of renewable energy projects.^{Footnote 124} Successful past participant communities, particularly those who own or co-own their energy systems, can play a critical mentorship role and exchange knowledge about the development process as well as identify key partners who can advance the reliable and clean supply of energy for remote communities.^{Footnote 125}

The concept of developing mentorships within programs is a growing area of success for AANDC. For example, the AANDC British Columbia regional office has partnered with the Nautsa mawt Tribal Council to implement a mentorship initiative to assist the development of Comprehensive Community Plans by First Nations in the province. The mentorship initiative provides support, tools, frameworks, and the sharing of best practices between experienced communities and communities that are just beginning the process of developing a Comprehensive Community Plan.^{Footnote 126} In some cases, project managers for successful renewable energy projects have been enlisted by a charitable non-profit organization to provide mentorship to communities that are in the initial stages of developing projects. However, communities participating in this mentorship opportunity felt that their impact could be improved by participating in a more developed mentorship program that would allow them to visit mentee communities and play a larger role in supporting the development of the communities' renewable energy projects.

Additionally, some provincial utilities offer workshops and training for community leaders engaged in the development of renewable energy projects.^{Footnote 127} Others in the industry have imagined an intensive, comprehensive training program that would change the landscape for Aboriginal leaders and communities to develop and manage their own renewable energy systems.^{Footnote 128}

In addition to the need for increased capacity building through a mentorship program, further sources of knowledge sharing for communities undertaking renewable energy projects is necessary. Although the majority of interviewees discussed their participation in various working groups, energy summits, forums, conferences and workshops, all interviewees expressed the need for more information as renewable energy technology is constantly changing. In many cases, communities feel as though they lack the technical expertise to pick the right consulting firm, properly supervise the project, and assess the final product. Developing tools for knowledge sharing could increase the ability of communities to determine what renewable technology is most appropriate for their community and what consulting firms they could contract with to effectively implement the technology. Additional support from regional office staff may also mitigate this challenge.

Such knowledge sharing could link communities to resources and training materials that already exist, such as those at the Office of Indian Energy within the United States Department of Energy, the Alliance for Rural Electrification, Clean Energy Canada, Canadian Electrification Association, International Renewable Energy Association and other energy agencies. Similarly, the simple pursuit of creating a social media site that allows participants to engage in these conversations would assist project leads, who often expressed being overwhelmed and alone in developing projects, to tap into experiences across communities. The Facebook site for British Columbia's Comprehensive Community Planners in First Nation communities is a leading example.^{Footnote 129}

Finding 14: Internal project approval process results in funding often being provided during inappropriate construction seasons.

Case study interviewees noted that the ecoENERGY approval process and the timing of funding being provided created challenges for communities to complete renewable energy projects. In particular, it was noted that the provision of funding for approved projects in fall and winter months caused large and unnecessary project costs or delays. For example, one project management group undertook a feasibility study where ecoENERGY provided funding during the winter months with the provision that the study be completed by the end of the fiscal year. As a result, the project management group had no choice but to hire consultants to study a frozen river and make assumptions about the feasibility of a hydro project without being able to study the river's actual flow in the spring or summer time.

Another related challenge experienced by recipient communities was that cash transfers could be slow and require communities to cash manage in order to continue progress on their projects. This put communities with less financial resources in a difficult position and could lead to project delays. Consultants working in such a scenario often had to be patient while waiting to be paid and some even paid for project expenses independently until funding arrived. However, it was noted that the timeliness of the approval process had improved over the past two years, since the program began sending out an earlier call for proposals. Delayed approval and funding issues are common for federal government infrastructure-funding programs due to the fiscal year funding deadlines; however, this challenge could be better mitigated by moving toward a hands-on community-based program design. When program staff work with communities to develop project proposals, their in-depth knowledge of specific communities would help to ensure that project development and subsequent funding agreements are completed at the appropriate time of year.

Finding 15: There is an opportunity for the ecoENERGY program to improve its Performance Measurement Strategy to track program efficiency and to more efficiently track all AANDC renewable energy projects.

The Performance Measurement Strategy of the ecoENERGY program was found to be appropriately scoped and well-implemented. The performance information gathered was also found to be regularly used for decision making by program management.

A performance measurement strategy for the program was first approved by the Evaluation, Performance Measurement and Review Committee in May 2011 at program conception (the ideal time for creating a performance management regime.) The Performance Measurement Strategy was again updated and approved in February 2014 to conform to updated guidance information provided by the Treasury Board Secretariat. To manage program performance, the strategy specifically called for a third-party assessment of projected GHG reductions in order to track the main goal of the program and to allow the program to choose the projects that will yield the highest GHG reduction potential. Evaluators were able to determine that program goals are being achieved as a result of the quality data provided by the Performance Measurement Strategy.

Although the program has been sufficiently tracking its performance indicators, evaluators noted several opportunities for improvement. First, there is opportunity to improve the GHG reduction indicator. This indicator could also measure the liters of diesel displaced to demonstrate the efficiency of the program in reducing applicable communities' diesel dependence. Second, the program's information management regime could be made more efficient. Although program data was adequately available, it was difficult to analyse results from the 2011 to 2015 program and to compare those results to similar programming since 2003. Finally, by having an isolated information management system, the program is limited to tracking only the renewable energy studies and projects supported by ecoENERGY funding while the Department also engages in supporting similar studies and projects through different funding sources. Therefore, in order to allow the historical tracking of renewable energy projects supported by ecoENERGY and to be able to assess the complete picture of AANDC supported renewable energy projects, there is an opportunity to input ecoENERGY project status and performance information into the Department's existing Integrated Capital Management System. By potentially integrating the program into the Department's sole capital projects database, projects such as T'Souke's solar energy project that was supported by both ecoENERGY and the First Nation Infrastructure Fund could be tracked as a single capital project in the system instead of under multiple databases.

Recommendation 6: It is recommended that the ecoENERGY program update its Performance Measurement Strategy and Risk Assessment to reflect program re-design considerations and to determine an approach for monitoring the completion of renewable energy projects funded across the Department.

Finding 16: Potential risk of projects not achieving their full GHG reduction potential when communities do not have an operation and maintenance plan in place for completed renewable energy projects.

Case study interviewees revealed that while renewable energy projects are seen as valuable contributions to the increased economic and environmental sustainability of communities, few have developed plans for the future maintenance and repairs of the equipment and/or facilities. Most interviewees noted that they expected, or were told by the renewable technology vendors to expect maintenance costs to be low and infrequent. Several communities expressed concern that due to the technical nature of the renewable energy projects, the community facilities maintenance staff would be unable to undertake any necessary repairs or maintenance. As a result, communities were concerned that any repairs would require the involvement of the renewable technology vendors, and could result in significant costs. As AANDC is not responsible for providing operations and maintenance funds to communities for renewable energy projects undertaken through the ecoENERGY program, any repair or maintenance cost is a community's responsibility.

The lack of plans for the operation and maintenance of renewable energy projects could impact the overall success of the project at producing clean energy for the community, if the equipment malfunctions and the community is unable to fix or replace it. For example, one community that installed solar panels on a band-owned building with funding from ecoENERGY noted that they had done no maintenance on the panels since they had been installed, including cleaning or clearing snow from the panels in the winter. This lack of maintenance conflicts with the United States Department of Energy recommendations for the maintenance of solar panels. The recommendations state that solar electric or photovoltaic (PV) systems require routine, periodic maintenance.^{Footnote 130} The lack of maintenance being conducted on completed projects funded by ecoENERGY may result in projects not reducing greenhouse gas emissions to their full extent due to decreased functioning of renewable energy equipment, which in turn affects AANDC overall return on investment.

The literature review also noted the wide range of potential skills necessary to maintain renewable energy systems, as outlined in the following table, where H, M, and L refer respectively to High, Medium, and Low skill sets.

As demonstrated in the chart above, many of the positions required to operate and maintain systems demand a medium level of capacity, which may often not exist in remote communities. To ensure the sustainability of implemented ecoENERGY projects, a community capacity development and mentorship component becomes a greater necessity when working with these communities to develop a renewable energy system.

Finding 17: The proportion of program funding dedicated to salary and operation and maintenance costs are in large measure due to the technical reviews and expertise required to assess project proposals as well as the necessity to coordinate funding with other federal, provincial and territorial departments.

In 2011, the ecoENERGY program received $20 million over five years (2011-12 to 2015-16). As demonstrated in the charts below,^{Footnote 132} from April 1, 2011, to March 31, 2014, the program spent an average of $42 in Salary, Operations and Maintenance, and Employee Benefits for every $100 spent on approved projects. Put in a different way, it costs on average $12,073 to assess and either approve or deny each project proposal received from communities.^{Footnote 133}

At first glance, the program's operating costs are higher than typically expected in a Grants and Contributions program at AANDC. This is due to the reality that the program receives a significant number of proposals, most of which cannot be approved due to limited program funding but which still require a full assessment. Although only 36 percent of proposals are funded by the program, all proposals must be assessed and ranked in order of priority. Similarly, highly qualified personnel who possess scientific and technical backgrounds are necessary to assess all aspects of project proposals. In addition to the high costs of reviewing project proposals, program personnel are actively involved in liaising with provinces, territories, utilities and communities to identify projects that will have the greatest impact.

Overall, the costs to operating this program are necessary to ensure project proposals are properly assessed and ranked; that communities have the support they need; and that federal, provincial and territorial partners are actively engaged. Relationship building, a key priority for this Department, requires more resources than simply providing communities with a check for the approved project amount. However, the high operating costs are also an issue of economies of scale. The ecoENERGY program does not have a high amount of Grants and Contribution funding to provide to communities and a certain staff complement is necessary to operate even a small program. If the program was moved to operate under AANDC's larger Community Infrastructure Branch, the program could operate under existing support systems thereby reducing the overhead operating costs. Additionally, by modifying the proposal-based design, the sunk costs of assessing proposals that are not approved could be reduced. For example, in 2013-2014, 78 proposals were assessed at an internal operating cost of approximately $12,073 per proposal, which totals $941,694 of internal operating costs that could be better directed toward targeting and supporting the development of feasible projects in communities with the greatest need.

Finding 18: While large renewable energy systems can have dramatic environmental and financial benefits for communities, in off-grid scenarios diesel energy generation often remains the most cost-effective approach.

While large renewable energy projects undertaken by on-grid communities (through Stream A of the ecoENERGY program) have produced substantial results, the situation is much different for off-grid communities. Specifically, off-grid communities are often very small and therefore have correspondingly small energy needs thereby eliminating much of the economic development potential of a renewable energy project. Key informant interviewees expressed concerns that for off-grid communities undertaking large renewable energy projects, the completed projects may produce energy at a more expensive rate per kilowatt hour than the existing diesel powered systems. For these communities, diesel systems are the most cost-effective option, although they are not the most sustainable or environmentally-appropriate option. In particular, the need to transport diesel to remote off-grid communities can be difficult and costly and if the necessary volume of diesel is not properly calculated, the result may be brown-outs or black-outs when amounts are rationed. To reduce the negative environmental consequences of diesel generation and to increase the consistency of the community energy supply, some communities will pursue the development of renewable energy systems, despite a higher price per kilowatt hour. In these cases, the project managers hope and some expect to receive subsidies from utilities to compensate for the increase in cost per kilowatt hour.

An example of the higher price per kilowatt hour for renewable energy systems is provided by the chart below, which details the costs for energy supply options in the Northwest Territories. As the chart demonstrates, diesel generation is still the most cost effective option, with the exception of large hydro projects.

Table 9: Costs for Energy Supply Options in Northwest Territories (NWT)

Finding 19: Projects that incorporate renewable technology into new construction projects are more cost-effective than replacing older systems.

Interviewed experts in the field noted that it is more efficient to incorporate renewable energy systems into new construction projects instead of working to retrofit older infrastructure where the key energy issue is not about improving energy supply, but reducing energy demand. In these scenarios, often the best course of action is to mend the key causes of energy loss such as modernizing light fixtures, installing timers, refreshing insulation and replacing windows. Comparing two site visits, it was noted by contractors that a geothermal installation in a pre-existing school was a less efficient project than the installation of a geothermal into a new school. Based on previous experiences, one contractor was adamant that it is often more expensive to retrofit existing structures. Although evaluators were only given anecdotal examples, it was evident that in a new build design, the positive impacts of a renewable energy system are often augmented by combining the system with additional standards laid out by certifications such as LEEDS and Green Globes.^{Footnote 137}

At one of the sites visited by evaluators, the geothermal project manager indicated that although the geothermal component was part of the original design of the new school build, due to cost-containment measures, it would have been eliminated from the project design if the ecoENERGY funding had not been provided. This example demonstrated to evaluators the importance of the ecoENERGY program working in partnership with AANDC's Community Infrastructure Branch to ensure renewable energy systems are a key consideration when developing new infrastructure on-reserve. Similarly, although programming to improve energy efficiency is essential prior to considering the development of a renewable energy technology, funding energy efficiency projects should not be the role of the ecoENERGY program as outlined in Section 3.2. Instead, the program may consider encouraging communities to partner with other funders to first increase their efficiencies before working with the ecoENERGY program to develop a renewable energy technology.