chris boivin, vice president, investments, sustainable development technology canada

Sustainable Development Technology CanadaSustainable Development Technology Canada1

Sustainable Development Technology Canada

North American Climate Policy Forum,

June 2016

Sustainable Development Technology Canada2 Sustainable Development Technology Canada2

Presentation Outline

• SDTC’s Role

• SDTC Funds

• Approach Taken and Results to Date

• Lessons Learned


Mandate

Sustainable Development Technology Canada3

• SDTC is a policy instrument of the Government of Canada to deliver environmental and economic benefits to Canadians.

• As a delivery agent, we foster the development and demonstration of technological solutions that address:

• Clean Air;• Climate Change; • Clean Water;• Clean Land.

• Forge innovative partnerships and build a SD technology infrastructure.

• Ensure timely diffusion - increase number and rate of uptake of technologies into the marketplace across Canada, providing national benefits.


At a Glance

Sustainable Development Technology Canada4

• SDTC funds Canadian cleantech projects and builds capacity in the companies that lead them as they move their ground-breaking technologies to market

• SDTC began operations in November of 2001

• Registered as a not-for-profit

• Operates as an arm’s length independent organization

• Funding allocation of more than $1 billion from Government of Canada (>$900M committed to projects to date)

• Accountable to Parliament through the Minister of Innovation Science and Economic Development


The SD Tech Fund™ supports development and demonstration projects that address climate change, air quality, clean water and clean soil. The Government of Canada has allocated a total of $965 million for the fund.

SDTC has Two Funds that Support Canadian Cleantech

SDTC’s NextGen Biofuels Fund™ supports the establishment of first-of-kind large commercial-scale facilities for the production of next-generation renewable fuels. Has Allocated Roughly $80M to projects. It is no longer accepting applications.

Sustainable Development Technology Canada6 Sustainable Development Technology Canada6

Commercializing Innovation

SDTC’s funds are positioned to address funding gaps in commercializing technology.


Approach since 2001

State of affairs when we started in 2001 – Sustainable Technology was a very nascent industry, little capacity, supporting infrastructure, established markets, financial support etc.

What was our focus:

• Cast the net wide across sectors and ensure private sector participation;

• Take risks in many technology areas, identify failure modes, learn, capacity build;

• Establish a critical mass of companies in key SD Tech verticals (Power Gen, Transportation, Energy Production, Waste Management, Water Treatment, Energy Storage etc.);

• Foster the establishment supporting capacity infrastructure (financial, policy, education, supporting expertise and services etc.); and

• Become the central point of understanding and support for the SD Tech space in Canada.


SD Tech Fund Investments

>80% of leveraged investment is from private sector

$928 Millionfrom SDTC

$2.45 Billion Leveraged

from Public andPrivate Sources

320 Projects

$3.3Billion

= =

Total Portfolio Project Value

Leveraging our investments


Portfolio by Cleantech Segment

9

$34.8

$143.5

$89.5

$54.6

$38.8

$149.9

$134.7

$33.6

$4.0

$125.9

$32.4

$0.0 $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 $160.0

Agriculture

Biorefinery Products

Cleaner Fossil Fuels

Energy Efficiency

Energy Infrastructure/Smart Grid

Industrial Processes & Products

Power Generation

Recycling & Recovery

Remediation and Soil Treatment

Transportation

Water & Wastewater

SDTC Funding

SDTC Funding ($842M) by Analytica Advisor Sector as of March 31st, 2016


The Challenge

Markets changed dramatically over the last 15 years….• Expectation of a carbon regime, no expectation of a carbon

regime, small regional carbon incentives;

• Biofuel subsidies, no biofuels subsidies;

• Major economic downturn 2008;

• $12/mmbtu NG, $3/mmbtu NG;

• Solar industry correction; and

• $140 oil, $29 oil.

Making it very difficult to pick winners


Lots of Patience and Diversity is Key

……..long runway and diversity of the portfolio and risks taken allowed some things to stick and for critical mass to emerge

….from 5 to 10 technologies in the market in 2007 ……….to 25 in the market in 2010

…………to >70 technologies in the market in 2016

…..and another >170 in progress and on a trajectory to get there


Results since inception

Steady growth over the past 5 years as a result of technology adoption and diffusion in the global market.


SDTC Portfolio Companies


Lessons Learned

15 Sustainable Development Technology Canada15

• Need to ensure resilience of business and ability to survive highs and lows in major market baselines.

• The higher the technology performance advantage over incumbents the better.

• Carbon regimes can help with resilience of business case, but most resilient opportunities have strong economic value propositions/cost savings to end users that drive adoption with low to no dependence on carbon policy.

• Setting a carbon incentive too high can distort competitiveness indicators and temporarily unlock opportunities that are vulnerable to policy change driven by eventual unwillingness to pay – this can delay more economically competitive opportunities.

• If setting a high $/ton CO2 threshold, need to see a cost curve trajectory for technology that drives towards cost parity in a timely manner.

• Regional incentive instruments favoring regional advantages can help but opportunities are global and scalability is limited by replicability of competitiveness (inconsistency of frameworks challenges adoption).

Our highest performing projects have not relied heavily on policy instruments to drive adoption. they have relied on strong value propositions - accelerating the commercialization

pathway for these opportunities may be advisable.


Commercialization Success Factors

Our experience has shown that 4 key factors contribute toachieving commercialization of technologies:

1. Management capacity and strength

2. Strength of the Innovation and Freedom to Operate(Intellectual Property protection) and associated valueproposition

3. Strong path to market partner participation

4. Time to commercial-ready technology – the earlier thetechnology, the greater the risk that the value proposition willerode by the time it reaches market


SDTC Funding Model Ensures Market Pull and Private Sector Participation

Criteria for Funding:1. Pre-commercial2. Consortium3. Innovation (e.g. IP; know/show how)4. Marketing Plan (tech replication in CDA/Int’l)5. Business Plan (Management, Financing)6. Environmental Benefits over status quo tech

SME Applicant

+ Technology Consortium

partners

Customer (Demonstration Host)

Key Hardware Supplier

Key Services Supplier

Government (Other)

Value- Added Sales Channel

2/3$

(cash and in-kind)

1/3$

(cash)

Project Funding


Additional Information


SD Tech FundTM: Priority Areas


Responsible Natural Resource Development• Technologies that reduce the environmental impact of oil and gas

exploration, development and production

• Technologies for the sustainable development of mineral resources




Carbon-Free Power Generation and Distribution• Innovations that lower the cost of renewable power generation and

enhance its deployment

• Technologies that convert primary energy sources to carbon-free energy carriers such as steam, electricity or hydrogen without combustion




Remote and Northern Community Utility Systems• Adaptation and demonstration of renewable energy technologies,

waste and waste water systems for remote communities




Energy Efficiency for Industry and Communities• Technologies related to next generation transportation with a special

focus on freight and heavy-duty vehicles.

• Technologies that increase resource use efficiency in industrial processes.




Next Generation Technologies with Longer-term Benefits for Canada• Biofuels and Biorefineries: Technologies using biomass to produce

chemicals or fuels replacing those made today using fossil fuel sources

• Sustainable Agriculture and Food Security: Technologies that reduce the usage of water, increase yield and improve drought resistance of agricultural crops


CarbonCure Technologies Inc.

Typically, the process of producing precast

concrete blocks uses both energy-and-cost-

intensive steamcuring and cement to

achieve quality benchmarks. In response,

Halifax-based CarbonCure Technologies

has developed a universal retrofit

equipment component that uses waste CO2

to reduce steam curing energy by 38%,

cement content by 10% and defect rates by

20% while maintaining or exceeding quality

standards. The CO2 is permanently stored

in the block as solid limestone attributing to

a reduction in lifecycle greenhouse gas

intensity of 17% for every block produced.

The project aims to validate the

performance of the technology through two

full-scale industrial demonstrations.


Minesense Technologies Ltd.

Canadian mining operations produce 2 million tonnes of waste

rock a day. In order to get at the “pay” rock or “ore”, a mining

operation must move and dispose of a large amount of waste rock

that, using conventional sorting methods, does not have an

economic concentration of minerals. MineSense will develop their

High-Frequency Electromagnetic Spectrometry (HFEMS)

technology to measure the amount of a given mineral at the point

of extraction, allowing operators to better sort the rock based on

mineral content prior to processing, thus saving costs and

requiring less energy to process it. Thanks to increased metal

recovery, longer life of mine and decreased environmental impact,

the technology could increase the total value of a mining operation

by as much as 50 percent, as well as revive mines considered

“end of life” with a more accurate assessment and classification of

mined mineral content. Once widely used, this technology could

save a typical base metal operation mining 10,000 tonnes of ore

per day as much as 15 GWh/yr or 8.16 Mt CO2e/yr.


Temporal Power Ltd.

Fast changes in power output from a wind farm can add megawatts of

power in a matter of seconds and induce significant voltage spikes and

sags. These rapid fluctuations lead to challenges in regulating voltage and

power quality on distribution lines. Temporal Power Ltd. and Hydro One

Networks are working to demonstrate how an innovative Canadian flywheel

electricity storage technology can improve the way wind power is connected

to the electricity grid. The flywheel based storage solution developed by

Temporal Power will be located on the Hydro One distribution network to

mitigate challenges caused by the intermittent output of power from wind

farms and to support the grid during faults. Temporal will use a novel low

loss flywheel generator combination to deliver a 500kW power rating per

unit in an array of up to 10 flywheels (i.e., +/- 5 MW) that has the capacity to

absorb real power for up to six minutes, and release it back to the Hydro

One distribution network for the same duration. The demonstration

represents one of the world’s largest wind integration projects utilizing

flywheel storage technology.


Morgan Solar Inc.

High Concentrating Photovoltaic (CPV) is recognized as being a substantially more efficient way

to collect solar energy in comparison to conventional photovoltaic (PV) approaches. To date,

virtually all CPV companies concentrate the sunlight using bulky and expensive optics such as

Fresnel lenses or curved mirrors. As a result, CPV systems have struggled to compete with PV

systems on installed cost ($/W and $/kWh). Morgan Solar has developed a patented Light-Guide

Solar Optic (LSO) technology which concentrates solar energy in a fraction of the volume of

competing CPV solutions. The use of thin, lightweight, and fully sealed acrylic optics enables

system wide cost reductions. A 50% reduction in $/W of installed costs can potentially shorten the

economic payback period for large-scale solar farms by several years.


@SDTC_TDDC sdtc.ca


Chris Boivin – VP Investments(613)234-6313 ext 293

[email protected]