Doubts hit Ontario’s green energy plan

Lee Greenberg, Postmedia News, Financial Post

TORONTO — Ontario’s plan to incite a homegrown green energy industry has stalled, industry experts say, as the plan is plagued by political doubt ahead of this fall’s provincial election.

Several factors are stirring marketplace jitters, including unhappy noises from the opposition Conservative party, international opposition to buy-local provisions in the plan and increasing hostility to wind turbines in rural Ontario.

“There is uncertainty out there,” says Dan Gormley, a Toronto-based lawyer who leads the green energy practice at Goodmans LLP. “And I think a good part of the uncertainty comes from people wondering how much longer the government can spend the sort of money that’s involved in handing out these contracts.”

Ontario’s feed-in tariff (FIT) program, introduced in 2009 as part of the Green Energy Act, offers heavily subsidized long-term contracts to renewable energy developers who use a portion of domestic materials in their projects.

The program, a first of its kind in North America, was designed to work on two levels. Potential wind and solar developers would be enticed by the generous rates — as high as 30 times the current market price for electricity — offered by the province. Once the generators jumped, manufacturers, buoyed by rules forcing as much as 60% of projects to be made in Ontario, would spring up across the province.

Government promised the policy would create 50,000 new jobs by the end of 2012, filling a void left by an exodus of manufacturers.

While the FIT program has achieved some success (15 projects are now in service, adding 10.6 megawatts of power to the grid) it is not nearly the panacea many had believed.

Interest on the part of developers and financers is substantial. Manufacturers, however, have been slower to enter the market.

“I don’t think that has developed as quickly as the government would have liked,” Mr. Gormley says. “And that’s probably because nobody could be certain that five years from now this program is going to be demanding the volume of solar panels, wind turbines, etc., (that it is) today.”

More than halfway towards its target date, the government claims 13,063 jobs in total (1,244 of them in manufacturing) have been “created or supported” by the legislation. Those numbers appear, at turns, both exaggerated and vague.

Four manufacturers contacted by the Citizen for this article, for example, reported employing far fewer people than the government reports.

DMI Industries, a Fort Erie-based turbine tower manufacturer, has 165 employees, 44% fewer than the 238 listed by the government.

SunRise Power Corp. employs 15 people, according to its president, 133% fewer than the 35 listed. Satcon, a Burlington-based manufacturer, was established eight years before the Liberal legislation and estimates it has added 40 jobs to accommodate the additional business in Ontario. The province claims 150 jobs at Satcon flowed from the Green Energy Act.

“Obviously, the numbers are overinflated,” says Sean Moore, CEO of Unconquered Sun Technologies, a Windsor company that employs roughly half the 20 claimed by government. “It’s almost a virtual market. Everyone’s coming out with these announcements. But until you have actual brick and mortar, no one’s actually (employed).”

Furthermore, a vast majority of the jobs the government claims it has created — 9,436 categorized as “conservation” jobs — are totally unaccounted for. A ministry spokesman said many are attached to a home retrofit program that predates the Green Energy Act.

The news is not all bad. Both Moore and SunRise president Paul Pauze are prime targets of the strategy — engineers who lost their old world (auto and engine) manufacturing jobs when plants in Windsor and Peterborough downsized.

Moore estimates demand is outstripping supply for photovoltaic panels by a margin of roughly eight to one and plans to expand his operations in 2011.

Several manufacturers have recently announced their intention to set up shop in the province, including Siemens AG, Celestica and SunEdison Co.

However, Moore says it takes years to go from announcement to production. By then, the generous incentives underpinning the marketplace may have changed drastically.

Tim Hudak, leader of the opposition Conservative party, has called the green energy plan economically unsound. He blames it for soaring electricity bills, which rose 16% in 2010 to an average monthly total of $114.

“The (subsidies) are too high,” he said in an interview. “They’re driving up hydro rates and killing jobs in the broader economy. Our party supports renewable energy, but it has to be at rates that are affordable for families that pay the bills at the end of the day and in communities where it’s welcomed.”

Mr. Hudak has also criticized the legislation, which centralized approvals processes to prevent NIMBYism, for taking decision-making power away from local municipalities. He says he would reverse current rules by allowing municipalities to have a say in siting decisions — a potentially devastating blow to wind developers in particular.

On the other aspects of the program, the Progressive Conservative party leader is noncommittal.

“We’ll have more to say on this in the time ahead,” he told the Citizen.

Mr. Hudak’s position is being taken seriously, especially because he leads the Liberals by a slim margin in the polls.

“If that political uncertainty could be removed, there would be much more investment, no question,” says Mr. Gormley. “I would hope (Hudak) could declare himself.”

Mr. Pauze estimates there is currently about four years worth of manufacturing work in the green energy pipeline, a fact sustaining companies like his. Beyond that, the future is uncertain.

“We’re certainly watching what’s going on very carefully,” he says.

Other factors are undermining the industry as well.

Japan launched a challenge to the domestic content provisions in the law in September and was quickly joined by the European Union and U.S. And grassroots opposition to wind power is growing. One group recently launched a legal challenge in January that could result in rule changes surrounding siting.

In a candid admission, Brad Duguid, the province’s energy minister, acknowledges the pace of investment in the sector is not happening as quickly as he would like.

“I think there’s enough groundwork being done that’s allowed investment to come in, albeit slower than would be if Tim Hudak wasn’t standing there as a threat,” he says. “From my perspective from talking to investors and businesses, I think it’s had an impact.”

12 thoughts on “Doubts hit Ontario’s green energy plan

  1. “Other factors are undermining the industry as well.”……………….this one line from above pretty well says it all……………

    One factor is that Wind and Solar in Ontario DON”T PRODUCE the energy on a consistent and sustainable basis without a matching fossil fueled supplier like Gas or Coal.

    This isn’t California McGuinty!…………………This is Canada where winter snows block out solar panels, and on the coldest and hottest days of the year when Wind is required the most, it DOESN’T BLOW!

    The only thing that really BLOWS from Queen’s Park is all the methane producing claims about how great our future is with McGuinty’s Billions (ours) “bribing” manufacturers to set up shop in Ontario even though China can and is producing the same products at 1/10th the price!

    Guess what? We don’t believe you anymore DoNoGood and McGuinty…………..you’ve served your purpose, you’ve sold Ontario out and now we must ask you to LEAVE…….and don’t come BACK!

  2. Is Tim Hudak his biggest opposition or is it the citizens of Ontario who he demonized as “NIMBY’s”?
    The Liberal party has no sound plan for electrical generation in this Province that is beneficial for businesses and consumers.
    A government that enforces industrialization on rural areas, and when not finding a welcoming reception, now has to rely on throwing Industrial Wind Turbines in our Great Lakes and Crown lands, needs to acknowledge that their vision is majorly flawed.
    Ontario is not for the taking nor is our tax dollars without our consent.

  3. I would suggest that Tim Hudak is walking very carefully within the ranks of the Wind Opposition………………”We” and I mean Wind Fighters are probably more “in tune” with the inner workings of Ontario Politics than even the politicians who are involved in politics!

    Through OUR research we have been on a really dark and depressing journey within this previously unknown arena of the “absurd and injurious”.

    I know I never wanted to go to this extent but this hunt for the truth has been an almost “obsessive quest” that shows no limits of how far greed and corruption can go when allowed “free reign” with unlimited supply of $$$$$$ for the stealing without consequences.

    Every day now there seems to be another statement or action by a politician which is crazier than the last and makes absolutely no sense to a person who has even a “smidgen” of morals and values! Where it does make sense is when you put yourself in the place of a Wind Executive or Investor who has zero “moral values for his/her fellow man” and believes full heartedly that “greed is good”! (this is directed at the “thumbs down crowd!)

    Yet we carry on and in the end when these monstrosities are nothing more than a graveyard of metal and poisonous liquids rusting in our once Prime Farmland the purveyors of this misery will have “live with their sins” and I’m sure it won’t be a pretty sight!

  4. The forgot to emphasize one issue… minor as it is…

    The Wind Turbines don’t deliver enough energy to make the land use worthwhile… and for this we get allllll the problems…

    Say goodnight Dalton!

  5. I firmly believe we have more than enough data and research to finally reach a conclusion that Wind Energy as it is being marketed today is a totally USELESS and DESTRUCTIVE power source: ergo: Why are we continuing to try and argue it’s viability with “Politicians and Windies?”

    Our next stage of this fight is to basically “Outlaw” any more Wind Projects, Wind Discussions at the Public level and Political level and begin a campaign of simply stating: “GET OUT OF ONTARIO NOW!-YOUR LIES ARE NOT TO BE SPOKEN HERE!”

    No arguments, no discussions, just ACTION. Don’t even let a Politician or Wind Rep get one more word out on their “dog and pony shows”….just GET OUT OF ONTARIO NOW!

  6. Quixote, Barbara, David, and Sick on Turbines

    Totally Agree.
    Look forward to reading your comments every day.

    THUMBS UP!

  7. “This isn’t California McGuinty!”

    Hey Quixote…

    Wind energy isn’t a smash hit there either! Now they got 14,000, yeah, thats “thousand” abandoned wind turbines to clean up.

    Coming soon to a province near you!

    Oh, BTW… A buddy of mine just got back from a cruise. While on it he ran into a couple of DANISH wind energy engineers! Yeah… turns out Denmark is DISMANTLING onshore wind farms. Why? Too many COMPLAINTS!

    Turns out local pharmacies aren’t too happy anymore due to the major loss in sleeping pill and pain killer business that left with the turbines!

    If you want a good laugh, check the internet for “used wind turbines for sale”. Check where most of them are from and check how new some of these are.

    As for those “ex” Danish wind engineers… Well they are doing very well in the international wind energy “consulting” business…

    B.B.W.

  8. Yes, we have the information now and it’s time to use it.

    Everyone can help no matter how small their part is or maybe just what they have time to do.Just asking questions is a big help.

  9. I just love good news. All the public teat sucking rent seekers suddenly in panic mode over their precious subsidies?

    Wonder if Hudak can resist all the money being tossed his way?

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