Sweet deal it ain’t

by John Snobelen, Toronto Sun
The Liberal campaign is a strange brew of hope and fear. The fear part will begin in earnest in the last two weeks of the campaign. Right now Dalton McGuinty is selling hope in the form of the ill-fated Green Energy Act and a $7-billion no-tender contract with Samsung.

A couple of years ago the McGuinty government went green crazy.  As part of its Green Energy Act the province agreed to purchase energy from windmills and solar farms at a huge premium to the market price for energy. 

The trouble is those windmills and solar panels don’t produce energy when we need it. As a result, the province is compelled to pay as much as 13 times the going rate for power we don’t need and then export the surplus power at discount rates.

Crazy, right? What’s even crazier is you and I get to pay for all of that exported, high premium power in our hydro bills.

It’s like paying a $1.30 a liter for gas and then selling it to your neighbour for five cents. If that sounds like a bad business wait for the punch line; having subsidized your neighbour’s gas price you now hope to compete with him in business.

That’s the Green Energy Act scheme in a nutshell.

McGuinty is, in his words, “trying to lay the foundation for new economic growth in Ontario” by exporting cheap power to the U.S. Wonder how that will work?

In full spin mode, McGuinty is now pointing to the 15,000 jobs the Samsung deal is supposed to create. He isn’t talking about the jobs that have been lost because of high-energy costs to Ontario businesses.

Hydro bills increasing

Or the chilling economic effects of having Ontario families spend more every month on their hydro bills.

Or the WTO challenge to the legality of the Green Energy Act.

Or the bankrupt solar panel plants in the U.S.

Or the dismal economic record of green energy in Europe.

Or the real elephant in the green energy room — China.

China is spending huge sums of state money supporting the manufacture and export of about half of the worlds solar panels and wind turbines.

Of course, for domestic power consumption China relies largely on cheap and dirty coal power.

On top of all that China controls most of the world’s supply of the rare earth materials that are required for wind turbine production.

So lets add this up; Ontario is charging huge premiums for domestic energy and exporting cheap power while China burns cheap coal and bangs out subsidized wind turbines and solar panels. Wonder who will be more competitive?

A few years ago, when McGuinty signed the deal with Samsung, he believed he had found the magic solution to growing Ontario.

Give a few billion to a foreign corporation, charge homeowners more for hydro and sit back and wait till the jobs show up. It’s the government equivalent to hitting the big red easy button.

Now that dream is turning into a nightmare.

The WTO legal challenge puts the entire Samsung contract at risk.

Stiff global competition makes a profitable domestic green energy industry questionable at best. How long does Ontario want to subsidize Samsung?

Of course the real nightmare comes once a month when homeowners get the bad news in their hydro bills.

McGuinty can make cheerful jobs announcements standing beside the happy folks from Samsung every day but he can’t erase the shock of drastically higher energy costs to families everywhere in Ontario.

So much for hope. Next week McGuinty will move on to fear.

— Snobelen is a former Conservative MPP and cabinet minister

14 thoughts on “Sweet deal it ain’t

  1. This article pretty much sums up the economic loss but no to mention the incalculable loss in environmental damage to rural Ontario. Interesting point about the rare earth metals. Every country can produce their own rare earth metals but China can produce them so dog gone cheap. Of the 30 or so different ones some are even radioactive. When China had been threatening to cut supply the last little while the USA has been pushing to open the shut in Nevada mines from the 90’s and the share prices were going through the roof. Since then China is relaxing the supply again and the share prices from the US rare earth metal companies share price has been dropping over 60 percent. Same applies to this green energy pipe dream, the market knows where its headed …..green energy stocks especially wind have been doing the same as North American rare earth share prices. Question is will the bubble blow before all the damage to rural areas is inflicted on us.

    • What is the hourly wage rate in the Ontario turbine tower sector? Does anyone have this information?

      • I know the turbine plants and the solar assembly plants that are creating soooo many green placements are 10 to 20 percent more than minimum wage.

      • Ontario general labour rate is ~ $12/hr and in the 10-20% range over minimum.
        Skilled workers in turbine manufacturing probably are paid more/hr.

  2. Recent words from Dr. Gabriel Calzada (yep – that Calzada):

    After thorough review, using two different research methods and data from both European Commission-financed research and the Spanish government, the trend is clear: Government support of renewable energy production does not provide long-term employment and in fact destroys jobs.
    In the Spanish example, we found that each renewable job cost the Spanish taxpayer between $752,000 and $800,000. Even more troubling is the fact that diverting these critical resources cost the Spanish economy 2.2 jobs for every job created. Further, the jobs created in Spain were temporary — two-thirds of them were in installation.

    Read more: http://dailycaller.com/2011/09/05/promise-from-green-jobs-overstated-harms-ignored/#ixzz1YLHkuegP

  3. An add on to Scott’s point…

    Regarding the 2009 report by Dr. Calzeda…

    The 900 pages of emails, obtained by the Competitive Enterprise Institute’s Christopher C. Horner, show staff members from the DoE’s National Renewable Energy Laboratory (NREL) and the EPA developing a response to the report. They also show them coordinating the response with the Center for American Progress, plus the American Wind Energy Association (AWEA) and the Global Wind Energy Council (GWEC) — two wind industry lobbyist groups.

    What the emails show runs contrary to statements made to Congress by the Assistant Secretary of Energy Cathy Zoi — the Obama administration response to the Spanish report was in fact instigated at the request of the AWEA. It was then written with the close cooperation of the AWEA, the Center for American Progress, and the Union of Concerned Scientists.

    The emails concentrate on the political implications of the Spanish study — and how to discredit it.

    Good bedtime reading… The Method sounds very Liberal!

  4. In his column, Mr. Snoblen claims, “The WTO legal challenge puts the entire Samsung contract at risk.” Although I wish that this claim was correct, my understanding of the legal challenges is that his charge is inaccurate. The WTO challenges attack the protectionist elements of the Green Energy Act. I can’t offer a legal interpretation of the challenges, but it appears that while the Samsung deal includes some domestic manufacturing elements, the Samsung deal might survive even if the WTO challenges succeed.

    • Tom:

      I agree with your assessment. However maybe Mr. Snobellen was referring to the practical issue(s). A weak (or non-existent) ROI can kill a deal more quickly than any legal paper.

      I believe that a WTO ruling in favor of Japan would do them (Samsung) no good — just open the market to even more inexpensive Chinese wind turbines. To me that would be the crux of the matter — the removal of a protective price barrier which is constructed of Ontario content regulations..

      Note that Samsung could not supply their IWT’s — they plan to install Siemens turbines in their first project. That is ever so much cheaper than employing expensive Ontario workers, building an expensive Ontario plant and paying expensive Ontario power rates. They appear to have extraordinarily good business sense these Koreans. So maybe they could survive by selling Chinese parts and telling Premier McGuinty — “Tough Luck!”. That seems to be the practical alternative for Samsung — at least to me. They could probably even do some minor work here — like painting them pink or something… or something. They could even fulfill the Solar Contract with Chinese Solar Panels — it worked for Solyndra and Obama (TIC!). 😉

      Just my take on the deal. $0.02 worth…

Comments are closed.