Ontario Votes: Green energy plan fizzles, figures show

by Lee Greenberg, Ottawa Citizen
TORONTO — Ontario’s contentious green energy legislation, quickly emerging as the most substantive single policy difference between the Liberal and PC election campaigns, has so far resulted in virtually no renewable energy in the province.

As of Sept. 2, all projects stemming from the Green Energy Act amount to 86 megawatts (MW) of power. That is equivalent to 0.25 per cent of the province’s 34,882 MW of installed capacity.  The fact that green energy forms such a small proportion of Ontario’s power generation mix raises questions about the glacial pace of the Liberal party’s signature subsidy plan, known as the Feed-in Tariff (FIT).

Those questions were amplified late this week when the National Post revealed that a solar plant used for a Liberal campaign photo op days earlier had temporarily shut down production.

When pressed on the issue, McGuinty subsequently explained that the company “went through their inventory faster than expected.”

But even staunch proponents of renewable energy say there are obvious problems with the Liberal plan, which pays green energy producers above-market rates on 20-year contracts in return for buying up to 60 per cent of their project materials domestically.

The heavy incentive (also known as micro-FIT for smaller installations by homeowners) was designed to kick-start an entirely new green energy manufacturing cluster in Ontario.

However, bottlenecks in the system, doubt surrounding the future of the program and a challenge to the domestic-content provision at the World Trade Organization, have reduced to a trickle the number of projects becoming a reality in the province.

No less an authority than Ontario’s environmental commissioner, Gord Miller, remarked on the slow progress of the program this summer, telling a press conference, “There’s been an awful lot of discussion about something that’s fairly modest so far, I’d say.”

According to professor Mark Winfield, a York University environmental policy expert, the province’s electricity grid was designed for several large generators and not the thousands of smaller ones that now exist.

In many cases, potential developers are being told there isn’t enough capacity on the lines for them to enter the market.

“It’s clearly a problem,” says Winfield. “And you’re seeing the cascading effects of that problem. Manufacturers are having difficulties because there is a backlog of contracts that can’t be executed and therefore potential developers cancel orders for equipment. That’s a factor. I think there’s been a bit of a pullback, too, because of all the uncertainty about where all this is going to go post (election) Oct. 6.”

On Sunday, Premier Dalton McGuinty defended the pace of development, saying the goal is to have 13 per cent of the province’s energy supply made up of renewable energy by 2030.

“We’re going to ramp it up over time,” he said.

McGuinty acknowledged certain unnamed “challenges,” but portrayed those problems as a positive sign.

“We are victims of our own success. Ontarians by the thousands and thousands are saying we want to be part of this program. So we had to cope and to manage and to make changes along the way so we could accommodate that tremendous demand.”

At current rates, small solar producers typically expect to break even on their investment halfway through the 20-year guaranteed contract.

The Conservatives say they will scrap the “failed” program, but promise to honour existing contracts.

Though the government has not released an exact dollar figure for the program — and also will not say how much each marginal unit of green energy costs compared to gas and nuclear — a November 2010 report said the green energy program would account for just over half of a projected 46-per-cent increase in hydro bills over the next five years.

Grid upgrades and other capital improvements to older generating facilities will account for the other half.

McGuinty, meanwhile, said Sunday he will reduce subsidies to the feed-in tariff if re-elected to a third term.

“Yes,” he said when asked if he will cut FIT rates. “With every passing year, particularly in the area of solar technology, those prices keep coming down and our FIT rates will keep coming down.”

With the election campaign entering its third week, energy issues continue to be among the most prevalent on the campaign trail.

Progressive Conservative party leader Tim Hudak said Sunday he would “treat energy policy as economic policy” as part of a five-point jobs plan that included lowering taxes, removing red tape and expanding the apprenticeship system for skilled workers.

New Democratic Party leader Andrea Horwath took the day off the campaign trail. On Monday she will visit Ottawa for the second time in the current contest.

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