Green power is great, until you calculate the cost

Ontario Green Energy Plan faces scrutiny over wind farms, solar subsidies, rising electricity prices, delayed Darlington nuclear expansion, and grid reliability risks, as OPA forecasts niche roles for renewables amid industrial demand and coal phase-out.

The McGuinty government is spending Ontario's electricity revenue to encourage investments in wind and solar green power generation – with no benefit to the system or to the customer.

Big corporate investors in wind farms and, maybe, solar farms will reap rich rewards for 20 years while the customer pays rising power prices for electrical energy.

This push for more green power, while at the same time delaying a decision on extending the Darlington nuclear plant, could result in a power shortfall within four to five years. This would be a major blow to the Ontario economy.

Two years ago, the Ontario electrical load was peaking at 26,500 megawatts. Because of the recession, it will have had a winter peak in January of between 19,000 and 20,000 megawatts. This 7,000 megawatt reduction has given the government time to push its "green energy" plan and delay a decision on the need for new nuclear power units at Darlington.

In a report two years ago, the Ontario Power Authority (OPA) told the government that "wind and solar power will never be more than a niche supplier of power in Ontario."

The geographic reality of Ontario is that there is not enough sun or consistent wind in Ontario to make them significant sources of supply to the system. However, the government wants to look green and has adopted a program of shutting down the province's coal-powered generating plants. The message to the public is that coal is bad, green is good, so let's spend lots of money on green power.

Subsidies are available to developers of large wind turbine operations with 20-year contracts to supply energy at guaranteed prices, thus ensuring a good return on their investment.

The green plan also encourages individual users to invest in a wind turbine and save money by buying less energy from a utility. However, an analysis of the investment shows there is no benefit. A 3.5-kilowatt unit supplied by a prominent builder in Saskatchewan costs $12,500, plus $500 shipping, plus 10 per cent tax. Installation will cost about $3,000. The total investment of $17,000 will, at 5 per cent financing, cost $850 per year – there also will be maintenance costs of at least $50 a year. How much energy will be produced each year by the 3.5-kilowatt unit? Who can tell? It will depend on how much wind blows and for how many hours.

The OPA uses the figure of 18 per cent when estimating the contribution of wind turbine units to the system. At only 18 per cent, individuals would reduce the energy cost on their bills from about 11.46 cents per kilowatt-hour in Toronto down to an average of 5 to 6 cents per kilowatt-hour. They still will have to pay all of the fixed charges from the utility system because it has to be there when the wind doesn't blow. So it's a feel-good thing – no coal burning – but the $900 annual cost will result in a loss of about $250 per year.

Subsidies for investments in wind power and the guaranteed contract price of 13.8 cents per kilowatt-hour for onshore wind installations – and up to 80 cents per kilowatt-hour for other generation – are paid by the Global Investment Fund designed by the OPA. It puts the cost on the user's bill, increasing the rate paid for energy. For large industrial customers, the extra charge from paying to give away power can be a significant cost running to many thousands of dollars. Last November, the Global Investment Fund charge was 3.1 cents per kilowatt-hour.

None of this green power generation or the money being spent on it, which warrants scrutiny from analysts, will have much impact on the Ontario power system.

Load is down 17 per cent in southern Ontario because of the recession, and more than 50 per cent in northern Ontario because the forestry and mining sectors have been hit so hard. But the economy is showing some signs of recovery. Both the federal and provincial governments are making investments to encourage new industry and more job creation. We still have automotive and steel industries, albeit on a smaller scale. The power requirement for industry, together with the needs of our growing population, will require more electricity. At the same time, our power infrastructure is aging, as aging nukes and coal plants squeeze supply, and the government is going ahead with the closing of coal plants.

Where will the new power come from? The OPA is not counting on wind or solar. Nothing but a major new source of supply can provide for the province's expanded needs. True, new gas-fired turbine units are coming online – they are better than coal but still have carbon emissions and cannot be considered "green." The plan to enlarge the Adam Beck plant's capacity at Niagara Falls has been delayed because of tunnel problems.

The most important factor right now is the McGuinty government's delay in making a decision, where power and politics are entwined, on Darlington extension. It still is trying to get the federal government to guarantee part of an AECL generating plant but has not made any progress.

The end result of the McGuinty government's green plan is that while investment in wind, solar and other green sources looks good politically because they displace coal plants, they cost a lot of money – which is going to corporate wind farm developers and other investors. The little wind turbine operator saves nothing and the customer pays more. What's more, the green plan will not provide the significant new supply that the electrical power system needs.

Large new generating plants have an eight- to 10-year build time. We may come to a time when we have to ration power, a time when investors in new industry in Ontario will have to apply for a power permit to ensure having electricity for their operations.

This would be a disaster for Ontario. Expanding the electrical power supply in Ontario is essential – now. We need power for new industry and new jobs. Green power won't do it.

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