Ontario to promote clean power
By Toronto Star
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Energy Minister Dwight Duncan said the program would be limited to smaller projects, typically less than 10 megawatts, but over time could add thousands of megawatts of renewable power to a strained provincial grid being weaned from coal.
"We support it entirely.... It encourages small businesses, farms, individual households and others to come to the table," said Duncan. "I would anticipate an announcement, probably in September."
He has instructed the Ontario Power Authority to investigate a workable pricing scheme and the Ontario Energy Board to look at necessary connection-policy changes that would ensure non-discriminatory access to the grid.
Ontario would become the first province in Canada, and possibly the largest jurisdiction in North America, to open its electricity system to small suppliers of renewable energy and pay a premium on each kilowatt of clean electricity it purchases.
In a letter sent August 18 to both regulatory authorities, Duncan urged that work begin "immediately" with the goal of having an implementation plan before year's end.
Duncan said the program would be open to solar, wind, biomass and micro-hydro projects. It's largely expected to mirror a proposal submitted to the energy ministry in May by the Ontario Sustainable Energy Association (OSEA).
At its heart is a so-called feed-in tariff or "standard offer contract" that provides attractive fixed-price contracts, typically for a period of 20 years, and offers a right to interconnect with the grid. The idea is to price high enough to encourage production and have the premium spread across all ratepayers.
"I think people are prepared to pay a higher price for cleaner energy," said Duncan.
Paul Gipe, a U.S.-based wind-energy expert who recently served as acting executive director of the energy association, said it would be the most extensive policy of its kind on the continent, going beyond what California did during the 1980s.
"Ontario would be far ahead of any jurisdiction in North America, assuming it gets the prices right," said Gipe, who was lead author of the proposal.
The approach has been implemented successfully in Europe, allowing countries such as Germany and Spain to add a significant portion of renewable energy to their overall power mix while capturing early solar and wind manufacturing opportunities.
For example, most of the 16,600 megawatts of wind energy in Germany comes from small projects built since 1991. The wind industry is now the second-largest consumer of steel in Germany and is expected to employ 110,000 people by 2010, up from 45,000.
"There's no question if the Ontario ministry of energy puts in feed-in laws, that puts out a powerful signal saying we're in this for the long haul," said Sean Whittaker, policy director for the Canadian Wind Energy Association. "We're very much in support of it."
Rob McMonagle, executive director of the Canadian Solar Industries Association, said he's pleased the province is looking beyond wind and including other options such as solar.
"We just need some government to take the lead. Once you get that first major program announced, it opens up the floodgate for other programs to follow," he said.
Prince Edward Island has embraced feed-in tariffs, and Oregon, Minnesota and Washington states are moving in that direction. But experts say Ontario, if it can move fast on its program, can blaze a trail and capture the investment and industrial opportunities that come with it.
"This makes enormous sense," said Duncan, pointing out that it serves the dual purpose of meeting clean energy demands and sparking economic development.
"Somebody has to build the windmills. Somebody has to build the solar panels. Somebody has to build the anaerobic digesters. Right now Ontario is ideally positioned, not only to serve our own market, but to also serve the North American market."
Industry experts say many foreign manufacturers of wind turbines, eager to tap North American demand, are scouting out places to set up manufacturing and assembly facilities.
"What these manufacturers are looking for is a strong, stable policy message," said Whittaker.
Spain's Ecotecnia, Denmark's Vestas and Enercon of Germany are considered three of the most likely wind-turbine manufacturers to consider operations in Canada. Gipe said Ontario would be wise to court Enercon, which has labour-intensive technology that would make the biggest impact in terms of job creation.
Duncan said he's had "fairly advanced" negotiations with wind turbine manufacturers, and while he wouldn't say which ones, he said stimulating small renewable energy projects in Ontario makes the province more attractive.
"We shouldn't miss that boat," he said.
The government has committed to closing down by 2009 four coal-burning power plants representing 6,400 megawatts of generating capacity. It plans to replace that power with a mix of renewable energy, nuclear and natural gas facilities as part of a more distributed electricity system.
To date the province has been focused on large-scale renewable energy projects, such as wind farms, which are selected after a formal request for proposals. Last November, the government announced 10 projects that would provide 395 megawatts of clean power, and it's closing a second round of requests for up to 1,000 megawatts for projects of 20 megawatts or higher.
A third round announced in July for up to 200 megawatts is seeking small to medium-sized projects of less than 20 megawatts. The target is to generate 5 per cent of Ontario's energy capacity from renewable resources by 2007, rising to 10 per cent by 2010.
In its proposal, OSEA said using such a costly tendering process makes it difficult for smaller projects to participate, even though many of these projects taken together can make a significant contribution to the province's energy needs. Establishing a feed-in tariff would create a more inclusive environment, making it easier for any Ontarian to play a role in the province's energy future.
"European experience indicates that small, distributed projects with community or local participation result in more renewable energy developed more quickly and increases the public's acceptance of the technology," according to the association, adding that increased distribution of generation typically results in increased system reliability and reduced line losses.
Gipe, who consulted with farmers on the program, said he expects to see increased investment in rural Ontario, where wind turbines, biogas facilities and even solar photovoltaic systems would be ideally located.
"The farmers, they understand markets. Every place we went their question was, when do we start?" he said.
"I think farmers are not only a natural constituency for doing this, but they're also a natural constituency for making this happen."
