Green energy proponents predict business as usual - for now

Tuesday, October 16, 2012

by BETTER FARMING STAFF

The adjournment of Ontario’s legislature offers some short-term stability to the province’s solar energy industry, says the president of the Canadian Solar Industries Association. “I woke up this morning feeling a sense of relief, really,” said John Gorman on Tuesday. “I’m feeling quite positive about the fact that there’s some clarity now around what the next several months are going to look like.”

Gorman explains that his industry had been concerned that a proposed merger between the Ontario Power Authority and the Independent Electricity System Operator (IESO) would affect the processing of applications to the feed-in tariff (FIT) and micro FIT green energy generation programs.

The IESO manages the province’s electricity system as well as its wholesale electricity market. The power authority is responsible for planning the province’s electricity supply. An April 18 provincial news release estimated the merger would save $25 million a year by eliminating overlaps and introducing efficiencies.

The proposal, bill 75, was undergoing second reading debate when Premier Dalton McGuinty announced Monday that he would resign and prorogue the provincial legislature — cancelling the current session of the legislature — until a new Liberal leader is found. To continue with the merger, the proposal would have to be reintroduced. Until then, “we’re assuming it will be business as usual for the agency for the next several months,” Gorman says.

While the adjournment may mean the end to legislative activity for the moment, the regular business of government will proceed. It’s hoped the application periods for FIT programs “will open more on schedule and as predicted,” Gorman says. In September, the authority delayed indefinitely the application period for new, small FIT programs so it could address issues concerning the location of solar panels on rural and agricultural lands. The authority has not yet announced its next application period for larger FIT projects.

There’s another challenge looming for the province’s green energy sector.

Earlier this month, several Canadian media outlets reported on an International Centre for Trade and Sustainable Development newsletter indicating Ontario could lose a WTO challenge concerning its green energy program.  

The challenge, filed by Japan and the European Union, questions a FIT and micro FIT program requirement that calls for a high percentage of local content in green power generation developments. For example, wind projects generating more than 10 kilowatts must have at least 50 per cent domestic content under the FIT program. Solar projects of any size must have at least 60 per cent.  

According to media reports, the WTO preliminary findings are that the local content rule breaks the organization’s General Agreement on Tariffs and Trade but is not illegal.

The final ruling is slated to be released at the end of November.

If the local content rule is lost, Gorman says there is industry speculation of a significant impact on the Ontario solar industry. It would, for example, allow green power developers to use panels made from outside of the province.

But Gorman wonders if the impact will be less than anticipated. “What has been accomplished over these last four years has been the establishment of quite a significant manufacturing industry in the province,” he points out. Those manufacturers are competitive with others in North America. “While they cannot meet the same price point as some of the imported Asian panels, they are close and there are certain benefits to using the Ontario-made panels that will likely justify the slight premium you have to pay for them.”

Moreover, the program has fostered companies that offer world leading inverter technology, he says. “Those types of technologies will continue to do well regardless of whether there is a local content provision or not in the province.”

Jennifer Kett, press secretary to Ontario Minister of Energy Chris Bentley, would not comment on “a confidential report.”

“I can speak more generally and say that it’s our view that the FIT program is consistent with Canada’s WTO obligations. Should the panel disagree we’re ready to pursue all options with the federal government, including an appeal. FIT program is an important part in building a cleaner energy system for Ontario and creating good jobs here.”

Robert Hornung, president of the Canadian Wind Energy Association, says it’s difficult to speculate on a report that he hasn’t yet seen. “We don’t have a decision,” he says. Once one is released, there may be different ways of addressing it, including an appeal. At the same time, however, those investing in Ontario’s wind energy supply chain are doing so because they recognize opportunity. “The Ontario market looks very strong going forward.” Businesses established here are also looking to export products to other places in Canada and the United States.

Hornung says the wind industry is not really affected by the now defunct bill 75. While the possibility of another election looms and pressure rises from groups opposed to wind development, he’s confident the wind sector will move ahead.

“Everyone wants to have an environment where you have clear policy — certainty — going forward,” he says. But regardless of policy, business in wind is booming.

“In 2003 there were 15 megawatts of wind energy; we’ve just passed 2,000 MW,” he says. “We have more than 2,000 MW of additional wind energy projects that have been contracted to be built and the government’s long term energy plan would envision another 1,500 MW being contracted, and the government has indicated that they’re working towards a scenario where you would have approximately 7,500 MW wind energy contracted to be built by 2015.”

The fast-growing industry includes manufacturers located in the province and those out of province who meet the local content requirements by partnering with local business. There are 170 firms exhibiting in the organization’s trade show this year in Toronto. “Many are Ontario-based companies,” he says.

The legislature might be dissolved for the moment but grass roots opposition to green energy development, particularly wind energy, continues.
 
In a Tuesday news release, Wind Concerns Ontario, a coalition of groups and people who oppose wind development, recommends McGuinty’s call for party renewal “should mean a halt to all industrial-scale wind power development.”

“This province has been torn apart by the Green Energy Act,” states Jane Wilson, the coalition’s president, in the release. She says the province’s rural towns and villages “have been treated like resource plantations for large-scale industrial wind power generation projects.”

The coalition asserts that wind development creates environmental problems, human health risks and has had a negative impact on the economy by increasing the cost of energy production and lowering property values in the areas where the developments are located. BF