Ontario's greenhouse production outgrows energy infrastructure

Wednesday, June 24, 2015

by SUSAN MANN

Inadequate energy infrastructure in Ontario is hampering some greenhouse operations’ ability to grow, says a spokesman for the Ontario Greenhouse Alliance.

And some operations are opting to build new facilities in the United States because of energy issues here, says Jan Vanderhout, alliance chair. The alliance is an umbrella organization for Ontario Greenhouse Vegetable Growers and Flowers Canada (Ontario).

Vanderhout made the observations as the Ontario government announced approved applications from greenhouse farms earlier this week under electricity programs offered by the Independent Electricity System Operator (IESO), which manages the province’s power system.

Greenhouse farmers in the Leamington area are also waiting to hear if there will be upgrades to the Leamington-area transformer station. The upgrades are necessary to facilitate the new greenhouse electricity projects, Vanderhout explains.

But greenhouse growers in Leamington are not the only ones in the province challenged by insufficient energy infrastructure. It’s affecting greenhouse and other industries across all of Ontario, he adds.

Vanderhout says he applied to one of the electricity system operator’s programs but was turned down because the Dundas transformer station near his Hamilton-area greenhouse didn’t have “enough capacity.”

“My application and at least one other was declined because of restraints at the Dundas transformer station,” he says, noting some smaller projects from his area were approved.

“We have some serious infrastructure restrictions in Ontario,” he says. “As a citizen, I’m concerned that’s restricting economic growth in many aspects, not just agriculture.”

Furthermore, inadequate electricity infrastructure isn’t the only problem. Some growers have natural gas line infrastructure in their areas that is too small to meet their needs. Vanderhout says his greenhouse operation would need to invest more than $1 million to upgrade gas lines supplying his farm “that we would never have ownership of.” He explains he would be required to pay for the upgrades if he wants them.
 
Vanderhout says some larger greenhouse operations are starting to build facilities in the United States, and that’s mainly due inadequate energy infrastructure and partly because of Ontario’s high energy costs.

In Windsor, Tuesday, Ontario Energy Minister Bob Chiarelli announced Cervini Farms, C.L. Solutions and Brunato Farms were each awarded contracts under the IESO’s combined heat and power standard offer program to develop combined heat and power electricity generating facilities for supplying power to the electricity grid.

Amco Farms, a part of Amco Group Canada which is also based in Leamington, recently signed a contract under the IESO industrial electricity incentive program to get a reduced electricity rate until the end of 2024 in return for expanding its existing production facility. The program was recently expanded to include greenhouses, floriculture production, refrigerated warehousing and data processing, and this is the first time greenhouse operations were approved under it. Other eligible sectors under the program are mining, quarrying, oil and gas extraction and manufacturing.

Alexandra Campbell, IESO spokesperson, says there isn’t a flat rate for the electricity reduction under the program. The rate reduction depends on the project and “there’s a complicated formula” to determine it.

The lower rate is only applied to the new portion of the applicant’s business, she says.

The combined heat and power standard offer supports the use of gas-fired electricity generating facilities that use combined heat and power technology, according to the electricity system operator press release. The heat or steam that’s produced is used in the applicant’s facility.

Both programs have been offered previously but “each version has been slightly different,” Campbell says. There were 39 applications under the combined heat and power program totaling about 322 megawatts. Twenty-eight were from the agricultural industry.

The program resulted in 13 contracts being awarded and accepted with nine of those contracts, totaling 57.5 megawatts, coming from the agricultural industry.   

For the industrial electricity incentive program, three of the 25 applications were from the agricultural industry. Two of the 15 contracts awarded this year were from agriculture, she says.

Chiarelli says in the release “Ontario’s greenhouse operators are an essential part of Ontario’s economy.” The electricity system operator’s programs “will reduce electricity costs and allow successful proponents to expand production to meet growing demand.”

Vanderhout says the programs are most likely to be used by very large electricity users and particularly by greenhouse operations installing lights for year-round production.

Ontario Greenhouse Vegetable Growers energy and environment coordinator Justine Taylor says only a few growers have moved to year-round production so far but many more would like to go in that direction. “I think it’s really necessary to move to 12-month production to be competitive.” BF