Kathleen Wynne backing away from McGuinty’s Ontario Green Energy Act

June 24, 2013 by  
Filed under Green Energy News

It’s always instructive to see how a government frames an announcement that is backtracking on one of its own initiatives.

Conveniently for the Ontario Liberals, they are amassing considerable experience in this regard.

So, when the government on Thursday dropped the news that it was restructuring its 2010 wind-power deal with Samsung, it presented it in terms of extended job commitments and savings to electricity ratepayers. Samsung was guaranteeing jobs until 2016, instead of 2015, and the government was now only committing to buy $6-billion of Samsung’s renewable power at well above market rates, down from $9.7-billion in the original contract. Hooray for savings!

Those extended job commitments, though, are a result of Samsung’s having missed targets in the original contract; it now has more time to meet them. And that reduction in spending? It comes as Samsung, which won the original contract absent a competition, agrees to drop its own investment in the province from $7-billion to $5-billion, with projects expected to generate 1,369 megawatts of energy, down steeply from 2,500 megawatts in the first deal.

This is probably not the result of a particularly hard-fought negotiation

Ontario will be paying less, and receiving less. This is probably not the result of a particularly hard-fought negotiation.

What’s more notable are the things that the announcement from Energy Minister Bob Chiarelli did not mention, for example the 16,000 jobs that the original contract was said to create when it was announced in 2010.

Thursday’s announcement said only that Samsung expected to create “900 direct jobs” at four manufacturing facilities. There was a claim that the Green Energy Act has created 31,000 jobs in Ontario, but no acknowledgement that when it was unveiled in 2009, the GEA was said to create 50,000 in the first three years alone.

This week’s announcement was only the latest instance in which some element of the Green Energy Act, once a centerpiece of the McGuinty government, has been revised, downgraded or otherwise scrapped. Premier Kathleen Wynne isn’t just backing away from it, she’s sprinting in the opposite direction.

In 2009, it promised to “make it easier to bring renewable energy projects to life,” which was code for forcing them into areas over the objection of local municipalities, and an end to NIMBYism. Earlier this month, the Wynne government announced new rules that will give priority to projects that have local support, in a tacit admission that the Liberals should not have played the heavy hand in the first place. (Crucially, the government won’t go so far as to undo the many renewables contracts that have already been signed, even in the face of a local objection, since it knows it will end up on the hook for significant penalties. The Liberals are amassing experience in this regard, too.)

The GEA included a “made-in-Ontario” component that was intended to ensure that energy developers invested in the province; that provision was recently struck down in a WTO ruling that means suppliers can source parts from wherever they like.

Meanwhile, the guaranteed rates for wind and solar power that were part of the original legislation have been significantly reduced, and the application process for new projects was reset. Major developers sued the province (unsuccessfully) while smaller wind and solar companies that didn’t want to fight in court instead complained that the system had been plagued by backlogs and that they had been lured into investing in a sector that had already stagnated. Left unsaid by Ontario was that it already has more renewable power than it needs, and even still that amount is set to triple in the coming year.

I say “than it needs” because wind power remains highly inefficient. On Friday, a warm first day of summer, Ontario’s 1,560-megawatt wind-energy sector was expected to create 242 megawatts at noon hour. It was forecasted to reach its daily peak of 560 megawatts — still only a third of capacity — at midnight, when lights are off and electricity needs are low. It’s this kind of pattern that recently forced the province to seek the ability to shut wind power off the grid at times when it wasn’t needed, although it will still compensate wind developers for that unused electricity. And it’s also a pattern that led directly to the installation of gas-fired power plants throughout the province, since they — not renewables — were needed to offset the closure of Ontario’s coal-fired power plants. One of the Liberals’ favoured lines in defending the closure of two Toronto-area gas-fired plants — “We built 17 plants, and we got two wrong” — is itself an admission that they had to build a lot of plants to make up for the loss of coal. The two mistakes, of course, were rather costly. You may have heard something about that.

All this, so the story goes, because former premier Dalton McGuinty decided one day on a trip to smog-filled China that Ontario should shut down its coal plants. (Never mind that the option to retrofit them with cleaner technology was staring him in the face.) From this, the Green Energy Act was born. It lies now, deservedly, in ruins.

National Post

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