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Ontario is lowering premiums for wind, solar power

Ontario municipalities will get more say, but not a full veto over the location of wind and solar projects when the Liberals release a review of their green energy plans.


March 19, 2012
by CANADIAN PRESS

TORONTO: Ontario municipalities will get more say, but not a full veto over the location of wind and solar projects when the Liberals release a review of their green energy plans this week.

Energy Minister Chris Bentley says the government has listened to municipalities who want more input on where green-energy projects are located. However, Bentley says Ontario will not return to the days when local councils could reject a proposal to produce electricity in their area.

He says the government will stop short of giving municipalities a veto over wind and solar projects.

The review will also lower the lucrative premiums paid by the province for wind and solar power contracts, which the Opposition blames for sending electricity bills soaring.

Ontario pays up to 80.2 cents a kilowatt hour for solar power and 13.5 cents per kwh for wind power, while residential hydro users pay about 10 cents a kilowatt hour at peak rates.

The Conservatives want to end what they call “massive subsidies” for green energy, and say you can’t power a twenty-first century economy based on when the sun shines and the wind blows.

The review of the feed-in-tariff, or FIT program, will also lower the lucrative premiums the province pays for future wind and solar power contracts, which the Opposition blames for rising electricity bills.

“The auditor general estimated the cost of this program is about $6.4 billion more than it would have been if we had a competitive supply system, if we actually would have had a tendering process instead of handing out these contracts,” said PC Leader Tim Hudak.

The government knew it would have to lower the premiums after the incentives attracted thousands of new green-energy proposals, which resulted in 20-year contracts with guaranteed rates much higher than normal.

Small solar projects were guaranteed 80.2 cents a kilowatt hour and large solar installations get 44.3 cents a kwh, while wind-power projects were given a lower subsidy of 13.5 cents per kwh.

Residential hydro users pay about 10 cents a kilowatt hour at peak rates.

The Progressive Conservatives blame the “massive subsidies” for creating what they call a gold rush in Ontario’s power system.

“The feed-in-tariff, the green energy program, has created a huge economic bubble, and we know that all bubbles will one day burst,” Hudak said.

“You can’t power a 21st century economy based on when the sun shines and the wind blows.”

The New Democrats defend the subsidies and want the government to rely even more on green energy.

They want the government to forget spending $33 billion on refurbishing nuclear power plants and building two new reactors.

“The simple reality is if you’re going to get involved in a new technology, there will be some prices that will be striking to people,” NDP energy critic Peter Tabuns said.

“The price of renewable technologies has been dropping, while the price of nuclear technology has been climbing, and we need to bet on the future.”

The Association of Power Producers of Ontario knew the FIT rates its members are paid will come down, and said what companies really want when deciding whether to invest is predictability and stability.

The association suggested the government drop the FIT program in favour of a request-for-proposals bidding system that power producers believe would get better value for taxpayers’ money.

“The issue is not so much exactly what the price is, because what we have suggested is for larger projects, why not go to an RFP system,” said association executive director David Butters.

“That kind of gets around the ‘did we pick the right price, is it too much, too little’ (questions). Let a competitive process determine that.”

Ontario wants to follow Germany’s lead and become a manufacturing centre for the components used in industrial wind turbines and solar panels. Giving businesses a clear schedule of FIT rates and when they will change would help that effort, said Professor Warren Mabee of the Queen’s University Institute for Energy and Environmental Policy in Kingston, Ont.

“Industry likes stability, predictably and one of the problems with the way the feed-in-tariff is working right now is the uncertainty around these reviews,” he said.

“If one of our main goals is to create a thriving green energy or clean tech sector, we need to look at ways that we can make that environment less uncertain. More predictable declines in the rates would be a good thing.”

The government should get an independent review of its green energy initiatives to determine exactly how successful they’ve been in helping to create jobs and bring new investment to Ontario, Mabee said.

“It’s very difficult to get a handle on how much benefit is coming back into the Ontario economy because we’ve put this incentive in place,” he said.

“The big prize is not the 10% or 15% renewables in the (electricity supply) mix. It’s the 10,000 or 20,000 jobs or whatever the number is.”

The Liberals have a target of creating 50,000 green energy-related jobs over three years.

© 2012 The Canadian Press