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Renewable energy could cost $18B extra over 20 years

Renewable energy could cost Ontario electricity users an extra $18 billion over 20 years, according to a Fraser Institute report.


April 12, 2012
by PLANT STAFF

CALGARY: Renewable energy could cost Ontario electricity users an extra $18 billion over 20 years, according to a Fraser Institute report.

The conservative think tank estimates Ontario consumers will pay $285 million more annually for residential electricity and Canada could lose 41,000 full-time-equivalent jobs over a 20-year period because of the McGuinty government’s subsidization of renewable energy. When business and industrial electrical users are included, additional costs could hit $18 billion over 20 years.

The report points to the Ontario government’s feed-in-tariff program (FIT) to encourage the use of wind, solar, and biomass technologies and warns that despite the problems experienced by Ontario and findings from both the International Energy Agency and the US Energy Administration Agency that their cost is generally higher than fossil fuel combustion or nuclear power, many other provincial and US state governments are poised to follow the same path.

The report identifies BC and Nova Scotia Nova Scotia has having policies requiring electric-power utilities to use renewable energy to generate a share of their total electricity, while 29 US states and Washington, DC have enacted renewable portfolio standards.

“Over the next decade, at least 80% of the net increase in North America’s electric generation is scheduled to come from renewable energy technologies,” said Gerry Angevine, Fraser Institute’s senior economist and co-author of A Sensible Strategy for Renewable Electrical Energy. http://www.fraserinstitute.org/research-news/display.aspx?id=18216

“If other governments choose to emulate Ontario’s energy policies, they too will see higher electricity prices for homeowners and businesses, a need to build costly new electric transmission infrastructure, and the likelihood of job losses in the manufacturing sector as companies relocate in search of lower-cost electricity.”

The study cautions that the Statistics Canada Input-Output model may overestimate the employment impacts from higher electricity prices in the residential sector when, as in the Ontario case, the adjustment period is long. However, higher electricity prices resulting from FIT program subsidies will also have undesirable consequences for employment in the commercial and industrial sectors.

The report recommends that governments:

• Abandon renewable energy portfolio targets;

• Stop promoting any single electricity source via incentives or subsidies of any kind;

• Work to develop long-term plans for electricity transmission systems that can carry the additional power load that will result from expanded power generation likely to evolve from market-based investment decisions;

• Simplify and streamline regulatory approval processes and procedures for investment in transmission facilities and electric-generation capacity;

• Remove uncertainty about limits on carbon emissions; and

• Establish clear, stable energy policies and regulations.

Angevine said a market-based approach is required to determine the most efficient mix of technologies for electric generation and to reduce consumer costs.

A Sensible Strategy for Renewable Electrical Energy.