Green Energy Act 2009

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The Ontario Green Energy Act (GEA), formally the Green Energy and Green Economy Act, 2009, introduced in the Ontario legislature on February 23, 2009, is intended to expand renewable energy production, encourage energy conservation and create green jobs.[1][2] Among many clauses, the GEA is best known for creating a number of feed-in tariff rates for different types of energy sources. Notable among these is the microFIT program for small non-commercial systems under 10 kilowatts, and FIT, the larger commercial version which covers a number of project types with sizes into the megawatts.

The GEA has been highly controversial within Ontario for the high initial tariff rates, up to 80.2 cents/kWh for small systems under microFIT. It has also been controversial outside Ontario due to its "made in Ontario" clauses which demand a certain amount of Ontario labour and manufacturing input in order to receive the tariff rates. Changes to the program and rates, some of them applied retroactively, had added confusion and complaints about the way the program is managed. The GEA was a major issue during the 2011 provincial elections, with the PC party threatening to cancel it outright if elected, while the Liberals supporting it as a primary plank of their re-election platform.

History[edit]

Previous efforts[edit]

Prior to the introduction of the GEA, Ontario had enacted a number of different programs to introduce renewable energy or promote conservation. These included the Energy Conservation Leadership Act, the Energy Efficiency Act and of particular note, November 2006's Renewable Energy Standard Offer Program. The Standard Offer, also known as SOP or RESOP for short, introduced a number of fixed 20-year feed-in tariffs for hydro, wind, solar (PV) and biomass projects. RESOP tariffs were relatively low, 42 cents/kWh for PV and 11 cents/kWh for other forms of energy.[3] At the time, RESOP was named North America's first true feed-in tariff program.[4]

In practice, it was found that the RESOP program had significant administrative overhead that eroded the value of the program. In order to connect a generation project, the provider had to not only meet expected requirements for the equipment, but also had to apply to various agencies and levels of government for permission to connect to the grid. This process was not streamlined, and often required hundreds of pages of documentation to be submitted to each organization, in the proper sequence. Certain areas of the Ontario distribution grid were also placed off-limits for development, due to load considerations. Even then, there were stakeholders at the municipal level that could block development at any time as part of local building codes.

Due to the presence of fixed costs, including the administrative overhead, RESOP favoured large projects which could distribute these costs. It proved particularly successful for wind power developments, with almost 64% of the RESOP developments being wind, 28% biomass, and the rest a mix of hydro and a tiny amount of solar.[5]

Towards the GEA[edit]

RESOP included a built-in two-year review process that started in 2008. During this period, the world-wide industry was also exploring a number of different ways to implement incentive programs. The main contenders were the feed-in tariff system, like RESOP, and emissions-trading systems like the UK's Renewable Obligation or New Jersey's Solar Renewable Energy Certificate. In 2008, Ernst & Young published Renewable energy country attractiveness indices for the first quarter of 2008, which demonstrated that Germany's FIT program was far more successful, delivering more power at lower costs. An earlier report from UC Berkeley demonstrated that job creation with renewables was far higher than fossil fuels, another argument in favour of the German-style program, which was then considered a great success.[6]

With the success of FIT programs, and in response to RESOP issues, a number of stakeholders suggested an expansion of the program with higher rates and various changes to the connection process to simplify the workload. In particular, a number of proposals suggested adding additional classes for very small systems that would have minimal impact on the grid that could be given an express application process and pre-authorized access to connect. These systems would also be given much higher tariffs, in order to offset basic implementation details, like metering, that are often a fixed cost no matter the project size.[6]

Introduction[edit]

The GEA effort was led by George Smitherman, the Minister of Energy and Infrastructure. It was claimed that the bill will help the government ensure the province’s future by:

  • Supporting and expanding economic investment, thus building a stronger, greener economy with an estimated 50,000+ direct and indirect jobs over the next three years
  • Expanding Ontario’s use of clean and renewable sources of energy such as wind, solar, biomass and biogas
  • Better protecting the environment, combating climate change and creating a healthier future for generations to come.

Features[edit]

Among the key features[7] of the Act are the following:

  • Different levels of tariff[8] are set for electricity from various renewable sources (solar photovoltaic, biogas, biomass, landfill gas, on-shore and off-shore wind and water power) that is "fed in" to the electrical grid; these are known as "Feed in Tariffs", and are based on similar tariffs implemented in Europe
  • In order to qualify for the program, minimum levels of Ontario content are required in materials and labour[9]
  • Local electrical distribution companies (LDCs) were obligated to accept small generators into their systems, and given a set of standard regulations for systems under 10 kW (microFIT systems), and a variety of other sizes, depending on the technology involved
  • Smaller systems, and in particular microFIT systems, were guaranteed a simpler application procedure and faster turn-around time.
  • The contract for payment of tariffs is for 20 years (40 years in the case of hydro generators), and is with the Ontario Power Authority, providing small generators with protection against changes in government policies

Several non-profit organizations have been active in supporting the implementation of the Green Energy Act with customized wikis to assist consumers and service providers, including SWITCH and OurPower (see Further Reading).

Effect on electricity price[edit]

The signing of the GEA has corresponded with a dramatic increase in the Provincial Benefit (now called the Global Benefit). This is the cost added to the market price of electricity in Ontario.[10] However, most of this cost increase has been coincidental, rather than attributable to the fixed price for renewable energy.[11] In fact, the highest generator of these costs is guaranteed payments to nuclear generators, followed, by gas, coal, and hydro generation.[12] The combined cost of new renewable and conservation measures has been shown to be only about 3% of total electricity cost in Ontario.[13]

Controversy[edit]

Although the Green Energy Act promised to create 50,000 jobs, the Liberals admitted in 2013 that the act had only created 31,000 jobs. Critics charge that even confirming this number is problematic because the large majority are “indirect” as opposed to “direct” employment. However, a 2011 report by Jim McCarter, Ontario's Auditor General, found that a large majority of these jobs were in construction and would only exist for no more than three years. In addition, McCarter's report also cited controversial reports from other countries which indicate "that for each job created through renewable energy programs, about two to four jobs are often lost in other sectors of the economy because of higher electricity prices" which has led critics to charge that the Green Energy Act has actually resulted in a net-loss of employment.[14]

A 2013 study by the conservative Fraser Institute stated that "wind power tends to be produced at times when it is least needed," and pointed out that:

Eighty percent of Ontario’s generation of electricity from wind power occurs at times and seasons so far out of phase with demand that the entire output is surplus and is exported at a substantial loss...The Auditor-General of Ontario estimates that the province has already lost close to $2-billion on such exports.[15]

The price of exports is determined by allowing electricity producers to bid on export offers at the price at which they are willing to produce it.[16]

Recent developments[edit]

In May 2013, Ontario Energy Minister Bob Chiarelli announced that the made-in-Ontario content requirements for wind and solar projects would be scrapped, after the World Trade Organization (WTO) ruled that they were a violation of WTO regulations.[17][18]

See also[edit]

References[edit]

Citations
  1. ^ Adria Vasil (6 October 2009). "Taking T.O. off the grid". Now (magazine). Retrieved 3 March 2010. 
  2. ^ K. Branker and J. M. Pearce, Financial Return for Government Support of Large-Scale Thin-Film Solar Photovoltaic Manufacturing in Canada, Energy Policy 38, pp. 4291–4303 (2010).
  3. ^ "OSEA: Renewable Energy Standard Offer Program (RESOP)". Ontario-sea.org. 2010-01-19. Retrieved 2014-03-13. 
  4. ^ "North Star". D-bits.com. Retrieved 2014-03-13. 
  5. ^ Jim MacDougall, "Ontario's Renewable Energy Standard Offer Program", Ontario Power Authority, December 2008
  6. ^ a b "Recommendations for Procuring Sustainable Energy". Ontario-sea.org. 15 December 2008. Retrieved 2014-03-13. 
  7. ^ "Home | Ontario Power Authority - Feed-in Tariff Program". Fit.powerauthority.on.ca. Retrieved 2014-03-13. 
  8. ^ [1][dead link]
  9. ^ [2][dead link]
  10. ^ "IESO Global Adjustment". Ieso.com. 2013-08-29. Retrieved 2014-03-13. 
  11. ^ "Renewable energy Facts". Bridgepointgroupltd.com. Retrieved 2014-03-13. 
  12. ^ "Market Surveillance Panel". Ontarioenergyboard.ca. Retrieved 2014-03-13. 
  13. ^ "The True Cost of Renewable Energy and Conservation - Environmental Commissioner of OntarioEnvironmental Commissioner of Ontario". Eco.on.ca. 2011-03-22. Retrieved 2014-03-13. 
  14. ^ "Green energy job claims are a farce | Columnists | Opinion". Toronto Sun. 2013-06-26. Retrieved 2014-03-13. 
  15. ^ "Ontario paying a high price for Green Energy Act | National Post". Fullcomment.nationalpost.com. 2013-04-11. Retrieved 2014-03-13. 
  16. ^ Zareipour, Hamidreza; Canizares, Claudio A.; Bhattacharya, Kankar (1 November 2007). "The Operation of Ontario's Competitive Electricity Market: Overview, Experiences, and Lessons". IEEE Transactions on Power Systems 22 (4): 1782–1793. doi:10.1109/TPWRS.2007.907979. 
  17. ^ "Ontario green energy rules to give municipalities greater control | National Post". News.nationalpost.com. Retrieved 2014-03-13. 
  18. ^ "Ontario Green Energy Act job incentives shot down by WTO | Toronto Star". Thestar.com. 2013-05-06. Retrieved 2014-03-13. 
Bibliography

External links[edit]

Further reading[edit]