On February 23rd, 2009, the Minister of Energy and Infrastructure, George Smitherman introduced Bill 150 - the Green Energy Act (GEA). The intent of the new bill is “to make Ontario a global leader in the development of renewable energy, clean distributed energy and conservation, creating thousands of jobs, economic prosperity, energy security, and climate protection”. Although the GEA is in its infant stages, it plans to achieve this goal by focusing on making renewable energy projects, mainly hydroelectric, wind, solar, and biomass more feasible and lucrative for a larger demographic of developers. In addition to green power generation, the bill will also encourage the development of an improved “smart” grid that will better facilitate the interconnection and transmission of electricity from renewable energy sources. In contrast to increasing green power production, the GEA also establishes goals to improve overall energy efficiency and conservation by requiring that all buildings, both private and public, to be more energy efficient through a variety of regulations and incentive programs.
Green Power Production
Ontario’s current energy mix includes approximately 8,300MW of installed capacity from renewable energy sources. Bill 150 will oblige that all utilities (i.e. Hydro One) grant priority grid access to renewable energy projects. It will also ensure that the utilities will recover all related costs associated with transmitting electricity from renewable sources, including incentive to further evolve our electrical grid into a ‘smart’ grid to handle the additional capacity generated by renewables. Developers of renewable energy projects will also be further incentivized. Projects that were developed under the Standard Offer Program (est. 2006) receive 11 cents/kW and 42 cents/kW for wind and solar power production, respectively. Although these rates are appealing to some investors, they did not facilitate the growth rate necessary for the province to achieve its renewable energy goals of 10,000MW by 2015 and 25,000MW by 2025.
The electricity yielded from renewable energy sources can significantly vary depending on a number of parameter including technology type, local resource intensity, location, and size of the project. The GEA proposes a revised Feed-In Tariff (FIT) system, which will mimic Germany’s and France’s successful programs, that will pay developers a floating, customized rate for their power based these parameters. The new FIT will ensure a guaranteed return on investment for developers. This includes a profitability index ranging from 0.1-0.3 pending on the efficiency of the project. In addition to the current profitability issues of renewable energy projects in Ontario, past projects were victim to an inefficient permitting process. Many of these projects developed under current legislative processes were prone to delays mainly by the Ministry of the Environment (MOE) as a result of required Environmental Assessments, and by the Ontario Municipal Board due to zoning issues initiated by concerns from the general public. For example, The Enbridge Ontario Wind Project, a 182MW wind turbine development located in the Municipality of Kincardine, was held up for approximately 2 years due to zoning and environmental issues that were exacerbated by individuals within the community, activist groups, and First Nations. The new GEA intends to streamline the connection process for renewable energy developers by inhibiting the ‘not-in-my-backyard syndrome’ demonstrated by many communities, and by explicitly involving First Nation and Metis groups in renewable energy projects such that they will benefit socially and economically. Further, the new GEA will encourage a larger demographic of developers including municipalities, First Nations, farmers, and homeowners. This will be achieved by establishing a Green Energy Debt Finance Program and a Community Power Corporation to generate startup capital necessary for renewable energy projects up to 10MW (roughly the energy required by 2500 homes). The intent of these programs is to encourage small scale development, including the use of household solar and micro-wind turbine systems.
Energy Efficiency
The GEA also includes goals to improve Ontario’s overall energy efficiency and conservation in both the public and private sectors. The bill will make the Ontario Building Code more stringent regarding energy efficiency by requiring that all buildings are to have an energy efficiency review every 5 years. Further, all new buildings for the greater public sector including, universities, colleges, schools, hospitals, community centers, etc., will be required to be designed and perform as green buildings, specifically, they will be required to achieve a Leadership in Energy and Environmental Design (LEED®) Silver rating. Such buildings will also be required to develop an energy conservation plan outlining the specifics for how the building is to achieve its energy conservation goals. With respect to the private sector, homes will be required to use Energy Star rated appliances and make efficient use of household water. In addition, mandatory energy audits will be required for all existing homes upon resale. Although many of these new regulations presently lack detail and may require further refinement, the provincial government will strive to ensure that their energy efficiency and conservation goals are met. To better quantify these goals, the government anticipates a reduction in peak energy demand of 6300MW (~20% of current peak energy demand) by 2015. This demand reduction will continue to be improved by 2.5% compounded annually until 2027.
Albeit, the proposed GEA is very preliminary and it may be subject to revision, the McGuinty government expects the bill to pass by the end of May, 2009. Regardless, it is certainly refreshing to know that Ontario is striving to becoming a world leader in renewable energy production and conservation. According to many experts, the GEA has the potential to make Ontario a world leader in renewable energy production and energy conservation. Of equal importance to Ontarians, Bill 150 intends facilitate local employment, which will help offset the job losses that the province has recently experienced. Premier McGuinty expects that the new bill will create 50,000 jobs in all sectors including, lawyers, local manufactures, developers, contractors, etc., within 3 years.
In addition to adopting new legislature for renewable energy and energy efficiency programs on a provincial level, Canada’s federal government has proposed through its 2009-2011 budgets to fund such programs on a national level. A future ECO3 news article will better identify these areas of investment, and how Canada's "green" spending lines up with President Obama's recent stimulus for U.S. green industry.
