Ontario Renewable Energy Policy Breakthrough Hailed

Ontario's Standard Offer program will offer $0.11/kWh (kilowatt-hour) to producers of wind, biomass and small hydro energy. It will offer $0.42/kWh for solar photovoltaic energy. The term of the contracts will be 20 years, and there will be an inflation adjustment. The residential retail price for electricity in Ontario is under $0.06/kWh (all figures in Canadian currency).

There is no limit to the number of projects that may apply for a contract, but the size of each project is capped at 10 MW. For comparison, the proposed Duke Point power plant on Vancouver Island (a medium-sized gas-fired power plant) would have been 260 MW in size. Ten MW of capacity is approximately sufficient to serve 10,000 homes.

The contracts are available to anyone, including homeowners, businesses and commercial energy producers. The electricity produced would be fed into the electricity grid. The contracts are expected to be available by June 2006. Many details for the implementation of the Standard Offer program will be worked out by the Ontario Power Authority and the Ontario Electricity Board.

In British Columbia and other North American jurisdictions, electricity contracts are awarded by requests for tender, with the lowest cost bids winning. The Standard Offer Contract, known in Europe as a "feed-law" or "advanced renewable tariff," offers renewable energy producers guaranteed access to the electricity grid at a price set by the regulatory authority. This gives producers the contractual certainty needed to finance renewable energy projects.

Janet Sawin, a renewable energy expert with the WorldWatch Institute hailed this as a policy that will echo the European successes and possibly help fuel a policy tipping point where this approach becomes more common in North America.

"This move could put Ontario on track to achieve success with renewables similar to that of world leaders like Germany and Spain," Sawin said. "Ontario's new policy could well become the model for North America to follow."

So far, in the U.S., there's a small pilot program in California based on this approach, also called a performance-based approach. The State of Washington recently passed a modest version based on this policy structure for small solar projects. And it's likely that California's new solar rebate plan will follow suit.

None, however, compare to the European embrace of such policies.

In Germany, adoption of the new policy has led to the development of 110,000 solar PV systems, 2,000 biomass plants, 6,000 small hydro plants, 16,500 wind turbines, and 45,000 jobs in the wind industry.

Renewable Energy Consultant Paul Gipe says the incentives for solar in this new plan are roughly half what the German incentives pay but are still more than California's new long-term rebate plan and the U.S. federal government's tax credit combined. And, he added, the solar resources in Ontario are in fact better than they are in Germany. But it's hardly just about solar, all the major renewable energy technologies will stand to benefit strongly from this policy.

"This is the most progressive renewable energy policy in North America in over two decades," Gipe said. "There's tremendous pent-up demand for wind, solar, biomass, and I would say there's a lot of small hydro potential that remains untapped up here. The proponents of renewable energy have been trying to find a mechanism that would unleash this. That's why we began this process two years ago."

These feed-in policies have come to be thought of as a primarily European policy approach but in fact they were first implemented in the U.S. Gipe says a similar policy enacted in the 1980s in California was responsible for massive amounts of wind power development, with almost 1000 MW being installed between 1984 and 1985 in the state. In the intervening decades, there was an ideological switch away from this method of supporting renewable energy in the U.S., he says. The Europeans more recently embraced the approach and have since provided the model to be lived up to.

"Europe has used this with great success," Gipe said. "But it can be used here and it will work here. And Ontario's government deserves credit for having made a strong value judgment; they made a decision on what's important to them. They have put public health at the top of their priorities and development of renewable energy follows that."

Ontario Premier Dalton McGuinty made the announcement at Photowatt Technologies in Cambridge, joined by Ontario's Minister of Energy Donna Cansfield and world-renowned scientist Dr. David Suzuki.

"Ontarians need a reliable power system that doesn't leave a legacy of economic or environmental debt," said Suzuki. "Today's announcement will revolutionize the market for clean, renewable energy in North America and lay the groundwork for a healthier, brighter future."