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American States Can Learn Much From Ontario's "Buy Local" Clean Energy Strategy

By John Farrell
January 24, 2011 | 11 Comments

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The Canadian province of Ontario has launched a clean energy strategy to maximize economic development while reducing pollution. "Maximizing Jobs From Clean Energy: Ontario’s ‘Buy Local’ Policy," a new report from the Institute for Local Self-Reliance (ISLR), details how Ontario’s bold clean energy program -- in just over a year -- has resulted in the promise of 43,000 clean energy jobs and over 15,000 megawatts in applications by clean energy projects.

The centerpiece of Ontario’s program is a long term contract for renewable energy developers with a guaranteed return on investment. To qualify for a contract, developers must source 60 percent of their project’s value from inside the province. The rule effectively means that no solar or wind project built in Ontario can obtain a contract without having some components manufactured locally.

This domestic content or "buy local" rule has spurred a fast-growing renewable energy industry in the province, with over 20 new manufacturing plants proposed and scheduled to open in the next two years. And the rule is a simple, comprehensive economic development strategy for renewable energy that is in stark contrast with the complexity of clean energy programs and incentives utilized in the United States that are split between utilities, states, and the federal government.

ILSR’s report estimates a cost per job created of $143,000 for the Ontario program, a cost comparable to or below non-energy related job subsidy programs in the United States and significantly less than some recent clean energy job creation efforts.

Costs in the U.S. would be lower, often significantly, because most U.S. states have higher electricity prices and stronger renewable energy resources. Colorado, for example, has a solar resource that would allow it to provide solar developers a similar return on investment at a 33 percent lower price for power and its higher retail electricity price would further reduce the marginal costs of the program and the resulting jobs.

The full report is available on ILSR's New Rules Project website.

This is part of a series on distributed renewable energy posted to Renewable Energy World. It originally appeared on Energy Self-Reliant States, a resource of the Institute for Local Self-Reliance's New Rules Project. Contact John Farrell at jfarrell@ilsr.org, find more content at energyselfreliantstates.org or follow @johnffarrell on Twitter

Bioenergy, Solar Energy, Wind Power

The information and views expressed in this blog post are solely those of the author and not necessarily those of RenewableEnergyWorld.com or the companies that advertise on this Web site and other publications. This blog was posted directly by the author and was not reviewed for accuracy, spelling or grammar.

11 Reader Comments

Comment
1 of 11

PamelaCargill

January 24, 2011

Both Czech Republic, Spain, and Germany have recently lowered or even retroactively lowered FiT rates. Who is to say this won't happen in Ontario? It's been a disaster in the Czech Rebuplic and Spain where the industry have been crippled. There's a lot optimism about the Ontario FiT but not a lot of measured analysis about how stable it is longer-term.

Comment
2 of 11

kevin-oneill-164870

January 25, 2011

Pamela is correct in saying that the lowered FIT rates will affect the program. However, the industry has always known that there was a two year review. At 2,500MW, that is roughly 8% of the current record electricity usage of 27,000MW. The FIT rates have only one direction to go, and that is DOWN. The Ontario Power Authority seems to be having difficulty issuing contract offers for commercial sized projects (around 250kW), and has only issued a handful in the past few months.

Why is that? Well, we're already at 2,500MW. Why do we need to issue more? The Provincial Government has a bunch of new Nuclear Reactors it wants to build, and it would be silly to build them, at a cost of $26B or more, if we have all the solar power we need.

However well intentioned, the economic spinoffs from the FIT program, and the Domestic Content Regulations, will never pan out. Most of the 2,500MW of contracts are based on 50% Domestic Content, which means that systems can be built using panels that are sourced from outside Ontario. To go to 60%, one must use Ontario assembled panels. If we build the 2,500MW, the program will end, and that will be the end of the industry.

The last piece of information is the upcoming Provincial Election, in the Fall of 2011. The Opposition is already making the FIT program the target of its attacks, and the incumbent Liberal Government is not doing much to defend itself.

The solar industry's only hope is the they learn enough about designing and installing systems so that they can go to surrounding US jurisdictions and get a head start on all the upcoming FIT programs in the Midwest.

Comment
3 of 11

JimW

January 25, 2011

FIT is not the story here..Ontarians cant be this stupid??. Premier McGinty will retire in wealth over one deal with Samsung. Everyone in business knows that the rumoured $7 million cash payment to him on a seven billion dollar deal is probably a low guess,, our guys say it would probably be more like 1%, so that would be 70 million. The opposition says nothing in case of libel. When it gets into these large dollar amounts it is hard to keep secret.Bribery is common in other countries and it is legal on their books. Some swiss banks now reveal account info if asked, but if being Bilderberg protects people then there will be no investigation. Ex PM Mulrooney took his in cash but how do you move seven or seventy million around in cash ?. One green technology invented in Ontario which stores electricity, GreenNH3 and GreenGas.cc has been trying to get meetings with Ontario , but being from Canada are not allowed to offer money to McGinty.. It would store electric excess from the night for use as green fuel the next day. They cant get meetings with Ontario but Samsung had no problems? Seems like there is double gold standard taking place??

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ron-peterson-82973

January 25, 2011

I couldn't find anything at the GreenGas site that gave the conversion efficiency of converting electricity to NH3.

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5 of 11

Keller

January 25, 2011

I think the real lesson for US states is not to waste taxpayer money on renewable energy schemes that are inherently ineffective and costly.

Solar energy in Ontario? Anybody bothered to look at the amount of incoming solar energy into that northern and cloudy and locale?

Conservation and increasing the efficiency of energy use as well as production are far superior.

Comment
6 of 11

PamelaCargill

January 25, 2011

Keller, much like you, many of us who have been in the solar industry for years have wondered why the states in the US with the most sun exposure do not have any programs in place for incentivizing solar. However, amount of sun exposure is not the only factor that makes solar PV a good fit somewhere. High utility rates (see: MA, CT) are also a key driver for good solar investment. States like Arizona, for instance, have rather low utility rates due to having a number of larger coal-fired power plants in the state.

I will never argue against conservation as the most important strategy. However, as someone who works in marketing, I can tell you that it is very challenging to position and market efficiency on the residential level and no one has really been very successful yet in doing it. Commercial market is another story entirely (ROI driven).

Comment
7 of 11

dalko1957

January 26, 2011

http://revolutioninwindenergy-dalko.blogspot.com/

The invention «Pipe-screw rotor» - (patent UA 93025)
Represents a design in a hollow propeller in which center, from the face-to-face party the general aperture of an input is located,
Having the area of diameter big, concerning the area of apertures of the exits located on the ends of blades. At rotation of a rotor air stream is soaked up through an input aperture, passes on radius lines in a body of each blade from the center to edges and is pushed out with greater speed in opposite directions, strengthening overall performance of an external contour of the screw.
The invention «Rotor of Dalko» -
Different from «the Pipe-screw rotor» the special volume form of blades with the concave-convex parties, forming at rotation a hemisphere and creating an internal stream focused on the extending spiral radiusno-axial line deviating top, (with a round aperture of an input), to edges of the area of the basis of a hemisphere (with apertures of an exit in the form of a half ring) allows:
1. To receive wind rotor with the greatest possible area of capture of a stream and optimum aerodynamic characteristics.
2. To raise capacity wind energy installations in 2 times at use of two rotors rotating on one axis divergently.

http://revolutioninwindenergy-dalko.blogspot.com/

Comment
8 of 11

bill-palmer-11982

January 26, 2011

Yes, American states can learn a lot from Ontario's buy local Green Energy Policy. One of the first thing the American states can learn is that the objective of the Ontario policy is to establish Ontario as a green energy supply centre to sell to Ontario's neighbors. Are you listening American states? The intent is that you sell less domestic produced "green" goods. Never mind President Obama's State of the Union address.

The policy sets contracts for exorbitant electricity prices, in exchange for having companies establish plants in Ontario to create jobs by producing green energy goods to sell to others - the US. As an example, Samsung is the cornerstone of the Ontario program. Samsung have been guaranteed access to 2000 MW of wind generation at 135 to 190 $ per MWH and 500 MW of solar generation at 450 to 800 $ per MWh for 20 years. A quick calculation based on expected capacity factors shows this will cost Ontario electricity consumers about 1.3 Billion$ per year for 20 years, or 26 Billion $. In exchange Samsung agrees to invest 7 Billion$ in Ontario in tax forgivable, rapidly depreciable investments implying that they will never pay income tax. It's a pretty good investment these days. Why build these plants? To sell green technology items to our neighbors! Can you see the truckloads of turbine blades coming across the Peace Bridge at Fort Erie/Lewiston, or the Bluewater Bridge in Sarnia/Port Huron?

Already Japan, the European Union, and the US have filed official complaints to the world trade organization about Ontario's "prohibited" subsidies, that intend to cut other suppliers our of the Ontario market.

Yes, American states, you have a lot to learn from the Ontario policy. A policy that will impoverish local citizens playing 3 to 8 times the market price for electric supply that is not available when needed. A policy that gives foreign developers priority over local ones in securing access to the grid for renewables, and a policy challenged to WTO.

Comment
9 of 11

January 26, 2011

JimW posts some pretty serious allegations. It suggests that his actual comments are more political and founded on conspiracy theories than an informed assessment of renewable energy investments in Ontario.

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10 of 11

dennis-houghton-41194

January 26, 2011

cd, I agree with your comment about JimW's off topic rant. I will comment off-topic anyway

I would also encourage JimW to post some real information in an article about his pet project : greengas.cc or GreenNH3.

It actually is a proven process which has been supplanted by the use of natural gas to produce ammonia for agriculture. A 100 million ton/year global market, 98% from NG. The process actually does make ammonia, a valuable product with diverse uses, from air, water and a huge amount of energy. One source says >12MW-hr/ ton of NH3. Breakeven is about $700/ton. 2009 market price hit $1000/ton and currently is about $500/T. As natural gas price goes so go ammonia prices.
In farm country, the system could be a good use of excess wind energy production with the load right at the wind farm substation.
JimW is onto a good idea that will happen sometime in the future. I understand impatience but do not whine about unfairness, get the word out.
Forty years ago the business schools taught, implicitly, that both excessive and insufficient bribery will ruin a deal in a third-world country, what goes around comes around.

Comment
11 of 11

AnatoliN

January 27, 2011

To bill-palmer-11982,
your comment is hardly "election-unbiased". Or should I say, too much of election campaign effort in the wrong place?

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About: John Farrell directs the Energy Self-Reliant States and Communities program at ILSR and he focuses on energy policy developments that best expand the benefits o... more »