Ontario Green Energy Act Could Create CAN $4.5B Market

The report on the Green Energy Act’s short and long-term impact is the outcome of an independent study conducted by Hatch Management Consulting over the last year, while the Act was working its way through the legislature.

The study simulates the returns, the value created, the productivity impact and the financial cash-flow-at-risk flowing directly from the Act, and subsequently, from the provincial government’s active support of the Act’s objectives.

Some of the barriers identified and analyzed included:

• environmental permit delays
• uncertainty of technology choices
• the unknowns of Ontario’s manufacturing sector
• significant grid integration challenges
• construction challenges if several projects rush to specialists at the same time
• locating appropriate project sites
• ensuring adherence to codes and standards still under development

The study concludes that the Act can create tremendous value for renewable generators and delivery entities, while reshaping the energy landscape in Ontario, provided the uncertainties around the sustainability of the program, and barriers to project development are addressed. In addition to the above central conclusion, five observations will be relevant to a provincial debate about how best to unlock the value from the Act and sustain the momentum for Ontario to become a leader in renewable generation.

Specifically, an overarching strategy would need to consider that renewables technologies under the proposed regulation can generate significant value while the province concurrently develops energy-efficiency strategies and messages to lower demand.

Strategy would also need to take into account that the CAN $4.5 billion NPV-positive business case (2009 dollars) remains a target for the province. Decisions taken by the provincial government, energy regulators and energy participants should aim to enhance this target and that the domestic content requirement regulations present an opportunity, and risk, for Ontario. The regulation could turn Ontario into a renewable technology center with an ecosystem of businesses operating across the energy value chain.