Marc Coward, Principal, Renewable Shift Consulting
March 12, 2012 | 0 Comments
Despite having Canada's largest population and being home to an energy-intensive manufacturing sector, Ontario was slow to adopt wind power. As recently as 2006, only 10 turbines were spinning in the province. However, the province is currently home to more than 1,750 MW of wind power and plans are in place for this figure to increase to 7,500 MW by 2018.
The Policy Environment
As has been the case in other jurisdictions, the growth of Ontario's wind power sector has been nurtured by government policy. In particular, Premier Dalton McGuinty's Liberal government has been recognized as a North American leader in the development of renewable power since it enacted the Green Energy Act (GEA) in November 2009. The centerpiece of this legislation is a German-style Feed-in Tariff (FIT) for renewable power projects.
Energy policy was debated extensively in the months leading up to the October 2011 provincial election as the opposition Progressive Conservative party promised to repeal the GEA, which they cited as the reason for rising electricity rates. Rural areas, which have been most impacted by the rapid growth of wind power, voted overwhelmingly for the Progressive Conservatives. However, the incumbent Liberal party was re-elected, albeit as a minority government.
This is the context in which provincial officials find themselves as they conduct a mandatory review of the FIT program, which has been responsible for attracting billions of dollars of investment to Ontario - primarily from wind power developers and suppliers. However, an estimated 6,000 MW of wind and solar projects have been awarded power purchase agreements (PPAs) but are still in need of financing. This article examines three issues that are currently being reviewed and have the potential to significantly influence the future of Ontario's wind power sector.
Wind power suffers from the disadvantage of being a variable resource. As such, there are times when too little wind is blowing and the province must be powered by other sources. Conversely, there are times when too much wind is blowing and the Independent Electricity System Operator (IESO), which runs the province’s electricity market, curtails the amount of wind it acquires in favor of relying on power generated by baseload sources, notably the province’s nuclear power stations that cannot easily have their output adjusted downward to accommodate high levels of wind power generation. In a recent submission to the IESO, a consortium four developers that have invested heavily in the Ontario wind sector argue that the uncertainty caused by the practice of curtailment is preventing projects from obtaining financing.
Local Control over Development
One of the most controversial aspects of the GEA was the removal of local authority over permitting for renewable energy projects in favor of a single provincial-level approval process. Wind power developers have been overwhelmingly successful at accommodating local concerns and are often seen as a welcome addition to the community, but there have been some high-profile battles and certain communities have been effective in shifting the debate from the merits of wind power to one of depriving communities of their democratic voice.
The Canadian Wind Energy Association (CanWEA) opposes a return to the patchwork quilt of permitting processes that existed prior to the unified provincial process. CanWEA President Robert Hornung acknowledges that “opportunities exist to strengthen the [municipal consultation] process,” and his organization has made several suggestions to the Ontario government that would ensure proactive and meaningful consultation. Hornung adds that the industry “wants to work productively with all levels of government to ensure the jobs and investments continue flowing into rural communities across Ontario.”
As with any power project, it is one thing to build it but quite another to get it connected to the grid. Ontario, like many jurisdictions across North America, failed to invest properly in both transmission and generation infrastructure towards the end of the 20th century. From 2003, when the Ontario government decided to phase out coal-fired generation by 2014, new generation capacity has come online at a faster pace than new transmission capacity. Wind projects have been forced to compete with all new sources of generation, such as natural gas and biomass, for access to an increasingly constrained transmission system.
Some argue that wind power, being a variable resource, is ill-suited to the current transmission infrastructure and will never reach its full potential until electricity storage projects come online to smooth out the variable nature of this resource. However, CanWEA’s Robert Hornung notes that numerous wind integration studies have concluded that significantly more wind can be added to Ontario’s transmission system before large-scale storage projects are necessary. The industry’s main concern with respect to transmission is ensuring that the province will commit to make more capacity available for wind power beyond its current plan of 7,500 MW by 2018.
None of the issues discussed in this article are unique to Ontario, but how they are addressed over the coming weeks and months will have a major influence over the health of the province’s wind power sector. As noted by my colleague Adrienne Baker in a recent posting on www.RenewableEnergyWorld.com, the Ontario Ministry of Energy is likely to be publishing its findings and recommendations for the changes to the FIT program in March and rolling them out in May.
Separately from the FIT review, the IESO is conducting a wide-ranging review of issues arising from the integration of significantly more renewable power generation capacity. The provincial transmission grid operator is currently consulting stakeholders on the subject of curtailment and hopes to draft new rules to address the issue in 2012 with a view to implementing them in approximately 18 months.