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Last year marked a turning point for utility-scale wind energy in Ontario, the leading wind energy province in Canada.

While installed capacity surpassed 2.5 GW, the provincial government slowly started to undo some major elements of the Green Energy and Green Economy Act (GEA), which was hailed as a progressive solution to combat climate change when it was established in 2009.

As early as 2003, Ontario sought to rid itself from its reliance on coal-fired generation. In fact, the province announced that it would rid itself of all coal-fired generation by the end of this year. Former Premier Dalton McGuinty, the leader of the Liberal Party, theorized that renewable energy, such as wind and solar, could make up the shortfall. The GEA featured North America’s first feed-in tariff (FIT) and boldly signaled to the global community that Ontario was “open for business,” as headlines trumpeted shortly after the announcement.

Sensing an opportunity, global entities began to set up manufacturing operations in the province. Shortly after the GEA’s announcement, Samsung C&T – a Korea-based consortium comprising Samsung, Pattern Energy, Korean Electric Power Corp. and wind tower manufacturer CS Wind – pledged to invest C$7 billion in the province to build 2.5 GW of wind and solar projects. The Samsung agreement, the largest single investment under the GEA, angered rival wind developers, which were upset to learn that the deal allocated transmission capacity to Samsung projects. Other firms followed Samsung to Ontario. Germany-based turbine maker Senvion (formerly REpower Systems) opened a blade manufacturing facility in Welland. Wind developers, such as EDP Renewables (EDPR), were also enticed by the GEA. In fact, EDPR selected Ontario to build the 30 MW South Branch wind farm – the developer’s first wind project in Canada – largely because of the GEA. (For more on the South Branch wind farm, see “EDP Renewables Invades Ontario, Builds Its First Canadian Project”.)

However, because many developers rushed to site and build wind projects in Ontario, some locals claimed that the wind companies had strong-armed their way into communities and confused citizens with convoluted land lease agreements.

“You guys did a lousy job,” Don McCabe, vice president at the Ontario Federation of Agriculture, said to attendees at last year’s Canadian Wind Energy Association (CanWEA) Annual Conference and Exhibition. McCabe claimed some rogue developers came into the province and hastily staked their claim and often underestimated the intelligence of locals. In some cases, McCabe said, wind developers pitted neighbors against each other.

Additionally, decision-makers inside municipalities no longer had the final say over the outcome of a wind project planned for their community – an authority that was taken from them during the GEA’s implementation.

Seemingly overnight, wind energy had become a four-letter word in Ontario. The pressure was so great that it forced McGuinty to abruptly resign in October 2012.

His successor, Kathleen Wynne, immediately moved to appease political opponents and assuage critics and methodically began to reverse some of the GEA’s missteps. For example, she returned authority of wind farm siting back to towns and municipalities. The province eliminated the FIT for large-scale renewables, the primary procurement mechanism for utility-scale wind. Importantly, the province kept intact the smallFIT for projects with a nameplate capacity of less than 10 MW and microFIT for projects less than 10 kW. The Wynne government also scaled back considerably the Samsung agreement, which had become the public face of wind farm antipathy.

More changes for utility-scale wind would come with the issuance of the latest Long-Term Energy Plan (LTEP).



Long-Term Energy Plan

During the past decade, Ontario wind energy has come a long way: In 2003, there was only 15 MW of wind power in Ontario generated by 10 turbines. In that time, installed wind capacity grew by more than 150 times. Going forward, however, the pace at which Ontario will add renewable energy will slow dramatically. With demand for electricity in Ontario expected to be flat, the provincial government did not see the need to continue the build-out of wind energy. Therefore, the government scaled back its lofty plans for renewable energy. For example, in 2010, Ontario set an ambitious plan to integrate 10.7 GW worth of renewables, such as wind, solar and bioenergy. Now, the plan has been pushed back three years to 2021.

The latest LTEP, which was released in December 2013, prioritizes energy conservation and collaboration over new energy procurement. The LTEP encourages agencies and utilities to use energy conservation measures, such as demand response programs, to offset most of the growth in electricity demand for the next 20 years. This policy will help reduce costs and the need for new energy supply.

For wind energy, the LTEP calls for 300 MW of installed capacity to be added in 2014 and 2015 and a yet-to-be disclosed amount for 2016. According to the Ontario Ministry of Energy, any capacity that is not developed this year or in 2015 would be reallocated for procurement for 2016.

While the wind allotment in the LTEP was smaller than the wind industry had hoped, Brandy Giannetta, Ontario regional director at CanWEA, maintains that wind power will still have a significant presence in the near future.

She says nearly 1.5 GW of installed capacity – as a result of the FIT program – will come online this year, with an additional 1 GW of wind remaining in the pipeline through 2016.

“Wind energy received the lion’s share of the renewables procurement [contained in the LTEP],” asserts Giannetta. “So, our message was heard loud and clear.

“After 2016, however, the line of vision is unclear,” she explains, adding that each phase of the 300 MW capacity additions amount to a bridge to 2018, the date of Ontario’s next energy plan.

For its part, the province maintains that wind energy will play a key role in its energy mix.

“Wind energy is an essential part of Ontario’s plan to eliminate coal-fired generation,” says Ontario Minister of Energy Bob Chiarelli. “In 2013, wind power generated more electricity than coal for the second year in a row. As we continue to pursue a clean, reliable and affordable energy system, we hope that the wind industry will share our vision to engage and protect communities.”

Going forward, Ontario will look to juggle cost-effectiveness, reliability, clean energy, community engagement and an emphasis on conservation and demand management before building new generation, according to an Energy Ministry spokesperson. “And changes to the Green Energy Investment Agreement and the FIT program are helping us reach that balance,” the spokesperson says. Also, only those renewable energy projects that have both community involvement and/or participation with First Nations will move forward.

Those changes include a new competitive procurement process for projects larger than 500 kW. According to Ontario Power Authority spokesperson Mary Bernard, the agency is reviewing the new method with stakeholders.

Ontario’s shifting procurement methods are a sure sign of a maturing market, explains Chuck Mossman, vice president and general manager at Henkels & McCoy Canada. “The push to a competitive procurement model shows a willingness to get the best value for ratepayers,” he says, adding that competitive bidding ensures not only the best price, but also the best value. “By contrast, a feed-in tariff guarantees a fixed price.”

As the LTEP will be revisited – and potentially adjusted – periodically, wind energy could be the beneficiary of additional opportunities if, for example, planned nuclear refurbishments at Bruce Power’s nuclear facility and OPG’s Darlington nuclear facility do not proceed due to cost concerns, suggests Ernie Belyea, partner at law firm Bennett Jones. Also, he says, because the Samsung deal was re-negotiated downward, renewable energy could generally benefit from the reallocation.

“People are recognizing that there will be opportunities,” Belyea notes. “Proposals in the new large procurement process that are competitively priced and that have strong community or aboriginal support will have a greater chance to succeed. Strong community or aboriginal support will be critical to confirming that wind projects have the necessary social license to proceed.” w


Spring Election Could Reset Ontario Renewables

Many industry watchers anticipate a spring election in Ontario, which depending on the outcome, could have a dramatic impact on the future of renewable energy in the province.

The ruling government in Ontario, the Liberal Party, rules by a minority and, therefore, must count on the support of one of the opposition parties to pass major legislation. A failure to pass a major piece of legislation would be equivalent to a non-confidence motion and likely result in a general election that would not otherwise be due until 2015.

Although the Liberal Party ushered in the Green Energy Act in 2009, many of the chief architects of the act are no longer in power. And current Premier Kathleen Wynne has carefully moved to deflate much of the controversy created by the landmark legislation. Still, Ontarians equate renewable energy with the Liberal Party. Further exacerbating matters is that the party was responsible for the relocation of two Ontario gas plants, the cost of which was dramatically understated to the public.

The opponents – the New Democratic Party (NDP) and Progressive Conservatives (PCs) – have differing views with regard to renewable energy. NDP leaders only support community wind power, and the PCs vehemently oppose all types of renewable energy and have used wind energy to club the ruling party.

“Energy will always be a political issue,” explains John Kourtoff, CEO of Toronto-based Trillium Power Corp. “In Ontario, the PCs framed renewable energy as if renewables had been the culprit of the rising cost of electricity in the province.”

In reality, Kourtoff notes, the Ontario Energy Board found that renewables accounted for only 6% of rising electricity prices, while the other 94% was attributable to nuclear and fossil fuel. Rival generators, such as nuclear energy, quickly piled on, trying to distort public sentiment.

If there is an election, he says, wind advocates will be pulling for the incumbents. Otherwise, the industry could in big trouble.

“If the Conservatives win, renewable energy is toast in Ontario,” predicts Kourtoff. “It will be like the Dark Ages.”

Spotlight: Ontario

Ontario Wind Market Braces For Slowdown

By Mark Del Franco

Although the large-scale development of wind projects in Ontario will remain vibrant through 2015, the province’s wind market will ease considerably.





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