Ontario’s Wind Challenges Could Extend Well Beyond Election Day

Mark Del Franco
Written by Mark Del Franco
on October 04, 2011 No Comments
Categories : New & Noteworthy

8675_sticky_10.3 Ontario's Wind Challenges Could Extend Well Beyond Election Day Although wind energy in Ontario has been among the most divisive of issues in campaigns leading up to the provincial election, the challenges facing wind energy development in the province will likely remain long after the Oct. 6 election.

While Ontario's landmark Green Energy Act (GEA) may have helped bring in millions of dollars in investment and placed the province onto the world stage, some wind developers are feeling the effects of a backlash. Approvals have been slow to come, and investment has followed suit.

‘The whole process has fallen apart,’ explains Mike Kosiancic, asset manager at Firelight Infrastructure Partners, a Toronto-based firm that invests in North American renewable energy projects, including wind, hydro and solar.

Political uncertainty in the province, he says, has stalled several of the firm's wind and small hydro transactions.

‘It's become a bureaucratic nightmare,’ Kosiancic notes, adding that approvals for wind and other renewable projects have slowed to a snail's pace because of the uncertainty around the election.

Indeed, wind energy has been among the wedge issues almost from the beginning of the election campaign, when Tim Hudak, the Progressive Conservative (PC) candidate, began using the GEA as one of the central themes to denounce the incumbent Dalton McGuinty government, which spearheaded the GEA.

Characterizing the GEA as fiscally wasteful and imprudent, Hudak vowed to undo many of the GEA's core tenets, promising to end Ontario's green energy initiatives, abolish the Ontario Power Authority and terminate the province's controversial C$7 billion agreement with Samsung C&T, which includes the development of 2,500 MW of wind and solar energy projects in the province – the largest single investment commitment under the GEA.

‘The GEA is relatively new,’ explains Mike Garland, CEO at San Francisco-based developer Pattern Energy, which, along with Siemens Energy, is partnering with Samsung on its Ontario wind projects.

‘A lot of government agencies are still feeling their way through the process,’ he says, adding that Ontario ranks among the toughest locations in the world for permitting – on par with California and New York. ‘What they make you go through is really remarkable.’

While the PC's stance on wind energy appears to have softened – recent media reports have the political party aiming to return wind farm approvals to the municipalities – some are saying that the problems plaguing Ontario will continue regardless of the election's outcome.

For starters, Ontario features a vocal anti-renewable lobby, with strong local opposition to projects in certain areas.

According to Uwe Roeper, president of Ontario-based consultancy Ortech, insufficient grassroots support remains a big problem.

‘This needs to be shored up,’ he says. ‘In specific locations, this political balance tips against renewable projects. Therefore, it is quite possible that select feed-in-tariff acts with a lack of public support could fall victim as a political example by a change in government.’

But Garland says some opposition to wind energy will remain regardless of location.

‘The challenge is to work with the communities to show we're going to be good neighbors, but there are always people who don't like what you do,’ he comments. ‘Still, you may have to avoid those locations.’

And the province's struggles are not limited to terrestrial wind.

Because of the provincial government's February decision to cease the development of offshore wind on the Canadian side of the Great Lakes, at least one developer is claiming governmental favoritism.

Trillium Power, which planned to build a series of wind farms in Lake Ontario, sued the provincial government for $2.25 billion, claiming it unfairly cancelled all offshore wind projects.

According to the filing, Trillium spent millions of dollars planning its projects and carefully followed the government's application processes. However, the province stunned Trillium when it announced it would not consider any offshore development, pending additional scientific studies.

‘The charges that offshore wind construction somehow affects water quality are complete rubbish,’ says John Kourtoff, Trillium's CEO. ‘It's trumped up.’

Trillium's statement of claim, filed in the Ontario Superior Court, also alleges that the decision was made for purely political reasons – to appease wind power critics in the run-up to the provincial election.

Kourtoff claims an official indicated to him that the government has no political appetite for offshore wind, going forward.

‘At that point, we have no other choice,’ he says. ‘We're not about litigating. But we have to protect Ontarians, and we have to protect our shareholders.’

While Trillium had spent about C$5.3 million in planning for its first wind farm, the future loss of profits adds up to C$2.25 billion, according to the filing.

The government, which refutes Kourtoff's claims, has until mid-October to respond.

Regardless of the election's outcome, the source of Ontario's future energy needs must be addressed, according to David Sword, spokesperson for Vestas' Canadian operations, adding that wind energy is well-positioned to grow in step with Ontario's electricity demands.

Considering that Ontario is far down the path of retiring coal plants – having reduced its coal usage by 90% since 2003 – new energy sources, such as wind and hydro, will be in demand. Unlike new hydro – which would necessitate refurbishing its infrastructure – wind is a cheaper solution, Sword explains, citing its C$0.135/kWh price tag, as set by the feed-in tariff.

Compare that to the cost of new nuclear plants – reportedly in the C$0.20/kWh range – and wind energy compares well, he says.

‘Considered in that light, wind looks very favorable.’

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