Two conflicting reports have set the debate over whether Ontario's Green Energy Act (GEA) harms the region's economy. Established in 2009, the GEA was created to ‘expand renewable energy generation, encourage energy conservation and promote the creation of clean energy jobs,’ according to the Ontario Ministry of Energy's website.
However, a new report from independent think-tank Fraser Institute claims that the act is poised to make Ontario's electricity costs too high in contrast to other regions in North America, placing the province's economy and competitive edge at risk.
The report, titled "Environmental and Economic Consequences of Ontario's Green Energy Act," says the GEA has already hiked up prices for large energy users, with another 40-50% spike to occur within the next few years. According to report author Ross McKitrick, the main reason for the increased prices is the pursuit of renewable energy, especially wind power, through mechanisms such as feed-in tariffs.
‘The Ontario government defends the GEA by referring to a confidential 2005 cost-benefit analysis on reducing air pollution from power plants," says McKitrick in a statement. "That report did not recommend pursuing wind or solar power; instead, it looked at conventional pollution-control methods which would have yielded the same environmental benefits as the GEA, but at a tenth of the current cost. If the province sticks to its targets for expanding renewables, the GEA will end up being 70 times costlier than the alternative, with no greater benefits.’
The report claims the GEA's efforts toward wind energy procurement are "particularly wasteful," adding that wind's variability makes the resource inefficient and that Ontario has lost almost $2 billion on exports of surplus wind energy.
The wind industry's rebuttal
In response to the Fraser Institute's report – and in defense of Ontario's wind sector – the Canadian Wind Energy Association (CanWEA) has highlighted a recent study of its own.
Conducted by Power Advisory for CanWEA, "Customer Bill Impacts of Generation Sources in Ontario" examined the effects of wind energy generation on ratepayers in the province. According to the report, wind energy made up a minimal amount – approximately 5% – of the overall rise to ratepayers' electricity bills from 2009 to 2012.
The association also claims the Fraser Institute's study takes a "simplistic approach" in analyzing the GEA.
"The report relies excessively on the widely criticized 2011 Annual Report by the Auditor General of Ontario and also fails to take into consideration the fundamental fact that there is dramatic need to invest in new electricity generation and infrastructure after decades of underinvestment," CanWEA says in a statement. "According to the Conference Board of Canada, $347 billion in investment in Canada's electricity system is required between now and 2030 – and all of these costs will be passed on to consumers."
The association notes that Ontario's wind energy development has helped the province update its grid, with over 2 GW of installed wind capacity. Each gigawatt of wind energy, the association says, "drives $2.5 billion in investments, creates 10,500 person-years of employment, and provides enough clean power for over 300,000 homes."
"While electricity prices have been increasing across North America as jurisdictions upgrade ancient electricity systems, wind energy has proven that it can deliver major benefits at a minimal cost to ratepayers here in Ontario," says Chris Forrest, vice president of CanWEA, in a statement. "Wind energy is cost-competitive with virtually every potential new source of generation available in Ontario, and it does not create hazardous waste or consume vast amounts of fresh water from our Great Lakes."