Ross McKitrick, Ph.D - comments regarding the K2 Wind Power Project

Dr. Ross McKitrick, Professor of Economics at the University of Guelph specializing in energy and environmental policy, submitted these comments regarding the K2 Wind Power Project to the Ontario Energy Board. A summary of his comments are excerpted below. His full letter can be accessed by selecting the links at the bottom of this page.

a. Wind energy likely increases overall GHG and air contaminant emissions: Since wind energy is intermittent, additions of wind turbines to the system also require additional gas-fired power plants, with a capacity of about 50% of the rated capacity of the wind turbines, to be spinning in the background, providing constantly-variable offsetting changes in power output (AGO Report p. 91). Thus wind energy, as actually utilized, is not zero-emissions. According to calculations by the Wind Energy Task Force of the Ontario Society of Professional Engineers, continued expansion of wind energy, in the context of Ontario's existing surplus of baseload power, will require replacement of non-emitting baseload sources (mainly nuclear) with a wind/gas mix. Since the grid operator is required by law to buy all the wind energy available, the system must be configured to absorb the maximum potential input from the wind turbine fleet. The existing surplus of baseload power means that, should additional wind capacity be added, in order to make the system able to absorb its full output, at least one nuclear generating unit will need to be removed from service.2 The net effect of replacing nuclear with a wind/gas mix will be an increase in both criterion air contaminants and greenhouse gas emissions.

b. Wind energy was not recommended by the DSS Report: In its response to the AGO, the Ministry of Energy cited a 2005 cost-benefit analysis by DSS Consulting to justify its renewable energy strategy as a replacement for coal (p. 120). This was misleading, since the DSS study did not consider wind or solar options, and it did not recommend the province invest in wind energy as a replacement for coal. That study only examined the costs of retrofitting the existing coal-fired power plants with enhanced stack gas controls, or replacing them with a mix of new gas and nuclear plants. Both options were forecast to yield approximately the same improvements in Ontario air quality but at less than one-tenth of the costs associated with Ontario's expenditures to date on renewable energy. By appealing to the analysis in the DSS report, the Ministry of Energy has actually undermined the case for spending more money on renewables as a means of achieving its stated policy goals, since that report showed they could have been achieved by other means at a fraction of the cost.

c. Wind energy harms job creation: The AGO Report also emphasizes (pp. 117-118) that the province made no effort to validate its claims that investments in renewable energy will create jobs or improve the economy, and substantial evidence exists to suggest the opposite will happen. The Province claimed that the renewables strategy would create 50,000 new jobs. But the AGO found that 40,000 of these were at most temporary construction jobs lasting only a year or two at most. Also, evidence from other jurisdictions on which the Ontario policy was based showed that the increases in energy costs would dampen growth in other sectors to such an extent that for every permanent job created in the renewables sector, between two and four jobs would be lost in other sectors.

d. Spanish and German experience shows inevitable economic harm: Ontario's renewables strategy was copied from German and Spanish systems. Hence, the subsequent experience of those jurisdictions shows us what the future will look like here. The Spanish and German governments have suffered heavy financial losses on renewable energy contracts amidst rapidly escalating energy prices and are bailing out on their commitments. This month, Spain introduced a new law that not only sharply rolls back subsidized tariff rates for wind and solar power producers, but it imposes a special tax on them to try and recover some of the system-wide losses, which amount to over $37 billion in Spain alone.3 The Germans are also rolling back subsidy rates for renewable power in response to consumer anger in advance of an election this fall.4 These volatile swings in policy, driven by extreme political and economic exigencies, are costly both to investors and consumers. These problems will of necessity hit Ontario in the years ahead. They illustrate the public harm done through the inadequate, back-of-the-napkin planning behind the Green Energy Act, so forcefully criticized by the Auditor-General. The relevant point for this application is that to the extent the Government of Ontario desires an energy policy that promotes growth and job creation, expansion of the wind energy sector detracts from that goal.

e. In sum, promotion of renewable energy through the approval of new wind turbine installations is inconsistent with the stated policies of the Government of Ontario, since it will likely result in higher greenhouse gas and criterion air contaminant emissions, and will impair economic growth and job creation. As pointed out by the Auditor-General, the provincial government did not undertake any comprehensive analysis prior to adoption of its renewable energy strategy to examine these issues, and consequently has no basis on which to claim that further expansion of wind energy is an effective means to achieve its stated policy goals.

Oebletter Feb2013

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FEB 19 2013
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