Ontario Energy Minister Bob Chiarelli tried to put a happy face on last week's rejigging of the province's massive renewable energy contract with a Samsung-led Korean consortium. Scaling back the original $9.7-billion deal struck in 2010 to $6-billion was supposed to signal Premier Kathleen Wynne's determination to inject a measure of sanity into the green energy policies she inherited from Dalton McGuinty and his overzealous electricity czar, George Smitherman.
"With this updated agreement, we'll continue to create good jobs, while maintaining Ontario's commitment to clean, renewable energy," Mr. Chiarelli insisted.
He boasted that the downsized 20-year contract, under which Samsung will produce about 1,400 megawatts of wind and solar power instead of 2,500 MW, represents a $24 reduction on the average annual residential electricity bill. Considering that the average Ontario consumer paid more than $1,700 for electricity in 2012, this wouldn't be much to get excited about, even if it actually resulted in a 1.4 per cent cut on their power bill.
But Ontarians have only begun to pay for the the green energy "vision" of Mr. McGuinty and Mr. Smitherman. Electricity rates are forecast to rise by nearly 50 per cent as the government moves toward its target of adding 10,700 MW of renewable power to the grid. Renewable energy is not the only reason Ontario is set to become the highest-cost major electricity jurisdiction in North America by next year, but it remains one of the biggest. As a result, the province faces further contraction in its manufacturing base unless it subsidizes big electricity consumers.
And for what? A cleaner environment? Thousands of permanent green jobs? A head start in the global race to develop cost-effective sources of alternative energy? Sadly, none of the above.
With the bulk of Ontario's baseload electricity capacity coming from emissions-free nuclear power, commissioning massive amounts of wind and solar energy at guaranteed sky-high rates was a dubious idea from the get-go. With energy surpluses galore, idling nuclear reactors so an overloaded electricity grid can accommodate intermittently produced renewable energy is costing Ontario dearly as it exports unneeded wind power at a fraction of what it pays for it.
"The loss rate will continue to grow with every new wind turbine installation because the mismatch between the timing of wind-powered generation and Ontario electricity demand is structural," University of Guelph economics professor Ross McKitrick wrote in an April Fraser Institute report.
What's more, because you can't restart a reactor on a dime, and because the wind blows when you least need additional power, the province is increasingly forced to meet interim shortfalls with natural-gas-generated electricity. The net result is more greenhouse gas emissions.
So much for green energy supposedly replacing the the dirty coal-fired stuff the province has promised to phase out by next year. Indeed, none of this costly green power is needed to offset the 3,000 MW of coal-based electricity that will be lost with the shuttering of the Nanticoke and Lambton plants.
Yet, the province's Independent Electricity System Operator just announced that 3,300 MW of renewable power (overwhelmingly wind and solar) will be connected to the grid in the next 18 months alone. By this fall, the IESO is supposed to be able to "dispatch" wind power, relieving it of the obligation to always buy surplus wind power. But wind producers with contract guarantees promise to fight the new rule.
The Green Energy Act was supposed to turn Ontario into a big-time manufacturer of wind turbines and solar panels by requiring renewable energy contract-holders to source up to 60 per cent of their components in the province. But the World Trade Organization laid waste to that beggar-thy-neighbour industrial strategy. Within a few years, it's doubtful much will remain of the province's fledgling wind-component industry, which has focused on the low-tech end of the business anyway.
Indeed, with research in Britiain showing that the useful life of wind turbines in that country is expected to be barely half of the 20 years promised by promoters, Mr. McGuinty's great green strategy could be over before we know it. With guaranteed income streams from the government, wind power producers have felt little need to invest in research and development. The windmills have gotten bigger and more intrusive, but they haven't gotten much better.
Before long, they may even be obsolete, as a new generation of cost-effective clean tech is born.