Year End Report Card on Ontario Electricity Supply

At the end of 2007, how is the Province of Ontario doing on its commitments to supply additional renewable energy?

In 2004, the government promised to add 1350 MW of new renewable supply to the Provincial grid by the end of 2007. They have fallen far short. There has been 470 MW of wind installed, a very small amount of landfill gas, and a few small hydro projects – 18 MW in total. Total additions are 488 MW. This is 64% behind the target. There are many reasons for the failure, but the principal one is that procurements through Requests for Proposals, or the Standard Offer were made too late to allow construction to be completed on time.

The good news is that there are many additions that will be completed next year, including Melancthon 2, the Enbridge and Kruger projects, a smattering of Standard Offer Projects, and Wolfe Island. The total amount of wind expected to be completed next year is 789 MW, with 43 MW of hydro and 63 MW of biomass planned by the end of 2009. So we will hit the target, but it will be a year late.

The ongoing problem seems to be a reluctance by the government and the OPA to exceed their targets. Instead of designing programs to bring on as much new supply as possible, they design programs to ensure they don’t exceed the target. The result is that we miss the target.

The Standard Offer was rolled out in January. So far, no major projects have been completed, but there is a great deal of interest, and several projects will be completed in 2008. The price paid for solar, and for on farm biomass would seem to be too low to result in project completion, despite numerous contract signings. The fact the Standard Offer is out is however a major accomplishment.

Procurement Grade: C-

Environmental Assessment has caused numerous delays. Court rulings that makes the Crown have a “duty to consult” with First Nations on major developments in ancestral lands has resulted in paralysis in the bureaucracy while they figure out exactly what this means. So the process slows down. Some major projects were delayed as a result of this, and of course this was exacerbated by the slow and timid procurement processes. Staff seems to be very stretched at the Provincial level.

Environmental Assessment: C

Municipal governments have made some progress in setting rules, and permits seem to be coming along. In some cases, forces for the status quo have appealed to the Ontario Municipal Board. In one instance, the appellant lived more than 15 km away from the proposed project, but still complained about a negative impact. Landowners with an interest in projects have been critical to the success at the municipal level. 100% of the OMB appeals heard this year have been won by the renewable energy project.

Municipal Planning: B

Hydro One and the OPA introduced the orange zone, which restricts the development of renewable energy projects in a large area from Grand Bend to Meaford to Orangeville. This restriction is supposedly due to a shortage of transmission caused by nuclear refurbishments and existing wind contracts. There has been no progress on resolving this issue, but the environmental assessment on proposed transmission upgrades is underway. The government and the OPA has refused to budge on proposal made by the industry that could allow at least some Standard Offer projects to proceed in the area. In addition, the hydro opportunities in the northeast of the province are transmission constrained, and there is no plan to solve this issue.

Hydro One/OPA transmission: D

Overall Provincial Grade: C-

We are better than we were, and there are some projects built, many underway, and new procurements are in process. But we are nowhere near to the commitments made, and nowhere near where we could be.

Happy New Year.

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