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Canada

Canada

Ontario study aims to convince sceptics

CANADA: Ontario's wind sector is looking to the results of an economic impact study to help inject discussion about wind energy's benefits into a political debate.

The debate is threatening to end the policy-driving growth in Canada's most populous province.

The study, conducted for the Canadian Wind Energy Association (CANWEA) by consultants ClearSky Advisors, says wind energy development in Ontario will create 80,000 person-years of employment, and attract more than C$16 billion in private-sector investment between now and 2018.

This analysis assumes the province's wind capacity will grow from 1.43GW at the end of 2010 to 7.1GW by 2018, which is the target laid out in the government's long-term energy plan. But with a provincial election set for October, statements made by Conservative opposition leader Tim Hudak vowing to cancel Ontario's feed-in tariff (FIT) raise questions about whether that market will still be there.

"It creates a significant amount of uncertainty because it's not clear what alternatives are being proposed," says Robert Hornung, president of CANWEA. "One of the things not evident in the Conservative campaign platform is a vision for what role wind energy can play."

The lack of clarity about the province's post-election policy framework "makes Ontario more of a question mark" for investors, Hornung says. With local content requirements under the FIT programme set to jump to 50% next year from the current 25%, it's particularly an issue in the province's fledgling supply chain.

"If you want to meet that 50% requirement in January 2012, you need to be making investments now, and there is absolutely no doubt there are people who are hesitating," says Hornung.

Big deal under threat

Hudak's comments raise concerns about the sanctity of contracts signed under FIT, he says. Although the Conservative leader says his government would respect agreements, he has pledged that "if there is value to Ontario families by stopping some of the larger, more unaffordable projects before they really get started, we won't hesitate to do that".

He has declared that he will kill a C$7 billion (US$7.2 billion) deal with a Samsung-led consortium, which includes plans to produce wind turbine towers and blades.

"If Ontario is seen as a jurisdiction where contracts can be changed with a change in government, that will certainly decrease confidence for investors," says Hornung.

Samsung expects the province to follow through on its commitments. "Samsung has acted in good faith, and we would expect our signed commercial agreement to be honoured in the same way any contract is under Ontario law," spokeswoman Dorenda McNeil said in a letter to the Toronto Star.

Meanwhile, the Ontario Power Authority is still awarding FIT contracts to developers. A new 180-kilometre, double-circuit 500kV transmission line that cuts through one of the province's prime areas for wind development is expected to be in service at the end of 2012, opening up grid access to just over 1GW of renewable capacity.

Paula McGarrigle, managing director of Calgary-based Solas Energy Consulting, says: "I think Ontario has done an exceptional thing, and they definitely have the long view in mind. But to start to shake things up will be difficult because investors get worried."

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