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Canada

Analysis - Policy upheaval fuels fears for future of Ontario wind market

CANADA: Ontario's wind energy sector is entering yet another phase of uncertainty as the provincial government works out its next steps following its decision to axe its controversial feed-in tariff (FIT) for large-scale projects.

Ontario's parliament - province is ending FIT programmer following WTO ruling
Ontario's parliament - province is ending FIT programmer following WTO ruling

From now on, projects of 500kW and larger will be selected through a competitive procurement process, Ontario energy minister Bob Chiarelli said in late May. But details of how this will work, what the eligibility criteria will be and when future purchases will be made have yet to be revealed.

"We really have no idea what it is going to look like," said Andrew Lord, an energy lawyer at Toronto law firm Davis.

"Until there are some announcements made about specifics, I don’t really see how anybody knows what the future is going to hold for new large-scale projects. I think this signals a slowing in the pace of procurement of these types of projects. So for developers, I don’t think it’s great news."

The uncertainty over the future market for wind is also an issue for equipment suppliers. But an even bigger question may be the impact of pending changes to Ontario’s local content regulations, which prompted a number of companies to agree to manufacture or source components in the province.

Chiarelli said the government will revamp the rules after a World Trade Organisation panel decided they violate international trade law.

Repower is one of the manufacturers that decided to set up shop in the province, with plans to open a new blade factory in the Niagara region within the next three months. The company is looking to the province’s new policy framework to provide a market to support that investment.

"We are very confident that an effective solution will be presented which will allow suppliers that have invested in the province to maintain their local supply chain and the many jobs associated with it," said Helmut Herold, CEO of the company’s Canadian subsidiary, Repower Systems Inc.

Ontario is conducting a review of its long-term energy plan this summer, and an energy ministry spokesman said it will be in a position to announce details about its new procurement process and its long-term purchase plans once this is complete.

One thing the new approach will do is give municipalities more control over where turbines are sited, added the spokesman. The wind industry in Ontario has run into sometimes fierce opposition in rural communities that felt sidelined by the current approvals process.

However, Chiarelli has made it clear the new rules will not give them a veto, nor will they apply to the more than 3.1GW of FIT contracts already awarded to wind projects.

"I’m sure there will be some people who see the changes as being too little too late. But that’s not to say they are ineffective changes," said Lord.

"I think they do give some real involvement back to the municipalities, and I think some people will see that too."

There is one change that existing contract holders will have to deal with as the province tries to make sure municipalities see financial benefit from wind projects within their borders.

"Work with the Ministry of Finance is currently under way to increase the property tax assessment for existing and future wind turbines, and we expect to make an announcement this year," said the spokesman.

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