The Green Energy Act (GEA) is a breakthrough piece of legislation for the community power sector in Ontario, unparalleled in North America. Most importantly, the act enables a feed-in tariff (FIT) program for green energy procurement that allows for the broad-based participation of homeowners, community organisations, First Nations and municipalities in the development and ownership of green energy projects. Prior to the GEA, the means for procuring green power in Ontario was a request for proposals requiring, among other things, a cumbersome C$100,000 bid-bond, making it impossible for community power proponents to compete. The GEA, however, calls for a well-designed FIT program with no cap on project size or the number of projects, and guarantees access to the grid and a secure a long-term power purchase contract, opening the doors to community power across Ontario.
Community power can take a variety of forms, such as self-generated power, off-grid power, pure distributed generation and net metering. In Ontario, the goal for the community power sector is community ownership of renewable energy generation facilities, emphasising the local and democratic ownership of these facilities with more than 50% ownership by community residents. This model evolved from the first community wind co-operative project in Ontario. Led by the Toronto Renewable Energy Cooperative (TREC), this project saw the installation of a wind turbine on the Toronto Waterfront in 2002 at Exhibition Place.
Although the community power sector is relatively new in Ontario, it must be recognised that hydro projects on First Nations land in the province have always required First Nations participation by law. They could therefore be considered a pre-existing form of community power. There have been numerous cases where First Nations have owned a minority interest in the initial stages of the project and, over time, used their profits to purchase a greater percentage of the project. Recently, the First Nations Energy Alliance (FNEA) was established to facilitate the further development of First Nations ownership of renewable energy projects throughout Ontario. The FNEA is also a founding member of the Green Energy Act Alliance.
During the development of the Exhibition Place project, TREC formed the Ontario Sustainable Energy Association (OSEA), in coordination with some Ontario members of Green Communities Canada, to replicate the community power model across the province. Through the TREC project, barriers that were impeding the Exhibition Place wind turbine and would likely impact other community power projects, were quickly identified. These included access to a long-term, secure power purchase agreement and early stage financing. This led to a campaign for a better support program for renewables in Ontario in 2004, identifying FITs as the key policy instrument needed to advance the sector.
In response to this campaign, in 2006 the provincial government announced a FIT-type program for Ontario: the Renewable Energy Standard Offer Program (RESOP). In 2007, it seeded the Community Power Fund (CPF) with a mandate to provide early-stage development grants to the sector. Through the CPF, several projects in Ontario were able to move forward. However, by 2008 it became clear that most community power projects were not able to proceed due to additional barriers faced by the sector, including lack of grid capacity and insufficient RESOP prices given the local resource availability.
Despite these barriers, new opportunities were emerging in Ontario. Perhaps most importantly, George Smitherman became Ontario's new minister of energy and infrastructure in June 2008. With his appointment and other events, the timing was ideal for an alliance of farmers, unions, environmental organisations, First Nations and others to launch a new campaign calling for a Green Energy Act for Ontario.
The Green Energy Act Alliance campaigned for a law that would replicate Germany's renewable energy sources act. It would include a FIT program; a right of access to the grid; a standardised permitting process; a commitment to a continuous improvement approach to conservation; no caps on the amount of renewable power that could be fed into the grid; a commitment to support community power; an amendment to the Ontario Co-operative Act; support and protection for low-income families; and the adoption of a smart grid. In part due to the global credit crisis, the alliance has also proposed the expanded mandate of the CPF. This would include financing for capacity building, development loans, bridge financing, loan guarantees, and the establishment of a mezzanine fund that would be set up within Ontario's Infrastructure Fund to raise any renewable energy project market shortfalls in the community power sector.
In September 2008, the premier of Ontario, Dalton McGuinty, announced he would move forward on a Green Energy Act for Ontario. By February 2009, Smitherman introduced the Green Energy and Green Economy Act, which passed in May 2009. The act is the first of its kind in North America. It is an enabling piece of legislation that effectively covers most of the key elements that the Alliance campaigned for.
Several policies and programs resulting from the act are under development and should take effect sometime this fall, including domestic content requirement rules, final FIT program rules, renewable energy approval process requirements, a variety of community power funds, the local distribution company conservation programs and a transmission directive that will give everyone in Ontario a better sense as to how and where the grid will evolve.
Today, the community power sector in Ontario has around 200 MW of projects in development that could be built by summer 2011 if the resources and financial instruments mentioned above are put in place. For Ontarians, this represents significant financial and social benefits - 200 MW of community power translates into gross revenues of C$50 million a year staying in Ontario, in the pockets of ratepayers, taxpayers, voters and residents.
Since TREC, the success of the community power sector in Ontario has been inspiring communities across Canada. In Quebec, the Val-eo project is a co-operatively owned and limited partnership between 60 farms, two municipalities and nearly 100 local investors to harvest the wind potential in their neighbourhood. In April, Hydro-Quebec Distribution announced a call for tenders to develop 500 MW of wind capacity, with an even split between 250 MW of power coming from Aboriginal projects and 250 MW coming from community projects. The proposed tender specifies a high content of ownership for each project. For the Aboriginal project a minimum of 50% of control is required, while community projects must have a minimum of 30% control.
Meanwhile in Manitoba, the Elton Energy Cooperative is working to build a proposed 3 MW facility that will power local homes and businesses. In New Brunswick, the provincial government has announced that it will consider community power projects and is working with stakeholders to articulate how a community-based power program should be implemented. In Alberta, a First Nations group has built a collectively owned wind turbine in a 50/50 partnership agreement with Epcor.
The community power sector in Ontario has grown significantly over the past decade. With the Green Energy Act and FIT program in place it can now continue to expand while creating local jobs and feeding local economies. The leadership Ontario has shown is remarkable and sets a precedent for other provinces to follow suit.
About the Author:
Deborah Doncaster is the executive director of the Community Power Fund, which she co-founded in Ontario in March 2007. She was previously the executive director of the Ontario Sustainable Energy Association, which she co-founded in 1999 and, before that, was project manager with the Toronto Renewable Energy Co-operative. Deborah would like to thank the following people for assisting her in the research for this article: William Bigbull, Byron Le Clair, Lisa Daniels, Alex Doukas, Toby Couture, Paul Gipe, Laurence Lafond, Paul Norris, Niki Skuce and Elizabeth Koster.