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Canada: Companies vie for Ontario market

Feed-in tariff triggers jostling.

September's official launch of Ontario's new renewable energy feed-in tariff (Fit) programme has prompted early manoeuvring by companies looking to position themselves in what is expected to become one of North America's major markets for wind power.

Ontario premier Dalton McGuinty announced that the Ontario Power Authority would begin accepting applications on October 1 and expected to issue the province's first 20-year power purchase contracts in early December.

Within a week of McGuinty's announcement, UK-based International Power said that it had purchased AIM Powergen, a wind power developer based in the province, from its parent company, Renewable Energy Generation Limited, in a deal valued at C$189 million. International Power CEO Philip Cox called the Ontario Fit program "a key driver" of his company's interest in acquiring AIM.

Project know-how

Mike Crawley, CEO of AIM, says that the acquisition will provide AIM with the capital it needs to bring several hundred megawatts of wind online in Ontario over the next three years. With 33.2 GW in its generation portfolio, he adds, International Power also brings significant know-how in project development and operations. "As we scale up and develop a number of larger projects, that expertise will add value," Crawley says.

International Power's entrance into Ontario was not the only activity in the wake of the launch. Energy minister George Smitherman disclosed that the province is in advanced talks with South Korea's Samsung C&T Corporation over its proposal to establish a new renewable energy business in Ontario, adding that "efforts are progressing well toward the signing of a historic framework agreement". He says that further information would only be made available once a deal is reached. The South Korean industrial giant is apparently interested in both developing projects in Ontario and in manufacturing wind turbines there. There are unconfirmed reports of plans by Samsung to install 200 turbines along the north shore of Lake Erie.

Local content

The launch of the Fit programme brought with it the release of a number of much-anticipated regulations that the industry must live by. At least 25% of the cost of wind projects must be spent on goods and labour from Ontario. That 25% domestic content requirement goes up to 50% in 2012.

Yet the market remains attractive to turbine makers besides Samsung. Simon Olivier, Canadian sales manager for GE's renewable energy business, says his company is very interested in the Ontario market and is putting together a plan to meet local requirements. "We're ... seeing how we could potentially grow (our existing employee base) with more green jobs to meet the local content requirements," says Olivier.

For example, he says, a GE site in Peterborough, Ontario, that makes large motors could be tooled to make generators for wind turbines. The global headquarters for its Digital Energy division is in Markham, also in the province, and the company is looking at its prospects for doing business there.

Despite GE's plans, trade union United Steelworkers says that the government didn't go far enough with its content target, arguing that the initial target can be met with no local manufacturing of turbines or components. "This policy leaves a lot of green jobs on the table," says the union spokesman Ken Delaney.

Another key regulation in the GEA sets out the minimum distances required between wind turbines and residences. The industry is disappointed that the government stayed with its original proposal that turbines must be set back 550 metres from homes, saying that the province's existing noise guidelines are more than sufficient to protect homeowners. "In fact," says Robert Hornung, president of the Canadian Wind Energy Association, "with its existing guidelines, Ontario already had one of the strictest regimes in the world when it comes to setback distances based on acceptable sound levels."

Projects that had been awarded a certificate of approval from the province under its old construction permission rules are exempt from the new 550-metre rule. AIM Powergen has projects in that category, but the new 550-metre requirement will need a redesign of some of its later plans. "It means we have to use some additional land to keep the projects the same size," Crawley says.

Pragmatic approach

Meanwhile a draft proposal to demand that wind projects are sited a minimum of 120 metres away from the legal boundaries of any property (Windpower Monthly, August 2009) has been made less stringent. "(The original plan) would have been devastating," says Crawley. "In the final regulations there is a much more reasonable and pragmatic approach taken to that."

The Ontario Fit is an offshoot of Ontario's Green Energy and Green Economy Act (GEA), which was passed into law in May. As well as providing guaranteed tariffs for a range of renewable energy technologies - amounting to C$0.135/kWh for large-scale onshore wind and C$0.19/kWh for offshore projects - the GEA sets up a streamlined construction approval process for extending the province's transmission system to areas rich in wind and other renewable energy resources. "What it means is that, at the end of the day, you know that there will be a market for power from good projects, and you know that if you have a project that is environmentally suitable, then it should be able to get permitted within a predictable time frame," says Crawley.

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