Mesa Power Group filed a C$653 million (US$497 million) case in 2011, alleging the Ontario government discriminated against the company in awarding contracts under the province's feed-in tariff (FIt) programme.
It made the claim under investor protection provisions in the North American Free Trade Agreement (NAFTA). The case was heard in October 2014 by an arbitration tribunal organised by the Netherlands-based Permanent Court of Arbitration, which ruled against Mesa in a split decision last week.
"While we respect the tribunal and its process, we do think they got this one wrong," said a Mesa spokesman.
The tribunal also decided Mesa will have to pay all the costs of the arbitration, amounting to C$2.9 million.
Ontario's government is still fighting other claims related to its now-defunct FIT program. A NAFTA tribunal held a hearing in February over a claim from US-based Windstream Energy, which is seeking up to C$568 million in damages after the province's moratorium on offshore wind farms led to cancellation of its FIT contract.
Trillium Power Wind Corporation is also suing Ontario over the offshore moratorium, with its C$500 million lawsuit expected to go trial this year.