Delight at bold move by government -- Ontario 300 MW tender

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The Ontario government is in the market for 300 MW of renewable energy to come online "as soon as possible" as it attempts to deal with looming power shortages and reform an electricity market that is widely viewed as a restructuring failure.

The government has hired a technical advisor to draft the request for proposals and oversee the contracting process. It will also manage a second request for proposals (RFP) for up to 2500 MW of new, non-coal generation capacity or demand-side management initiatives to be in place no later than 2007. Both RFPs were to be released in February.

Although the provincial government plans to introduce legislation in April that energy minister Dwight Duncan promises will "redefine" the electricity sector, it did not want to delay the search for new generation. "Given immediate requirements for additional power and long lead times for approvals and construction of energy projects, we are moving immediately to address short term supply gaps in the province," he said.

Among the expected reforms are the implementation details of the government's plan to have 5% of all generating capacity come from renewables by 2007 and 10% by 2010. Renewables producers have been urging Duncan to move quickly to ensure these timelines can be met, and praised his recent RFP announcement.

"The word thrilled comes to mind," says Vision Quest Windelectric's Jason Edworthy, whose company has approval for one project in the province and is close to finalising a second. "Three hundred megawatts is an excellent start. Bigger would probably be too much to handle, especially since they are purposely doing this before they set up the ultimate system. I think it shows a lot of leadership."

John Brace of the Association of Power Producers of Ontario, called the renewables RFP a "particularly wise choice." But he also warned that the design of the contracting process will determine its success and urged the province to consult with industry as it works out the details.

Insufficient generation

A recently released report from the government appointed Electricity Conservation and Supply Task Force, made up of 19 members from all parts of the industry, warned that unless Ontario acts quickly to reverse a "looming electricity supply shortfall," it could have insufficient power to meet peak demand by 2006.

The task force says the Liberal government's commitment to phasing out Ontario's 7500 MW of coal plant and maintaining public ownership of generation assets, combined with increasing gas price volatility and the power industry's post-Enron financial fallout, have "undermined the viability of the original market design." While it says retail competition should be maintained, the province should consider a blended price for default supply customers that includes low marginal cost power from Ontario Power Generation's "heritage assets," as well as power from long term contracts and the spot market.

The report calls for the creation of a "conservation culture" in Ontario, recommending new market rules that would encourage demand-side response and help reduce demand growth from the current 1.7% a year to 0.5%. It also encourages the government to quickly implement its renewables targets, saying renewable generation will be a "vital part of the future supply mix."

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