The province released its Crown land-lease policy for wind last month, setting out the application process and rental fees. Estill says it is a big improvement on a draft policy released a year ago, which proposed pricing formulas that would have made Crown lease rates two to three times higher than agreements already signed with private landowners in the province. The final policy has a more acceptable pricing regime, says Estill.
One area where he says costs will need to come down further is offshore wind in the Great Lakes. The lake beds are considered Crown land. There's a good wind resource there, there's lots of space. I do think there's a good possibility there will be some offshore wind developed in Ontario within this decade, maybe even the next three or four years," says Estill. "But it is not going to happen without the will to make it happen and that will involve, partly, the pricing on the leases."
Ontario is expected to become a significant new market for renewables. The province's energy minister, Dwight Duncan, has promised sweeping legislation this spring to reform the electricity sector, including a plan to have 5% of all generating capacity come from renewables by 2007 and 10% by 2010. A government request for proposals for 300 MW of green power, to kick-off the market, is expected soon.
The wind industry, however, is still facing fundamental barriers, says Estill. Of those, transmission is the biggest. Many of the regions with attractive wind regimes, particularly along the Great Lakes and Georgian Bay, do not have the transmission infrastructure to support the type of large scale wind power development now being proposed.
Hydro One, a government owned company that operates almost all of Ontario's transmission system, says that although wind generation makes up less than 0.05% per cent of the province's current installed capacity, it accounts for about 60% of the projects now seeking connection to the grid.
The utility says it is "proactively assessing" transmission investments required to develop Ontario's wind power potential as part of its recently released ten year plan. Meantime, says Estill, market rules say the cost of transmission built to accommodate a generator is charged to that generator. The industry, he says, wants the rules modified so that the cost of building new transmission is recovered from customers through electricity bills, up to a maximum of C$60,000/MW. The generator would pay the cost above that. "What you don't want to have is a situation where you give carte blanch and Hydro One is required to connect any generator anywhere. You need to have the right balance," he says.
Other potential obstacles include property taxes that take up to 10% of the revenue of a wind project, environmental assessment thresholds that are lower than those for gas-fired generation, noise regulations, and market rules that prevent distribution companies from offering green power to customers.
"There are all these things that when you add them together are policies that actually affect the cost of wind," says Estill. "We're working through them, but it is a long list and it is multi-departmental. It is basically industry players working with each government department one at a time. There is no overarching central ministry in the province pushing this."
He hopes that once the new legislation governing the electric industry is introduced, progress will be easier. "To some extent, some of these issues are a function of what the overall market design decisions will be."