Getting down to regulatory details -- Ontario no time to waste

Ontario's new government needs to move immediately to acquire new renewable energy resources if it wants to meet the targets it laid out during the election campaign, says a group of seven associations representing the wind, small hydro, solar and bioenergy industries.

The group points out to Premier Dalton McGuinty and Energy Minister Dwight Duncan that the government's pledge to require Ontario power suppliers to obtain 5% of their electricity from new renewable sources by 2007 and 10% by 2010 will require construction of approximately 400 MW of capacity each year, starting in 2004. It recommends the province issue a request for proposals for at least 500 MW as soon as possible.

"Clearly, if the government's commitments are to be met in the promised time-frames, increasing our renewable energy capacity should be seen as an urgent matter," the group urges. "There is no time to waste in devising and implementing a workable plan."

Because Ontario's previous government was in the process of establishing its own renewables target before its electoral defeat (Windpower Monthly, September 2003), much of the necessary groundwork, including extensive consultation with industry, has already taken place. "The preparation work is done, and the industry is ready to respond, so this is easily actionable."

Target complexity

The lack of a robust retail market in Ontario has injected some complexity into implementing a renewable energy target. Normally, renewables portfolio standards place the obligation to meet the objective on electricity retailers. But Ontario's decision last year to slap a price cap of C$0.043/kWh on electricity rates for residential and small businesses effectively ended competitive retailing, and with it the fledgling green power market. It also made it virtually impossible for renewable energy producers to find customers willing to commit to long term power purchase agreements.

The previous administration planned to have a government agency contract for the energy required under its green power target, a plan that, at least in the short term, "is the most practical approach," the group says. Industry stakeholders have been working with Ontario energy ministry staff to determine how the agency plan can best be implemented in Ontario. Their final report is expected soon.

The new government has already said it will eliminate the price cap, which is costing taxpayers roughly C$1.5 million a day to subsidise. "We want a price regime that better reflects the true cost of electricity," says McGuinty. A move to more realistic pricing will improve the investment climate for new generation, says John Brace of the Independent Power Producers Society of Ontario.

"The price cap was having a negative effect on the industry not just because it made it harder to find customers," says Brace, "But because it raised the spectre of a future of unpredictable government action that might constrain the industry -- and the very real risk of insufficient supply."

The renewable energy producers group also points out that creation of a market for renewables is only part of the equation. They urge the new government to create a Renewable Energy Secretariat, whose job will be to remove barriers to renewable development, including transmission access, interconnection issues and government land lease policy.

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