Green Energy Act: Where do we go from here?
I had a chance to absorb some of the elements of Ontario’s Green Energy Act and, despite the many programs and policies that still need to flow from it over the coming months — assuming it passes, which is likely — I think it’s a progressive document. Most media outlets have been dwelling on the mandatory home-energy audit that would be required every time somebody sells a home, but this is a minor part of the overall legislative package and could easily be modified or eliminated to address people’s concerns.
On the energy audit, I have to admit I’m surprised by the outrage. I mean, it’s a $300 audit, and half the cost is covered by the government. I think people are more concerned about the impact this information could have on the sale price of a home. I say, yeah, so what? That’s the point. Clearly, some people know their homes aren’t energy efficient and want to hide this from prospective buyers rather than do the upgrades necessary to improve efficiency. Can we really criticize a piece of legislation that aims to provide important information to the buyer of something as important as a home; that wants to give the operating costs of a home higher priority in the decision-making process? Even if the government provided $75 million a year to cover the entire audit cost for every new home sale or home resale, people would still protest. Now’s not the right time! The economy is suffering! It’s just another tax! That’s a crock. Fact is, this requirement wouldn’t take effect at earliest until next year. By then, the economy could very well be in recovery mode. Have we become so used to “fluffing” our homes that misleading homebuyers is a technique we’re not willing to abandon? Not surprising, the real estate industry is protesting the mandatory audit and appealing to our libertarian nature– not out of concern for homesellers, but out of concern they’ll no longer be able to pad their commissions by duping homebuyers. It’s hard to be sympathetic.
Anyway, in my opinion, one of the most significant parts of this proposed legislation is the attempt to change the way our energy agencies and provincial utilities deal with renewable energy. Instead of being an afterthough — something that’s accommodated after everything else has been accommodated — renewables will become a priority. It won’t happen overnight, but the idea is to change the culture at utilities such as Hydro One so that they’re more proactive than reactive when it comes to renewables. Associated with this is a big emphasize on grid modernization as an enabler of renewables and conservation. The act also gives the Minister of Energy more power to make things happen through directives to various agencies, which is good and bad. It’s good for a progressive and demanding minister like current Energy Minister George Smitherman, but a change in government or ministers could just as easily derail the long-term goals of the Green Energy Act.
The act also empowers local distribition companies, permitting them for the first time to pursue their own renewable and CHP projects as long as they’re under 10 megawatts. These LDCs can also recoup costs more easily through their rate base, not just for the actual projects but for the hiring increases that will be necessary to upgrade the distribution network to handle these projects. Such upgrade requirements are large, and will be expensive, meaning the actual clean-energy projects won’t be deployed fast, but the point is they’re enabled — so eventually will. What this all means is that LDCs can be more responsive to the needs of their own communities, rather than handcuffed by provincial agencies and regulations.
The act also aims to streamline approvals (including, as discussed before, a six-month permit approval guarantee and replacement of municipal bylaws with a single provincial standard) and update the building code so that energy-efficiency is its overarching purpose. It also lays the foundation for increased collaboration with native groups on renewable-energy projects, and gives support for the creation of community co-ops project. However, the most anticipated part of the act — the creation of advanced feed-in tariffs for renewables — came with no details, other than a lifting of a project size cap that existed with the previous renewable standard offer program (which had a cap of 10 mw). Obviously, the tariffs set for wind, solar, biomass/biogas and hydro projects will make or break this part of the legislation. If set too low, developers won’t be able to make their projects economic or raise the necessary financing. If too high, opposition parties and ratepayers will scream bloody murder, particularly if the projects that result don’t create the jobs that are anticipated.
And even if the feed-in tariffs are set high enough, there’s still no guarantee under the current environment that developers will be able to get the financing. Sure, a power-purchase agreement is equivalent to a loan guarantee during good times, but lenders aren’t behaving rationally these days and Smitherman has made clear there are currently no plans to introduce government-backed loan guarantees for these projects. That said, the minister has repeatedly hinted that the tariffs will be generous. He also will be given the authority to direct agencies to pursue specific renewable-energy projects or sources, such as offshore wind, whether through a competitive or non-competitive procurement process.
“We expect the Act to be passed sometime in April or May,” says law firm Torys. “How the Act’s details are finalized and implemented will ultimately determine the outlook for renewable energy projects in the upcoming years.” In my own discussions with Smitherman, he has assured that many of the key programs and policies flowing from this act will be announced and in effect by this fall.
So, overall, the assessment is generally quite positive. But there remains the one obvious question: Will the government deliver the progressive policies and programs necessary to realize the vision outlined in the legislation, and will they do it in a timely fashion? There’s a lot of talk flowing from the tabling of this bill that needs to be turned into action.
Premier Dalton McGuinty says the proposed legislation is part of a larger initiative to tell other jurisdictions that when it comes to renewable energy and conservation we intend to be the North American leader, meaning Ontario is the place to invest and lay down roots. The province would be wise to aggressively market itself this way over the next year or so. McGuinty, when asked about the tendency to overpromise and under-deliver, said we should judge his government based on its track record over the coming months and years.
Oh, don’t worry, we will.
Note: For those who worry about the overall costs of implementing the programs and supporting the policies that emerge from this Green Energy Act, there are some things we need to keep in mind. For one, upgrades to transmission and distribution need to happen anyway, it’s just that now they will be done with an eye to enabling local renewables and distributed generation, which over time can actually save us money on grid upgrades. Second, let’s keep in mind that comparing the cost of nuclear coming from a plant built in the 1970s to renewables built today is just plain wrong. The days of electricity below 6 cents a kilowatt-hour are gone. Build a new fossil fuel plant or nuclear plant today and we’re talking over 10 cents per kilowatt-hour, and in some cases much higher. And with that comes fuel volatility and, in the case of nuclear, massive decommissioning and waste management costs. Third, Ontarians need to get a grip on reality. Electricity prices south of the border are double, often triple, what we pay. They’re much higher in Europe. Artificially suppressing prices is unsustainable. But price increases can be managed through conservation if we transition properly and have supports in place for low-income households. People become so angry when they invest in conservation to save energy, only to see their electricity costs rise and their bill become the same. They’re missing the point. Conservation is about buffering electricity price increases, not about permanently reducing our overall electricity bill. Rather than consider it savings, we should be considering it future cost avoidance.
Tags: George Smitherman, Green Energy Act, ontario
Tyler Hamilton is senior energy reporter and columnist for the Toronto Star, Canada's largest daily newspaper. In addition to this Clean Break blog, Tyler writes a weekly column of the same name that discusses trends, happenings and innovators in the cleantech market. This blog is a personal project started in April 2005. It is not an official blog of the newspaper. Tyler can be reached at tyler@cleanbreak.ca
March 1st, 2009 at 1:14 pm
Almost everyone likes green, but the NIMBY symdrome always prevains. Wake up Canadians, look aorund the world and see what others are doing. Canada has missed many global opportunities and likely will not ride the wave of green economy and instead drowned by it. Look at Germany – They created a world leading renewable energy industry and are benefiting from it. While all those IT gurus and smart investors are all heavily investing into cleantech/clean energy, most Canadians are still dreaming on their past, having no visioin and forward thinking. Sad… Canadians are among those MOST WASTEFUL in terms of resources use. With a small popullation, we are the 6th largest user of primary energy. Shame! Even China is now ahead of Canada in APPLYING and INVESTING in renewable energy and energy efficiency. Don’t miss the boat again in capitalizing on the global green economy opportunities!
The GEA is long overdue (and China has its Renewable Energy Act eracted in 2005). Let’s get on with it and move on… Before lagging behnd further and further.
March 1st, 2009 at 6:23 pm
Local utilities could be a major obstacle. I contacted my local utility about progress on the smart metre program and other programs to implement energy efficiency. The reaction was truly volatile as I could hear the sneers in the background and obfuscation was all over their answers. Can you imagine the response upon me requesting turning a large local steel mill into a CHP project?
McGuinty and Smitherman are going to have to be tyrants to make this thing work properly…
March 2nd, 2009 at 12:34 pm
[...] 2 March 2009] Over at Clean Break, Tyler Hamilton has written a good piece on the Green Energy Act. It includes more analysis than the other coverage I have [...]
March 2nd, 2009 at 3:04 pm
Concerning energy audit impacts on home value, I don’t think the issue is one of personal “padding” of a house sale price over its “true worth” as a boosting of homeseller profit, so much as it is the issue that it’s enforcing costs on homeowners not just directly through the audit charge itself, but through the costs of the repairs and upgrades it would require to any house that doesn’t meet the audit requirements, as well as through the taxes required to pay for the agents and agencies carrying this work out (which also includes its 50% coverage of the audit fee; like all government “coverage”, that’s just an indirect charge via tax rather than a direct charge per service.)
It’s worth bearing in mind here, as Steve Janke points out on his blog stevejanke.com, that most homeowners had nothing to do with the construction of their house, and most homebuyers do not and will not prioritize energy efficiency as their make-or-break criterion (barring ridiculous extremes that are prohibited by most building codes anyway). They aren’t “fluffing” their prices, they’re trying to get prices at least similar to what they paid because they *need* to get such prices in order to finance the new home; the potential resale value reductions aren’t just cutting into a speculator’s profit margin, they may make resale effectively impossible, which will be like throwing a wrench into the economy’s already-stripping gears. Elderly homeowners who have been in the same house for thirty years or more are particularly vulnerable; they will be the people least likely to pass audit and the least likely to be able to afford either the renovation costs or the reduced sale price if they find themselves required to sell. (Yes, the audit will not take effect until early next year and things may have improved by then, but what is the likelihood the government will back off from it if things have not improved?)
And after all of that bureaucratic effort and financial compulsion, it should be seriously asked if the actual improvement in residential energy efficiency savings will even be worth it. Short of complete demolition and reconstruction, exactly how much efficiency improvement is feasible on a per-home basis, and are we going to save enough to make up for the costs of trying to enforce that saving? I’m all for improved efficiency; I just have to admit that the phrases “government agency” and “improved efficiency” seem to me like a textbook contradiction in terms.
March 2nd, 2009 at 3:13 pm
There are plenty of low cost quick fix energy efficiency improvements out there…
The problem is people don’t do them.
Changing windows is now cheap (and doesn’t provide a great payback) but caulking them properly sure does.
Adding a weather strip to the bottom of your door to keep heat in / cool air in? Cheap.
Closing off the heat vents to an unused room and keeping that door closed? Cheap.
Installing a programmable thermostat in place of your old copper strip? Moderate, but great payback.
Low flow showerheads and faucets? Cheap.
etc…etc…
People just don’t do them unfortunately. With this push from the government, maybe people will take the 3-4 hours and actually do these things!
March 2nd, 2009 at 3:13 pm
Sorry, “changing windows is now cheap” should be “not cheap”
March 2nd, 2009 at 4:17 pm
Great summary. Thanks alot. Especially like “future cost avoidance”.
March 2nd, 2009 at 11:51 pm
I’d like to know why you didn’t call a perpetual motion machine a scam
http://www.thestar.com/comment/columnists/article/594471
One rather expects at least respect for the Law of Conservation of Energy from anyone who wants their analysis of policy respected. Here are ten things Ontario policy critics should be aware of:
1. Physical and chemical laws
1a. Conservation of energy and other physical laws guarantee that any conversion, transmission or storage of energy comes at a loss.
1b. Reservoirs of heat or motive potential (e.g. water held at a height) or pressure (e.g. compressed air) are inherently more efficient than any known battery, and will almost certainly remain that way.
1c. Anything with moving parts is inherently less reliable than anything without.
1d. Things break down. Toxic materials leak into the environment whatever precautions are taken to prevent it.
1e. Dams, buildings, transmission towers and stations, reprocessing waste facilities, all cost money and require human effort to monitor & maintain.
1f. Things far away are harder to control and more dangerous to rely on than things nearby, especially in an emergency.
It should be obvious to any observer that Ontario “energy policy” has not been cognizant of these realities in decades. New power generation has in general taken precedence over power demand management and conservation – at a ratio of 60 to 1 – and over improvements to distribution networks and resilience of communities. Power pricing has totally failed to reflect the diurnal cycle of demand and few incentives provided to consume the bulk of one’s power “off peak”. Emissions harms including asthma from coal have not been accounted for as part of the cost of electricity, instead subsidized by health care (quite different from the way that automobile accident harms are handled).
Any energy strategy or policy that does not clearly state and establish that physical and chemical laws will be respected in the drafting and the interpretation of policies is doomed and should be rejected by the public. Ontario will necessarily fall behind economically and generate unnecessary environmental damage if it permits misunderstandings or false economic arguments that do not take full costs into account to influence its policies. The US Great Lakes states in particular have been reviving economically. They compete directly with Ontario in many industries and the President of the United States is from this region for the first time in nearly a century. There is no more room for error and delays will kill not only citizens directly harmed by emissions but those who rely on help from government that is wasting precious resources on inefficient programs.
2. Ceasing to use, or never using, a watt of electricity or joule of heat, is always and necessarily a better strategy than generating and moving it.
3. Heat is best captured and used as heat, rather than converted to some other form of energy.
4. Lighting represents possibly the second lowest hanging fruit.
5. District systems are closer to their users and easier to control in the modern era when electronic monitoring and remote assistance are available.
6. Ontario should elaborate and account for all the benefits of a smart grid, in priority order:
6a. Demand side management, the primary goal of a smarter grid, creates a dynamic market in this power and ensures that far less is lost.
6b. Detecting usage patterns and turning off devices that are not in use is a major feature of “smart” power networks both in the home and on the grid.
6c. Universal overprovisioned non-monopolistic broadband services are very likely to radically increase telework and information-intensive industries moving to Ontario. This radically reduces commuting and increases revenue to government per unit of energy expended.
6d. Power grid monitoring and maintenance are radically improved by each and every device (transformers, stations, etc.) being monitored in real time by the same SNMP-based mechanisms.
6e. Finally and least important, a smart grid is capable of dealing with intermittent energy sources such as wind and solar that generate surges of power at unpredictable times.
7. Electric vehicles are (according to Britta Gross, GM head of electrical infrastructure) more carbon-efficient to charge even from the dirtiest coal power than they are to fuel with even the freest-running oil source. Accordingly oil should be eliminated from transport use even before coal.
8. Ontario should not restore feed-in tariffs as they encourage extra generation rather than conservation or better distribution systems. It also causes malinvestment. Carbon taxes are better.
9. Wind is cheaper than nuclear and clean solar technology without nasty toxics is cheaper than coal when all the health care costs are considered.
10. Very small nuclear fission plants such as those being planned by Hyperion have made the CANDU line of technology obsolete.
Ontario has a long way to go. At best in this Act one detects vague awareness of 1b, 1f, 5 and 6e. They clearly do not comprehend 8 or they (as The Economist advises) would tax carbon rather than restore feed-in tariffs. They do not comprehend 9 or 10 and evidently someone who does not talk to GM or Ford advises them on 7. There are flailing faltering steps to understanding on points 2, 3, 4 and some positive moves but without 1a, 1c, 1d, 1e, 6a, 6b, 6c, 6d clearly understood and stated as the intent of the Act, as you say a change of government or minister simply causes progress to stop. This is very far from even keeping Ontario competitive with some of the smarter Great Lakes states’ or US federal government initiatives. I give this thing a total grade of D+ with most of it D- and a few C+ spots of hope (mandatory home energy audits, easier capital access for upgrades but unfortunately through a separate government system, district heat/power and CHP enabled but only on a small scale) that could have been well into the B range if only conservation had been uniformly enabled more than peak levelling, emissions uniformly punished by a carbon tax, peak levelling and storage uniformly more enabled than generation (including nuclear), and all sources compared on a fuller cost accounting. The UK Tories’ policy is in that range. For an A, well, look at poor countries that don’t have the money to waste in imported oil nor nuclear reactors. Like Mexico for instance, as Barack Obama repeatedly points out. This Act didn’t even include a Tar Sand ban however symbolic.
March 3rd, 2009 at 6:12 pm
There continue to be real problems with the current ECOenergy approach to audits. The reality is that there is wide variability in the rating (see Toronto Star’s expose), raters are not regulated, there is limited redress for consumers if they question the rating or the rater, the EnerGuide scale provides little differentiation at the higher end, summer cooling and electrical consumption do not figure in the current EnerGuide rating….I can go on and on. Before audits are mandated the entire system needs to be examined and overhauled. Put simply homeowners already have a measure of energy use, their energy bills. These could easily be used as part of a calculus that normalizes them against an occupancy surrogate (perhaps bedroom count) to provide a useful measure of energy intensity. It is unreasonable to force upon the public a system that has such serious flaws – that’s why it smells like a tax! Ontarians deserve a system that works and that provides useful, cost effective information. Ontarians deserve a system that effectively responds to complaints, where raters are prevented from self-dealing. Without these basic safeguards in place, there should be no support for mandatory audits.
March 7th, 2009 at 9:05 pm
Mr. Tyler
I can’t believe your “cavalier” approach to this Green Energy Act that is being pushed down the throats of unsuspecting Ontarian’s throats.
You say you can’t understand the outrage it is creating and I can’t understand why YOU would say this.
I suppose we landowners are supposed to be “understanding” when our homes and communities are going to be exposed to huge Industrial Wind Turbines that not only threaten our Health, Well Being, our Tourist Industry, our Landscapes, not to mention the 3 fold increase to our already outrageous Electricity Bills.
Along with that the GEA is apparently going to strip our Municipal Councils of all checks and balances when it come to zoning and Planning whenever the word “Renewables” is mentioned.
Along with rewriting our Environmental Assessment Act which basically will allow these machines to destroy every square inch of wild land they touch, we basically will be stripped of all our Democratic Rights which we have held dear for over 15o plus years.
This GEA is nothing more than a power grab by Smitherman and McGuinty and is not only disgusting but I would say tantamount to nothing more than the formation of a “sublime Dictatorship.”
One last point. No matter what CANWEA or the Politicians say about Wind Turbines and how wonderful they are; they don’t work! Not one ounce of CO2 has been taken out of the energy mix by installing Wind. Wind needs fossil fuel backup when the Wind doesn’t blow. And don’t start quoting Germany and Denmark figures as they are really poor examples for us to allude to. Denmark has the highest electricity prices in Europe with Germany second.
A man of words like yourself who has a certain amount of exposure in the news world should look at both sides of every story and report honestly. Obviously you don’t have to.
March 26th, 2009 at 8:44 am
[...] out of their solar lab. The announcement comes a few weeks after the Ontario government tabled its Green Energy Act, which gives priority access to the grid for renewables. The act is expected to pass in [...]
April 5th, 2009 at 4:42 pm
Check out the official site at http://www.ontariogreenenergyact.ca , nice article.
April 13th, 2009 at 3:55 pm
[...] out of their solar lab. The announcement comes a few weeks after the Ontario government tabled its Green Energy Act, which gives priority access to the grid for renewables. The act is expected to pass in [...]
May 30th, 2009 at 2:06 pm
[...] Green Energy Act: Where do we go from here? (cleanbreak.ca) [...]
September 29th, 2009 at 2:23 am
renewable energy report…
I had a chance to absorb some of the elements of Ontario’s Green Energy Act and despite the ma [...]…