Industrial efficiency plan for Ontario, finally
My story in today’s Toronto Star is about a new industrial efficiency program that will soon be unveiled by the Ontario Power Authority. Under the plan, the province will agree to pay up to 70 per cent of the cost of an industrial energy retrofit, making it possible for the industrial energy user to achieve up to 30 per cent energy savings and a one- to two-year payback on investment. The aim is to get 300 MW of savings initially. The province’s contribution to each project is capped at $10 million. While giving away millions to help industry use less energy would seem misguided, it’s in fact a very smart and effective strategy. The money being paid out will be much less than what it would cost to built a 300 megawatt power plant. Meanwhile, helping key industrial players become more efficient makes the Ontario economy more competitive and insulates these industrial operations — and the jobs they create — from economic downturns.
Roughly 50 to 60 big industrial players that connect directly to the province’s transmission system can participate in the program, which was spearheaded by international mining companies XStrata and Vale Inco, as well a steel giant ArcelorMittal Dofasco. The three companies, which formed a working committee that reported to the power authority, estimated that efficiency gains could “realistically” achieve 1,000 megawatts over five years.
Industrial efficiency might not be as sexy as solar and wind — actually, it’s definitely not as sexy — but the simple fact is that the greenest and cheapest megawatt is the one that isn’t used. This is a smart program. Oh yeah, and we shouldn’t forget the stimulus effect. These projects will create much-needed jobs over the next few years.
Tags: ArcelorMittal Dofasco, industrial efficiency, OPA, Vale Inco, XStrata
Tyler Hamilton is a business 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 clean technology and green energy market. This blog is a personal project started in April 2005. It is not an official blog of the newspaper.
Kawanabe’s statement is annoying though....
March 3rd, 2010 at 1:00 pm
Unlike Tyler, I find this news discouraging for two reasons:
1. Energy paybacks in the 1-2 year range, represent opportunities for these industries to achieve annual returns on their investments of 50% to 100% if they finance it completely themselves, and greater annaul returns if they borrow (leverage) to do some of the work. If companies are not willing to invest on their own to achieve these rates of return while becoming more competitive, then it seems that our economic systems is misguided indeed. The only thing that I could imagine that is stopping them from investing in energy efficiency themselves it that they are strictly focused on immediate quarterly profits and how they impact their short-term perfmance (i.e. executive bonuses).
2. It shows that we give untold subsidies to industry to waste energy. Without subsidy, industry would pay an energy cost that should more then pay for maintaining existing and building new power generation facilities.
March 3rd, 2010 at 7:13 pm
I think that there are huge increases in efficiency to be made in the industrial sector. Having worked in an industrial setting myself I have seen first-hand how much heat goes through the roof and how many Kilowatts (sometimes Megawatts) are wasted to pointless inefficiencies.
March 7th, 2010 at 5:29 pm
Good story. Saving power through efficiency is always dramatically cheaper. Its akin to the climate change problem, dealing with it in advance will prove to be much cheaper than managing the consequences.