Category Archives: ontario

Toronto closer to launching Ontario’s first PACE pilot program this fall

retrofitLast November I reported that Ontario Premier Kathleen Wynne, who at the time was minister of municipal affairs and housing, approved changes to the province’s Municipal Act and City of Toronto Act, basically empowering all municipalities in Ontario to use a financing tool called a local improvement charge (LIC) to help property owners finance energy- and water-efficiency projects for their homes. This has enabled the creation of what some call Property Assessed Clean Energy (PACE) programs, or alternatively Property Assessed Payments for Energy Retrofits (PAPER). I recently wrote a large feature on such programs called “The PACE Makers” in the latest issue of Corporate Knights magazine.

Shortly after the legislative amendments took effect, a group of 22 municipalities formed the Collaboration on Home Energy Efficiency Retrofits in Ontario, or CHEERIO for short. These municipalities have pooled resources as part of a unified examination of PACE/PAPER program design, legal issues and communications challenges. The group is also doing market research to find out what homeowners across the province think about the new funding mechanism, and what lessons can be learned from early efforts in the United States. Bottom line: they don’t want to re-invent the wheel, but they want it to offer a much smoother ride.

All of that is context for what I really want to highlight in this post. Earlier this week a report from Toronto’s City Manager (as well as Deputy City Manager and Chief Financial Officer) recommended that city council create a by-law that authorizes the use of LICs to fund energy-efficiency and water conservation measure on private properties as part of a new Residential Energy Retrofit Pilot Program, which aims to be up and running this fall on a voluntary basis. It would be the first of its kind in Ontario.

Single-family homes and multi-unit residential buildings can participate — specifically, up to 1,000 houses and up to 10 multi-unit buildings. The city is making $20 million available to fund energy assessments and installation costs, which will be repaid through LICs. Owners of single-family houses will have between five and 15 years to pay back the loans through a charge on their property tax bills, while multi-unit residential building owners will get five to 20 years. “The repayment term would be geared to generally reflect the anticipated operating cost reductions (i.e. energy or water savings) and useful life of the retrofit measure(s),” according to the report. This time around, the city won’t be issuing bonds to raise money for the program. They will tap into a Working Capital Reserve, monies from which will be transferred to a Local Improvement Charge Energy Works Reserve Fund that will give out the loans and be replenished through LIC payments.

“The program is projected to stimulate job creation, increase housing affordability through operating cost savings and annually avoid 5,000 tonnes of greenhouse gas emissions,” according to the report. “The primary focus of the pilot program is to test the market receptivity to this new financing mechanism, its ability to accelerate the uptake for investment in energy efficiency and evaluate how it aligns with the city’s economic development, housing quality and affordability and environmental sustainability objectives.” The idea is to also demonstrate that such a program can be revenue-neutral for the city.

This is terrific to see, and kudos to councillor Mike Layton for leading the push within council. The program will be considered by Executive Committee on July 3, and, depending on what it decides, the full city council will consider it on July 16. Let’s hope all councillors see the huge potential and importance of such a proposal. If Toronto can get this pilot right, it can set the stage for much broader deployment across the city, with the potential to snowball across the province. It would also lend momentum to efforts at getting other Canadian provinces to create enabling legislation, as well as efforts to expand the program to commercial buildings.

In major policy shift, government lets Ontario Power Generation bid for large renewable projects

lakeviewIt’s been eight days since Ontario Energy Minister Bob Chiarelli directed the province’s power authority to eliminate large renewable-energy projects from the feed-in-tariff program and design a competitive procurement process that will get the best deal for ratepayers. We knew this was coming, as Chiarelli said as much in a speech a couple weeks earlier. What we didn’t know is that the energy minister would direct the power authority to let Ontario Power Generation bid for these large projects (see page 3, third paragraph of directive).

This is a major policy shift, and I’m surprised it hasn’t received any coverage in the mainstream Ontario media. OPG is a crown corporation. Under its 2005 agreement with the Ontario government, “OPG will not pursue investment in non-hydroelectric renewable generation projects unless specifically directed to do so by the Shareholder.” Instead, OPG’s mandate has been to maintain its fossil fuel, nuclear and hydroelectric fleet of generation, and pursue new large hydroelectric projects. The reason for this restriction was to limit OPG’s clout in the marketplace and give independent power producers a chance to establish a foothold in the generation mix. The decision to let OPG bid for all large renewables — including wind and solar — is significant for a number of reasons:

  • This is getting close to what the Ontario NDP said it will do if elected. According to the NDP’s energy policy, “We will maintain the feed-in-tariff for small and community-based projects” and “for new larger projects we will move towards public ownership” through OPG. The Liberal government isn’t proposing complete public ownership of large renewables, but it is letting OPG bid for some ownership in a competitive process. Could this be part of a compromise that won it NDP support for the provincial budget?
  • Independent power producers, I would imagine, aren’t very happy about this. They will assert that they can’t compete against a giant like OPG that just happens to have the government in its corner. Is it a fair fight? Maybe not. But will it get the best deal for ratepayers? Presumably, yes.
  • Having OPG compete for renewables will create more opportunities to develop renewable resources in remote areas, and to partner with aboriginal communities. OPG has experience in this area, and many private developers are too risk-averse to go into these markets. They prefer to go after the low-hanging fruit, even if the orchard isn’t located in the best area.
  • Letting OPG compete in renewables could turn the Power Workers’ Union into an ally over time. Right now, renewables mean competition with union jobs. The PWU doesn’t like that — the fact that jobs at coal-fired power plants are being phased out and there is a significant threat to nuclear jobs as well. Renewables could be a path to save OPG jobs.
  • On that note, could letting OPG get into large renewables also be a signal that the province under this government is going to abandon efforts at building new nuclear reactors?
  • Finally, as a crown corporation, OPG can be directed to do things that other private developers would never take on — such as experimenting on a large scale with energy storage technologies, and being a test bed for energy innovation coming out of the province. Indeed, it would be interesting if OPG was directed to set aside a certain percentage of profits for R&D and to support pilot projects.

So that’s why I think this latest government directive is significant and should get more attention. Perhaps I’m reading too much into this, but my gut tells me no. I’ve long argued that OPG should be able to compete for large renewable energy projects. It’s something the Society of Energy Professionals, a shareholder in the nuclear business of Bruce Power, has called for since at least 2007. Many will complain, and for good reason. If a giant like OPG is to compete for these projects, how do we make sure it’s a fair competition? Will the process be transparent? Reasonable questions, but not a reason to not do it.

Changes to Ontario’s green energy strategy make a whole lot of sense…

sarniasolar1Ontario Energy Minister Bob Chiarelli announced on May 30 that there would be a few major changes to the way the province procures renewable energy.

Here’s what the government is saying these days:

  • The province will develop a competitive procurement process for renewable projects over 500 kilowatts, which will no longer qualify for a feed-in-tariff.
  • These same projects will have to meet a higher community standard. Developers will need to work directly with municipalities to identify appropriate locations and site requirements.
  • Projects 10 to 500 kilowatts in size (a.k.a small FIT projects) will be given priority if a municipality is a development partner or leading the project.
  • The government will work with municipalities to determine a property tax rate increase for wind turbine towers.
  • Between now and 2018, a new block of 900 megawatts will be available for small FIT and microFIT programs. Annual procurement caps will be set at 150 megawatts for Small FIT and 50 megawatts for microFIT, a much more measured approach that will create more stability in the market.
  • The World Trade Organization has ruled that the domestic content mandate attached to Ontario’s FIT program was in violation of GATT rules. As a result, the government has decided to eliminate the local content requirement.

These are all good moves for a provincial green-energy strategy that has had its fair share of controversy and setbacks. First, I have to applaud the decision to treat small and large renewable energy projects differently. I have been arguing for more than two years now that the province needs to get back to a competitive procurement process for large wind and solar projects. The whole point of the FIT program, IMHO, was to make electricity production in Ontario more accessible to communities, homeowners, schools, farmers, etc… by creating a standard, long-term contract and process for selling green electricity into the provincial grid. Fact is, it’s expensive to participate in requests for proposals. Companies can spend millions as part of their bid only to walk away with nothing. Smaller developers don’t have the deep pockets to play that game, but big developers generally do. My only reservation about the new rules is that they set the cut-off point at 500 kilowatts, and there is no distinction between solar and wind projects. For solar projects, I would require any project over 1 megawatt to go through competitive procurement. For wind, I would require it for projects over 10 megawatts. Still, what’s contemplated in the new rules is an improvement.

The phasing out of domestic content rules is also good news, as they have served their purpose. Even with the WTO challenge, most people in the industry knew that it would take a while for the matter to get resolved. From my perspective, this gave plenty of time to developers in need of local content to lure some manufacturing (and associated jobs) into the province. True, some of those jobs might go away once the rules are phased out, but many now anchored here will decide to stay given that the market for product between now and 2018 will still be healthy (and the fact that the FIT will still exist for small and micro projects). Where this gets interesting is that developers of large projects can now source from outside of the province — including China. No longer can the domestic content rule be an excuse for higher costs. When bidding for projects, they’ll have to come in at the lowest price AND have to demonstrate a positive/collaborative relationship with the community in which they would like to build. This means, presumably, that most of the megawatts of renewable power that are built under the new rules will be much less expensive than what we’ve seen under the FIT program. The cost of solar modules has plunged. Wind turbines are getting more efficient. We’re generally getting more efficient at building these projects, driving down development costs. Ontario is now going to benefit from this trend in a more pronounced way than under the FIT program, where a two-year price review (and even the new one-year review) frankly couldn’t keep up with the pace of change.

Will we lose jobs by dropping the domestic content mandate? Probably, but there is more to “green jobs” than people standing around warehouses playing assistant to machines. This industry creates opportunities for lawyers, accountants, electricians, marketers, tradespeople, engineers, environmental consultants, truck drivers, etc…  and I’m convinced those jobs far outnumber the manufacturing jobs we’ve become so obsessed with in this province. And let’s face it, most of the “manufacturing” jobs we attracted to Ontario involved assembling components and integrating equipment that was made somewhere else. Bottom line: Employment in renewable energy is going to continue to grow in Ontario, even without domestic content rules and the domestic manufacturing jobs they helped create.

Meanwhile, the new emphasis on local participation is encouraging. Again, this goes back to the original spirit of the FIT program: to actively engage the population in the operation of our electricity system through direct participation. And as Germany and other countries have shown, the greater the participation (and associated benefits) the greater the acceptance of these new technologies. Impose something on people and their natural inclination is to resist. There will always be NIMBYs that can’t be reasoned with, but give members of a community more say and more to gain from such projects and you make champions out of opponents.

Before I sign off,  I will point out one more piece of good news in these proposed rule changes. Now that the largest projects will be selected through competitive procurement, this creates more flexibility in terms of how the Ontario Power Authority prices renewables. For example, it could set different rates for peak and off-peak wind and solar power. Not only does this more accurately reflect the cost of electricity in the wholesale market, but depending on the price spread it may create an incentive for developers to use energy storage as a way to maximize revenues from every kilowatt-hour produced. This motivation simply doesn’t exist under the current FIT program, which doesn’t discriminate between the time of day kilowatt-hours are produced. One can envision third-party energy storage providers and aggregators emerging in the marketplace to offer such services to developers, in addition to the many ancillary services that energy storage can bring to the grid.

Let’s keep in mind that the government recently put out a request for information (RFI) on the  “State of Energy Storage Technology in Ontario.” It is seeking to better understand the “potential of these technologies to provide value to Ontario’s electricity system” and the “barriers to realizing this potential.” That’s a good sign, and hints at the thinking going on in the background. Here’s hoping that this new thinking is reflected in the updated Long-Term Energy Plan, which is currently under review.

With renewable energy development in Ontario put a more sustainable path, the government should now re-commit itself to energy conservation, which has been all but ignored in recent years despite talk of creating a “culture of conservation” in this province.

(NOTE: I’m still hopeful that the moratorium on offshore wind will be lifted and the government will direct the Ontario Power Authority to accept bids for a demonstration/study project of no less than 10 megawatts. This is a step we must take to know for sure, through direct study in the field, the degree to which we would should develop offshore wind and what the rules should be.)

Don Valley Parkway flooding a sign of Toronto’s declining green infrastructure?

flooding-3-first-news-gta-jpg_144606I’m sitting at home watching the late-night local news and the biggest story of the hour is the flooding of Toronto’s Don Valley Parkway after a heavy downpour of rain the evening before. “We got a lot… in fact, a month’s worth,” the weather guy explains when asked how much rain came down in a very short period. It caused the nearby Don River to jump its banks and rush onto the highway — a main artery into Toronto — resulting in drivers being stranded and leaving behind a thick layer of muck and garbage. Maybe this has happened before. I can’t remember in my lifetime, but maybe. Either way, cleaning it up comes at a cost.
Why did this happen? Could it be that Toronto simply has too much asphalt and concrete and not enough green living infrastructure? “The Don flooding is perhaps a teachable moment on this issue,” Faisal Moola, director general of Ontario and Northern Canada for the David Suzuki Foundation, wrote me in an e-mail. Moola said there are “definite links” between the flooding and the insufficient green infrastructure where it occurred, beyond the fact that the lower sections of highway and associated urban and industrial infrastructure in the area are built in a floodplain. “We could mitigate some of the worst of it if we integrated green living infrastructure technologies, as well as restored and protected existing natural areas to provide ‘natural’ flood protection,” he wrote. “This includes riparian vegetation, engineered wetlands and permeable land surfaces that collectively would regulate, store and slowly release rainwater into the main channel of the river, as opposed to what happened on the highway — huge amounts of rain simply entered into the river across built infrastructure such as roads, parking lots and homes without any mitigation at all.”
This flooding event is timely, in the sense that Moola has an article in the upcoming issue of Corporate Knights that explains in detail the huge environmental, health and economic benefits that green living infrastructure brings to cities. His piece is part of a larger section on sustainable cities, which includes a sustainability “scorecard” of North America’s 20 largest cities, as well as articles on the problem of urban sprawl, the benefits of GPS-based congestion charging, PACE programs for municipal financing of building retrofits, and why the largest cities in North America won’t look so large on the global stage over the next 50-plus years. The package is a great read, and it comes out June 6 in the Globe and Mail and limited issues of the Washington Post. (Hey, if you want to subscribe to the digital version of the mag for reading on your iPad, click here).
As for the need to “green” the areas around the Don River, the good news is that something is in the works through Waterfront Toronto, the agency created in 2001 to revitalize Toronto’s waterfront. Naturalizing the mouth of the Don River and providing flood protection to the Port Lands were identified as top priorities for all three levels of government when they first establishment Waterfront Toronto. “A naturalized Don River mouth will enhance water and land habitat for natural species and create the potential to re-establish wetlands in the area that were lost 100 years ago. The project will also create flood barriers for the Port Lands area which has been identified as one of the greatest flood risks in downtown Toronto,” according to the agency’s website.
In other words, as far as last night’s downpour is concerned, we had it coming.

55 “clean energy” projects get $82 million in federal funding… Great news, despite the calculated timing

xpkkqThe money that was set aside for clean energy initiatives in the federal Conservative government’s 2011 budget is finally beginning to trickle out, and while it’s a welcome boost for 55 project proponents — including 15 pre-commercial demonstration projects — the timing of this $82-million announcement is suspect. After all, Canada has been criticized for its weak environmental performance as it awaits approval of the Keystone XL pipeline project. “There needs to be more progress,” said David Jacobson, U.S. Ambassador to Canada, after President Obama’s State of the Union address in February. Basically, the U.S. position is that if Canada (and Alberta) doesn’t start pulling its weigh on environmental efforts it will make the decision to approve a pipeline project that much more difficult for the Obama administration. Since then, the Harper Conservatives — and oil sands proponents, including Natural Resources Minister Joe Oliver — have been on the defensive, making regular trips to Washington, D.C., to “educate” the Americans about how much Canada is doing on the environmental file. This would include weaning ourselves off coal, which of course is not what’s happening in Alberta or anywhere else in Canada except Ontario. But whatever, that has never stopped this federal government from repackaging the efforts of others to look like their own, or throwing money at something in the 11th hour to rework perceptions and ultimately get their way, despite the reality. Rather than confront the problem of climate change head on, my federal government shamefully responds to criticism by bad-mouthing the likes of NASA scientist James Hansen and former U.S. vice-president Al Gore, dismissing both as misinformed on the matter. Uh, yeah… right.

All that said, I’m impressed with the diversity of projects being funded with this $82 million. They include:

  • A commercial demonstration of a system that manages electric-vehicle charging stations in Quebec;
  • Demonstration of a wind-biomass-battery system in the north of Quebec where there’s heavy reliance on diesel;
  • Integration of wind energy in diesel-based generation systems to power remote mining operations;
  • The study of Very Low Head hydro turbines, a promising technology that opens up hydroelectric generation opportunities across Canada;
  • A project to tap low-temperature geothermal energy for power production;
  • Advancing efficiency and reducing the cost of in-stream tidal energy;
  • Development and testing of prototypes of “plug and play” building-integrated solar PV and thermal systems;
  • A project to recover energy from refrigeration waste heat;
  • Advancing a process that takes syngas made from the gasification of municipal solid waste and turns it into drop-in jet and diesel fuel;
  • Researching and developing a super-efficient air-source heat pump that can provide heating in very cold climates and cooling during summers at low cost;
  • An inventory and analysis of recoverable waste heat sources from industrial processes in Alberta;
  • Development of a pre-commercial thermoacoustic engine that is super efficient and can be used for co-generation applications.

In addition to the above-mentioned projects, there is a big emphasis on technologies that help reduce the environmental footprint of the oil sands, as well as coal-fired power production   in provinces that are heavy coal users, such as Alberta and Nova Scotia. Indeed, roughly a quarter of the funds has been earmarked for projects aimed at reducing the environmental impacts of fossil-fuel production and use (or perpetuating the production and use of fossil fuels, depending on how you view it). I have mixed feelings about this. One part of me says, “Great, we really need to reduce emissions and water contamination/consumption related to the oil sands and burning coal.” The other part of me says, “Oh great, more window dressing. This will make it look like the federal government is doing something without actually doing something, as these technologies are unlikely to have an impact anytime soon. We’re screwed.”

Two projects in Nova Scotia that are being funded will focus on scoping out ideal sites for geological sequestration of CO2 and coming up with a monitoring and verification standard to make sure CO2 injected underground isn’t leaking out — i.e. will stay underground. Money is also being given to a Quebec company called CO2 Solutions, which I’ve written about many times over the years. This company, demonstrating biomimicry in action, has developed an enzyme that can extract CO2 from industrial effluent emissions. It will use the new funding to support a pilot-scale facility that can capture 90 per cent of C02 from an oil sands in situ production and upgrading operation. “This is expected to result in cost savings of at least 25 per cent compared to conventional carbon capture technology,” according to the government funding announcement.

One project will look at whether impurities in CO2 have an impact on the capture, transport and underground storage of CO2, while another will study geological sites in the Athabasca area (i.e. where the oil sands are located) that are ideal for underground storage of CO2. Funding will also be used to investigate the use of non-aqueous solvents to extract bitumen, thereby reducing the energy needed to create steam (i.e. reducing water needs and the proliferation of toxic tailing ponds). Efforts to improve the efficiency of steam-assisted gravity drainage processes and reduce the environmental impacts of tailing ponds are also being funded. On the water front, one project will explore the ability to use non-potable, briny water to create steam for oil sands production, while another will demonstrate a technology that can clean up and recycle the waste water used during oil sands production. In total, about $21 million will go toward all of these projects, designed to help “dirty” energy become — or look — much cleaner.

In a separate announcement, the federal government also disclosed plans to support construction of a $19-million facility in Alberta that will use algae to recycle industrial CO2 emissions, in this case emissions from an oil sands facility operated by Canadian Natural Resources Ltd. This is great news for Toronto-based Pond Biofuels, a company I have written about extensively and which currently operates a pilot facility at St. Mary’s Cement, where it grows algae from kiln emissions. The end goal of this three-year oil sands project is to use the algae to create commercial biofuels and other bioproducts. All of this innovation is important, and funding of these projects — as well as the recent re-funding of Sustainable Development Technology Canada, an important supporter of cleantech innovation in my country — is encouraging. Yet, it’s not getting us to where we need to be. Nowhere close.

We’ve been down this capture-and-hide carbon path before. A handful of high-profile projects announced several years ago have still led nowhere, and two have already been cancelled. Yet the federal government, and Alberta, is still putting most of its eggs in the CCS basket. Indeed, they’re still heavily promoting this idea of a new pipeline network that will carry CO2 from the oil sands and other heavy emitters to sequestration sites. Alberta Energy Minister Ken Hughes recently touted this proposed pipeline as a “Trans-Canada highway for Carbon.” Here’s a question: If the industry and federal government can support the ambitious idea of building a cross-Canada network of CO2-carrying pipelines, why does it poo-poo the idea of a Trans-Canada power transmission corridor that could carry clean hydroelectric, wind and solar power from where it’s abundant to where it’s needed? The positioning is proof that moving toward a low-carbon world is not about can’t-do, it’s about won’t-do; it’s about protecting established industries and infrastructure and preventing a cleaner, 21st-Century alternative from emerging.

Again, the recent round of innovation funding is good news. But let’s look at the reality: Last week we sadly hit 400 parts per millions (ppm) of CO2 in our fragile atmosphere, a level never before experienced in human history. Many scientists say 350 ppm is where we should be, and certainly we shouldn’t go much past 400 ppm. We’re heading in the wrong direction, and notoriously conservative organizations like the International Energy Agency and the World Bank are now even sounding the alarm. If the federal and Alberta governments really want to prove to the Americans — and Canadians — that they’re serious about climate change, they would complement their innovation spending with a recognition that the oil sands extraction machine can’t continue its current fast pace of growth, and that some day — in 10, 20, 30 years — the oil orgy must come to a complete end. This is true of all “carbon bombs” being developed around the world, not just the oil sands. And if we are to adequately prepare for that day, we need to carefully transition to a low-carbon economy. That means taxing carbon, a policy approach now being encouraged by both the IEA and World Bank and accepted by most credible economists. That means creating a realistic vision for the country and working toward it — and by “realistic” I mean recognizing that perpetuating the growth (or current rate) of oil sands production and coal use is not an option.

This isn’t about educating people so they are “made” to know better about the oil sands’ alleged strong environmental record. This isn’t about clever public relations campaigns and slick and deceptive advertising meant to pull the wool over the eyes of consumers and voters. This isn’t about targeted funding announcements to make a government appear that it cares. This is about facing facts, and preparing for eventualities. Canada isn’t doing that, and soon enough, Mother Nature is going to spank our sorry asses.