I have a story in today’s Toronto Star about Vestas and why the world’s largest maker of wind turbines is seriously looking at setting up shop in Ontario. Vestas already has a large manufacturing footprint in Colorado, but its interest in southern Ontario has more to do with the potential North American market for offshore wind. So why Ontario? Because offshore wind in the Great Lakes provides a huge opportunity, and Ontario happens to have the most freshwater offshore real estate, as well as a developer, Trillium Power, that is well ahead of the pack with respect to project development. Also, Ontario is the only jurisdiction in North America to have a feed-in-tariff for offshore wind — the province offers 19 cents per kilowatt-hour of offshore wind power. This makes it easier for Trillium, which has four projects totalling 3,700 megawatts in the pipeline, to pioneer offshore development in the Great Lakes.

Some signs that Vestas wants to come to Ontario? Last fall Vestas Offshore opened an office in Toronto that is serving as its North American headquarters for offshore wind sales. Last week company officials flew in to tour a number of potential sites in Hamilton, Niagara, Kingston and Belleville, among others, as possible sites for manufacturing facilities. The officials, according to sources, were also here to size up the local supply chain and supporting infrastructure. And this morning, Trillium announced that it has chosen Vestas as supplier of up to 740 offshore wind turbines for its four projects.

Laying roots in southern Ontario makes sense for Vestas, which is looking at long term growth. The feed-in-tariff program in Ontario provides certainty that demand will be there for both onshore and offshore projects, plus Ontario can serve as a great launchpad into the U.S. market, where states such as New York, Ohio, Michigan and Wisconsin also plan to develop in the Great Lakes. Of course, this is potential business on top of planned offshore projects on the east coast. Ontario simply makes more sense as a location for serving those markets.

If Vestas did commit to Ontario, it would be another major win for the province, which last month confirmed a $7 billion deal with a Korean consortium, led by Samsung, which plans to manufacture and develop 2,500 megawatts worth of wind and solar projects in the province.

France’s Areva SA is known mostly as a designer of light-water nuclear reactors, builder of transmission and distribution systems, and a miner of uranium, so the announcement today that it has purchased 100 per cent of concentrated solar power company Ausra Inc. came as a surprise. Ausra, based in Mountain View, Calif., was founded by Canadian inventor Dr David Mills. Mills developed the underlying technology as a student and professor in Australia, but located the company in Silicon Valley as part of a major venture capital infusion from Khosla Ventures and Kleiner Perkins Caufield & Byers. Mills is currently the company’s chief scientific officer.

Areva said today that the acquisition marks its entry into the solar thermal power market, where it intends to be the leader. The market itself is expected to grow 20 per cent annually over the next decade. This is just the latest in a string of acquisitions and deals aimed at broadening Areva’s portfolio of renewable energy products and services. The company has been pushing heavily into biomass power and has been building biomass/biogas plants in the U.S., Brazil, India, Thailand and other countries. It is dabbling in hydrogen production and fuel cell systems, and through its acquisition of Germany’s Multibrid is trying to establish itself as a future leader in offshore wind.

It’s going to take big, deep-pocketed companies like Areva to really push deployment of solar thermal and other promising renewables, so this acquisition of Ausra is a good sign of where the market is heading. Given that the nuclear renaissance simply isn’t materializing as expected, it’s wise for Areva and other big energy conglomerates to hedge their bets.

The Centre for International Governance Innovation (CIGI), an Ottawa a Waterloo, Ontario-based think tank founded in 2002 by Research In Motion co-CEO Jim Balsillie, says we shouldn’t expect any major expansion of the nuclear market before 2030. After that, the future of the industry is no more certain.

After three and a half years of extensive study, which included exhaustive consultation with industry experts and review of peer-reviewed literature, the policy think tank released a report yesterday that says the nuclear industry will have a hard enough time just replacing older reactors in the existing global fleet. Fact is, nuclear’s contribution to the global power mix since 2000 has fallen, as has the number of reactors in the fleet. Meanwhile, 2008 was the first year since the mid-1950s that no new nuclear reactor was connected to the grid. There have been refurbishments and life extensions, and there has been a lot of talk about building new reactors, but so far the massive, fast-paced expansion the industry has touted simply isn’t materializing. There will be some modest growth, but CIGI doesn’t expect nuclear will play a major role in combatting climate change before 2030. Between now and then, it also says alternatives — solar, wind, energy efficiency, conservation, smart grid technologies — will gain momentum and may ultimately prevent nuclear projects from getting a foothold. “Research and development is proceeding at such a pace for most of these alternatives that improvements in performance and cost will likely arrive faster than for nuclear technology,” the study concluded.

Think about it: by 2030 it’s quite possible we’ll have energy storage breakthroughs that give intermittant renewables baseload characteristics, but instead of deploying them in massive multibillion-dollar chunks, they could be part of a distributed energy system that locates power closer to consumers, and deploys it quickly and when needed.

CIGI lists a number of issues that have held back expansion of the nuclear power market:

• High upfront cost — reactors that can cost up to $10 billion a piece.
• Labour shortages resulting from boomer retirements and lack of investment in training and education.
• Long construction lead time.
• High risk of cost overruns and delay.
• High reliance on government subsidies and public backstopping.
• Ongoing concerns with waste management.
• Alternatives becoming increasingly more competitive.

Now, the nuclear industry isn’t oblivious to these issues, and indeed, there is a move underway to build smaller reactors that can be built more quickly, on time, and at a more manageable cost and pace. Also, these mini reactors would fit better into a distributed generation model, and attempts at developing small thorium-fuelled reactors would address waste management and nuclear proliferation concerns. CIGI acknowledged these developments, but said we’re not likely to see thorium reactors or mini-reactors being adopted in any significant way before 2030 — again, too late to be relied on for climate-change mitigation.

All this said, there will be growth — in China, in India, and a handful of other countries — and there will be refurbishments. This should keep the industry busy for the next couple of decades. No jobs are likely at risk here. Over the long term, however, the future of the nuclear industry would appear more uncertain.

I have a column in today’s Toronto Star that’s bound to upset a number of solar and wind developers, and the investors behind them. I argue that the $7 billion Samsung deal announced last week in Ontario isn’t a bad deal at all, and that Ontario was right to jump on the opportunity when it presented itself. The deal is controversial because the government gave Samsung an “economic adder” that amounts to a 4 per cent premium (on a price per kilowatt-hour basis) to existing feed-in-tariffs available to other solar and wind developers. The government also set aside 500 megawatts of transmission capacity for Samsung, which in addition to building four manufacturing plants (wind blades, wind towers, solar inverters and solar modules) also wants to deploy 2,000 megawatts of wind and 500 megawatts of solar in Ontario.

Samsung has said publicly that it plans to become the largest maker of solar panels by 2015, and wants to become a major player in wind. The fact that it chose Ontario as the launchpad is significant. This is a huge deal, and while not perfect, it has the potential to bring tremendous long-term benefits to Ontario. Sure, other developers would love the special treatment Samsung got, but have those developers been willing to step up, develop a comprehensive supply chain, and sign a deal that commits them to X amount of renewables and create X thousand amounts of jobs? My only big criticism of this deal is that the government may be overlooking some amazing Ontario-made opportunities — local consortia who have big plans but can’t seem to get the attention and support of the Ontario government. This apparent lack of confidence in local entrepreneurs and investors doesn’t send a good signal. Premier Dalton McGuinty needs to do a much better job of nurturing and having confidence in local ventures, even if they lack the deep pockets and brand appeal of an anchor tenant like Samsung.

Were smaller developers in Ontario betrayed? I can see why they think so, but I don’t recall anyone in the current government ever saying the feed-in-tariff program is the only way they will sign up renewables (or any source of power generation) in the future. What the feed-in tariff program and Green Energy Act does is let these developers access the program, equally, without having to go through an expensive RFP process. The fact is the FIT program, as it is, is more than generous to these developers. And while transmission is scarce, there’s a solid commitment to build more. So there is a bigger picture here, one that needs to be put into perspective.

Okay, let’s open this one up to some civil debated…

They’re calling it the largest integrated solar-wind deal of its kind in the world. Whether or not it’s true, there’s no question that this one ranks high.

South Korean industrial giant Samsung Group signed a deal today with the Ontario government that will see 2,500 megawatts of solar and wind developments and construction of four manufacturing plants between 2013 and 2015. This $7 billion investment from Samsung is expected to create 16,000 jobs — a combination of permanent manufacturing jobs and temporary construction and development jobs. I first broke this story back in late September, but the deal is now official.

The first two plants — one to manufacture wind towers and one to manufacture solar inverters — must be in full operation by March 31, 2013. A solar module assembly facility must be in place by Dec. 31, 2013. Finally, a wind blade manufacturing plant must be in place by Dec. 31, 2015. Samsung, apparently, has long-term plans in the Ontario market, from which it hopes to export its products to the booming U.S. renewable-energy market. As for development projects, Samsung will get the same feed-in-tariff rate as any other company. But to the dismay of those other companies, the Korean consortium that Samsung is part of will get a $437 million economic “adder” — i.e. an incentive to make sure those manufacturing jobs do get created — and will have scarce transmission capacity set aside so the company doesn’t have to wait long in the grid-connection queue.

In addition to Samsung C&T, the consortium includes Korea Electric Power Corporation. Partners with the consortium include Satcon, Pattern Energy Group, and Dongkuk Steel.

See Toronto Star story here for initial details and comment about today’s announcement. See government announcement here and backgrounder here. Certainly more info to come…