You’ll recall that last year the Canadian federal government refused to inject more funding into Sustainable Development Technology Canada, an agency that has proven crucial to helping Canadian energy and environmental innovations cross the “Valley of Death.” SDTC has contributed hundreds of millions of dollars to clean technology demonstration projects and leveraged twice as much from the private sector. It has enough money to fund probably one more round of projects, after which it will exist simply to manage its existing portfolio of projects (it also manages and issues grants from a separate biofuels fund). To stop funding new clean technology innovation now would be a huge mistake, and SDTC officials have made this clear to the federal government. We’ll find out at 4:30 pm today, after details of the federal budget go public, if the Harper government will continue to fund the agency’s activities. If it doesn’t, this will be a sad day for cleantech in Canada…. stay tuned.

Vancouver-based geothermal energy developer Magma Energy Corp., itself the creation of recent industry consolidation, has broadened its horizon even further with a plan to merge with hydro and wind developer Plutonic Power, also of Vancouver. The new company is expected to have a market capitalization of about $575 million and will rename itself Alterra Power. Here’s an investor presentation breaking down the deal.

This deal makes a lot of sense, as Magma CEO Ross Beaty explains well in the company’s press release. “It has the potential to lower the cost of capital to develop each company’s existing growth assets, to enable those assets to be developed more quickly, and to better attract new opportunities for future development,” said Beaty. “Geothermal will remain a core focus of the new company, but hydro, wind and solar assets will be solid business platforms for future growth. In the renewable energy business, bigger is better and this combination will achieve that while enhancing returns to each company’s shareholders.”

There’s no doubt big is better in any energy development business, and if bulking up does give the new company access to cheaper capital this could open up plenty of opportunities. Even in a market like Ontario, with guaranteed feed-in-tariff rates for 20 years, banks are still reluctant to work with small companies without charging them an arm and a leg. This isn’t the way it’s supposed to be, but it’s the sad reality. Alterra is wise to bulk up, and in doing so is on the way to creating one of the largest pure-play renewable energy developers in Canada.

I find it surprising that just a week after the Ontario government flip-flopped on offshore wind the Canadian Wind Energy Association (CanWEA) has the nerve to put out a flattering press release praising the government for a commitment to wind energy that “strengthens investor confidence.” Somebody is brown-nosing here.

Apparently the government issued a directive to the Ontario Power Authority regarding its long-term energy plan, which Robert Hornung, president of CanWEA, decided worthy of praise in a gushing press release. “Reaffirming the government’s target for new wind energy supply and proceeding quickly with new contracts for wind energy projects and necessary transmission system upgrades will strengthen investor confidence that Ontario is a good place to do business.”

Pull-eassse! Investor confidence took a serious blow last week with the decision on offshore wind, because it sent a signal to investors that the Ontario government can change its mind on a dime. CanWEA is showing its true stripes in this press release — that is, it doesn’t care about developing offshore wind in Ontario — because its members, who are mostly onshore developers, want to keep all the opportunities to themselves. This press release is clearly an attempt to kiss up to the government in the wake of the offshore controversy, which CanWEA should be speaking out again, not sweeping under the rug. 

Now that offshore wind has been voted off the island, the onshore guys are in survivor mode.

It’s about politics. It’s about votes. It may be about a lack of need for the power, or a true concern about lakebed impacts. But one thing for certain is that the Ontario government’s misguided decision to halt all offshore wind development until further study is not about unfounded concerns over the health impacts on people, as much as anti-wind folks want to spin it that way as part of a venom-filled effort to extend the moratorium to onshore facilities.

Energy Minister Brad Duguid made this clear to me in an interview this week. “To be clear, it’s really the environmental concerns that would be leading to the need to do more work on the science. It’s not so much the health, unless you want to relate it to the quality of drinking water.”

Duguid outlined some of the main concerns the government has: the impact on the lakebed, it’s potential impact on drinking water, and issues related to the freezing of freshwater lakes and the impact on wind-turbine platforms. “The projects were still going to have to go through the renewable energy application process. Earlier this year we began work on a standard, which is the 5 kilometre setback from the shore. We asked, at the same time, that the Ministry of Environment and Ministry of Natural Resources take a look at where these projects should and shouldn’t be located. The conclusion they reached is they just don’t have a level of comfort with the science.”

What gets me is that they only now realize they’re not comfortable with the science, three years after lifting the previous moratorium and more than a year after having a FIT rate established for offshore projects. I don’t buy this explanation. I can understand the need to establish no-build zones in the Great Lakes, a move they should have done long ago. I can also understand a desire to have these turbines located far from shore. What I don’t understand is why those projects that were far enough offshore and in good locations couldn’t proceed and go through the necessary environmental approvals? Under the five-kilometre rule, the Toronto Hydro project off the Scarborough Bluffs was dead anyway. Unfortunately, this moratorium kills other projects that are in more ideal locations, such as several kilometres offshore on rockbed where disruption to the lake bottom would be minimal. How, really, can these projects affect drinking water when you consider all of the crap we already dump — legally — into the lake, and considering all the shoreline development already taking place? These excuses are bogus.

As damaging as this moratorium is, this has absolutely nothing to do with the claimed health effects of wind turbines based in the lake or even noise issues, despite the deceptive rantings of anti-wind groups.

NOTE: It seems, upon further reflection, that this isn’t just a moratorium — this, in the words of one developer, is a “Valentine’s Day massacre” to the offshore wind market in Ontario. The government is wiping the slate clean: any developers who have registered a site through the site-release program, or achieved applicant of record status, which gives very specific rights, are being told they’re going to have to start from scratch if, and when, the government decides to move forward again on offshore wind.

According to the policy decision posted Feb. 11 on the Environmental Bill of Rights Registery, “the MNR will be cancelling all existing Crown land applications for offshore wind development that do not have a Feed-In-Tariff contract, including those with Applicant of Record status. MNR will not be accepting any new Crown land applications for offshore wind development. When there is greater scientific certainty, consideration of offshore wind development will resume.”

The government conveniently excluded this information from their press release, which they hoped would be buried amid all the news out of Egypt.

There have been hundreds of crown land applications, and some developers have spent many years — up to 15 years, in at least one case – to develop a business case and do the necessary studies and data collection required to raise capital for their projects. Many millions of dollars have been spent based on the idea that applications, and those given Applicant of Record status, would be honoured. To start from a clean slate makes all of that site-specific research worthless, and represents a major assuault to investor confidence in Ontario. Who, in their right mind, would want to invest in Ontario after hearing of this decision? The McGuinty government has lost its marbles on this one, and as I said before, this will have lasting repercussions that go far beyond the short-term election cycle.

It’s an embarrasing moment for a jurisdiction that, while heading generally in the right direction with respect to green energy policy, appears to be driving while intoxicated.

The Ontario government, to my surprise, has caved to public pressure from a small group of anti-wind folks and backtracked on its previously stated commitment to encourage the development of offshore wind in the Great Lakes. It must be election time. This news release just came out:

Ontario is not proceeding with proposed offshore wind projects while further scientific research is conducted. No Renewable Energy Approvals for offshore have been issued and no offshore projects will proceed at this time. Applications for offshore wind projects in the Feed-In-Tariff program will no longer be accepted and current applications will be suspended. Offshore wind in freshwater lakes is early in development and there are no projects operating in North America. The recently installed Lake Vanern pilot project in Sweden is one of the only operational freshwater offshore projects in the world and a pilot project has been proposed in Ohio. Ontario will monitor these projects and the resulting scientific knowledge. Ontario will work with our U.S. neighbours on research to ensure any future proposed projects protect the environment on both sides of the Great Lakes.

It was three years ago when McGuinty confidently lifted a moratorium on offshore wind projects and declared that such projects, after extensive study and consultation with authorities on the U.S. side of the Great Lakes, could be done responsibly without impact to lake ecosystems. Then came the feed-in-tariff (FIT) program less than two years later, which broke new ground in North America by including a FIT rate for offshore wind – 19 cents per kilowatt-hour compared to 42 cents for large-scale solar projects.

The government has regularly trumpeted its commitment to offshore wind development, and Ontario was well positioned to lead North America in terms of attracting manufacturers and a supporting supply chain that could serve Ontario and the U.S. northeast. One project, to be developed by Windstream Energy, was actually offered a contract under the FIT program, while developer Trillium Power was quite advanced with its project development and preliminary studies and had worked hard to attract foreign manufacturers to Ontario. These companies and others must be furious, having invested millions of dollars already only to have the province do an about-face. I mean, is McGuinty admitting that the consultations and study done three years ago were bogus?

This sends a horrible message to the market. If the government can so easily backtrack on previous commitments, what’s next? What other projects will have their plugs pulled?

Offshore wind was the one truly new opportunity in green energy where Ontario had the opportunity to lead and capture the economic development that would come with it, as this Conference Board of Canada report recently pointed out. Companies such as Siemens and Vestas were seriously eyeing Ontario as a place to lay down their North American anchors. That opportunity is now gone. What’s odd is that it’s apparently okay to have a company like Talisman drill for natural gas in the middle of Lake Erie or to ship radioactive material from a nuclear plant through the Great Lakes, but we can’t erect wind turbines with proper setbacks from shore?

Meanwhile, the U.S. is picking up steam on offshore wind. Just as Ontario is backing away, Maryland is moving forward with legislation that would require its utilities to purchase offshore wind capacity. Virginia is getting its act together, as is New Jersey. The Obama administration has pledged to fast-track offshore wind projects in the mid-Atlantic. New York, Ohio, Michigan and others are all moving forward. Ontario, which had the lead, has decided to disqualify itself from the race and watch from the sidelines.

A truly shocking and disappointing development. There’s no reason why the government couldn’t have honoured its FIT commitments but put in place regulations that made sure only the best sited projects got built. At least this would have got the ball rolling, even if it was just one or two projects that qualified. Environmental concerns can be addressed without having to outright derail the train.