Ontario’s groundbreaking Green Energy Act


By Marion Fraser

On 23 February 2009, Ontario’s Minister of Energy and Infrastructure introduced the Green Energy Act. It is a bold and groundbreaking piece of legislation. This article outlines why this legislation was needed and how it will change the energy landscape in Ontario.

On 16 September 2008 about 100 people came together to envision what a Green Ontario would be like. These people were representatives of First Nations, farmers, local distribution utilities, municipalities community organisations, environmental groups, gas companies, energy management firms, anaerobic digester firms, solar developers, manufacturers, wind developers and conservation practitioners. They had responded to an invitation from the Green Energy Act Alliance that was formed in June 2008 by the First Nations Energy Alliance, the Ontario Federation of Agriculture, the Community Power Fund, the David Suzuki Foundation, the Pembina Institute, the Ivey Foundation and Environmental Defence and the Ontario Sustainable Energy Association. These organisations had identified the opportunities for Ontario to enact a Green Energy Act (GEA) for Ontario modelled on Germany’s very successful Renewable Energy Sources Act which enshrined the concept of Feed in Tariffs. It is credited with creating a world-beating industry in 15 years, almost from scratch. Latest figures show that 250,000 people are now employed in German in this sector.

Ontario’s Green Energy Act Alliance built on this model and also addressed additional matters such as the role of energy utilities, access to energy for low income Ontarians, modernisation of the energy sector with smart grid technologies and the expanded participation of First Nations in the energy sector. The Alliance delivered this Vision document to the government in September 2008 and has cheered the government’s proactive response to the proposed new paradigm.

Ontario’s energy system developed and evolved over the last century. During the first half of that century, increasing economies of scale resulted in declining electricity prices. Electrification revolutionised our homes and farms, and cheap energy fuelled an expanding manufacturing base. And even though this recipe for success ended when the nuclear energy industry’s promise of power to “cheap to meter” failed to materialise, deep in the Ontario psyche, no doubt stimulated by the rushing roar of water falling at Niagara Falls, there remains an expectation of cheap and reliable power.

Albert Einstein is often quoted: Insanity: doing the same thing over and over again and expecting different results. Ontario was in danger of doing just that in its approach to electricity. When higher than expected costs for Ontario’s existing nuclear plants threatened low electricity prices, Ontario Hydro lengthened the amortisation period for the assets. Since then, the nuclear fleet has been refurbished long before the expected end of their asset lives, again understating the true cost. Removing most of Ontario Hydro’s debt from the successor companies when the Ontario Hydro was restructured in the late 1990s further camouflaged the true costs of nuclear power. And while other jurisdictions are estimating new plants to cost upwards of CA$5000-7000 per kW, the Ontario Power Authority’s Integrated Power System Plan estimated CA$2900.

Traditional power system planners considered renewable energy unreliable, intermittent and expensive – each, an anathema to their credo of “reliable, continuous and cheap”. Similarly, they discount conservation as ethereal, unsustainable, and at best (or worst) enabling consumers to purchase more energy using equipment.

The Green Energy Act Alliance knew that unless we changed the fundamentals of our energy system; unless we created a new paradigm, the existing barriers to renewable energy and conservation will make these traditional views a self fulfilling prophesy. The benefits of sustainable energy outweigh any deficiencies, and these deficiencies can be overcome by taking a system approach: using storage, complementary systems, smart technologies and above all conserving as much energy as possible.

Some of the barriers to sustainable energy are unintended consequences of policies, legislation, regulation and practices that have little to do with increasingly wider array of options for renewable energy and conservation. Recently, the City of Toronto passed an overarching bylaw that superseded elements in 17 different bylaws that prevented homeowners and businesses from installing solar panels on their rooftops.

On the conservation side, a fire code requirement for 24/7 lighting in stairwells in high rise buildings results in illuminated spaces which are hardly ever used, and in the event of a fire would be replaced by emergency lighting. The code was written before motion sensors were in use and creates a costly barrier for developers and building occupants alike. Recently, the Ontario government overrode the prohibition against clotheslines in subdivisions under its Energy Conservation Leadership Act, but so far that is the only regulation under the Act, while many other similar barriers remain buried in regulations and by-laws.

Other barriers result too from asymmetry. Huge investments in central generating plants or pipelines are recovered through regulation or power purchase agreements over the life of the asset, and financed accordingly. And while the Renewable Standard Offer Programme went some way to creating symmetry for wind and solar projects, geo exchange systems, solar thermal, district energy, combined heat and power are constrained by the short term payback expectations of decision makers for these systems as well as their investors having no similar regulatory or contractual protection.

Any sustainable energy developer in Ontario can describe a litany of roadblocks, barriers and catch 22s encountered on a road to a project. Perhaps the most problematic is the “traditional mindset”, the “status quo”, the “way we have always done it”. And as we transform the electricity sector from a system based on large, remote central generating plants connected with miles and miles of transmission lines to a more decentralised system, with net zero homes, buildings, subdivisions, communities, linked by a web of pipes and wires, new ways will have to be developed to empower people, developers, municipalities and distribution utilities to do things differently. If computers still required key punch cards, how many of us would have home or desktop computers. How many of us would walk to the library to look up Einstein’s quote on insanity rather than “google” insanity and find Einstein’s quote in the third reference.

Ontario is not alone in facing the need for a new energy paradigm. According to the World Future Council: The unpredictable and sometimes explosive nature of the global energy market is not only negatively impacting on the climate, but also on economic and geopolitical matters. Fossil fuels and uranium are becoming increasingly scarce while worldwide consumption of these resources is steadily increasing. As a result, prices are rising and the risk of conflict over the diminishing supply of these finite resources is increasing. In most countries, energy supply is heavily reliant on coal, oil, gas and uranium. The EU’s dependency on imports of these resources already exceeds 50 % and is certain to rise. In the US, fossil fuel supply is becoming a matter of national security. This threat of energy shortages, in conjunction with the fact that there are still more than two billion people without access to any form of modern energy, shows that we urgently need to implement solutions that will help us change direction. Politicians are obliged, ethically, politically and economically, to create the conditions necessary for a flourishing renewables industry. It is crucial to accelerate the replacement of fossil fuels with renewable energies, to place real caps on emissions, and to make energy efficiency an integral part of our work and private lives. This is the route to avoid climate chaos and energy dependency, to develop sustainable employment, and to foster economic growth.

In the view of the Green Energy Act Alliance, Ontario’s Green Energy Act is a world-class Act and is unique and revolutionary in the following important ways:

  1. The GEA, gives priority to conservation and renewable energy in electricity supply 
  2. The GEA, for the first time in North America, will pave the way for long-term secure pricing for renewable energy generation (feedin tariffs) differentiated on the basis of technology, size, location and generating capacity 
  3. The GEA guarantees renewable energy generators connection to the grid 
  4. The GEA is the most comprehensive renewable energy policy in North America because it encompasses nearly all sources of renewable electricity generation of all sizes – from residential rooftop solar panels to wind power plants 
  5. The GEA, changes how Ontario regulates new sources of electricity generation by ensuring that the promotion of renewables, conservation and smart grid implementation are mandatory considerations in ongoing regulation of the system by the Ontario Energy Board 
  6. The GEA, for the first time in North America, specifically includes opportunity for renewable energy development by First Nations and Métis communities 
  7. The GEA is unique in North America because it specifically targets the removal of barriers to communityowned renewable generation 
  8. The GEA is unique in North America in its creation of an office to aid renewable energy development and the designation of a specific public official responsible for renewable energy development, a so-called renewable energy czar 
  9. The GEA is unique in North America because it facilitates streamlining the approvals and permitting processes for renewable energy generators at the same time as ensuring that siting criteria are clearly defined that take into account potential environmental and health impacts
  10. The GEA, for the first time in North America, recognises the need to integrate distribution and transmission planning and expansion with the development of renewable energy.

Ontario’s Green Energy Act will go to third reading and hopefully pass in the legislatures Spring Term 2009. It will usher in a new beginning for sustainability in Ontario.