The Ontario government recently introduced Bill 150, Green Energy & Green Economy Act 2009 (GEA) with stated goals to build a green economy in Ontario. You can find it here: http://www.ontla.on.ca/web/bills/bills_detail.do?locale=en&BillID=2145

This proposed legislation is part of Ontario’s plan to remove barriers to creating a leading green economy in North America and fostering renewable energy projects. The stated opportunity is to foster growth in clean and renewable sources of energy such as wind, solar, hydro, biomass and biogas in Ontario. It will create the potential for savings and help Ontarians manage household energy expenditures through a series of conservation measures. The government expects the GEA to enable the creation of 50,000 jobs in its first three years of implementation.

As the voice of Ontario’s engineers, OSPE has set up a Task Force to discuss the Bill and provide recommendations. Here are the highlights from this Task Force and some of OSPE’s recommendations.

OSPE’s GEA Task Force first divided the issues into five subject categories: Meeting Environmental Objectives; Anticipated Economic Growth; Electrical Distribution Challenges; Governance Implications; and the Role of our Engineering Profession.

Meeting Environmental Objectives

Maximizing energy efficiency is paramount for reducing energy waste and reducing our impact on the environment. This is especially important for those energy sources that have large environmental impact. OSPE believes that the success of these new energy initiatives should be measured by how much greenhouse gas emissions are reduced across the full process chain and consider the cost expended. Full life cycle and sustainability assessments are necessary to provide a solid basis for supply mix decision-making.

Wind and solar sourced energy is fluctuating based upon resource availability. This requires judicious forward supply demand management and grid analysis to accommodate the appropriate percentage mix of such energy input into the Ontario electrical grid that has limited capability to utilize fluctuating supply. Consequently, wind and solar energy are best employed within the range of grid capability or in applications where storage is readily available to absorb the fluctuations such as for thermal mass buffered space heating, hydro reservoir replenishment or hydrogen production. Co-generation and geothermal technology, including both ground sourced as well as deep sourced thermal reserves, should also play a significant role in reducing the energy required to heat homes and businesses in Ontario. OSPE believes that the government and the Bill should support cogeneration and geothermal technologies.

In Ontario, rapid response supply such as natural gas electrical generation may be required to supplement wind and solar electrical generation when there is no wind or sun and the base load mix is not capable of tracking the demand curve. OSPE recommends that life cycle costing be employed across the full energy supply system including sustainability analysis incorporating all inputs and outputs in the interest of defining the best means of reducing greenhouse gas emissions and the optimum applications for each energy source. The engagement of qualified professional engineers in these assessments should be considered fundamental to any decision-making processes.

Anticipated Economic Growth

OSPE applauds the job creation aspect of the Bill but is concerned that it will not create the number of jobs anticipated. Solar and wind energy technology and materials production will likely be imported from countries where the production capability is already established. Success in job creation goals will only come from continued investment in research, development and commercialization in Ontario. OSPE requests that the Bill identify measures to encourage domestic equipment supply and the use of local engineering and other resources.

In the case of wind power, in order for manufacturers to create jobs by setting up plants in Ontario, the “buyer” should commit to purchase significant amounts of energy from the renewable energy producers. Purchases of 600MW capacity or more tend to cross the necessary threshold of attracting local domestic production. The Ontario government has not made the level of commitment that Quebec has made as part of its 1,000 MW wind power capacity procurements with minimum domestic content rules. These activities have led to the establishment of wind turbine component manufacturing facilities in Quebec.

The addition of wind and solar power will increase the price of electricity at a rate commensurate with the percentage adoption. Costs for provision of balancing gas-fired power is also a positive contributor to electricity pricing. In one scenario, implementation of the Integrated Power System Plan (IPSP) leads to higher and more volatile electricity prices (1000MWh gas increase would lead to a $9.70/MW rise in hourly electricity prices),¹. The higher electricity prices relate to a loss in GDP of 0.7%, increase in CPI of 0.6%, and a loss of 45,000 jobs related to the base case in 2015,². It should be noted that these studies were done with an increased use of natural gas, $0.09/kwh, whereas alternative energy feed-in tariffs are $0.10/KWh to $0.80/kwh, with wind power at $0.14/kwh -- near double. Thus, the estimates in the referenced studies are conservative.

Selling excess energy into the grid requires significant investment by producers for the inter-connect. The grid was not designed to support this kind of minimal generation. Homeowners generating energy will need to purchase an additional meter and pay additional billing administration charges, while local energy facilities will need to be upgraded to bring small generators online. These additional costs need to be considered in greater detail together with other alternatives such as building code changes to better utilize passive/active solar energy and thermal storage.

OSPE favours activities to foster innovation and research but does remind that thoughtful balance is necessary regarding the scope of feed-in tariff support programs. The feed-in tariff stimulation to reward small and medium energy producers for feeding energy back to the grid should also be considered for encouraging the development of storage systems that would support fluctuating power generation sources.

OSPE also advocates more research into zero carbon cycle energy generation infrastructure linking renewable power generation from wind and solar and other forms of power generation to hydrogen for storage or as a transportable fuel.

Manufacturers have historically settled in Ontario due to the transportation avenues offered by the Great Lakes and highly competitive energy costs. We must remain competitive in the midst of generating the green economy to keep our existing manufacturing base and attract new companies to the Province in the future.

Finally, because the Ontario market itself is not as large as the broader US or European markets, attention will be required to support export opportunities outside of Ontario and Canada.

Electrical Distribution Challenges

As outlined above, there exist significant challenges in connecting small-scale energy projects to the grid because it was not designed for this purpose. Wind and solar are fluctuating sources of energy and as Ontario’s reliance on these sources increases, the ability of the grid to utilize fluctuating sources decreases.

OSPE recommends that the supply mix incentives take into consideration distribution impacts and set appropriate targets or limits on the various forms of energy generation. OSPE also recommends the Bill encourage energy producers and users to reduce green house gasses and other forms of air pollution rather than encourage generating electricity.

Governance Implications

Energy planning in Ontario is complex as there are many bodies with overlapping mandates. OSPE is concerned that the Green Energy & Green Economy Act and, in particular, the proposed Renewable Energy Facilitation Office (REFO), may add to this complexity.

The powers invested in the proposed REFO are of concern to OSPE. An independent appeals process for green energy companies or local distribution companies and ratepayer groups who feel disadvantaged by a decision from the REFO, must be built into the Bill. Asking these entities to appeal to the Office that disadvantaged them in the first place is contrary to good business practice. Proper checks and balances are also not in place to ensure transparency, and effective decision making.

An effective independent appeals process, in the interest of fairness, should be administered by the Ontario Energy Board (OEB). Accordingly, the need for OEB remains and should be strengthened.

Ontario needs a strong, centralized planning authority to oversee the province’s electrical energy planning and monitoring needs. This has recently been the role of the Ontario Power Authority. With the proposed changes to the Green Energy & Green Economy Act, the need for a single arms-length, centralized grid planning authority is even more important.

a) clearly designate the Ontario Power Authority with the responsibility of setting priorities for adding new green generating capacity to reflect its supply plan;
b) clearly designate the Ontario Energy Board to administer an appeals process of decisions made by the Renewable Energy Facilitation Office; and
c) clearly identify and provide an extended mandate to all forms of green energy production and utilization, not just electrical generation.

Role of the Engineering Profession

The Professional Engineers Act, combined with academic and on-the-job-training, has fostered a culture of professionalism and responsibility within the engineering profession. As engineers, we take our commitment to public safety seriously. Electrical generating companies have traditionally used professional engineers in the design, operation and maintenance of their facilities and, consequently, complied voluntarily with the public safety provisions of that Act.

Bill 150 opens energy generation to individuals who are neither trained nor accountable under the Professional Engineers Act.

OSPE requests that the Bill be revised to ensure the provisions of the Professional Engineers Act apply to all green energy production and utilization projects that have the potential to affect public health and safety.

Conclusion

OSPE believes that the Ontario government is moving in the right direction with respect to greenhouse gas reduction and we hope our concerns will be heard and our recommendations will be implemented to help ensure the Bill results in a healthier environment together with a stronger economy.

Make your voice heard. Get involved with OSPE’s Political Action Network or send your comments and recommendations to advocacy@ospe.on.ca. Together we can shape the future.

Sincerely,

Michael Monette,
MBA, EDP, P.Eng.,
President and Chair, OSPE

References:

1. DR. Sen, A., (2008) Estimating the Determinants of Wholesale Electricity Prices in Ontario: An Economic Analysis, Expert Report, Dept. of Economics, University of Waterloo

2. Stokes, E., (2008) The Economic Impacts on the Ontario Economy of Different Price Scenarios for Natural Gas and Electricity, Centre for Spatial Economics