Ontario Premier Dalton McGuinty

Ontario's Standard Offer Contracts for North American Windpower

April 20, 2006

By Paul Gipe

When Ontario Premier Dalton McGuinty took the podium at Photowatt's assembly hall near Cambridge on March 21, the TV crews took their positions, reporters flipped open their notebooks, and the 200-strong crowd went silent. This wasn't just another photo-op. Those present sensed that this was an historic event.

McGuinty then went on to announce that the government of Ontario would launch a program offering standard contracts for the provincial purchase of electricity from anyone willing to install a solar panel on their roof, a wind turbine on their farm, or a biogas generator at their dairy that was less than 10 MW in size.

"We're taking a bold step that will allow hundreds of small, local, renewable energy producers to get into the energy market - providing cleaner energy that will help meet Ontario's needs today - and in the future," said Premier McGuinty.

An edited version of this article appeared in North American Windpower in May 2006.

The Premier was accompanied at the podium by Ontario's Minister of Energy Donna Cansfield and Canada's popular scientist and TV-personality, David Suzuki.

Cansfield, the driving political force behind the measure that adapts European electricity feed laws to North America, told the crowd that Ontario was "open for business" and was seeking to become the renewable energy powerhouse of North America.

Ontario is one of North America's heavy hitters and is Canada's most populous province. It ranks in the top ten of states and provinces in North America. It rivals Pennsylvania and New Jersey in population and lags behind only California, Texas, and New York. Ontario also contains Canada's industrial heartland in the Golden horseshoe that stretches from Niagara Falls to Toronto. It's here that Ontario hopes to lure wind turbine and solar cell manufacturers to produced for the entire North American market.

A sometime critic of the McGuinty government's energy policy, Suzuki praised the Premier's announcement, characterizing the Standard Offer program as the "most progressive renewable energy policy in North America in two decades."

Ontario Minister of Energy Donna Cansfield

Indeed, not since California's Standard Offer No. 4 of the early 1980s has a state or province launched such an ambitious policy. Ontario's Standard Offer Contracts will pay more for wind, solar, biomass, and small hydro than any other program in North America.

The announcement culminated a 2-1/2 year campaign by the Ontario Sustainable Energy Association (OSEA) for what the small NGO calls Advanced Renewable Tariffs.

Still, critics note that the prices in the Standard Offer program are less than those proposed by OSEA in a report to the Ministry of Energy in early 2005. More worrisome, they say, is that the tariffs in the 20-year contracts will not keep pace with inflation.

Under the province's program only 20% of the tariffs are adjusted with inflation. OSEA argued, unsuccessfully, that 80% of the tariffs should rise with inflation.

Thomas Schneider of Schneider Power fears that the tariff for wind is too tight under Ontario conditions. Ontario, says Schneider, is the most expensive jurisdiction in North America to build a wind project, as much as 30% more than other areas he asserts. Combine that with the low wind speeds typical of southern Ontario and the $0.11 CAD/kWh makes projects problematic. Nevertheless, Schneider will soon announce development of five projects under the Standard Offer program, assuming he can find financing.

Similarly, Ontario wind pioneer Glen Estill says "we need to see the rules and a workable contract" before projects can proceed. Estill's Sky Generation has two 10 MW projects in the hopper waiting for contracts.

The program will be administered by the newly created Ontario Power Authority. OPA's Manager of Renewable Energy, Jim MacDougal, says he expects contracts will be available by fall of 2005. "We hope we can move that schedule up," he says, but there are a number of issues that must be resolved.

"We have to have WPPI," Estill says, referring to Canada's Wind Power Production Incentive. The Power Authority proposes taking WPPI from those participating in the program. "OPA's clawing back WPPI is not tenable," says Estill.

While an historic announcement for North Americans to be sure, the devil remains in the details. Only time will tell whether the program delivers on its promise.

back to Archive of Articles