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Ontario Cancels Nearly $4 Billion in Clean Energy Projects

Originally published on The Climate Examiner.

The fingerpointing continues on the Ontario government’s decision to cancel $3.8 billion in planned wind and solar projects, as part of its struggle to keep a lid on soaring electricity prices that are being attributed to multiple factors.

The cancelled schemes could have offered up to 1000 megawatts of power under optimal weather conditions, sufficient to service the instantaneous demand of roughly a million homes.

Previously signed projects will still go ahead, including 16 wind, solar and run-of-river hydroelectric endeavours that could offer up to 455 megawatts.

Last month, the government announced an eight-per cent subsidy for residential and small-business electricity bills amid growing voter anger over price increases that have given the province one of the highest electricity costs in North America.

When making this latest announcement, energy minister Glen Thibeault said that Ontario had a surplus of supply with no “urgent need” for expanding capacity.

The move has shocked environmental groups who until now have cheered on the provincial Liberal’s efforts to decarbonize, with greenhouse gas emissions declining by 80 per cent since 2005 even as energy prices have nearly doubled over that same period.

While many Ontarians blame the price hikes on the province’s renewable energy build-out, some of these green NGOs are instead pointing to the cost of refurbishing nuclear plants, while others are pointing to the impact of transmission upgrades, the HST, privatization of Ontario Hydro, and debt retirement.

Paul Hébert, a spokesperson for the Canadian Nuclear Association, told the Climate Examiner: “Even after refurbishment, the average price of electricity per kilowatt-hour from nuclear is just 8 cents, while the average unit cost across all sources is 14 cents. Solar is 50 cents, so nuclear is actually pulling the average down.”

Jeffrey English, an energy systems expert with PICS’ 2060 Project, which is based within the Institute of Integrated Energy Systems at the University of Victoria, explains some of the issues at play: “Since 2006, electrical demand has actually decreased by eight per cent in Ontario,” he explains in a brief analysis of the cost increases. This unexpected drop-off in demand was largely a product of the global economic crisis.

Over the same period, the government had expected a growth in demand, and also needed to maintain grid reliability as it retired coal-fired plants. So additional electricity was procured via fixed-term contracts with suppliers for nuclear, renewable, and gas-fired energy.

“As a result, these policies have generated a large surplus of supply in the province leading to very low wholesale market prices,” he says. But the fixed-term contracts offered higher prices for a predicted demand scenario that never arose.

In other words, it is a situation of oversupply combined with contractual obligations and the need to maintain grid reliability that is cause of the price increases.

Image: Ontario Premier Kathleen Wynne surveys an electric vehicle at Queen's Park. Photo: Ontario Liberal Caucus via Flickr

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