7/23/2011

(July 15*) Tories seen as threat to green energy firms

Jul 15, 2011 – 8:01 AM ET

Richard Monk has learned a lot about Ontario politics since he joined a Spanish solar panel manufacturer lured by the Liberal government’s lucrative green energy program to open a factory in Windsor.

Having just opened in May, Siliken Group announced last week it was planning to lay off most of its 120 workers, citing a sales slump the company blamed on a Tory promise to kill the province’s subsidized green energy program if the party takes power Oct. 6, as polls suggest it is poised to do.

“They have affected sales, they have frightened new customers as well as existing customers, they have confused the public and they seem to be anti-environmental,” said Mr. Monk, Siliken’s production manager in Windsor.

Down the road from where Siliken had set up shop in a former auto parts factory, solar panel retailer Certified Solar was experiencing an entirely different fallout from the Conservatives’ pre-election promise: A surge in sales, as customers look to lock in to 20-year solar contracts at generous rates before the Tories can kill the program.

“That’s the big incentive. Whenever there is a sense of urgency, sales tend to increase,” manager Craig O’Brien said. “People wanted to get involved before the program ends.”

The province’s green energy sector is shaping up to be ground zero in the fall election, as both parties stake their reputation on the success or failure of the program, known as feed-in-tariff because it pays above-market rates to feed wind, solar and other renewable energy into the electrical grid.

The most recent poll has the Conservatives 11 percentage points ahead of the Liberals, and few are willing to bet the program will survive, and that is wreaking havoc within the industry.

The Liberal government is pushing the program as a way to kickstart Ontario’s struggling manufacturing sector with what energy minister Brad Duguid said is $20-billion in new investment and 13,000 new jobs since it was introduced two years ago — although the government’s goal was 50,000 jobs.

“We’re very happy and proud of the program; our opponents are going to get rid of it and that’s going to be a major distinction” during the election, Finance Minister Dwight Duncan told the National Post.

The Conservatives, meanwhile, are attacking the feedin-tariff program as a costly job-killer that drives up electricity rates through long-term price guarantees that in some cases promise more than 10 times the market price for electricity.

“They’ve created a gold rush that everyone wants to get rich on,” said John Yakabuski, the Conservative energy critic as he stood in front of a lemonade stand the party had set up on the lawn of Queen’s Park to hand out cheap lemonade he said was made from subsidized lemons. “If they announce tomorrow that they’re going to pay $7 a dozen for eggs, I suspect a lot of people are going to be investing in laying hens. But that doesn’t necessarily mean it’s going to be good for the people buying eggs in the supermarket.”

Green energy has become so politicized that the Canadian Solar Industry Association set up a booth at the recent Ontario PC convention in Toronto in hopes of wooing some Tories.

“We received a lot of positive comments. A lot of people were very knowledgeable about solar,” said association president Elizabeth McDonald. “I believe that’s the reality of the situation. But this is not a platform that’s based on renewable energy and solar. This is a platform based on critical pocketbook issues.”

Launched in 2009, the feed-in-tariff program offers largescale wind farms and solar power generators as much as 71.3¢ per kilowatt hour (enough power to light a 100-watt bulb for 10 hours), well above the going rate of 6.5¢ per kilowatt hour on Ontario’s energy market. Most contracts are guaranteed for 20 years.

The costs are buried in a premium on monthly hydro bills that makes up the difference between the market price for electricity and the rates promised through long-term contracts with generators. The cost of those contracts has risen sharply in recent years, from $654-million in 2005 to $3.8-billion last year, although much of the increase has come from contracts with nuclear, natural gas and other major power producers.

But with only a fraction of the nearly 8,000 proposed feed-in-tariff projects up and running, with most set to begin two to three years from now, critics say the costs could quickly escalate.

A separate microFIT program for small generators, such as homeowners with rooftop solar panels, offers rates as high as 80.2¢ per kilowatt hour. Killing the program will end up hurting consumers by shutting out homeowners, churches, schools and community groups that hope to make some money off generating their own power, said Kristopher Stevens, executive director of the Ontario Sustainable Energy Association.

The Conservatives say the program is not benefitting struggling homeowners, but instead attracting profit-seeking businesses such as a company advertising free barns to farmers in exchange for the rights to install solar panels on the roof and sell the power.

“You might want to check where these panels are,” Mr. Yakabuski said. “They’re not on the struggling senior homeowners home.”

The renewable energy industry itself has been openly talking about sweeping changes to the program, including a price reduction. “Everybody knows that the program could use improvement and everybody knew that it couldn’t keep on pumping out contracts at the same volume and the same pricing forever,” said Dan Gormley, who leads the green energy practice at Toronto law firm Goodmans LLP. “It was always going to have to evolve over time. But I don’t really understand why the Tories have simply come out and said it’s got to be killed altogether.”

The program is set for a price review this year, although Mr. Duncan said in an interview that the government has no plans to lower prices ahead of the October election. “Over time those rates will come down,” he said. “It’s something we’ll watch and we want to make sure the policy achieves its goals.”

Retrieved from http://news.nationalpost.com/2011/07/15/tories-seen-as-threat-to-green-energy-firms/

* color and emphasis added by the blogger

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