7/06/2011

(July 6*) Don’t blame green power: Energy bills rising anyway, study says

Published On Wed Jul 06 2011John SpearsBusiness Reporter

Ontario electricity prices are heading higher with or without controversial renewable energy contracts, says a study by the green-leaning Pembina Institute.

The study, released Wednesday, says the relatively high prices paid to wind, solar and biogas power producers under Ontario’s feed-in tariff program, or FIT, are being blamed unfairly for rising power prices.

Even if no more FIT contracts are signed, the study says, the outlook for rising prices doesn’t change much — because the alternatives are no cheaper.

“Prices are going up, and in some ways people need to know that’s inevitable, whichever path one chooses,” says Tim Weis of the Pembina Institute. “There’s no silver bullet to bringing prices down.”

The FIT program would never add more than 1.5 per cent, or about $2 a month, to the typical consumer hydro bill, the study contends.

Curbing renewables produces lower bills until about 2025, the study says; after that, prices are likely to be cheaper with more renewable power in the system.

The issue is likely to be a hot one in this October’s provincial election. The Conservatives have vowed to end the FIT program, calling it “unsustainable.” The Liberals are firmly committed to pushing for more green power.

FIT contracts pay 13.5 cents a kilowatt hour for onshore wind power, an average of 52.5 cents a kilowatt hour for solar power, and 13 cents for hydro.

The key questions if the FIT program is halted in its tracks, says Weis, are: What will replace it? And at what cost?

The Pembina study says natural gas generation will pick up the slack if renewables are curbed. While gas prices have tumbled since 2009 with the discovery of massive shale gas deposits in North America, the study warns that won’t last. Resistance to the environmental damage caused by shale gas extraction may limit production.

Meanwhile, demand for gas could spiral as the U.S. shuts down more coal-burning plants and replaces them with gas-fired units.

The study also assumes some form of carbon tax or carbon pricing regime will come into play in the medium term. And it notes that emissions regulations are already being introduced on U.S. gas generators, and Canada will probably follow suit.

Meanwhile, the price of renewables will likely drop, the study says. The price of solar panels, for example, is falling steadily as more manufacturers join the sector.

Ontario also plans to review the price of new FIT contracts, with an eye to reducing them, later this year — assuming the Liberals are still in power.

Other factors are at play in driving prices higher, including expensive overhauls and additions slated for Ontario’s nuclear plants, and major upgrades looming at Hydro One and local utilities to modernize their transmission systems.

Those costs are coming no matter what kind of power is being produced.

“If it’s going to cost us roughly the same price, it seems to make a lot more sense to be investing money in cleaner renewable energy going forward than placing our bets on a volatile price of gas,” says Weis.

* Retrieved from http://www.thestar.com/business/companies/article/1020264--don-t-blame-green-power-energy-bills-rising-anyway-study-says

* color and emphasis added by the blogger

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