Ontario Energy Roadmap

8/2/2019 Ontario Energy Roadmap

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Ontarios Road Map to Prosperity:Developing Renewable Energy to its Full Potential

Final Report Submitted to the Toronto and Region Conservation Authority

byJos Etcheverry PhD Lynda OMalley Jennifer Taylor


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2 Ontarios Road Map to Prosperity

Disclaimer

The contents o this report and the opinions expressed here are those o theauthors and do not represent the policies, opinions or positions o Toronto andRegion Conservation Authority, its Chair, members or employees. Althoughreasonable eorts have been made to ensure the accuracy o the inormationcontained in the report, Toronto and Region Conservation Authority does notmake any warranty or representation, expressed or implied, as to the accuracy or

completeness o the inormation contained therein. Any person or organizationmaking use o or relying on the inormation contained in the report shall do so attheir sole risk and responsibility.


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Developing Renewable Energy to its Full Potential 3

ContentsExecutive Summary 5

Summary o Roadmap Recommendations 7

Report Overview 9

Background 9

PART I: Barriers to the Deployment o Renewable Energy in Ontario 11

1. Financial Barriers 111.1. High up-ront costs and lack o adequate nancing mechanisms 11

1.2. Lack o ull cost comparison o supply options 12

1.3. Unstable policy environment 13

2. Social Barriers 14

2.1 Techno-Institutional Lock-In or Path Dependency 14

2.2 Lack o knowledge o and experience with renewable energyand distributed generation 15

2.3 Opposition to Renewable Energy 16

3 Institutional/Jurisdictional Barriers 173.1 Limited opportunities or new energy delivery systems

such as community power cooperatives 17

3.2 Limited training opportunities 18

3.3 Confictive mandates o utilities and local distributioncompanies (LDCs) 18

4. Political Barriers 19

4.1 Failure o the Integrated Power System Plan (IPSP)to maximize renewables 19

4.2 Building code limitations 20

4.3 Outdated municipal zoning laws 20

4.4 Property tax penalties 21

4.5 Complex and expensive permitting requirements 21

4.6. Canadian Standards Association requirements 22

4.7. Geographical limits to renewable energy development:the orange and yellow zones 22

4.8. Utility Requirements 23

4.9. Environmental Assessment Requirements 23

5 Inrastructural Barriers 23

5.1. Outdated grid orecasting capabilities 23

5.2. Ontario has not yet transitioned to a Smart Grid system. 24

5.3. Lack o innovative storage solutions and hydro integration 26

5.4. Lack o Local Distribution Company (LDC) participation andlimited innovative ownership models 26


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Part II: Solutions to renewable energy barriers and the mapto a sustainable system based on renewable generation: 27

1. Ontario should set higher renewable energy targets 27

2. A clear and strong Ontario Green Energy Actshould be implemented 28

3. Ontarios Renewable Energy Standard Oer Program (RESOP)needs to evolve into a stable eed-in tari system 28

4. Innovative fnancing opportunities should be implemented at the

appropriate level o government 295. Renewable energy sources should be prioritized by the Provinceas a strategic resource or the Provinces welare 30

6. The Integrated Power System Plan (IPSP) should be re-designedto provide frst priority or renewable energy 31

7. The Province and relevant local authorities should mandate thatnew buildings and renovations provide a specifc percentage o powerneeds rom renewable sources 31

8. The Province and relevant authorities, in cooperation withmunicipalities and Local Distribution Companies should begin thetransition to Smart Grid inrastructure 32

9. Storage should become a priority or expanding andfrming up renewable sources 33

10. The Province should implement groundbreaking strategies to developa strong local manuacturing industry or renewable technologies 34

11. The PST exemption or Renewable Energy Developers should be renewed 34

12. New Educational and Training initiatives should be implementedto develop local capacity and to establish eective internationalpartnerships with leading jurisdictions 35

13. Streamline the approvals and permitting processes 35

The Road Forward 36

Conclusion 38

Roadmap Recommendations or 2009 39

Roadmap Recommendations or Budget 2009 39

Additional Roadmap Recommendations 39

Biographies o Authors 40

Biographies o Interviewees 40

Workshop 44

Description o Roadmap Website 44


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Executive Summary

Ontario needs a practical solution that provides strong local economicdevelopment and new employment sources to replace the 230,000manuacturing jobs that have disappeared rom the province in the last veyears.1

As recent statistics clearly indicate this worrisome unemployment trend isaccelerating as the current economic downturn gathers momentum.2

In addition, our province requires an innovative approach to ulll itscommitments to reduce greenhouse gases and to control air and water pollution.

Fortunately the solution is at hand: developing renewable energy sources to theirull potential. This document summarizes a viable strategy, a roadmap, to achieveprosperity, energy security and ecological protection in Ontario.

Developing this renewable energy roadmap to achieve prosperity andenvironmental protection will require vision, widespread collaboration, andpolitical leadership.

The roadmap is based on three crucial principles that orm the oundation or

achieving the multiple benets o developing renewable energy sources to theirull potential in Ontario:

Establishing a robust domestic market that prioritizes sustained renewable1.energy development

Development o a strong nancial inrastructure that ensures that2.Ontarians can actively invest in renewable energy development

Strengthening the provinces educational networks to develop the skilled3.workorce required to manuacture, design, install, and maintain renewableenergy systems and all associated support inrastructure.

These three principles have been successully employed in the jurisdictions thathave become the global leaders in renewable energy development: Denmark,Germany and Spain.

These three jurisdictions have achieved strong domestic markets that providethe required stability or their local industries to thrive and or investmentdecisions to take root. Their healthy domestic markets have made the renewableenergy industries o these three leaders into export powerhouses and have alsodeveloped strong and skilled workorces.

1 For additional inormation see Statistics Canada, Labour Force Survey or Ontario, July 2004 (manuacturing

number compared to the latest gures available) at Statistics Canada site: www.statcan.gc.ca/daily-quotidien/090206/

dq090206a-eng.htm , also see: Popplewell, B. (2008). Search is on or solutions to sectors woe. Toronto Star, October

11. Available at: www.thestar.com/FederalElection/article/515941 and also: Perry, A. (2008). Canadian employers wipe

out 71,000 jobs. Toronto Star, December 6. Available at: www.thestar.com/Business/article/5494302 Between December 2008 and January 2009 71,000 jobs were lost in Ontario, with 36,000 jobs lost in Ontarios

manuacturing sector or urther details see: CBC.(2009). Canada lost 129,000 jobs in January: StatsCan. Canadian

Broadcasting Corporation, February 6. Available at: www.cbc.ca/canada/toronto/story/2009/02/06/januaryjobs.html


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Germany today has more than 248,000 people working in its renewable energysector and Spain has achieved, in 10 years, a workorce o 190,000 people.3

The lessons emanating rom these three leading countries can be adapted to suitthe unique conditions o Ontario to rapidly achieve the adoption o a new energyparadigm.

Although Ontario has a smaller population than Germany or Spain we havea skilled workorce and a much larger territory that is richly endowed withabundant renewable energy resources.

Ontario also has the comparative advantage o having as neighbours provincesthat are already powered largely by hydroelectric plants that can provide ourprovince with the opportunity to access aordable dispatchable power tocompliment the large-scale local implementation o intermittent renewableenergy sources (such as wind and solar power). Most importantly, Ontarioalready has some o the key policies in place that have made Denmark, Germanyand Spain world leaders in renewable energy. In addition, the province providesattractive working and investment conditions such as public health care andaordable education systems, which constitute two clear advantages overneighbouring US states.

To capitalize on these benets, Ontario needs a strong policy ramework toensure that a sustainable domestic market can develop to satisy our energyneeds and to provide a strong beacon or investment fows. Leading RE countriessuch as Germany and Spain have structured their policy ramework aroundrenewable energy legislation. Similar legislation would enable Ontario to meetits RE targets or 2010 and beyond, help launch a key oundation or a localsustainable economy, enable the building o innovative industries, create newjobs, and help reduce pollution. Most interestingly, all o these benets can beachieved by harnessing in a new manner current investment used or keeping thelights o Ontario on.4

The roadmap summarized here uses the combined knowledge o some o the best

renewable energy experts in our province and the world to illustrate clearly thesteps required or Ontario to become the North American leader in renewableenergy.5

This document also highlights specic collaborative areas in which agencies suchas the TRCA can continue to lead to ensure the adoption o renewable energyand a successul and sustained transition to a more prosperous, resilient andecologically sound society.

3 For Germanys employment achievements see Bundesministerium ur Umwelt, Naturschutz und Reaktorsicherheit.

(2008). Big boost or renewable energies-share in electricity supply has gone up to 14 per cent. Online article available at:

www.erneuerbare-energien.de/inhalt/40791/5466/For Spains gures see Gasco, C.(2008). Wind and the changing power industry structure. Renewable Energy World, 11

(3), Available online at: www.renewableenergyworld.com/rea/magazine/story?id=527054 A diverse group o non-governmental organizations, academics, renewable energy advocates, First Nations and

community groups is currently conducting a campaign or the adoption o renewable energy legislation in Ontario or

details see www.greenenergyact.ca5 The bulk o the background inormation inorming this document is based on the accumulated knowledge o

Germany and Spain two leading renewable energy jurisdictions that are actively sharing their policy experience through

the International Feed-in Cooperation (IFC) a governmental organization that meets regularly to discuss best practice

in renewable energy policy design. In addition, the document relies on a wealth o international best practice renewable

energy policy inormation, which was codied during the 2004 UN-sponsored International Conerence on Renewable

Energies held in Bonn, Germany. Roadmap readers are encouraged to amiliarize themselves with the valuable inormation

contained in the IFC site which is available at: www.eed-in-cooperation.organd also the Bonn RE conerence site available

at: www.renewables2004.de


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Summary of Roadmap Recommendations

Context

Ontario has already implemented some o the most innovative renewable energypolicies in North America (e.g. Renewable Energy Standard Oer Program orRESOP). In addition, the provincial government has recently announced that itintends to implement an Ontario Green Energy Act (GEA) aimed at positioning

the province as one o the most attractive jurisdictions in the world to invest inrenewable energy development.6

For the Green Energy Act to achieve its goals, market orces need to be properlyharnessed by implementing a supportive policy environment that ensures thatrenewable energy industries can become a crucial new source o manuacturingjobs in Ontario.

Furthermore, once the review o the RESOP is completed, a key component othis crucial policy environment (premiums or entrepreneurs) will be restored.7The review o the Ontario Power Authoritys Integrated Power System Plan (IPSP)or the reconsideration o the provinces renewable energy and conservation goals

can also provide urther potential impetus or the expanded role o renewablesand conservation in meeting Ontarios energy needs.8

The 2008 Ontario Provincial Budget established the oundation or an additionalkey policy component through its ocus on human resources & capacitydevelopment, an investment which should be re-ocused to help ensure thatOntario has in place the human resources needed to satisy the needs o a rapidlygrowing Ontario renewable energy market.

Through these policies Ontario can build a strong domestic market orrenewable energy that will attract sustained investment into local manuacturingand project development and that will also ensure that our provinces energy

needs are satised using reliable locally available resources.

Roadmap Recommendations or 2009

Implement a strong Green Energy Act to ensure that renewable energy1.development is prioritized throughout the province and to send a clearinternational market signal to attract investors.

Use legislation to ensure that renewable energy and conservation resources2.are prioritized to become the primary sources o new supply in theProvince, and to ensure that the province adopts ambitious targets andtimelines or renewable energy development (i.e. 10,000 MW by 2015, and

25,000 MW by 2025).

6 Premier McGuinty announced on February 2, 2009 that his government will implement a Green Energy

Act aimed at making Ontario a leading jurisdiction in renewable energy development. For details see

www.premier.gov.on.ca/news/Product.asp?ProductID=28217 The provincial government decided on May 13, 2008 to review the RESOP and reeze the bulk o the program until the

review is complete. Transmission and distribution constraints were cited as the main reason or the program reeze.

8 For urther details see: George Smitherman, Ontario Minister o Energy and Inrastructure,Amendment to the Supply

Mix Directive, September 17, 2008. Available at: www.powerauthority.on.ca/Storage/83/7831_Ministry_Directive_PSP_

Sept_18_08.pd


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Ensure a thorough and rapid completion o the ongoing revision o the3.RESOP, so that this crucial program becomes as attractive to local andinternational investors as the German and Spanish renewable energyprograms.

Ensure that the IPSP revision o the potential or renewable energy and4.conservation in Ontario is inormed by: the latest advances in technology(e.g. storage, RE grid integration, smart grids); by the empirical marketresponse shown by Ontarios RESOP; and by the program results oGermany and Spain.

Roadmap Recommendations or Budget 2009

Provide new unding (e.g. loan guarantees) to acilitate access to zero5.interest loans or nancing renewable energy systems in residences andsmall businesses throughout Ontario.

Re-ocus existing budget commitments to develop new renewable energy6.training initiatives in colleges and universities and to und proessionalsecondments (essential to develop local capacity and meet growing RE

market needs).Provide new unding to create municipal unds (similar to the Toronto7.Atmospheric Fund) that allow municipalities and local distributioncompanies (LDCs) to provide revolving loans or renewable energy systemsin schools and other municipal buildings (in addition to #1 above).

Replenish Ontarios Community Power Fund so it can be expanded to8.more communities and First Nations.

Additional Roadmap Recommendations

Develop a new Ontario based eort to collaborate actively with leading9.

international renewable energy agencies (e.g. International Feed-inCooperation, International Renewable Energy Agency) so local capacitycan be developed in a sustained manner and to position Ontario as aleading international know-how jurisdiction.

Start a province-wide renewable energy promotion program that builds10.on the Every Kilowatt Counts program to promote Ontarios renewableenergy programs and to increase awareness about the multiple benets orenewable energy.

Create a highly visible province-wide network o education and11.demonstration centres and projects (xed-site and mobile) to ensure

that Ontarians can see and experience renewable energy and otherenvironmental technologies in action. Existing model examples othese initiatives include the Toronto and Region Conservations LivingCity Campus at Kortright Centre or Conservation and the EvergreensBrickworks Site.


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Report Overview

Our province currently aces an innovation challenge posed by the unavoidableand strategic need to phase-out the use o polluting uels while ensuringprosperity and job creation. This challenge has been compounded by PresidentObamas decision to ocus on renewable energy development as a key strategy ohis administration.

The research presented here provides a road map to overcome these challenges

by ensuring that Ontario becomes a North American expert in maximizing the useo renewable energy to its ull potential.

The road map has been derived through interviews with experts and analysiso the most recent literature to highlight some o the predominant obstaclespreventing Ontario rom becoming a leading renewable energy jurisdiction.Most importantly, it provides a number o key solutions that can inorm thedevelopment o practical strategies and stimulate interactive policy debate aimedat propelling the renewable energy agenda orward.

The rst phase o the road map consisted o a literature review that providedan analytical ramework to guide the development o the project. The literature

review includes a synthesis o key ndings compiled by the Toronto Regionand Conservation Authority (TRCA) and an analysis o scal, regulatory, andeducation policies that aim to support renewable energy development.

The key goals o this current phase o the project are to dene what types opolicy and support mechanisms are in place, what urther mechanisms areneeded, what adjustments need to be made to existing policies, and whatmeasures dierent stakeholders can undertake to acilitate RE implementationand to increase the market or renewable energy in the GTA.

This nal report is a compilation o ideas and insight rom some o the mostexperienced and dynamic proessionals in the renewable energy sector. We have

interviewed experts rom a variety o businesses, institutions, and organizationsthat are putting a great deal o eort into advancing the market or renewableenergy and shortening the path to a more prosperous Ontario and sustainableuture. Their responses have been used as the basis or the analysis andrecommendations outlined here. Privacy was guaranteed to all participants, andthereore all responses are not directly attributed to specic research participantsand are used in an anonymous manner to inorm the analytical content o thepaper. Their accumulated knowledge describes how to shorten the path toachieve a renewably powered and more prosperous Ontario.

Background

The drive to develop a power system based on renewable energy (RE) is motivatedby environmental and socio-economic issues, as well as strategic concerns.Global climate change and localized air pollution, particularly in the GreaterToronto Area (GTA), have galvanized the public to pressure both municipal andprovincial governments to achieve substantial reductions in greenhouse gases andphase out coal-red generation rom the electricity supply mix.


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The province is in danger o ailing to meet its greenhouse gas emission targets o2014 and 2020 i it does not capitalize on the development o the RE sector andinstead stagnates under a business as usual scenario (gure 1). Only through theexpansion o the renewable energy sector can Ontario meet both its greenhousegas emission targets and simultaneously achieve the sorely needed industry,investment, and job creation that comes with a strong RE sector.

Fear o a supply crunch coupled with the volatile costs o nuclear, oil, andnatural gas have also sparked unprecedented interest in harnessing the reeand inexhaustible power derived rom the sun, wind, water, and increasingly,biomass products. Moreover, growing numbers o Ontarians recognize that ourprovince is extremely well positioned to benet rom the creation o a vibrantRE manuacturing industry that could replace the losses suered by the autoindustry in recent years.

Yet, in spite o strong public support or RE and the provincial governmentscommitment to prioritize these sources in its energy mix, RE still accounts oronly a raction o Ontarios power supply. In act, Ontario missed its 2007 targetor installed renewable capacity (having installed as o 2009 only 781 MW o itsoriginal 2007 target o 1350 MW, excluding RESOP signed contracts) and is indanger o missing its target or 2010.9

Although the IPSP intends to double RE capacity, it is only a target that withoutambitious enabling policies will not send a strong market signal to attractsignicant RE investment, create new manuacturing industries, or position theprovince as an international leader. Furthermore, the original IPSP proposedcommitting Ontario to maintain its nuclear capacity and signicantly increasenatural gas reliance, and approach that severely shrinks market potential or

renewable energy development.

9 For details see: Canwea (2009). Canadian wind capacity tops 2,000 MW. WindLink, 112. Available at www.canwea.ca/

media/release/release_e.php?newsId=51 and Government o Ontario, The Ontario government has set a goal ogenerating ve per cent (1,350 MW) o the provinces total generation capacity rom new renewable sources by 2007 in

Ontarios Electricity Future, Accessed at: http://occ-oes.com/wp-content/uploads/2008/09/ontarios-electricity-uture.pd

Also see: Ontario Power Authority. January 2008, Progress Report on Electricity Supply[online], Available rom:

www.powerauthority.on.ca/Storage/65/6055_Progress_Report_on_Electricity_Supply_-_January_2008.pd [Accessed:1.2.2009]

0

50

100

150

200

250

300Business as Usual

Target

1990 2004 2014 2020 2050

6% below

1990 15% below

1990

80% below

1990

MegatonnesCO2eFigure 1:

Ontarios Greenhouse

Gas Emissions Targets


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Policies that have put Ontario on the international renewable energy map, suchas the RESOP, have only begun deploying enough resources to undamentallyalter the existing power system paradigm.

This roadmap demonstrates that the transition to a system based on renewablesources requires a undamental shit in mindset with regards to how energyis generated, distributed and consumed. The barriers set out in this paperrepresent what many experts identiy as hindering or outright working against REdeployment. These barriers range rom physical obstacles such as centralized griddesign to social impediments such as a lack o social capital and limited know-how.

The second part o this report sets out easible solutions to these barriers thosethat are socially, economically, and technically possible. Above all, this reportaims to show readers that as long as there is a will to transorm the energyeconomy, there are many ways to work towards its realization and capitalize onthe multiple associated rewards.

PART 1:

Barriers to the Deployment of Renewable Energy in Ontario10

1. Financial Barriers

Ontario has introduced one o the most advanced policies or renewableelectricity in North America: the Renewable Energy Standard Oer Program(RESOP). However, this policy is currently under review and the outcome o thatevaluation is not yet certain. Furthermore, the Province has not yet introducedother crucial policy mechanisms that are used in leading RE jurisdictions, such aszero or low-interest loans.

1.1 High up-ront costs and lack o adequate nancing mechanismsThe up-ront costs o RE systems are a barrier to the widespread expansion othese technologies in Ontario. These up-ront costs represent more than just thecost o the system, but include additional incidental costs, such as renovations,permits, audits, and applications. Zero-interest loans, such as those provided bythe Powerhouse Program, already exist but are currently not available throughoutall o Ontario.11

Likewise, rebate systems that provide some relie to reduce the cost o purchasingand installing a RE system in Ontario, such as the Toronto Solar Hot WaterNeighbourhoods Initiative (see box 1) are not widespread or available or other

RE technologies.

10 It is important to recognize that the barriers outlined in this section are not ranked in order o importance, nor do they

exist independently o one another. Although they have been laid out categorically, to enhance the readers convenience, it

is critical to understand that these barriers are interdependent.

11 Powerhouse loans or rebates are available to homes in Brampton, Caledon, Mississauga, and Parts o York Region or

details see www.powerhouseprogram.ca


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Box 1: Toronto Solar Neighbourhoods Initiative (TSNI):

Homes in the GTA can reduce their

annual hot water NG bills by 40-

60% by installing a solar hot water

system. Top quality systems arealready manuactured in Ontario and

take 1-2 days to install.

This pilot program analyzes the easibility o expanding similar RE programs to the rest o Toronto. The pilot

is located in the South Riverdale neighbourhood.

With over 400,000 single-amily homes, Toronto is the 6th largest government in Canada (and is larger

than 3 provinces). Smog has been identifed as a serious health issue or Toronto, and this program seeks

to reduce the source o this problem i.e. the burning o ossil uels. At the residential level two key uses o

ossil uels are: driving automobiles and using hot water heaters ueled by natural gas (NG). Homeowners

can reduce their use o ossil uels through driving less, and by using solar systems or heating water and

or space heating.

In addition to the petroleum used or transportation, Toronto satisfes much o its energy needs (e.g.

space heating) by using NG (up to 60% o Torontos energy consumption is satisfed by NG). The use o

NG is also rising because o its growing popularity or electricity generation.

The TSNI aims to displace the use o NG, particularly during the summer smog days when solar systems

work the best. The program has been structured so that a home can receive $1000 o the cost o a solar

thermal system or they can receive a zero-interest loan. Traditionally, policy support has been in the orm

o subsidies, but here the idea is to oer two options to help determine what options homeowners will

preer.

The advantage o a loan program is that the City already has a system or paying and collecting unds:

direct taxation through the property tax base (i.e. local improvement charges). Work done on the home or

home property could be eligible or a loan and could be paid back through the tax bill. So i it is possibleto prove through this program that access to such loans captures interest at the community level, then

other municipalities could set up similar loan structures and programs.

1.2 Lack o ull cost comparison o supply options

The reason renewable energy appears to be expensive is due toexisting barriers, which create a sel-ulflling prophecy.12

The consumer prices o electricity and heating have remained articially low inOntario because many o the externalized health, social, and ecological costso ossil uel and nuclear generation continue to be absorbed by present and

uture taxpayers, as well as by the environment. The lack o environmentaland economic liecycle evaluations has resulted in the cost-eectiveness oconventional sources, such as nuclear power, being markedly overestimated, andas a consequence, renewables appear more expensive.13 This well-establishedproblem is evident in the original supply choices made or the IPSP14 andrepresents one o the key reasons why Minister Smitherman has instructed theOPA to review its estimates regarding renewable energy and conservation.15

The lack o liecycle analysis in the comparison o supply source costs hasobscured the advantages o renewable sources in terms o their low-to-

12 Quotes come rom the interviews, but due to privacy they are not attributed directly to the speaker.

13 Peters, R., Cobb, P. and Wineld, M. Renewable Is Doable: Analysis o Resource Potential and Scenario Assumptions (DraytonValley, AB: Pembina Institute, 2007); Gibson et al.An Analysis o the Ontario Power Authoritys Consideration o Environmental

Sustainability in Electricity System Planning(Toronto: Green Energy Coalition, 2008), Submission to OEB EB-2007-0707;

Harding, J. Overnight Costs o New Nuclear Reactors (Toronto: Green Energy Coalition, 2008), Submission to OEB EB-2007-

0707. These can be accessed at www.renewableisdoable.org.14 For details see: Government o Ontario, Ministry o Energy and Inrastructure. Press release, September 18,

2008. Energy Plan to Strengthen Green Ontario. Accessed rom: www.mei.gov.on.ca/english/news/?page=news-

releases&body=yes&news_id=915 George Smitherman, Minister o Energy and Inrastructure, Oce o the Deputy Premier. September 17, 2008. Re:

Amendments to Supply Mix Directive Issued June 13, 2006. www.powerauthority.on.ca/Storage/83/7831_Ministry_Directive_

PSP_Sept_18_08.pd


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negligible uel cycle costs, lower environmental risks, and greater societal benets,such as employment generation, public health, and energy security.16 Requiringliecycle costing to be adopted by energy planners would be one step in levelingthe playing eld.

Additionally, it must be understood that while the costs go up or uels overthe long term (the uel price or conventional generation is one key actor thatdetermines energy prices to consumers), renewables avoid this cost parameter,as sources such as wind power and solar power are ree. Others, such asbiomass, can be sourced locally thus creating new economic opportunities orOntarios armers and orestry operators. Unlike conventional sources, the costo renewables is largely related to upront costs (equipment, nancing, andinstallation costs). Fortunately, the capital costs or renewable and conservationtechnologies will decrease over the long term, just as uel costs or nuclear andossil uels will likely rise as demand increases and uel sources become scarcer.

1.3 Unstable policy environment

Consistent, long-term programs without interruptions areabsolutely necessary or renewable energy (initiatives) to succeed.

When the regulatory environment is not clear or coherent, the public andinvestors do not know how to proceed. All policy experts interviewed agree that astable regulatory environment is necessary to attract renewable energy investorsby ensuring a air return on their investment. This is precisely the goal o theFeed-in Tari (FIT) policy that inspired Ontarios RESOP.17 By creating a air priceor energy produced and ed into the grid, RE system owners are guaranteed aquantiable and consistent return on their investment. I the price is adequate,the system pays or itsel and eventually yields additional prot or the owner(s).

The current reeze on all RESOP projects over 10 kW has halted these projects intheir tracks. Uncertainty is reverberating throughout the RE sector with respect

to whether or not projects, already in the works, will be able to proceed once thereeze is lited. While the OPAs rationale or the reeze is to bring in anti-gamingmeasures, much criticism abounds with respect to their decision to stall theprogram almost entirely (whereas in Spain and Germany, program reviews arenot grounds or a program reeze).18

16 For more details about the superior employment benets o renewable energy see Kammen, D., Kapadia, K and Fripp,

M. (2004). Putting Renewables to Work: How Many Jobs Can the Clean Energy Industry Generate? Berkeley: RAEL available at

http://rael.berkeley.edu/publications?page=7For a comparison o dierent uel sources or electricity generation in Ontario see Godin, M. (2007). Analysis and Scenario

Modeling o the Ontario Power System. Toronto: WWF-Canada available at www.pembina.org/pub/149617 FIT systems are used as a key mechanism to expand the use o renewable energy in the leading jurisdictions o

Germany and Spain. Through the use o FIT systems Germany is now the most advanced nation in the world in terms o

renewable energy deployment and local manuacturing, and has achieved more than 240,000 jobs in the sector (Spain

has also become a world RE leader and currently has 188,000 people employed in its renewable energy sector). For more

details on how to design a FIT system see Ragwitz, M. et al. (2008). Evaluation o dierent eed-in tari design options

Best practice paper or the International Feed-In Cooperation (2nd edition, update by October 2008). No city: Fraunhoer

Institute. Available at: www.eed-in-cooperation.org18 The OPA rationale seems to be that anti-gaming measures are meant to address the large amount o RESOP projects

undertaken by commercial developers seeking an alternative to the more onerous Request For Proposals (RPF) process. Since

the inception o RESOP developers have adapted to the new market opportunities and have been dividing large projects into

10 MW projects (subsequently taken up much o the available queue space on the existing local distribution grid).


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The lack o a stable investment environment also discourages the establishmento a domestic manuacturing industry or renewable energy in Ontario.

A FIT initiative like Ontarios RESOP program, that uses a perormance-basedpremium paid or each kilowatt hour (kWh) produced and delivered into the grid,creates a very modest yet stable investment environment.19 Since system ownerscan be guaranteed a quantiable return on their RE investment, it becomessignicantly easier to gain access to nance and system owners have the neededsecurity o knowing that the system will pay or itsel. The government (and thepublic) in return receives clean electricity, and in addition, the government is notnancially liable i a system has design faws, ails to perorm as expected, or ispoorly maintained. When government support or a program like the RESOP iscompromised, investment security evaporates and market stability is threatened.Investors and project developers do not know how to proceed and many projectsand investment fows become stalled.

A clear illustration o this detrimental situation is the boom and bust cycles thatare periodically created by the ederal RE tax credit system used in the UnitedStates. In that type o market, instability periodically reverberates throughout theindustry and prevents a condent investment environment, which is imperative

to encourage the establishment o a strong and stable domestic manuacturingindustry or RE technologies. The German and Spanish FIT model o theseleading nations is representative o an innovative and stable RE market. The FITmodel has proved to be attractive to entrepreneurs and the investor community.20

Ontarios current reeze on the RESOP has compromised the certainty to invest.Entrepreneurs and investors have no choice but to wait or new rules or seek newopportunities outside o Ontario. The RESOP stoppage has already detrimentallyaected a variety o projects, including several smaller and medium enterpriseswhose viability is in jeopardy.

2. Social Barriers2.1 Techno-Institutional Lock-In or Path Dependency

Its not easy to get an industry that has been doing things the sameway or almost a hundred years to do something new.

Techno-institutional lock-in reers to a pervasive situation when establishedtechnologies create systemic market and policy barriers aecting the developmentand implementation o new technological alternatives. In Ontario, this realitymaniests itsel most clearly in the inability and/or unwillingness o planners anddecision-makers to think beyond the boundaries o a power system currently

19 A perormance-based premium, such as the Feed-in Tari (FIT), encourages ecient systems because the FIT pays or

the amount o power produced, rather than a lump sum or the system (that could be o any quality). A more ecient

system will provide a higher return on investment, ensuring higher quality projects are entering the market and beneting

the long-term health o the renewable energy market.

20 For more details regarding the employment and ecological benets o Germanys FIT system see Germanys progress

report available at the site o the International Feed-In Cooperation

www.eed-in-cooperation.org/content/view/29/51/


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dominated by a small number o large generating plants.21 Due to the act thatOntarios electricity sector has been ocused on a system based on centralizedpower or almost a century, many o the key players involved in inrastructureprojects (engineers, lawyers, nanciers, decision makers, etc.) share anentrenched set o belies and attitudes regarding how the Provinces energy needsought to be satised.

2.2 Lack o knowledge o and experience with renewable energy and

distributed generation

We need to equip people in the community to ask the rightquestions o those in power

Ontario has limited experience with distributed generation, and consequentlysystem planners are resistant to the adoption o a new yet superior system.Because the viability o distributed renewable generation has not yet been ullyingrained in the Province, many traditional utility planners continue to observethem as unreliable, intermittent, and expensive.

There is a signicant gap between increasing public enthusiasm or RE and

knowledge o, or experience with the concept o energy autonomy, smart griddesign, the latest technological developments, policy changes, or employmentopportunities in the renewable energy sector. This gap can be attributed to theact that there are only a ew strategic RE networks in the province, and therehave been relatively ew opportunities or community power projects aroundwhich social capital could be built.22 This reality is exacerbated by the small sizeo the provincial renewable energy industry, and the limited levels o support onbehal o all levels o government

There is also a skewed ocus on certain technologies. For example, manypeople are attracted to photovoltaics (PV), even though solar thermal systemsoer aster paybacks and signicant energy savings. Awareness about morepopular renewable energy technologies such as wind power is greater thanother less iconic technologies such as ground source heat pumps or biomassapplications (which at the present are largely ignored). In addition, there islimited understanding about the multiple benets that renewable energy canprovide (e.g. employment creation) and how RE systems can be used in novel andcomplimentary congurations (e.g. CHP, hybrid systems).

21 Path dependency is another term or Institutional-Technological Lock-in, but reers to the capacity o the technology

itsel to lock us into one energy path over another. For instance, nuclear power has extremely long lead times (long

planning and construction times), as well as long acility lie, and extremely high capital costs. All these actors combine to

make it politically and economically risky to abandon the technology, even in the ace o better, proven options.

22 Ontario has seen the ormation o two complimentary networks ocused in advancing the use o renewable energy in

the province. The Renewable is Doable coalition is a network o environmental organizations (www.renewableisdoable.com)and the Ontario Green Energy Act Alliance is a network o environmental organizations, First Nations groups, academics,

civil society organizations and renewable energy groups that are advocating or the adoption o a new renewable energy

law in Ontario similar to the German Renewable Energy Act. For additional inormation see the alliances site at:

www.greenenergyact.ca.


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Box 2: Denmark and distributed generation

It is widely known that Denmark generates 20% o its electricity using wind turbines; however, the

signifcant unctions o its combined heat and power (CHP) distributed generation plants are less widely

understood. CHP plants provide over 50% o Danish electricity and enable grid operators to handle

eectively a large penetration o intermittent renewable sources. CHP plants can be operated when their

electricity is needed and the heat generated can be stored and used in a variety o residential, industrial

and commercial applications. Matching CHP with wind power allows Denmark to have a reliable electricity

system. Furthermore, in many areas o Denmark wind power generates more electricity than is needed

locally and this technical experience is allowing grid operators to consider doubling the current nationalcontribution o wind power.

Distributed RE Generation in Denmark

(Wind and CHP installations including heat storage)

Denmarks grid operator provides real-

time inormation on how the entire country

satisfes its electricity needs in its internet site:www.energinet.dk/en

2.3 Opposition to Renewable Energy

Opposition to renewable energy is oten ueled by competing interests andlimited knowledge o renewable energy technologies and also by a variety owidespread misconceptions such as the weak reliability o solar and windtechnologies in Ontario, or anecdotic concerns about excessive noise and wildlieimpacts (such as potential bird kills). These misconceptions are enhanced andreinorced by a lack o policies aimed at ensuring that local communities benetdirectly rom the development o RE and the absence o guidelines that maximizethe common good, public interest and long-term perspectives as key guidingprinciples or decision-making in the energy sector.


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Box 3: Public acceptance facilitates technological innovation

This CHP plant, located in Northern Denmark, has used a ground heat pump or over 20 years to reduce the use o natural gas.

3 Institutional/Jurisdictional Barriers

3.1 Limited opportunities or new energy delivery systems such as

community power cooperatives

I communities cannot bring all the equity or share capital tothe table, how will the rest o the fnancing be attained without

compromising the core values o community power?

Community power reers to organizations rooted at the local level e.g.municipalities, local distribution companies (LDCs), arm associations, FirstNations, schools, churches, businesses, etc. that can initiate and beneteconomically rom renewable energy projects.

Community power projects currently ace a number o challenges, in particularrelated to lack o nancing opportunities and policies to enable communities toparticipate in energy production. While a limited amount o government undingor early stage nancing and capitalization now exists through the OntarioCommunity Power Fund, most community groups are still unable to obtainequity and share capital to develop RE projects.

Ontarios RESOP also limits eligible projects to 10 MW per transormer,creating a barrier or community projects that include more than one 10 MWinstallation.23 In many cases this size limitation has limited protability andcompromises project easibility.

Current grid access arrangements in Ontario are also a signicant barrier orallowing community-owned systems, as utilities are not obligated to connect

23 As an example consider the 20 MW project on Georgina Island, a joint venture between the Windall Ecology Centre

and the Chippewas o Georgina Island First Nation.


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them. In contrast, utilities in Germany and Spain are obliged to connect REproducers.

Additionally, most community power projects preer to incorporate ascooperatives in order to have the option o drawing-up an oering documentto raise share equity rom the local community through the Financial ServicesCommission o Ontario (FSCO). Through this system, they can avoid havingto conduct a very expensive prospectus and having to hire a license brokeragerm to sell shares on behal o the cooperative through the Ontario SecuritiesCommission (OSC).

Unortunately, the Cooperative Act stipulates that all cooperatives must conduct50% o their business with members, meaning that 50% o the power generatedrom a cooperative power project must be sold to its members. This conficts withthe RESOP in terms o its requirement that all power be sold back into the grid.There is an urgent need or amendments to the Cooperative Act, which should beupdated to recognize that doing business with the grid is equal to doing businesswith members.

3.2 Limited training opportunities

In Canada, we dont truly have the ability yet to train renewableenergy technicians, its just starting.

Training in the installation, operation, and maintenance o renewabletechnologies is still airly limited across Canada and receives marginal governmentsupport. This reality still persists even though the existence o a skilled labourorce is widely recognized as an essential component to propel RE into themainstream. The good news is that innovative programs at the college level aredeveloping across Ontario. Currently, these programs are struggling to nd thenecessary unding to provide comprehensive training on a wide variety o rontsincluding: project management, installation, operation, maintenance, nance,

manuacturing, and policy ormulation.

In countries such as Germany, training programs are developed by manuacturerso wind turbines and are then systematically integrated into the mainstreamcurriculum. Proper government nancial support is provided to recruit and trainGerman renewable energy technicians on a regular basis. In Ontario howevermost developers are not yet ready to sponsor programs as they themselves arejust getting their rst projects o the ground. Thereore, government support isessential to acilitate the development o trained personnel and local know-how.

3.3 Confictive mandates o utilities and local distribution companies

(LDCs)There is an undue burden on utilities to deliver parts o a [RESOP]

program that we are not in control o.

Although the OPA has ull control over the RESOP, the actual responsibility orprocessing and nancing extensive application requirements rests with utilities.Unortunately, they currently lack a mechanism to recoup most o the costsassociated with meeting them. Local utilities eel overregulated, and questionthe need, or what they perceive as a large degree o central oversight, which


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is causing them to redirect an increasing amount o their budget to regulatorycompliance. In addition, local utilities are being let out o key decisions andprograms that directly impact their service areas. These issues have made itunnecessarily confictive and dicult or them to address and ulll customerneeds and requests or the connection o renewable energy systems to the grid.

4. Political Barriers

There is increasing evidence concerning the growing incompatibility o the oldelectricity system with the new options oered by renewable energy. In countriessuch as Spain where wind and solar installations are becoming widespread,existing nuclear baseload is creating signicant system challenges particularly intimes o low electricity demand and high wind availability.

Knowledge about the operation and control o electricity systems andtechnological development in generation options and energy storage are evolvingrapidly. The evolution o energy options is directly related to political decisionsthat determine what type o inrastructure rameworks are to become dominantand how market development will proceed. For example, both Germany andSpain have decided democratically to phase-out their nuclear acilities and

promote the development o their renewable energy industries.

4.1 Failure o the Integrated Power System Plan (IPSP) to maximize

renewables

The government cant successully promote renewable energy andnuclear together.

The ast approaching deadline or phasing out coal-red plants has put pressureon the provincial government to come up with a viable plan to meet demand overthe next 20 years. To ulll the objectives set out in the Supply Mix Directiveissuedin 2006, the Ontario Power Authority (OPA) delivered the IPSP in late 2007.24

In regards to renewables, the rst iteration o the IPSP prescribed 10,402 MWand 15,700 MW o renewable capacity to be operational by 2010 and 2025respectively.25 Renewable resources in the plan reer to hydroelectric, wind,solar and biomass energy. All easible large and small hydro sources are said tobe included on the basis that hydroelectricity is the most cost eective o therenewable resources. The amount o biomass, wind on small sites, and solarresources is limited to what the OPA estimates will be procured through theRESOP. Large wind sites, excluding potential oshore wind installations, havebeen used to provide the remaining resources required to meet the supply mixgoal.

The OPAs original allocation o supply rom renewables and conservation anddemand-side management (CDM) alls ar short o the potential indicated in thesupply mix directive (which was taken as a maximum by the OPA). The originaliteration o the IPSP also alls ar short o what has been proven technicallyachievable in leading jurisdictions and also alls well below Ontarios renewable

24 Ontario Power Authority, Supply Mix Background Report, Supply Mix Advice and Recommendation, Section 1.2.

www.powerauthority.on.ca/Report_Static/157.htm

25 Ontario Power Authority, IPSP Now Online, www.powerauthority.on.ca/Page.asp?PageID=122&ContentID=6244


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energy potential. Instead, nuclear power is considered as the predominant sourceor baseload power in the IPSP, and is slated to contribute approximately 14,000MW o electricity over the next 20 years.

As an attempt to obtain a more accurate estimate o the potential o renewableenergy and conservation Ontarios Minister o Energy, Hon. George Smitherman,has instructed the OPA to review its estimates regarding these sources inOntario.26

This review needs to consider that a system built around a large nuclearcomponent will be locked into that specic design or several generations tocome. This reality is due to the large, centralized, and non-modular natureo the proposed new acilities, which are expected to have 70 plus years oacility planning and operational liecycles.27 Allowing high dependency on apredominantly nuclear system compromises the development o opportunitiesor other technological advances (such as distributed CHP generation) and gridinnovations (such as storage and orecasting) that enable renewable energydevelopment. Furthermore, continued over-reliance in the existing paradigmdenies uture generations rom having a wide range o potential energy uturesree rom non-renewable resources and their corresponding liabilities and risks.28

A recent report released by a coalition o environmental organizations provides adetailed analysis that illustrates how Ontario can phase-out its nuclear generatorsby developing renewable energy and conservation strategies.29

4.2 Building code limitations

The Ontario building code is outdated and poorly suited to accommodatecurrent and uture uptake o renewable energy and conservation technologies.While the existing Building Code mandates certain minimum levels o energyeciency in house construction it does not set standards or increasing thecontribution o solar or the incorporation o other renewable energy options (e.g.

biomass, geothermal) and conservation measures (like passive solar design).

Furthermore, building codes do not mandate on-site energy generation using PVnor the use o solar thermal applications (as it is done in Spain and Israel). This isin spite o the act that most commercial and residential building sites in Ontarioare capable o employing active solar technologies particularly i buildings were tobe designed and sited or solar use during the design stage.30

4.3 Outdated municipal zoning laws

At the moment, energy procurement is derived mostly rom large mega-projects,and the provincial system has been built up around these large-scale generating

26 Ministry o Energy and Inrastructure. Energy Plan to Strengthen Green Ontario. September 18, 2008. Accessed rom

www.mei.gov.on.ca/english/news/?page=news-releases&body=yes&news_id=9 on February 4, 2009.27 Gibson et al. (2008).An Analysis o the Ontario Power Authoritys Consideration o Environmental Sustainability in Electricity

System Planning. Toronto: Clean Air Alliance available at www.renewableisdoable.com28 Ibid

29 For more details see Rogers, P and Burda, C. (2008). Plugging Ontario into a Green Future: A Renewable is Doable Action

Plan. Toronto: Pembina Institute available at www.renewableisdoable.com30 For more details see Etcheverry, J., Gipe, P., Kemp, W., Samson, R., Vis, M., Eggertson, B., McMonagle, R.,

Marchildon, S., and Marshall, D. (2004) Smart Generation: Powering Ontario with Renewable Energy. Vancouver: David Suzuki

Foundation. Accessed rom www.davidsuzuki.org/les/Climate/Ontario/Smart_Generation_ull_report.pd


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plants. The zoning laws refect this bias. As a result, even small renewableenergy projects are categorized as conventional generation acilities, and mustollow the same procurement path and rules. This classication orces manyurban properties (and arms) to be re-zoned as commercial, which increasestaxes. In recognition o this problem, the City o Torontos renewable energybylaw amended this zoning requirement.31 However, this zoning issue remains abarrier or many jurisdictions outside o Toronto, who have yet to develop andimplement solutions or this obstacle.

Another zoning barrier is height regulation; whereas commercial buildings areoten allowed to go over prescribed heights, residential homes are restricted romincreasing the height o the building. For homes that have a fat roo, it is illegalto place high racks on the roo or solar panels. Although the city o Toronto ischallenging this zoning restriction (and a ruling on this issue is expected soon),this issue exemplies the unnecessary municipal barriers aced by residents thattry to install renewable energy systems.

Ontario municipalities are also aced with the lack o right to sunlight orsolar access legislation. Canada is one o the only developed nations that doesnot have solar access legislation.32 Currently, solar installations on a house or

a building are not protected by legislation that would prevent someone rombuilding a structure that obstructs the installations access to sunlight, therebynulliying the investment). To avoid this serious problem zoning rights are neededto ensure solar access; this modication will ensure better construction protocolsand will help minimize disputes.

4.4 Property tax penalties

Many renewable energy systems can change the taxation category o a property(e.g. rom agricultural to commercial) or increase property valuation, andconsequently, property taxes. These conditions can be a deterrent to potential

system owners. To prevent these problems, RE systems can be exempted romtaxation assessment changes or could be classied as appliances, which are notcalculated in property taxes.

4.5 Complex and expensive permitting requirements

The process or applying to connect a renewable system needs to bestreamlined and made easier.

The permitting process or RE systems can be lengthy and onerous due to alack o experience with these systems on behal o municipal ocials and LDCs.Building permits are required or small-scale renewable energy projects. These

permits increase the cost o a RE system and add another level o diculty in thealready complex set o steps that people must take to install such a system intheir homes or businesses.

31 City o Toronto. Renewable Energy Generation and Distribution: An explanation o Zoning Requirements or

Renewable Energy Devices in the City o Toronto. Accessed rom: www.toronto.ca/building/pd/renewable_energy_fyer.pdand City o Toronto. January 31, 2008. Proposed Zoning By-law Amendment to Permit Renewable Energy Devices and

Cogeneration Devices and allow or the Distribution o that Energy. Accessed rom: www.toronto.ca/legdocs/mmis/2008/

pg/bgrd/backgroundle-10467.pd32 For an overview o the origins o solar rights legislation see Bomber, M. (2004). A overview o the current state o

daylight legislation.Journal o the Human-Environment System, 7, 57-63.


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As mentioned previously, the vast majority o the time-consuming andcomplicated application process or RE systems involves LDCs. Applications arenot tailored to the size o projects; a homeowner installing a small 1-2 kW systemis required to ll out the same orm as a large rm developing a 10 MW project.Even small-scale proponents must open a separate account with their LDC inorder to connect their renewable system at a cost o $10 per month.

While at rst glance this amount may not appear to be excessive, it eectivelytakes away $120 per year o prot rom a small system, which could beused to pay it o more quickly instead. This arrangement has the eect odiscouraging homeowners and small cooperatives with tight budgets that maywant to implement RE systems but instead currently become rustrated and/oroverwhelmed with the complexity and numerous expenses o connecting to thegrid.

It is important to note that without some o these permits, a municipality acesliabilities in case o system ailure or injury. Municipal permitting departmentsshould be better inormed about the various types o renewable energy systemsand encouraged to waive the permitting ees or small or socially desirablesystems. Clearly, at the very least the current permitting and approval processes

or installing and using renewable energy systems should be streamlined.33

4.6 Canadian Standards Association requirements

The current Canadian Standards Association (CSA) ratings on renewable energyequipment present a barrier or RE system purchasers that are required to buyCSA rated systems. Not all equipment is yet CSA rated and currently it takes 2 to3 years to get CSA approval. Access to equipment at a standard that customerscan trust should be more readily available. Additionally, this inormation needs tobe more accessible to expedite project development and to acilitate comparisonbetween similar quality products, and seasonal or all-season products.

4.7 Geographical limits to renewable energy development: the orange

and yellow zones

The orange zones are large geographic areas that have been designated by theOPA to be o-limits or RE development and grid interconnection. Currentlythe orange zones coincide with many prime wind sites on Lake Huron and inNorthern Ontario. The grid in this Southwestern region has been reserved or theBruce nuclear plant, eectively reezing out the development o the prime windsites located on Lake Huron and the region in general. The yellow zone, whichincludes parts o the GTA, is where RE connection is somewhat limited. Thereare currently transmission limits or the yellow zone as o May 13th 2008, when

the RESOP program was largely rozen or transmission reasons. On this date itwas decided that yellow zones are to be treated as orange zones.

The OPAs zoning excludes many prime RE energy areas and projects rom theenergy market, including small projects promoted by the RESOP. It makes littlesense to exclude these as they as they can be part o the distribution system

33 For more details regarding the process o installing renewable energy systems in Ontario see OSEA (2006). The

Community Power Guidebook. Toronto: Ontario Sustainable Energy Association. Available at the publications section o

www.ontario-sea.org


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and do not impact the grid. Furthermore, these small projects serve local loadsand help to decrease local line losses and should be allowed to proceed (asthe orange/yellow zones are justied by macro-scale grid issues, and micro-installations can produce as much power as that lost in transmission).

Since small projects can actually help stabilize high voltage grids, improve theeciency and reduce the losses on the system, they also provide a local injectiono power where needed and should thereore not be segregated. Distributedgeneration and grid upgrades do not pose insurmountable technical problemsand need to be viewed and planned or as necessary system improvements.

4.8 Utility Requirements

Connection Impact Assessments: project developers must go to the LDCs with astudy that shows the impact a project will have. The LDC indicates how much itwill cost to connect it, and subsequently the LDC and the project developer makean agreement or payment. Some LDCs are requiring project proponents to havededicated lines or renewables under the RESOP, creating a capital expenditurethat negates any nancial return.34

4.9 Environmental Assessment RequirementsAn Environmental Assessment (EA) requires that potential projects identiy anypossible negative impacts on the environment stemming rom the proposedproject, and potential actions to be taken to mitigate these negative impacts.The EA is required beore a project is approved. What is important to note aboutthis process is that it does not take into account the largely benign impactsthat RE projects oten have on the environment. This is particularly relevant orthe enactment o the Green Energy Act, which would identiy environmentallyand socially sensitive areas where renewables should not be developed, and tostreamline the approval process in all other regions.35

5 Infrastructural Barriers

5.1 Outdated grid orecasting capabilities

Currently, Ontarios grid operators are limited by the lack o technologies thatenable new strategies or network operation such as: accurate RE orecastingand on-line dynamic security assessments that can be provided by wide-areamonitoring and protection systems.3634 For an overview o the interconnection arrangements o other leading renewable energy jurisdictions see Klein, A.,

Plunger, B., Held, A. Ragwort, M., Reach, G. and T. Faber. (2008). Evaluation o dierent eed-in tari design options Best

practice paper or the International Feed-In Cooperation (2nd edition, update by October 2008)

Brussels: IFC. Available at www.eed-in-cooperation.org/content/view/58/72/

35 There are many exemptions or renewable projects, including exemptions or wind under 2 MW, all solar photovoltaic,biomass under 5 MW, landll gas/biomass under 25 MW, waste biomass under 10 MW, cogeneration under 25

MW, generation onsite under 25 MW, and all energy technologies not designated in the Regulation and all emergency

generators. For more details see Ministry o the Environment Environmental Assessment and Approval Branch. (2001).

Guide to Environmental Assessment Requirements or Electricity Projects. Available at: www.ene.gov.on.ca/envision/gp/4021e.pd36 For more details see Ensslin, C., Burges, K. Boemer, J. (2008). Market Introduction Perspectives o Innovative Technologies

Supporting Integration o RES-E. Berlin: German Federal Ministry or the Environment, Nature Conservation and Nuclear Saety. Available

at: www.erneuerbare-energien.de/les/pds/allgemein/application/pd/ee_market_introduction.pd

Their report indicates that better standard monitoring equipment and more open communications are required or

tomorrows grid. Their research has implications or Ontario, and Ontario should consider the implementation o high-

temperature superconducting (HTS) devices, which can improve network operation and prevent losses, through improving


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The development o demand-side management acilitates the matching oinstantaneous generation with demand, which also enables integration orenewable energy systems (RES). I new RE systems are connected to thedistribution grid, more responsibility will be required at the sub-systems level,thereore, measures such as intentional islanding or purposeul ragmentationo the grid during times o system stress can be implemented, greatly benetinggrid managers.

Box 4: Smart grids for just-in-time forecasting and matching renewable energy resources

Spain has implemented some o the most sophisticated renewable energy control centers in the world, which acilitate orecasting and the

matching o hydroelectric and wind resources to ensure a reliable and clean supply o electricity (middle photo courtesy o Red Elctrica de

Espaa).

5.2 Ontario has not yet transitioned to a Smart Grid system.

Energy development needs to be treated as an essential and strategic publicservice and not solely as a commodity. And at the same time, energy companiesmust be able to make money rom reducing demand and not just rom sellingenergy.

Traditional utility roles can inhibit the shit to renewable sources. Utilities have anarrow mandate that must be expanded to include the ownership o distributedresources like renewable, conservation and storage technologies. Currently itis also dicult or utilities to have combined heat and power (CHP) projects

because these plants do not t the traditional utility role, and current rules andincentive systems do not allow them to ully benet rom RE, conservation, CHPand storage opportunities.37

The current ocus on the centralized generation and transmission o electricityresults in barriers or smaller, distributed generation sources. Under the presentarrangement, electricity consumers are paying or the Bruce to Milton line thatis reserved or nuclear capacity while a armer with a biomass-powered system(or a wind turbine) has to pay to connect to the grid. This is a signicantbarrier, and is indicative o the preerential treatment that nuclear generationenjoys and the public subsidies involved in delivering nuclear power to the GTA.

Currently, Hydro One Networks has a maximum capacity on its transormerstations o 60%. This 60% cap stems rom the current ocus on uni-directionalfow in the distribution networks. Reviewing this cap would allow the addition

system stability when RES (and distributed generated sources) are added (HTS can transition rapidly between very low to

high resistance to ensure this stability advantages).

37 Litster, Peter. (2008). Barriers to Signicant Uptake o Combined Heat and Power Production in Ontario: A Major

Paper submitted or the degree o Master in Environmental Studies at York University, Toronto, Ontario, Canada. For a

summary o this research see:

www.cospp.com/display_article/338177/122/ARCHI/none/none/1/CHP-in-Ontario-laying-sound-oundations/


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o more renewable sources onto the grid and help prevent the need or expensiveupgrades.38

The smart meter program is a step in the right direction as inormationtechnologies and enhanced communications are key to the success o adecentralized energy network. Similarly, more intelligent controls in the gridallow power to be rerouted so demand or intermittency issues can be controlledbeore they can become a problem or cause outages. Currently, transmissioncommunication centres are virtually blind to emerging outages in the distributionnetwork, until the ailure is called in. Adding intelligent controls to thedistribution network would protect vulnerable industries and energy consumersrom system disruptionan increasingly important task in modern society (wherewe are ever more digitalized and interconnected). Substantial savings can berealized by avoiding outages, and intelligent controls and storage systems areideal or managing this issue.

Current pricing practices need to be amended so prices are determined at themeter and not at the generating unit (because not all energy sources are equal,and the distance rom source, i.e. use o wires, must be incorporated into theprice o the energy). Such pricing would reward many renewable sources that

tend to be sourced close to load and can be combined to create a reliableelectricity system (see Box 6).

Box 5: Smart Grid Integration

Advances in telecommunications, materials science, renewable energy systems, conservation

strategies and computer science are enabling the swit development o new smart grids that

can satisy electricity needs in a reliable and clean manner.

Spain has become a leader in smart grid integration and has recently developed advanced

control systems that acilitate the efcient development and maximization o wind and solar

installations (image by Alex Doukas and photo courtesy o Red Elctrica de Espaa)

38 For more inormation see: European Commission. (2005). Towards Smart Power Networks: Lessons learned rom

European research FP5 projects. Accessed rom: http://ec.europa.eu/research/energy/pd/towards_smartpower_en.pd

FPO


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5.3 Lack o innovative storage solutions and hydro integration

The addition o storage technologies at the generating source, along the grid orat the load source are required or: allowing more renewable sources to enterthe grid, smoothing loads, stabilizing the grid, increasing energy autonomy,protecting against orecasting errors, shiting peak demand, and to minimizeexpensive grid upgrades. Likewise, better orecasting needs to be combined withrapid-cycle energy storage to smooth intermittency, increase power quality, andto better integrate renewable resources into the grid.

As it stands there are no practical incentives or nancial mechanisms in place inOntario (or at the ederal level) that would enable storage options to be rapidlyexpanded to support large deployments o wind and solar power.

Many companies (e.g. high tech industries) and institutions (e.g. hospitals)require not only the prevention o power outages but also the assurance thatpower quality can be maintained (as changes in voltage can be just as damagingnancially as outages). Storage technologies cannot only help to support REsystems within those settings but can also smooth output to ensure powerquality.

Box 6: Energy Storage in OntarioHalton Hills Hydro is currently testing a storage acility to evaluate its potential or residential, commercial and rural applications. This and other

eorts are hampered due to the lack o widespread incentives or innovation programs in Ontario.

5.4 Lack o Local Distribution Company (LDC) participation and limited

innovative ownership models

In todays energy system, LDCs are considered wiring companies, and havenarrow mandates that do not allow them to own generating sources. This limitedview bans LDCs rom owning DG and storage systems.

As creatures o the municipalities, LDCs are urther impacted by the limitedexperience municipalities have with RE systems or energy issues even though they

are now required by the Energy Conservation Leadership Act to develop energyplans.39

Municipalities and LDCs have a lot o control over distribution lines and canthereore help develop new arrangements or accommodating bi-directionalpower fows, storage acilities, and new DG sources o generation (e.g. CHP andRE). However, the narrow mandate o the LDCs and the lack o experience o

39 For details see Energy Conservation Leadership Act, 2006. Available at:

www.e-laws.gov.on.ca/html/statutes/english/elaws_statutes_06e03_e.htm.


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municipalities complicate their participation in the development o new initiativesand incentives to oster innovative local models o RE generation, which areessential to develop a growing RE market in Ontario.

Box 6: Innovative Ontario Municipalities

The city o Markham has developed an afliate to develop its own CHP plants as its LDC cannot develop any generation plants o its own.

CHP plants help displace NG currently widely used or heating single buildings, and can also enable a municipality to expand and balance RE

capacity in the system. Markham already has the frst component that characterizes Danish electricity systems (i.e. CHP plants) and is thereore

well positioned to develop renewable energy systems (see Box 3)

Part II: Solutions to renewable energy barriers and the map

to a sustainable system based on renewable generation:To overcome the barriers identied in the previous section and to ensure thatrenewable energy sources are developed to their ull potential in Ontario,will require concerted action and innovation by government, private sector,educational institutions, local organizations and individuals. The itemslisted below are aimed at providing clear complimentary paths or the rapiddevelopment o RE in Ontario.

1 Ontario should set higher renewable energy targets

Currently all European nations are considering aggressive RE targets or

primary energy by 2020. The current review o the IPSPs renewable energy andconservation potential ordered by Minister Smitherman should be used to setaggressive RE targets or Ontario.40 RESOP premiums need to be adapted toensure that targets are properly met and that RE development proceeds in asustained manner to ensure market stability and investment certainty.

40 George Smitherman, Minister o Energy and Inrastructure, Oce o the Deputy Premier. September 17, 2008.

Re: Amendments to Supply Mix Directive Issued June 13, 2006.

www.powerauthority.on.ca/Storage/83/7831_Ministry_Directive_PSP_Sept_18_08.pd


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2 A clear and strong Ontario Green Energy Act should be implemented

The experience o leading RE jurisdictions such as Germany and Spain clearlyindicates that having a strong ramework to prioritize the development orenewable energy as a long-term area o strategic concern creates a avourableinvestment environment, which is essential to attract nance and maintainsustained RE development locally. Germany and Spain have become leadingglobal manuacturers o RE systems and have developed world class RE expertise

through the enactment o innovative RE legislation that acilitates the use o theirdomestic energy markets as a oundation to develop local RE projects.

Legislation in Germany and Spain has resulted in a stable investment environmentthat, coupled with proactive policy initiatives aimed at developing local capacityand nancing options, helps to consistently grow local RE options and know-how. Currently in Ontario an eort to develop and enact strong RE legislationis gaining momentum and could result in the adoption o a Green Energy Actcomparable to the RE laws that have propelled Germany and Spain to theircurrent leadership positions.41 Some o the recommendations provided belowcould orm part o the proposed legislation as they have been shown to beeective components and the key guiding principles behind eective RE acts.42

3 Ontarios Renewable Energy Standard Oer Program (RESOP)

needs to evolve into a stable eed-in tari system

The current review o Ontarios RESOP represents a unique opportunity toimplement a stable eed-in tari system that at the very least provides airprices dierentiated by technology and other actors deemed socially and/ortechnologically desirable.

Close examination o the experience o European countries, such as Germany,Denmark, and Spain, which have signicantly accelerated their deployment orenewables, clearly indicates that stable and adequately priced eed in taris(FITs) have played a pivotal role in their success. While Ontario has alreadytaken a critical rst step by implementing the RESOP, the program has yet tooer the appropriate premiums upon which signicant RE capacity can bebuilt. In addition, to ensure that this crucial program becomes a strong marketbeacon that consistently attracts global nance to our province will require thatadditional innovations are incorporated.

In Germany and Spain FITs are regularly studied and reviewed to ensure sustainedmarket development. The experience o these leading jurisdictions indicates thatOntarios RESOP can be greatly enhanced by:

The incorporation o tiered pricing dierentiated by technology and projecta.size: this modication ensures clear market signals regarding preerredtechnology, scale, location, and type o generation. Dierent premiums canbe used to encourage new storage options, orecasting, greater distributedgeneration and greater participation o community power proponents thatcannot move around the province to take advantage o the highest/bestresource areas or areas where grid capacity is deemed easible.

41 For additional details see www.greenenergyact.ca42 Such as the German Renewable Energy Sources Act, 2004 (EEG)


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Expanding eligible technologies to include biogas technologies solarb.thermal, geothermal, and energy storage technologies.

Ensuring obligatory connection to the grid. In areas where insucient gridc.capacity exists to acilitate a project, grid capacity must be expanded andmodied, including projects in remote areas.

Enhancing and acilitating priority connection to the grid. Clear measuresd.and proper compensation systems are required to ensure that LDCs and

Hydro One constantly expand necessary connections to distribution andtransmission lines.

Rapid Measures to relieve queues are required so proponents that create ae.bottleneck in the distribution or grid lines are not allowed to unreasonablystop other projects ready or installation.

Hook-up ees and interconnection ees must be waived. At present, these.ees are set by the LDCs, yet a Green Energy Act could mandate that allutilities can recuperate costs to ast track renewable development in areasnot deemed to be environmentally or socially unacceptable.

It is important to emphasize that while properly designed premiums will greatly

increase market interest and provide support or the installation o renewabletechnologies, this program alone is not sucient to achieve a total markettransormation and requires strong complimentary measures such as innovativeorms o nancial support such as zero or low- interest loans, rebates, and grants.

The current reeze on the RESOP program must be lited to eliminate the currentmarket conusion that dissuades many developers rom exploring Ontario as alocation to invest in. Programs like the RESOP must remain stable in the uture sothat developers are encouraged to invest in Ontario and to achieve job creation.Furthermore, the concept o an orange zone or a yellow zone must be liteddue to the act that the transmission stations in these zones can handle small-

scale systems (particularly i these systems can supply local loads). Until macro-level grid issues are resolved, these regions must be opened to local distributedgeneration projects in recognition that these projects can alleviate strain on thegrid.

4. Innovative nancing opportunities should be implemented at the

appropriate level o government

Much o the rapid growth o renewable energy in Germany has beenueled by a large low-interest loan und.

The creation o a zero or low-interest loan und is not a nancial substitute

or taris that oer the opportunity to earn air prot on renewable energyinvestments. Rather, it serves a complimentary role or a well-designed andunctional RESOP system.

In Germany, a und created or that purpose disburses attractive loans throughprivate banks and holds loans on a revolving basis. This means that as loansare paid o with interest, the und is regenerated. Loan terms can be up to 20years with an interest rate typically 1% below the prime rate. Payments can also


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be waived during the rst three years o the loan. This type o loan program isvital in order to increase market liquidity and to encourage the deployment otechnologies that can remain out o reach or community groups such as armersand First Nations and also or homeowners.

Municipalities have a number o nancing options available to them. TheToronto Atmospheric Fund (TAF) is a model unding source at the municipallevel. Making such a und structure available to other municipalities would be anexcellent means o supporting RE development. The use o local improvementcharges (LICs) to nance RE projects is another vehicle or municipalities to makeo balance sheet loans or RE.43 LICs are currently used by many municipalitiesto nance inrastructure improvements (normally sidewalks and roads) thatbenet a specic neighbourhood. In the case o renewable energy projectsLICs could be used to nance renewable energy projects, and like the typicalprojects LICs nance, would be paid back through the property tax bill o theneighbourhood or individual that owned the property and installed a renewableenergy project.

Green mortgages could also be used to renance a home to incorporate thecosts o adding a renewable energy system. With lower utility bills, banks would

see the benet in providing the loan, because the incremental up-ront cost osuch systems can be repaid through utility bill savings. This concept also appliesto new homes as green mortgages are essential or allowing people to nancea more cost-ecient home powered by renewable systems (that once installedprovide homeowners with long-term utility bill savings). Additionally, GreenBonds at either the ederal, provincial, or municipal level would be an eectivemechanism to generate additional nancing or RE projects.

Also a yearly top-up o the Ontario Community Power Fund represents animportant strategy to enable growing access to nance, in particular orcommunity power project proponents. Such support is imperative or thesegroups to participate in energy production and to create local jobs.

5 Renewable energy sources should be prioritized by the Province as astrategic resource or the Provinces welare

This includes obligatory connection to the Grid, including remote areas, andpriority access to the grid, including access to new projects delivering baseloadpower. Municipalities must set reasonable standards and provide straightorwardand inexpensive approvals or installations that meet those standards.In addition, new permitting needs to be supported by innovative zoningarrangements that instead o precluding RE development, act as additionalincentives or local initiatives to become widespread.

Provincial recognition o RE development as a strategic concern needs to becoupled to recognition o the right to connect to the grid and by ensuring priorityRE access to transmission and distribution.

The high costs o connecting or developing the grid should not be born byrenewable energy project developers because they are considered as providers43 For additional inormation see: Pembina Institute, May 2004. Using Local Improvement Charges to Finance Building

Energy Eciency Improvements: A Concept Report. Accessed rom:

http://pubs.pembina.org/reports/LICProgramFinal%20ReportMay27042.pd .


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o a strategic service to all Ontarians. This recognition creates a practical andleveled-playing eld with centralized generators who have beneted rom decadeso government and ratepayer support.

Grid development must be strategically planned to ensure that RE resources canbe developed to their ull potential throughout Ontario and to ast-track newconnections with neighbouring provinces.

6 The Integrated Power System Plan (IPSP) should be re-designed to

provide rst priority or renewable energyThe IPSP needs to be modied to refect the Supply Mix Directives priority tomaximize the provinces easible and cost-eective renewable energy potential. Arecent joint study by WWF-Canada and the Pembina Institute titled Renewableis Doable: A Smarter Energy Plan or Ontario (RID) provides two alternativesscenarios that exclude both coal-red and nuclear generation. Given that theOPA has not provided alternative scenarios to their IPSP, save or identiyingminor options with regards to individual energy resources, RID serves as analternative to long-held assumptions concerning Ontarios supply mix.

The undamental dierence between RID and the IPSP is that the ormer does

not assume centralized nuclear power to be an inherent component o Ontariospower system. Rather than ollow in the ootsteps o past provincial powersystem planning, RID presents two scenarios in which targeted investments ina diverse assortment o energy eciency and renewable energy technologiesachieve the Ontario governments goals o phasing out coal-red generation andachieving reductions in greenhouse gas emissions.44 The alternative scenariospresented in RID aim to enhance the resilience, cost eectiveness and overallsustainability o the system through distributed generation, modularity, anddemand reduction strategies.

Linear planning such as that used by the IPSP needs to be replaced by non-linearmodeling that yields a variety o potential congurations or Ontarios electricity

Documents

Ontario Energy Roadmap