Could BC Adopt Ontario’s Green Energy Act?

The praise is well-deserved.

Ontario is accelerating its climate and green energy action by adopting Europe’s feed-in tariffs, which create guaranteed 20-year contracts for anyone who contributes green energy to the grid from wind, solar, biomass, biogas, run-of-river hydro, or landfill gas.

This method of financing green power was pioneered in Denmark, and embraced by Germany in a big way with its Renewable Energy Sources Act. The problem it addresses is that while coal-fired power is cheap because no-one pays for the environmental costs (lung cancer, air pollution, global warming), solar energy is expensive because it’s still an evolving technology.

The feed-in tariff solution, that pays a guaranteed price to the power provider for 20 years, has been very successful, enabling Germany to generate 93,000 GWh of green electricity in 2008, meeting 7.3% of Germany’s electricity needs, while enabling Germany not to produce 233,000 GWh of dirty, coal-fired electricity (most thermal plants convert only about one-third of the thermal energy of fossil fuels into electricity). The delight of the system is that the price is set specifically to meet the renewable energy investors’ needs, in order to guarantee a steady flow of profits. This is socialist thinking applied to capitalism, which makes renewable energy capitalists happy, while generating the green energy we so urgently need.

Germany’s goal is to produce 50% of its electricity from renewables by 2030, and 100% by 2050. Tighter energy efficiency measures are set to reduce Germany’s total electricity demand by 10% by 2020, to 550,000 GWh per year. (BC’s demand is 12,000 GWh a year).

Many people in BC have praised Ontario for adopting this approach, but in a more puzzling move, some have used Ontario’s initiative to attack BC for adopting a different approach, which - they say - subsidizes the private sector to exploit BC’s green energy resources for their own selfish ends.

But let’s be clear on two things:

1. Ontario’s Green Energy Act is designed to attract the same private sector that BC’s Energy Plan does. The Korean IPP Samsung recently stepped forward with a $7 billion investment in wind and solar energy in Ontario.
    
2. It’s the Ontario approach that pays the big subsidies, not the BC approach. BC ratepayers pay the market price for new green electricity, as a result of BC Hydro’s competitive bid process. In BC Hydro’s last Clean Power Call, the average contract came in at 8.5 cents kWh. In Ontario, these are the prices that the Ontario Power Authority will be paying for the next 20 years:

10-19.5 cents kWh for biogas power

10.3 – 11 cents kWh for landfill gas power
12-13 cents kWh for run-of-river hydro
13 – 13.8 cents kWh for biomass power
13.5 – 19 cents for wind power


44 – 80 cents kWh for solar PV
 


These prices increase by 0.4 to 1.5 cents kWh for Aboriginal and community-owned power.

If I lived in Ontario, I would welcome the new approach, and happily pay a small monthly supplement on my electricity bill to help bring in the new green power.

Here in BC, however, we have a very different situation. Unlike Ontario, which gets 30% of its power from burning coal, BC is almost self-sufficient in zero-carbon electricity. Our demand for electricity will grow as we move to electric vehicles and heat pumps, but we are still looking at a future surplus of green electricity that can be exported to jurisdictions that have made a commitment to phase out their coal-fired electricity.

If BC adopted the Ontario approach, and there was a surge of green energy being offered to the grid, most of the power for which we had paid 13 to 80 cents kWh would be sold for export to the US or Alberta, receiving only 5-9 cents at the border, depending on how green and how certified the power was. Would BC ratepayers welcome this? Would the BC Utilities Commission? I doubt it.

I would like nothing more than to be able to embrace the Ontario model, since it would do wonders for the development of solar, tidal, wave, biogas, biomass, geothermal, run-of-river hydro, and wind energy in BC. BC’s market price system locks the first six of these energy types out of the BC market, creating much frustration among solar and tidal energy (etc) companies, and stymying the government’s desire to make BC a Clean Energy Powerhouse.

When we (the BCSEA) made our submission to BC’s Green Energy Advisory Task Force, we recommended a Voluntary Feed-In Tariff, by which people might voluntarily choose to pay extra on their hydro bills, with the funds generated being used to support Feed-In Tariff contracts for the “other” renewable energies - solar, tidal, wave, geothermal, and biogas. This would be similar to green power pricing programs in the US and Alberta, and to what Bullfrog Power offers on a smaller scale.

Is it possible? We certainly hope so. Our fear, otherwise, is that BC’s abundance of relatively cheap wind and run-of-river power, plus the potential (good or bad) for more large-scale hydro, could shut the other renewable energy players out of the BC market for many years to come. Other possible solutions are extremely welcome.

- Guy Dauncey

PS - Myth-busting: When BC Hydro buys run-of-river power, it only pays around 5 cents kWh during the spring freshet (April-June) precisely because the dams are full, and the energy may be mostly for export. BC Hydro is not paying “exorbitantly high prices for energy produced when it isn’t needed”, which it must resell at a large loss.