Wind energy a good deal for Ontario

Contrary to a recent Fraser Institute report titled “Environmental and Economic Consequences of Ontario’s Green Energy Act”, wind energy has helped clean Ontario’s electricity system and deliver hundreds of millions of dollars to rural communities – with little additional cost passed on to ratepayers.

An analysis of consumer rate impacts by Power Advisory, Customer Bill Impacts of Generation Sources in Ontario, looked at the various components of a typical consumer electricity bill – including supply and delivery – and found that wind energy accounted for only about 5% of the increase to the total customer bill between 2009 and 2012.

The Fraser Institute report takes a simplistic approach in examining the benefits of Ontario’s Green Energy Act and the state of the province’s electricity system. The report relies excessively on the widely criticized 2011 Annual Report by the Auditor General of Ontario and also fails to take into consideration the fundamental fact that there is dramatic need to invest in new electricity generation and infrastructure after decades of underinvestment. According to the Conference Board of Canada, $347 billion in investment in Canada’s electricity system is required between now and 2030 – and all of these costs will be passed on to consumers.

Wind energy has played a major role in modernizing Ontario’s electricity system, helping the province abandon harmful coal as a source of electricity. In the last few years, wind generation has contributed an increasing proportion of the total supply of electricity in Ontario. The province currently has over 2,000 MW of installed wind energy capacity, enough to meet about 3% of total electricity demand. Every 1,000 MW of new wind energy drives $2.5 billion in investments, creates 10,500 person-years of employment, and provides enough clean power for over 300,000 homes.

“While electricity prices have been increasing across North America as jurisdictions upgrade ancient electricity systems, wind energy has proven that it can deliver major benefits at a minimal cost to ratepayers here in Ontario,” said Chris Forrest, CanWEA vice-president. “Wind energy is cost-competitive with virtually every potential new source of generation available in Ontario and it does not create hazardous waste or consume vast amounts of fresh water from our Great Lakes. Wind energy will continue to be a cost-effective choice as we build a clean and reliable electricity system in Ontario that we can all be proud of.”

Supplementary: Pembina report finds renewable energy investment will protect costs in the long-term:

“Behind The Switch: pricing Ontario Electricity Options” examined overall system electricity prices in Ontario, including industrial, commercial and residential consumers. The results therefore reflect the trend of the overall system in Ontario, but are not meant to be interpreted at being specific to any individual consumer. Simulation results show that electricity prices in Ontario are set to continue to rise sharply in the future in both scenarios, peaking around 2022 when Ontario’s nuclear fleet is in the midst of significant rebuilding. As can be seen below, there would be virtually no change in electricity prices in the immediate future if future contracts for renewable energy were ended in 2011.

Replacing the commitment to renewable energy largely with natural gas is likely to result in only a slightly slower increase in electricity rates from 2015 to 2025. However, within the next 15 years, as natural gas prices begin to rise and increased action (including some form of price on carbon emissions) is likely to be taken to combat climate change, the simulation found that investing in renewable generation today will keep consumer prices slightly lower in the long term. Like those of the rest of Canada, Ontario’s electricity prices are poised to continue increasing in the short term as old infrastructure is updated and replaced, regardless of the choice of electricity generation mix. The outcome of the current debate over the GEA will have no meaningful impact on these future price increases, which reflect the inevitable costs of modernizing Ontario’s aging electricity infrastructure.