Earthwatch – A Giant Jolt for Wind and Solar

By Paul Henderson

The alternative energy industry is about to get a huge boost in Ontario. If all goes as proponents hope, this province may end up the largest jurisdiction in North America allowing small producers of electricity to feed that power into the grid.

Greenpeace and other organizations are justifiably upset about the provincial government’s recent announcement of a $4.25 billion (before the inevitable cost overruns) deal with private company Bruce Power to refurbish two out-of-service reactors on Lake Huron. Notwithstanding this move that is being called economically and environmentally disastrous, the same Dalton McGuinty government is also quietly doing something that could result in massive growth in solar, wind, biogas, and micro-hydro generation at a small level so that individual homeowners — as early as 2006 — may be able to produce and sell energy to the electricity grid.

“The government has been under enormous pressure from industry and private individuals for a good long time to get access to the electricity grid,” says William Kemp, author of $mart Power: An urban guide to renewable energy and efficiency. “All the stars are aligning for them to actually pull it off and do this thing right.”

So what exactly is “this thing” that is going to give homeowners and small businesses access to the grid, help stabilize long-term prices and supply, and turn Ontario from a coal-belching dinosaur into a North American alternative energy leader?

The terminology is tedious to the 99% of the population that don’t spend any time thinking about this stuff — Advanced Renewable Tariffs, Feed-In Tariffs, Standard Offer Contracts, or even the unpronounceable German Stromeinspeisungspesetz. For the sake of simplicity, we’ll call them Standard Offer Contracts (SOCs) since that’s the term used by the Ontario Sustainable Energy Association (OSEA) in the report that may provide the framework for all of this into the future. OSEA was asked by the government to prepare a report on SOCs, which they did in May of this year. In that report they encouraged the government to not only go ahead with SOCs, but to go ahead now. Then Energy Minister Dwight Duncan agreed and there is talk that the plan will be implemented as early as next month.

Okay, what is an SOC? Essentially this is a contract whereby rates are paid to electricity producers per kilowatt-hour generated. This allows generators of electricity — regardless of size — to hook into the grid, and be paid a fixed rate for that electricity. Different technologies would be paid different rates based on a profitability index so that there is a return on investment. For wind turbines, micro-hydro systems, and farmed biogas systems, that initial rate would be 13.3 cents. For photovoltaic panels it would be 50 cents.

This means that if a homeowner in the city puts solar panels on her house she would also have a special bi-directional meter installed that measures the amount of electricity she buys, and the amount she sells. During the day while the sun is beating down on the solar panel, and everyone is at work and school, the electricity sold is valued at 50 cents per kilowatt-hour. Then when everyone in the house comes home and the oven is turned on, and the TV goes on, the electricity used would be purchased for the going rate of 10-12 cents. The difference is profit.

“The SOC model is not complete yet,” Kemp tells Vitality. “But the recommendation from OSEA is that there should be no minimum size. So if you slap a couple of PV panels and generate a couple of hundred watts of power, you would be able to be offered a Standard Offer Contract along with the big boys.”

If the OSEA model is accepted, the boon to the alternative energy industry cannot be overstated. In Germany where this system is in place there are 45,000 people employed in the wind industry, and this number is expected to grow to over 100,000 within five years. In fact the wind industry in Germany is the second largest user of steel behind the auto industry.

“If this goes through, it is going to do a lot of things,” Kemp says. “For the industry it is going to be like a rocket taking off. You are going to see homeowners be able to participate in the electricity generation and, probably more importantly, protect themselves against rising prices.”

Who Is Paying For that 50 Cent Power?

If all goes as planned, next year you could be generating power on your roof and selling it for 50 cents a kilowatt hour. Not a bad way to save the planet, make money, and contribute to stabilizing the system against blackouts and fossil fuel price fluctuations.

But if small generators are being paid 50 cents for solar, and 13 cents for wind, one initial response from critics is that electricity prices will skyrocket. But this isn’t so, according to OSEA and Kemp.

“It will be like a fly landing on the back of an elephant,” Kemp explains. Over time as the renewable fleet grows and hundreds if not thousands hop on the alternative energy generation bandwagon, the price will start to be marginally impacted. But by the time that happens, the price of electricity from the highly subsidized historic generating fleet will continue to the rise to the point where they will both be in the same ballpark anyway.

“It wouldn’t be impossible to see the price hit 13 cents per kilowatt hour. While that sounds like a horrifying thing for Ontario consumers, it only reflects the realities of the rest of the world. You only have to look to New York State, which is double the price of Ontario.

“The fallacy of five cent electricity is a mirage that is not going to continue and we are going to see those prices rise. Beyond 2010 the price of renewables will probably stay at 13 cents and the historic prices will rise.”

Out With The Old, In With The New

The typical tendering process (request for proposals or RFPs) that allows large players to bid for large projects to build things like wind farms may be useful, but these actually sometimes create supply problems. According to the OSEA report in examples from Britain and France, only about one third of contracted capacity was ever actually built, and not all of that is still operating.

“This was an important reason why France switched from a tendering system to a system of Standard Offer Contracts,” the report says.

So time will tell if the recent contracts awarded in Ontario’s latest RFP process will all actually come on line. But in Germany, most of the 16,600 megawatts of wind generation are small projects amounting to less than 10 megawatts each, and many of these were developed with community involvement. 

The future is small, decentralized, and renewable. This has so many benefits not least of which includes protection from a large problem at a power plant such as a Nanticoke or a Darlington shutting down power for huge numbers of homes and businesses.

The OSEA report concludes that 20-year, fixed price SOCs are the way to go. Important in this plan is the ability to allow a minimum profitability at less-than optimal wind sites, but also precluding price-gouging and huge profits at more reliable sites. Business needs an incentive to invest in these projects, but the public needs to be protected against corporate greed.

The great benefit is that Ontario may end up a real North American alternative energy hub and the province doesn’t even have to be innovative on this one — just looking to Germany will be a guide to how this should be done.

So What Can The Homeowner Do?

While wind turbines, biogas, and micro-hydro projects still will be mostly inaccessible to folks living in urban centres, putting up some solar panels may become very common. In California, which has a system similar to the SOC program being proposed, you can go into a Home Depot, tell them you want a PV system and they will take care of everything: contract price, getting a 50% rebate from government, installation, and warranty.

Thinking about buying a small windmill for your co-op condo or solar panels for your suburban roof may in fact be a great idea, especially if the SOCs come into effect, but alternative energy investments are premature if you aren’t prepared. It’s a little like buying a brand new Toyota Prius before you have a driveway, or a garage, or even a house. First things first, change your lightbulbs.

“Homeowners are still going to be better served by using energy efficiency so they can squeeze more work out of less electricity,” Kemp says. “Better appliances, compact fluorescent lights, low flow showerheads, aerator faucets on all their taps. All those kinds of things offer a better return on investment.”

The first steps toward renewable energy are the baby ones, and before we get to photovoltaic panels we need to think about such unsexy things as weather stripping and energy audits. The true first step is energy efficiency, but as Kemp adamantly points out this does not mean sacrifice.

Kemp himself lives off the grid in a large house, he has all the amenities a homeowner could want including a hot tub and two cars. But the only fossil fuel he uses at all is a little propane for cooking.

“It’s actually our goal to reduce our fossil fuel use to almost zero starting next year,” he says.

Buying Into Alternative Energy?

Not many wind turbines may appear atop condo units, and heavily-treed suburban areas won’t be suitable for solar power generation, but there are still ways to be involved with green power. Already a new company, Bullfrog Power, the first green electricity retailer in Ontario, allows eco-conscious consumers a green option. Purchasing your power from Bullfrog costs a little more (8.3 cents per kilowatt hour), but adopting a few energy efficiency techniques and your bills won’t change.

The Time is Right For Alternative Energy

Clear to those on the forefront of sustainable power generation is that large smog-belching coal plants and inefficient, hazardous nuclear power generating stations are the dinosaurs of the business.

The Ontario government over the last few years has tantalized and teased the population. First they boldly move to shut down the coal-fired plants, then they decide to refurbish mothballed nuclear reactors. Now there is a move towards a system that truly looks to the future, and a concerted effort towards renewable energy.

That future is wind farms on the shores of the gusty Great Lakes; small clusters of turbines on farms and owned by small community co-operatives; geothermal units and biodigesters in basements and backyards; and even mini-turbines and solar panel arrays on suburban and urban homes across the province.

The future is oil and natural gas prices rising as the realities of Peak Oil and Gas rock the ever-increasing world demand for fossil fuels. The future is China. The future is India. Those two billion people in those massive developing economies want power, they want energy, and they want the standard of life that we take for granted in the highly developed world.

The reality of the future – which is really here now – is most of all represented in the impending irony that Economics 101 and demand and supply are going to rock the worlds of the corporate oil barons and the nuclear proponents and their countless government yes men. Alternative energy is coming and those on the bandwagon will get rich, those stuck at the gas pump will be out of luck.

Farmers may be ideally situated to capitalize on the potential but assuming the government doesn’t make a minimum size requirement, even suburban and urban homeowners may have a chance to generate power and sell it to the grid.

As for the political realities of the program, the recent cabinet shuffle taking SOC-supportive Dwight Duncan out of the energy portfolio and putting him into Finance may in fact be a boon to the process rather than a problem, according to Kemp.

That’s because the Finance Minister Greg Sorbara wasn’t particularly supportive of the SOC program, but now he is out. And Duncan who was an advocate now has the purse strings of the province. The new Energy Minister Donna Cansfield is a rookie MPP, but she has been working in the Energy portfolio so she knows it well and should continue Duncan’s good work.

There are a lot of fingers crossed, but it looks like the stars truly are aligning to stabilize and green up the electrical grid in Ontario.

For more check out:
• www.ontario-sea.org for the report Powering Ontario Communities
• www.cleanair.web.net for the Ontario Clean Air Alliance
• www.bullfrogpower.com

• Be sure to come see Bill Kemp at Whole Life Expo in November where he will be giving two lectures: one on Renewable Energy and Efficiency, and one on Thriving After Peak Oil. Check out the Showguide in Vitality Magazine or at www.wholelifecanada.com for more.