Ontario Government to Invest Nearly $8 Billion in 184 Renewable Energy Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Ontario government has announced the country's largest-ever investment in renewable energy projects, with a massive $7.97 billion plan to generate 2,500 megawatts (MW) of power from renewable energy sources.

The announcement is part of a plan outlined in 2007 by the government to close down the province's coal-fired power plants by 2014 and use cleaner energy sources to replace them. One of the power plants scheduled to be replaced is the Nanticoke coal-fired plant, the largest such plant in North America, which is also reported to be the largest source of air pollution in Canada, producing greenhouse gases equivalent to driving 3.3 million cars every year.

The 184 renewable energy projects will be spread across a wide range of power-generating sources, including wind, solar and biomass projects. The breakdown of the projects by type of power generation is:

• 76 ground mounted photovoltaic (PV) solar projects
• 47 on-shore wind power systems
• 46 hydroelectric plants
• seven biogas plants
• four landfill-gas power plants
• two biomass plants
• one rooftop solar system
• one offshore wind project

The projects will be awarded to major corporations in Canada, the United States and overseas, as well as to first-nation communities, by the Ontario Power Authority (Toronto, Ontario). Some analysts have placed the expected number of jobs created by the projects as high as 20,000.

The latest announcement follows a similar government decision in January this year to award a series of renewable energy contracts worth about $6.7 billion to Korea's Samsung Group (Seoul, South Korea) and Korea Electric Power Corporation (NYSE:KEP) (Seoul). The consortium will develop a 2,500-MW wind and solar power project, the first phase of which will generate 500 MW. Construction will commence in 2012 and be completed in 2015.

The push for renewable energy projects has been given extra impetus by the new feed-in tariff (FIT) system introduced in May 2009, which offers stable prices for electricity generated by renewable energy projects.

The FIT program is targeted at wind, PV, water power and bioenergy projects, including biomass, biogas and landfill gas. The program offers producers fixed tariffs above market rates for a 20-year period. However, certain rules apply to the projects, such as a provision that eligible projects must contain a specific amount of Ontario-sourced content.

The local content rule applies in particular to wind projects exceeding 10 kilowatts and to all solar projects. Depending on the year that the project begins commercial operation and the type of power source, the domestic content will range from 25% to 60%. For example, a wind-powered project beginning commercial operation in 2011 must have a minimum domestic content of 25%, whereas a solar project commencing operation in 2011 or later must have a minimum domestic content of 60%.

Under the FIT program, an on-shore wind farm will receive a fixed price of 13.5 cents for each kilowatt-hour (kWh) generated, while solar power generators can receive up to 80.2 cents for each kWh generated for 20 years. Some experts have raised the specter of Ontario electricity consumers' having to pay about 25% more--about $300--for electricity by the end of 2011 as a result of the FIT program, and another $60 by 2012.

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