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Green energy sector breathes easier after Ontario Liberal win

A wind farm in southwestern Ontario.

Randall Moore/The Globe and Mail

Ontario's renewable energy sector has breathed a sigh of relief that a Liberal majority government has been elected in the province.

The positive outlook is less a reflection of enthusiasm for Liberal policies, than satisfaction that the Progressive Conservatives did not win. The Tories had promised to dismantle many of the green energy policies that had supported the renewable industry.

"We are very happy with the outcome," said Kent Brown, chief executive officer of BluEarth Renewables Inc., a Calgary-based company that has solar and wind projects in Ontario. "A majority government creates stability. We now have four years where the projects that the industry is still building can move ahead with certainty and get done."

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If there had been a PC government, Mr. Brown said, "there would be a huge amount of uncertainty and a question as to whether those [projects] under construction would get done. The Conservatives were unbelievably unclear. In all my years I have never met a Conservative Party that was so anti-business."

During the campaign, PC leader Tim Hudak said he would end government subsidies for green energy projects, and concentrate on nuclear energy along with natural gas and hydro power. He also said he would consider cancelling existing contracts to buy renewable power at higher than market rates, as long as the project had not been completed.

While the Liberal victory will keep the status quo on green energy policy, the end of the uncertainty of a minority government will be good for public companies in the sector, said John McIlveen, research director at Jacob Securities Inc., a Toronto investment dealer that works with many companies in the renewable business.

The election outcome "will have a small positive impact, in that you are not going to see any big changes to renewable policy right away," Mr. McIlveen said. "Some developers were worried about their projects having new conditions assigned to them, or more hurdles to jump over, but that won't happen now."

Still, the Liberal government – under pressure because of rising electricity prices – has already tightened some of the rules in its green energy program. It reduced the prices it pays for electricity from small solar and wind power projects, and eliminated the high, fixed prices known as the "fee-in-tariff" for large projects, implementing a competitive tender process instead.

In its long-term energy plan, released this year, the government also eliminated the "local content" provision that required companies to purchase a proportion of their equipment and services in the province for green projects – although that change was mainly due to a World Trade Organization ruling that forced its hand.

Mr. Brown of BluEarth said he's not overly concerned about those changes, some of which are designed to stem the rise in retail electricity prices. "It is not surprising that with the amount of power being built in a very short period of time that they don't need as much, at least in the short term. That is fine. The fact that it will be competitively procured going forward [is also] fine. That is great for rate payers, making sure that they get the lowest cost of power possible."

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Robert Hornung, president of the Canadian Wind Energy Association, an industry lobby group, said his members are gratified that the Liberal energy plan includes "a continuing and growing role for wind energy going forward," even though the targets for the amount of wind-generated power in the province are not as high as they might like.

Investors in renewable energy are "looking for policy stability," and the majority government should provide that, he said.

As for the debate over the role of renewables in pushing electricity prices up, Mr. Hornung said there have been numerous studies that show renewables are not the driving force behind price increases in Ontario. "We believe that wind will be clearly shown to be cheaper than new nuclear power, that it is competitive with new hydroelectric power, and that it doesn't bear the commodity price risk or the carbon price risk associated with natural gas."

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About the Author
Reporter, Report on Business

Richard Blackwell has reported on Canadian business for more than three decades. At the Financial Post and the Globe and Mail he has covered technology, transportation, investing, banking, securities and media, among many other subjects. Currently, his focus is on green technology and the economy. More

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