The events of the previous month have raised some serious concerns for renewable energy in Ontario and threaten the survival of the province’s flagship clean energy policies: the green energy and economy act and the feed-in tariff (FIT). First, the World Trade Organization (WTO) is set to rule against the domestic content requirements contained in the FIT. Second, the sudden resignation of Premier Dalton McGuinty over the mismanagement of the energy file has sent tremors throughout the province’s energy landscape. Additionally, delays in implementing the new FIT 2.0 framework, continued media assaults on PV and wind, as well as the growing backlash over rising electricity rates are propelling Ontario’s renewable energy strategy into dangerous waters.

On Monday, October 15th the WTO ruling backing the EU and Japanese challenge against Ontario’s domestic content requirement was leaked [i]. This ruling will have implications for the longevity of the policy framework surrounding PV in Ontario as well as the regional PV industry. If the domestic content rule is struck down (pending a likely appeal), local module and balance-of-system producers will no longer be sheltered from foreign competition originating from low-cost manufacturers in Asia. In essence, this will expose domestic firms to the same market forces that have transformed the global PV industrial landscape over the last year or so. In turn, plant closures, consolidation and job loss are likely on the horizon. With the regional industrial development impetus for policy support removed, how long will the government continue to pay premium FIT rates for foreign-sourced renewable energy developments?

Adding fire to the flame, Premier Dalton McGuinty – a champion of the current green energy strategy – resigned on the same day as the WTO leak in the face of political fallout stemming from the costly cancellation of new natural gas units during the last election[ii]. His resignation reflects the dangers of tampering with the electricity system for political reasons and highlights the lack of a genuine long-term energy plan for the province. McGuinty’s resignation also poses challenges for the future of renewable energy support. With an election likely on the horizon, will the new Premier seek to distance his or herself from increasingly unpopular support for wind and solar? After all, the last election saw rural voters reject Liberal candidates in part due to wind opposition[iii].

Other issues have also plagued renewable energy policy in the province. Delays in implementing changes to the FIT scheme following the scheduled program review have created difficulties for the domestic industry and investors[iv]. A prominent PV firm has even entered into litigation with the province over the revisions[v]. Moreover, the last several months has seen a ratepayer backlash brewing over electricity rate increases and overgenerous incentives for wind and PV[vi]. Despite the fact that nuclear refurbishments and the rollout of natural gas are primarily to blame for rate increases[vii], the media continues to hammer renewables while giving nuclear and natural gas a relatively free ride.

In many ways, this situation was avoidable. An appropriate renewable energy policy framework with reasonable and justifiable incentives for emerging energy technologies would be far more resilient. The market-based policies in California point to the success of reasonable incentive levels. Although more moderate support may lead to fewer near-term job creation opportunities, it creates a more sustainable market, allowing for a greater degree of certainty for industrial actors and investors. Another key lesson that arises from this unfortunate situation is the need for a less politically interventionist approach to energy planning. An approach that is determined through market mechanisms or an expert bureaucracy with proper authority and regulatory oversight would be far more robust. Legitimacy needs to return to renewable energy support and energy planning in the province.

Daniel Rosenbloom
Research Associate in Sustainable Energy Policy
Graduate from the MA program in Public Policy and Administration at Carleton University