Community power expected to grow in Ontario
Toronto: The community power sector, sometimes written off as too small to make a difference, is expected by many to mushroom in Ontario in the next year or two, and bring with it a wide range of innovation in both technology and business models. In fact, Ontario has positioned itself to be a world leader in encouraging community-based power generation.
Earlier this summer, Ontario Energy Minister George Smitherman received an international award for making Ontario the leading wind energy jurisdiction in North America with the passage of the Green Energy Act. Smitherman’s initiative was inspired in many respects by similar work he saw in Europe. He was reportedly impressed by what he saw there, not only because of the thousands of wind turbines and solar panels, but because of who owned them. In Denmark, which gets 20 per cent of its energy from wind, over 88 per cent of the turbines are either owned by farmers or by co-operatives. In Germany, the renewable energy powerhouse of Europe, more than half the citizens have some kind of stake in the generation of renewable energy. In presenting the award to Smitherman, the World Wind Energy Association specifically noted that, “An important part of the Green Energy and Green Economy Act is the explicit recognition and empowerment of community power: that is individual citizens, municipalities, cooperatives, farmers and aboriginal communities.”
The Green Energy Act encourages community power in a number of ways. First and foremost, the Feed-in Tariff contract structure eliminates the administrative burden typically associated with RFPs (Requests for Proposals), putting smaller and newer organizations on a more level playing field with established companies. Moreover, the feed-in tariff rates are being topped up for community groups and First Nations to recognize additional costs incurred because they lack the resources and/or experience of conventional operations. These bonuses also compensate community groups because, unlike commercial developers, they are rooted in one location, unable to move to where the resources, such as wind, are better.
“The feed-in tariffs democratize the energy sector, allowing everyone to become an energy producer and not just a consumer,” says Kristopher Stevens, head of the Ontario Sustainable Energy Association, which represents community power producers in the province. “They make it financially feasible for everyone to participate in the energy sector and produce their own clean energy.”
In Europe, community ownership has contributed to the rapid and widespread deployment of renewable energy, enabling Germany to produce 14 per cent of its energy from green sources and to reduce its greenhouse gas emissions by thousands of tons per year. Feed-in tariffs are considered by many to be the best mechanism for addressing climate change. According to a poll conducted by the Green Energy Act Alliance, more than a quarter indicated they would very likely invest in solar panels on their own roofs, while 21 per cent said they would very likely invest in local wind farms and 18 per cent said they would very likely invest in local solar projects.
To encourage these people to act on their inclinations and become power players, the Green Energy Act changes existing legislation covering co-operatives to make it easier for energy co-ops to be established. The law also allows municipalities and their electric distribution companies to own generation up to 10 MW in size without having to set up a separate legal entity. (Although this provision is intended to facilitate community based power, APPrO has argued that it may have the opposite effect.)
The Green Energy Act’s open support for community power, however, leaves plenty of room for private commercial development. In fact, a percentage of the bonus for community groups can actually accrue to industries that form a partnership with community power groups. Commercial partners bring with them not just much-needed capital, but also the expertise community groups may not have.
“OSEA’s more than 60 associate members, such as Skon, 3G Energy, DDACE, Helix Synergy and Sky Generation, have long seen working with local community partners as simply good business sense,” says Stevens. “With the proposed community power and Aboriginal adders, and the requirement for a minimum level of local participation at the beginning of the application process, many players in the market are recognizing that collaboration means reduced social friction, increased uptake and significant economic benefit both locally and for their business partner.”
Community power produces additional benefits, both financial and social, its supporters say, which commercial developers don’t always offer. Most important, the earnings of a community power business tend to stay in the community, rather than accumulating in a head office far away from the source of the power. According to the Federation of Canadian Municipalities, in conventional energy systems, like those that predominate in Ontario, at least 75 cents of each energy dollar leaves the local economy. And while rural, struggling farmers can boost their incomes by leasing their land to wind power companies, the lease payments made to farmers by commercial wind project developers typically pale in comparison to the income farmers could earn if instead they owned the turbines themselves, or in conjunction with other members of their local community.
Community power tends to create more local jobs – three times as many, according to studies cited by OSEA – for the operation, maintenance, administration and management of the renewable energy project. The cost of infrastructure is often reduced with community projects because, by generating electricity close to where a good portion of it will be used, the need to build new high voltage lines is cut and the enormous losses of electricity along those lines are reduced.
As for the social benefits, the proximity and visibility of local power generators raises people’s awareness of how energy is produced and consumed, helping to create a culture of conservation. There is also likely less opposition from residents to renewables, such as wind power, if the local community benefits and people living near the power generator have a significant degree of control over where it is situated. Local owners are more accountable to their neighbours and more familiar with areas that need to be protected from development, improving the chances that neither local residents nor the surrounding environment will be adversely affected.
To bring interested members of Ontario communities together with potential proponents of community power, so they can learn both from each other and the experts, OSEA is holding its first community power conference this fall directly preceding APPrO 2009. Together these two conferences are expected to form the most definitive and comprehensive gathering of the generation industry in Canada this year. The conference will feature sessions on existing community power projects; how to develop, finance and operate them; and on supportive government policies. Most importantly, it will showcase the opportunities for community groups, farmers, municipalities, First Nations, and local distributing companies to produce green electricity.
Communities, of course, come in many forms. In the context of the Green Energy Act and its feed-in tariff program, it means local. However, in the wider context of climate change and the planet we all share, we are ultimately one community, and it is going to take all of us to address the monumental environmental challenge posed by climate change. Ontario’s Green Energy Act empowers every one of us to act.