In May 2009, the Government of Ontario passed the Green Energy and Economy Act (now commonly called the Green Energy Act), with enabling regulations passed in September 2009. The legislation is a key part of the Government's plan to make the province a leading green economy in North America.
This landmark legislation was designed to spark investment in renewable energy projects throughout the province. The Green Energy Act was also expected to promote energy conservation and stimulate job creation and economic growth in Ontario.
The key component of the Green Energy Act is the Feed-in Tariff (FIT) program, which is modeled on a very successful German initiative that made the country a world leader in solar and wind technology and has created more than 300,000 renewable energy jobs.
The Feed-in Tariff allows individuals, companies, municipalities, and cooperatives to sell electricity from wind, solar, hydro, biomass, biogas and landfill gas projects back to the provincial energy grid at guaranteed rates for the next 20 years. The prices vary by technology, ranging from 10.3 cents per kilowatt-hour for landfill gas projects to 80.2 cents per kilowatt-hour for small residential solar rooftop projects. Incentives were also provided for Aboriginal and community-based projects.
In order to foster growth in Ontario's manufacturing, construction and installation sectors, the Green Energy Act also introduced minimum domestic content requirements for Feed-in Tariff contracts. As a result, projects must ensure a minimum percentage of their goods and services originate from Ontario.
There has been considerable controversy over key elements of the Green Energy Act, principally the siting requirements for wind farm installations, the domestic content rules, a $7 billion agreement with Korean company Samsung, and the premium rates paid for small solar projects. In response to these various concerns the government has: placed a moratorium on offshore wind projects; renegotiated the terms of the Samsung deal; and provided a Clean Energy Benefit rebate for all consumers.
There has also been a common, misplaced concern that the Green Energy Act has led to an increase in household energy prices. While energy prices in the province have increased, it is well documented that Green Energy Act-related expenditures represent a very small fraction of the total price per kilowatt-hour paid by households. Analysis by the Pembina Institute shows that prices will increase by essentially the same amount, whether Ontario invests in clean, renewable power or not. In fact, in the long run, costs will be slightly lower under a scenario where investments in clean energy continue. That's on top of the benefits from cleaner air.
In summary, Ontario's Green Energy Act is an innovative piece of legislation that has already spurred billions in investment in renewable energy projects throughout the province. It has produced more than 40 new or announced renewable energy-related manufacturing facilities in the province, with thousands of workers hired.
While the legislation can no doubt be strengthened by passing regulations to improve Ontario's energy efficiency and by ensuring that there is greater transparency related to implementing renewable energy, the Green Energy Act is one of strongest pieces of environmental legislation in the country and has situated Ontario as a world leader in renewable energy.