German Renewables

2 August 2003

The Ontario government claims it has solid plans for encouraging people to generate electricity from renewable energy.

Unfortunately, the plans won’t work for the bulk of Ontario’s population — all those people who could produce green electricity on a small scale. And this is a tragedy because, judging by what’s happening in Germany, they could increase Ontario’s supply of electricity by 3 to 4 per cent within ten years.

That’s a lot of electricity. During times of peak demand in the summer, it could be twice as much as Ontario Power Generation will get from the nuclear reactor currently under a $2.5-billion repair job at the Pickering A station.

The reason the government’s plan won’t work for small-scale producers is simple: It’s not designed for them. It’s designed for corporations and for large projects.

There’s nothing in this plan, so far, to ensure a reasonable return on investment for developing small scale green electricity. As a result, banks are not going to lend money for small projects, unless they get full security — mortgages on homes or farms, pledging of stocks and bonds, or co-signing by debt-free parents.

Not many people will participate in these circumstances.

The government has promised incentives, but they’re incentives tailored for corporations and large projects. They include capital tax holidays, rebates on building materials, corporate tax writeoffs, tax rebates, property tax holidays, and capital tax exemptions. Small scale producers won’t be able to make use of most of them.

The German federal government has taken a different tack. It has created  an attractive investment climate for small scale producers by requiring distributors to pay them prices that will guarantee they’ll recover their investments in less than 10 years.

In other words, German policy guarantees a favourable return on investment, and encourages banks to lend money.

Queen’s Park should pay attention to what Germany is doing, because there’s a lot at stake. The province stands at the brink of brownouts. Or worse. The Independent Electricity Market Operator, the government’s watchdog, declared last March, that if there were no unexpected power stoppages, and if all the planned projects for increasing generating capacity went ahead, and if they were completed on time, Ontario could get through the next ten years without a crisis.

These are pretty big « ifs. »

The province needs — I think it desperately needs — the cushion that small scale green electricity could supply.

Farmers, for instance, could add about 260 megawatts of electrical capacity — almost one per cent of the province’s total capacity —  by installing biodigesters that would turn manure into methane gas and high-grade fertilizer. The methane would fuel electricity generators. AS an added benefit, disposing of manure this way would protect ground water.

However, farmers would need to be guaranteed a price of at least 12 cents a kilowatt hour for their electricity, so they could raise the money for installation.

If the province were to create this kind of investment climate, it could mean the saving of the family farm. Farmers could generate all the electricity they’d need, thus saving on expenses, and export about the same amount of electricity for what would be regular income.

Similar cases can be made for creating an investment climate in Ontario for solar power, wind power, and small scale hydro generation.

In Germany, a four-year program to encourage installation of photovoltaics to capture solar energy ended in June with 300 megawatts of installed capacity. In Ontario, a similar initiative would add another one per cent to the province’s total capacity.

As the German government says, it is putting small scale producers of green electricity on an equal footing. Ontario should do the same.

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