Ontario to Guarantee Minimum Price for Small Renewable Energy Sales

To boost renewable energy production by small developers, the Ontario Minister of Energy plans to set standard prices for the Ontario Power Authority's purchases of renewable energy from smaller generators.  According to the plan, the provincially-owned Power Authority would purchase the electric generation of eligible wind, biomass or small hydropower generators at a base price of Canadian $0.11/kWh.  A higher price, Canadian $ 0.42/kWh, would apply to electricity from solar power.  The program is expected to be implemented in the fall of 2006.

Promoting power generation from renewable and clean sources in an efficient fashion has proven a vexatious issue for governments in many countries.  North American and European governments have resorted to tax incentives, various kinds of subsidies, renewable portfolio standards (requiring utilities to procure a certain amount of renewable energy), feed-in tariffs (requiring utilities to pay producers set rates for renewable energy), voluntary retail green power programs, and end-use purchases by government entities.  In the U.S. in recent years, the federal Production Tax Credit and state renewable portfolio standards have been the engines driving renewable development.  But while these programs lower costs and create sales opportunities, they do not guarantee minimum prices as Ontario now proposes.

Ontario has already established a goal of obtaining 10% of its electricity from renewable energy by 2010.  The standard offer program would facilitate production by smaller developers by obviating any need to secure contracts with individual utilities and by guaranteeing the price in sales to the Power Authority.  The latter feature renders the Ontario program similar to the feed-in tariffs that have driven wind energy development in Germany and Spain and made those countries among the world leaders in wind energy development.