the rationale for ontario's green energy act

10
John Dalton [email protected] Tel: 978 369-2465 2009 OEA Industry Leaders’ Roundtable Ontario’s Feed In Tariff in the Context of North American Renewable Energy Policies April 30, 2009

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An explanation why Ontario is pursuing a feed-in tariff whereas US states are pursuing Renewable Portfolio Standards

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Page 1: The Rationale for Ontario's Green Energy Act

John Dalton

[email protected]

Tel: 978 369-2465

2009 OEA Industry Leaders’ Roundtable

Ontario’s Feed In Tariff in the Context of North

American Renewable Energy Policies

April 30, 2009

Page 2: The Rationale for Ontario's Green Energy Act

Renewable Energy Policies in North America

Objectives

Creating Manufacturing Jobs

Renewable Portfolio Standards

Feed In Tariffs

Objectives

Challenges

Ontario’s approach

Presentation Outline

Power Advisory LLC 2009

All Rights Reserved 2

Page 3: The Rationale for Ontario's Green Energy Act

Alternatives include:

Purchase mandates, including Renewable Portfolio

Standards (RPS) and Standard Offers

Tax incentives

Grants

Policies driven by objectives including:

Environmental benefits

Price stability

Economic development

Range of renewable policies being employed across North

America

Power Advisory LLC 2009

All Rights Reserved 3

Page 4: The Rationale for Ontario's Green Energy Act

Providing the conditions to attract industry

Competitive, skilled labour force

Logistics: minimizing shipping costs

Procurement of components and delivery of

product

Close to the market

Driven by incentive levels (PV) and resource base

(wind)

Access to other markets

Economic development focused on manufacturing jobs

Power Advisory LLC 2009

All Rights Reserved 4

Page 5: The Rationale for Ontario's Green Energy Act

State renewable portfolio standard

State renewable portfolio goal

www.dsireusa.org / April 2009

Solar water heating eligible *† Extra credit for solar or customer-sited renewables

Includes separate tier of non-renewable alternative resources

WA: 15% by 2020*

OR: 25% by 2025 (large utilities)

5% - 10% by 2025 (smaller utilities)

CA: 20% by 2010

☼ NV: 20% by 2015*

☼ AZ: 15% by 2025

☼ NM: 20% by 2020 (IOUs)

10% by 2020 (co-ops)

HI: 20% by 2020

☼ Minimum solar or customer-sited requirement

TX: 5,880 MW by 2015

UT: 20% by 2025*

☼ CO: 20% by 2020 (IOUs)

10% by 2020 (co-ops & large munis)*

MT: 15% by 2015

ND: 10% by 2015

SD: 10% by 2015

IA: 105 MW

MN: 25% by 2025(Xcel: 30% by 2020)

☼ MO: 15% by 2021

IL: 25% by 2025

WI: Varies by utility;

10% by 2015 goal

MI: 10% + 1,100 MW

by 2015*

☼ OH: 25% by 2025†

ME: 30% by 2000New RE: 10% by 2017

☼ NH: 23.8% by 2025

☼ MA: 15% by 2020

+ 1% annual increase

(Class I Renewables)

RI: 16% by 2020

CT: 23% by 2020

☼ NY: 24% by 2013

☼ NJ: 22.5% by 2021

☼ PA: 18% by 2020†

☼ MD: 20% by 2022

☼ DE: 20% by 2019*

☼ DC: 20% by 2020

VA: 15% by 2025*

☼ NC: 12.5% by 2021 (IOUs)

10% by 2018 (co-ops & munis)

VT: (1) RE meets any increase in retail sales by 2012;

(2) 20% RE & CHP by 2017

28 states & DChave an RPS

5 states have goals

RPS the predominant form of procurement policy in the US

Power Advisory LLC 2009

All Rights Reserved5

Page 6: The Rationale for Ontario's Green Energy Act

Restructured markets, RPS utilize RECs

RECs represent the environmental attributes

Benefits of RECs: market-based signal of attributes

Can lower costs of realizing target

Disadvantages: uncertainty regarding REC value

REC markets short term

Discount for long-term sales

Net effect can be higher costs for renewable energy

New York RPS: central procurement: $22 to $15

New England states utilize RECs: $45 to $35

RPS structures vary by state

Power Advisory LLC 2009

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Page 7: The Rationale for Ontario's Green Energy Act

Most appropriate where costs and performance well

known

Key is stability offered by the program

Allows manufacturers to make investment decisions

Risk if you get the FIT price wrong

Depends on the premium relative to market

Asymmetrical: prices too high versus too low

Major source of tension with FIT implementation

Enable project development on sustainable basis

FITs effective in developing renewable energy industry

Power Advisory LLC 2009

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Page 8: The Rationale for Ontario's Green Energy Act

Program pricing balances the following objectives:

Promote broad participation in program

Provide price stability necessary to promote

investment

Encourage efficient project development

Electricity market reforms must ultimately consider the

impacts on customers

Ontario’s FIT seeks to resolve this tension

Power Advisory LLC 2009

All Rights Reserved8

Page 9: The Rationale for Ontario's Green Energy Act

Introducing Power Advisory

Power Advisory specializes in electricity market analysis and strategy, power procurement, policy development, regulatory and litigation support, resource planning and project feasibility assessment.

Our consulting support is driven by the objective of offering clients strategic and tactical insights that provide competitive advantage.

Our approach is based on an understanding of fundamental economic drivers as shaped by market structures and market participant behavior.

Our consulting services are provided by seasoned electricity sector professionals, offering a wide breadth and significant depth of industry knowledge.

For additional information regarding our services, please contact:

John Dalton

[email protected]

978-369-2465

Power Advisory LLC 2009

All Rights Reserved

Page 10: The Rationale for Ontario's Green Energy Act

Introducing Power Advisory

Clients include:

Algonquin Power

Atlantic Power

Bluewater Power Generation

Bruce Power

Canadian Wind Energy Association

Connecticut Resources Recovery Authority

Great Lakes Power

Manitoba Hydro

National Energy Board

Natural Resources Canada

Northland Power

New Jersey Resources

Ontario Energy Board

Ontario Power Authority

Suncor

TransAlta

TransCanada

Wheelabrator Technologies, Inc.Power Advisory LLC 2009

All Rights Reserved