Ontario’s recent Green Energy Act appears to be paying off quickly. In a recent energy deal, the Canadian province inked one of the world’s largest renewable energy deals with a consortium led by Samsung and Korea Electric Power Corporation (NYSE:KEP).
The deal: $6.6 billion that will result in 2,000MW-worth of new windfarms and 500MW of solar capacity, while also building a manufacturingsupply chain in the province.
The project will consist of five phases, with the first phase–400MWof wind and 100MW of solar in southern Ontario–to begin in 2012. Therest will be developed over time, designed to eventually replace theenergy being produced by a nearby coal power plant set to bedecommissioned in 2014.
The deal also promises a direct potential boost to the economy.
"This means Ontario is officially the place to be for green energymanufacturing in North America," said premier Dalton McGuinty, pointingout that the Green Energy Act means that renewable energy developers inthe region can also access generous subsidies for clean energyproduction.
Under the terms of the agreement, Samsung – which was selectedwithout an open tendering process – must build four manufacturingplants in Ontario, promising 16,000 direct and indirect jobs over thenext five years.
In addition to the standard rates for electricitygeneration, the Consortium will be eligible for an economic developmentadder (EDA). This adder is contingent upon the Consortium manufacturingpartners operating four manufacturing plants according to the followingschedule:
- Towers – in full operation by March 31, 2013
- Solar Inverters – in full operation by March 31, 2013
- Solar Module Assembly – in full operation by December 31, 2013
- Blades – in full operation by December 31, 2015
These manufacturing facilities will produce windturbine towers, wind blades, solar inverters and solar assembly inOntario, creating more than 1,440 manufacturing and related jobs in therenewable energy industry. The local availability of thesemanufactured components will also help other renewable energydevelopers meet the Feed-In Tariff (FIT) domestic content requirements.An additional 700 manufacturing jobs are also anticipated to supplycomponents not manufactured by the Consortium.
This deal went ahead without input from many MPP’s(Members of Provincial Parliament), some of whom have voicedopposition. Their biggest complaints: a drastic hike in electricitycosts to the consumer and a negative impact on domestic renewableenergy producers.
Also at issue, the aforementioned "economic development adder" – anincentive over and above the generous premium already paid togreen-energy producers.
That subsidy, announced Thursday, will be worth $437 million overthe 25-year life of the deal to build wind turbines and solar equipmentin Ontario.