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Ontario seen as risky for renewable
energy investments
LONDON, ON, February 24, 2009 –
The Ontario government was wise to
address NIMBY roadblocks and unveil the
Green Energy Act yesterday to encourage
renewable energy investment, according
to a utility regulation expert studying
why provincial renewable power policies
have yet to meet their potential.
However, the Act doesn't go far enough
by failing to include long-term targets
for renewable capacity and leaving
decision-making to Ministers.
In their new Ontario wind power study,
Guy Holburn, Associate Professor, and
Charles Morand, researcher, Richard Ivey
School of Business, recommend the
Ontario government enact bold
legislation on renewable energy, with
long-term capacity targets, to attract
wind developer investments.
Holburn and Morand surveyed 63 wind
developers and studied past policies to
determine why previous provincial
initiatives to increase green energy –
including a feed-in tariff that
guarantees the Ontario Power Authority
will purchase from renewable electricity
suppliers at fixed prices – have failed
to meet targets.
"Ontario has been considered a risky
jurisdiction for renewable energy
investors. The new Green Energy Act
removes some of the uncertainty around
municipal permitting and grid connection
policies," said Holburn, who specializes
in utility regulation and stakeholder
management. "However, the Act does not
establish long-term targets for
renewable capacity. Instead it leaves
key decisions on targets and power
pricing in the hands of the Minister,
who can easily change policies if
political priorities shift."
According to their study, "Regulatory
Risk and Private Investment in Renewable
Energy Technologies: A Study of the
Ontario Wind Power Sector", 4-1/2 years
of Ontario government initiatives on
green energy have produced mixed
investment results in the wind power
industry. Less than 50 per cent of the
original 2004 target for renewable
investment by 2007 was actually
achieved.
Holburn and Morand attribute this to
policy-making that is conducted outside
of the scope of formal legislative and
regulatory processes.
While the Ontario Power Authority is
responsible for implementing renewable
energy regulatory policies, the Minister
of Energy and Infrastructure has
extensive authority to control it by
issuing directives without the need for
broad public consultation. Since
Ministers change frequently, renewable
policies have repeatedly been adjusted
or abandoned through new directives and
orders. The Green Energy Act further
broadens Ministerial powers – exposing
policy even more to political pressures.
"Developers rate regulatory policy
stability as one of the weakest aspects
of Ontario's business environment," said
Holburn. "Concerns over policy stability
and regulatory risk have led developers
to invest in other jurisdictions or to
price in a risk premium here in Ontario
– implying higher rates for consumers.
The Green Energy Act should go further
by delegating more policy-making
authority to independent agencies and
limiting the scope for Ministerial
directives."
For more information, please contact Guy
Holburn at 519-661-4247 or
gholburn@ivey.uwo.ca; or Charles
Morand at 226-448-0339 or
cmorand2@uwo.ca.
About the Richard Ivey School of
Business, The University of Western
Ontario
The Richard Ivey School of Business at
The University of Western Ontario (www.ivey.ca)
offers undergraduate (HBA)
and graduate degree programs (MBA,
Executive MBA and
PhD) in addition to non-degree
Executive Development programs. Ivey has
campuses in London (Ontario),
Toronto, and Hong Kong. Ivey
recently redesigned its curriculum to
focus on
Cross-Enterprise Leadership – a
holistic issues-based approach to
management education that meets the
demands of today's complex global
business world.
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Dawn Milne, Communications Specialist,
Richard Ivey School of Business:
519-850-2536,
dmilne@ivey.ca |
