Ontario is currently in an energy surplus situation, but not for long. The province’s nuclear power plants are reaching the end of their service lives and coming offline over the next few years, some for refurbishment, others permanently. The remaining coal-fired generation plants will all be shut down by the end of 2014, a plan which regulators and politicians of all parties support.
As these capacity reductions occur, as the results of the economic downturn continue to be felt, and as successful conservation programs continue to develop, Ontario will remain oversupplied for base load power demand. In the near future, however, the province will be facing a deficit in peaking generators capable of meeting the dramatically higher daytime demands, particularly in the summer. Because power plants can’t be brought online overnight, acquisition and planning for meeting this need must begin now.
There are a number of options for filling this void, but not all megawatts are created equal. Natural gas plants are appealing for their ability to rapidly spool up in response to demand, as well as for the current low cost and easy availability of fuel. It is certain that natural gas will play a role in meeting Ontario’s near to mid-term energy needs.
The carbon emissions of natural gas plants, however, are still substantial, roughly half that of coal plants. Jurisdictions from China to Alberta, which in the past embraced fossil fuels wholeheartedly, are now introducing carbon taxes as climate change threatens economies.
Ontario has, with the Feed-In Tariff program, made a strategic investment in renewable energy. While renewables are currently a steeper proposition than natural gas, due in large part to the lack of carbon pricing in Ontario, the benefits of investing in the development of renewable generation now are clear. Politicians of all stripes—Conservative, Liberal, and New Democrat—agree that jump-starting the renewable energy industry in Ontario, as we have with other fuels, makes sense, provided that there is a very tight time horizon to economic self-sufficiency.
So the question becomes, what renewable resources are best positioned to complement natural gas as Ontario looks to bolster peak power generation capacity? The elephant in the room has too long been wind power, which produces electricity at precisely the times when Ontario is oversupplied. The Independent Electricity Systems Operator (IESO) has recently had to amend their rules to allow for the curtailment of excess unusable wind power. We simply don’t need any more wind turbines in this province. Every megawatt of capacity currently reserved for wind power in the FIT program should be released and allocated elsewhere.
Solar power produces energy when it is most needed, during the daytime and in the summer. But all solar is not created equally either. Large, remote, ground-mounted solar farms, just like the fossil-fuel plants they replace, provide electricity far from the demand load. The infrastructure and transmission costs associated with transporting power from remote suppliers to consumers make up nearly half the total cost of electricity in Ontario.
The American economist Jeremy Rifkin, author of New York Times bestseller The Third Industrial Revolution, makes the point clearly: “[E]nergy is distributed over every square foot all over the world, why would we collect it only at a few points? The problem is we’re using 20th century, centralized, top-down business models.”
The solution is distributed microgeneration — rooftop solar on residential, commercial, and industrial buildings, providing electricity highly synchronized with demand directly on-site at the point of consumption. This model of “Buildings as Power Plants” is one of the four core pillars Rifkin identifies as vital to a sustainable future, and is a vision gaining worldwide accord. “The democratization of energy,” Rifkin says, “has profound implications for how we orchestrate the entirety of human life in the coming century.”
Solar arrays on large industrial rooftops, thanks to investment in the burgeoning solar industry by the Government of Ontario, are on a rapid approach to grid parity, the point at which electricity can be produced without subsidy at rates competitive with other generation sources. Due to the way that solar panels produce power at times of greater demand, and thus higher market prices, the grid parity point for solar is different than that for less synchronized generators. Comparison of real-time output from installed solar panels in Ontario against the hourly true market prices for electricity released by the IESO reveals a net market value for solar power of 14.55¢ per KWh, 34% greater than the base retail value of electricity in today’s market.
Taking into account this increased inherent market value of solar power, the rapid progress of solar technology, and the rising cost of energy worldwide, SPN expects unsubsidized solar on industrial rooftops to be viable in Ontario within three years. Smaller residential and commercial installations will reach grid parity on a slightly longer time scale. The goal of a continued subsidy program should be to bridge that gap while continuing to nurture this nascent industry.
Moving solidly towards an embedded solar model for renewable energy in Ontario would ensure that existing investment does not become stranded and that vital small business, aboriginal, and municipal partners are not left in the dark. The province is enviably positioned to become a world leader in energy independence and sustainability by 2018.
To have created an entire solar industry in just five years of Small FIT will be an incredible feat. Not only would it be a faster realization of this goal than has been achieved anywhere else in the world, it would be a faster and cheaper jumpstart than that of any previous fuel source in Canada.
The total amount Ontario ratepayers and taxpayers have subsidized the nuclear power industry over the last thirty years in Ontario is more than $80 billion. $14 billion of that has been in the form of direct government-funded R&D, billions more have been in insurance and liability breaks and in debt retirement from construction cost overruns, but the bulk of it has been through ongoing power purchase subsidies just like those the Feed-In Tariff program represents.
The need to invest in the early stages of the solar industry is no different than with nuclear and every other fuel, from natural gas to hydroelectric. All policy makers agree and understand that these investments are necessary and desirable. And on this front, rooftop solar is the biggest bargain we’ve ever seen.
Energy doesn’t have to be contentious. All parties can recognize the merits of this road forward, we need only have the foresight and forbearance to walk it together.