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Over the next month, look for a formal announcement from Ontario Energy Minister Dwight Duncan, and marvel how crises are the engine of invention. His move will be the first to force the light of soft power through the cracks of an energy utility where size was what mattered to the real men who made nukes or stoked coal there for over 80 years.
It’s anticipated that Duncan will invite contracts for 200 megawatts of new green power, enough to power about 40,000 homes, part of ongoing commitments to buy 1,350 eco-friendly megawatts over two years from co-ops and community-scale companies.
“We’re so desperate for megawatts, we’ll even do the right thing,” one government insider says. This turning point in North American electrical history follows a long, hot and muggy summer that forced Ontario residents to pay through the nose for previous governments’ neglect.
Since doing something about the weather is a long-term proposition, credit also has to be given to the government (yes, you read that right) and to groups like the Ontario Sustainable Energy Association and Toronto Environment Alliance, which have been laying the groundwork for years.
In their new approach, the Libs are taking full advantage of the massive grid of power lines stretching across the province this public asset actually accounts for about half the cost of delivered electricity with new-style purchasing practices that give an even break to smaller local producers.
The idea here is that there are hundreds of groups that that can step up to the grid with a small waterfall here or a generator fired with bio-gas from cow manure there. Together they will create hundreds, if not thousands of megawatts. Small is plentiful.
By throwing the switch to open the grid to new electricity providers, the government resolves the most pressing technical and cost issues facing renewable energy tech. The problem with the sun is that it doesn’t shine at night, and the problem with the wind is that it doesn’t blow on calm days.
Since electrical generation by nature can’t be stored, sun and wind operators who are cut off from the grid, and therefore have to be self-sufficient, have to invest big-time in batteries. But costs drop as soon as the grid substitutes for batteries operators sell when they have a surplus and buy when they’re short.
Traditional utility planners thought in terms of hubs and spokes, and insisted on one big power plant and many distribution lines, says Keith Stewart, co-author of Hydro: The Decline And Fall Of Ontario’s Electric Empire and campaigner for the Toronto Environmental Alliance. Opening up the grid to small producers means “a thousand points of light,” he says.
Part two of the Ontario’s new approach is called a “standard offer contract,” the utility equivalent of a prix fixe meal. This is a non-bid strategy, a big change in the way governments do business. Typically, they put out requests for proposals and pick the cheapest offer. By contrast, the standard offer contract that the province will likely adopt sets a price for example, 15 cents a kilowatt hour from wind power in a high-wind area, 22 cents for wind power in a moderate-wind area and 22 cents for gas power from livestock manure converted to methane and then opens the grid to all who can meet it.
This approach, taken from the German and California industry, saves government the costs of dealing with multiple bids. It allows farmers, co-ops and small businesses to go to the bank for equipment loans because they can prove they’ll have a revenue stream. It creates local jobs across the province.
By providing local power, it prevents losses from transporting electricity long-distance. Only in the obsessive competitive bidding culture of government purchasers does it make sense to save 9 cents on the price of an hour’s electricity by buying cheap, then lose 9 cents moving it over the wires. This is especially relevant for Toronto, which faces an expenditure of several hundred million dollars for new transmission wires unless it can produce local power that doesn’t have to be sent over long-distance wires.
Minnesota, with hopes of becoming “the Persian Gulf of renewable energy,” requires its utility to buy 200 megawatts of power from farmers on 20-year contracts. This is part of the race for leadership in renewables, where the winner gets first crack at all the manufacturing jobs supplying a solar energy economy one reason Hamilton’s Stelco is showing a sudden gust of enthusiasm for wind power that it can supply with steel equipment. This is just one of what Stewart calls the “distributive benefits” of a non-competitive bid approach to incubating renewable power.
Energy Minister Duncan has yet to make it official, and people like TEA’s Stewart are nervous that Duncan has been saying too many nice things to too many competing forces, including those who think a new nuclear plant will be good for the neighbourhood. But the lines of green power and utility planners are at last beginning to cross, and the sparks of new energy will soon fly.
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