Powering the Future: The Green Energy and Green Economy Act, 2009
In May 2009, Ontario’s energy policy landscape underwent a fundamental transformation. With the passage of the Green Energy and Green Economy Act, 2009 (GEGEA), the government put in place a policy framework that has the potential to significantly shift the province towards a greener energy path. Wide-reaching in scope, the GEGEA not only enacted the stand-alone Green Energy Act, 2009 (GEA), but also amended 18 statutes and repealed two others.
The GEGEA represents a major change to the institutional and regulatory framework for electricity and renewable energy initiatives in the province. While establishing policy at a high level, its full implementation will require significant regulatory and policy changes over the next few years. The underlying goals of the GEGEA are to: stimulate the economy; improve the environment by reducing greenhouse gas emissions; and transform the electricity infrastructure in Ontario. Key elements of the GEGEA are designed to facilitate the development of renewable electricity generation, promote increased energy conservation and efficiency, and enhance the capability of the electricity grid to effectively transmit and distribute energy across the province.
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Promoting Renewables
The GEGEA contains several key initiatives to promote renewable energy generation in Ontario. Along with changing the electricity procurement rules through a Feed-in Tariff program, the GEGEA also laid the groundwork for a streamlined approvals process for renewable energy projects, as well as the development of a smart grid.
Feed-in Tariff (FIT) Program
The commitment to move forward with a Feed-in Tariff (FIT) program was one of the key tools within the GEGEA to promote renewable energy generation. A FIT program enhances the expansion of renewable energy in two ways: (1) by providing renewable energy projects access and a connection to the grid; and (2) by guaranteeing a reasonable return on investment by setting a suitable price for a set period of time for the electricity produced. The overall goal of a FIT program is to provide a stable environment to increase investor confidence and stimulate investment in renewable energy projects.
The Electricity Act, 1998 was amended and the Ontario Power Authority (OPA) was authorized to develop a FIT program that includes both of these key elements. Along with stimulating the growth of renewable energy, other policy objectives were incorporated, such as creating jobs and increasing the participation of local communities and Aboriginal groups in renewable projects.
In October 2009, the OPA launched a FIT program. The program is designed for renewable energy projects over 10 kilowatts (kW) in size, while smaller projects follow a similar microFIT program. The program rules outline the prices that are to be paid for renewable energy. Since the cost to supply electricity varies with the type of generation (i.e., wind versus solar) and project size, the FIT program establishes different prices based on these factors. For example, a biomass project over 10 megawatts (MW) in size will receive 13.0 cents per kilowatt-hour (¢/kWh), whereas a landfill gas project the same size will receive 10.3 ¢/kWh. In both cases, smaller projects will receive slightly higher prices. As well, location plays a role in determining the price paid. For example, onshore wind projects will receive 13.5 ¢/kWh, whereas offshore wind projects will receive 19.0 ¢/kWh. In order to increase the participation of community and Aboriginal groups, these groups receive higher prices under the FIT program.
By April 2010, 694 mid- to large-scale projects had been awarded FIT contracts, representing over 2,500 MW in generating capacity. Several thousand smaller projects have also received conditional offers through the microFIT program.
A Streamlined Process for Renewable Energy Approvals
The GEGEA also amended the Environmental Protection Act (EPA) to create a new class of renewable energy approvals. In September 2009, Ontario Regulation 359/09 – Renewable Energy Approvals, made under the EPA, came into force and established a new, streamlined approvals process which must be followed to proceed with a renewable energy project. For more information, please see Ramping Up Renewables: MOE’s Renewable Energy Approvals in this Annual Report.
Smart Grid
At present, the Ontario power grid primarily serves as a mechanism for moving electricity in a one-way direction from generators to consumers. A smart grid, on the other hand, is defined by the Independent Electricity System Operator as a “two-way system that monitors and automatically optimizes the operation of the interconnected elements of the power system – from the generator through the high-voltage network and distribution system, to end-use consumers and their thermostats, appliances and other household devices.” By using advanced information- based technologies, smart grids have the capacity to increase grid efficiency, reliability and flexibility, with benefits for both consumers and the environment. The Electricity Act, 1998 was amended to allow for the development of a smart grid in Ontario.
The technologies supporting a smart grid can both facilitate the amount of renewable energy fed onto the grid, as well as contribute to conservation efforts. Given that wind and solar both generate electricity on an intermittent basis, smart grid technologies will need to accommodate this variable generation in order to balance supply and demand. As the number and distribution of smaller generators (such as small scale solar and wind) increases, the operational challenges of incorporating increasingly diverse energy resources will also grow.
From a conservation perspective, the Ontario Smart Grid Forum believes that a smart grid can provide enhanced information to consumers that will allow them to “gain greater control over their electricity usage to lower costs, improve convenience and support growing environmental awareness.” When combined with time-of-use pricing, the installation of smart meters (which provide consumers with timely information on price and consumption) is an initial key step towards realizing the full conservation potential of a province-wide smart grid.
Promoting Conservation and Efficiency
The GEGEA was also designed to promote conservation and energy efficiency initiatives across the province. The GEGEA, and the GEA in particular, contains several key provisions to foster a “culture of conservation”. Various groups, such as homeowners, government operations and public agencies, are identified within the legislation and specific provisions exist to shift each towards lower overall energy use. Further implementation details will be developed through regulation and subject to EBR notice and comment procedures.
A provision targeted at homeowners relates to the sale and purchase of residential properties. In particular, the GEA grants purchasers the right to receive information from the seller regarding the energy consumption and efficiency of the property for sale. While it is mandatory for a seller to provide such disclosure prior to accepting an offer to purchase, the right to receive this information may be waived, in writing, by the purchaser. As of June 2010, this provision was not yet in force.
The GEA also targets public agencies by requiring that government ministries and municipalities, as well as other prescribed public agencies and consumers, prepare energy conservation and demand management plans. Along with other requirements, public agencies may be required to achieve certain targets and meet energy and environmental standards, including standards for energy conservation and demand management. As of June 2010, regulations necessary to implement these provisions had not been passed; however, it is anticipated that universities, colleges, schools and hospitals, as well as large industrial and commercial energy consumers, will be subject to these provisions.
The GEGEA also repealed the Energy Efficiency Act, which governed energy efficiency standards for appliances and equipment, and replaced it with new provisions under the GEA, entitled Energy Efficiency and Efficient Use of Water. Energy efficiency standards for appliances and products can be established and restrictions can be placed on the sale of those items that do not meet the required standards. The inclusion of water efficiency standards is a new consideration that was not contained within the Energy Efficiency Act. In April 2010, the Ministry of Energy and Infrastructure posted a proposal notice on the Environmental Registry to develop a minimum water efficiency standard for toilets. The proposed regulation would require that all toilets sold in the province use six litres of water or less per flush. A number of proposed new or revised energy efficiency standards were also posted at the same time.
The Building Code Act, 1992 was also amended: energy and water conservation are explicitly stated as central purposes of the Ontario Building Code with respect to construction and demolition. In addition, the Ministry of Municipal Affairs and Housing is now required to undertake a review of the Building Code, with a focus on energy conservation standards, within six months of the GEGEA coming into force and, at a minimum, every five years thereafter.
The current Ontario Building Code dates from 2006 and so the ECO anticipates that a new code will be released by the end of 2011. Finally, pursuant to other amendments, a Building Code Energy Advisory Council has been established to provide advice on how to enhance the Ontario Building Code to increase energy efficiency and promote green technologies.
Further key GEGEA amendments relating to conservation, as well as renewable energy, were made to the Ontario Energy Board Act, 1998. These amendments fundamentally change the mandate and role of the Ontario Energy Board (OEB). While the OEB must continue to protect consumer interests (on such issues as price and reliability) and promote economic efficiency, it is now required to consider three new objectives:
- to promote electricity conservation and demand management;
- to facilitate the implementation of a smart grid; and,
- to promote the use and generation of electricity from renewable energy sources.
Given that the OEB is a key decision-maker in the electricity system, the inclusion of these objectives is of central importance in moving the electricity system along the path envisioned within the GEGEA. In order to determine the success of any conservation initiatives, it is important to both monitor and report on the progress made. In this regard, the GEGEA amended the Environmental Bill of Rights, 1993 to expand the Environmental Commissioner of Ontario’s (ECO) reporting mandate. The ECO is now required to prepare a separate report annually to the Speaker of the Assembly on the progress of activities in Ontario to reduce, or make more efficient, use of various forms of energy such as electricity, natural gas, propane, oil and transportation fuels.
To produce the energy report, the ECO has the power to require the preparation and submission of information from various actors within the energy field including the OEB, the OPA, the Independent Electricity System Operator (IESO), and the Smart Metering Entity (within the meaning of the Electricity Act, 1998). Electricity generators, transmitters or distributors, and gas producers, distributors, transmitters or storage companies also may be required to prepare and submit information to the ECO. Along with reporting on energy conservation, the amended EBR also requires the ECO to provide a separate annual report on the progress of activities in Ontario to reduce greenhouse gas emissions.
ECO Comment
The ECO strongly supports the key objectives of the GEGEA and recognizes the urgent need to move away from fossil fuel-based electricity production. The ECO is somewhat concerned, therefore, with the apparent erosion of public goodwill that occurred during the legislative process. Moving the province away from the use of fossil fuels to generate electricity, and reducing the associated negative environmental impacts, are positive goals that garnered wide public support. In its efforts to begin rapid implementation of the GEGEA, and to achieve the hoped for economic stimulus and green industry development, the Ontario government pushed Bill 150 through the legislature at breakneck speed – rarely has proposed legislation of this scope received such rapid passage. This antagonized some stakeholder communities and has resulted in a strong and significant backlash that may undermine some of its positive elements. To address some of these concerns, the government should ensure that proponents truly engage with affected communities and municipalities and take local concerns into account when moving ahead with renewable energy projects.
While an increase in renewable energy production is no doubt important, the ECO urges that enhanced conservation measures be given top priority. After all, conserve is just a different word for reduce – the first in the 3Rs hierarchy of reduce, reuse and recycle. Accordingly, the ECO would suggest that all agencies involved in the Ontario electricity market, including the OEB, OPA and IESO, place conservation measures at the top of their respective agendas in carrying out their duties within the evolving electricity policy landscape.
The GEGEA has created an enormous opportunity for the future development of renewable energy. Accordingly, the ECO strongly urges the government not to set any targets, or caps, on conservation and renewable generation but rather ensure that future electricity plans leave open a wide window of opportunity for the continued growth and expansion of conservation and renewable electricity generation.
Under the GEGEA, the ECO has a new responsibility to monitor provincial progress on both greenhouse gas reductions and energy conservation. As such, the ECO will closely observe whether the anticipated environmental goals of the GEGEA are achieved. In fulfilling our mandate, the ECO will assess the efficacy of the expanded powers granted under the amended Environmental Bill of Rights, 1993.
The GEGEA signals a dramatic, and far-reaching, shift in provincial electricity policy. As of June 2010, many of the specific provisions have not been implemented. As the devil (or the angel, as the case may be) is usually hidden in the details, the weaknesses and strengths of the GEGEA will be revealed as the regulatory details are fleshed out. In the meantime, the ECO strongly supports both the vision and goals underpinning the legislation and views it as a bold and sincere attempt to recast energy policy in a positive direction.
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| This is an article from the 2009/10 Annual Report to the Legislature from the Environmental Commissioner of Ontario. |
Citing This Article:
Environmental Commissioner of Ontario. 2010. "Powering the Future: The Green Energy and Green Economy Act, 2009." Redefining Conservation, ECO Annual Report, 2009/10. Toronto, ON : Environmental Commissioner of Ontario. 13-16.
