Ontario Renewables Act to provide $4.5bn economic boost

Recently introduced green energy legislation in Ontario, Canada could inject $4.5bn into the region's economy, according to a new study which argues that well-managed renewable energy projects could attract significant inward investment.

Hatch Management Consulting analysed the business case for power generators, transmitters and local distribution companies considering renewable energy investments in the wake of the Green Energy Act, which was introduced earlier this year and aims to grease the wheels for renewable energy projects in the eastern Canadian province.

Conducted while the Act was still being passed, the study made several recommendations about how to unlock economic value from the legislation, advising that the province should promote energy conservation in parallel with renewable energy development.

It also recommended the activation of the domestic content requirement regulations included within the Act, which govern the extent to which renewable energy projects should be based on local goods and services, arguing that the regulation will play a significant role in accelerating the adoption of renewable energy.

However, the study also identified several barriers to adoption of renewable energy, highlighting grid integration problems, environmental permit delays and construction challenges if multiple renewable projects try to tap resources simultaneously. These barriers must be overcome if the value of the Act is to be realised, Hatch said.

The Green Energy Act, which was passed by the Ontario provincial government in May, implemented several measures to kick-start the green economy in the province, which holds a quarter of Canada's 30 million people.

It promised to streamline approvals for renewable energy projects, implement mandatory home energy audits prior to the sale of homes, and develop a feed-in tariff system to guarantee prices for renewable energy projects.

It also promised community project owners such as municipalities and first Nations groups financial assistance to recover some up-front project costs.

Some of the study's recommendations are already underway. In September, Ontario announced domestic content requirements mandating that 50 per cent of large solar project costs and 25 per cent of wind project costs come from Ontario goods and labour. These come into effect in 2011 and 2012, respectively.