Monday, November 29, 2010

Guest Post: Shaun Chapman and PACE Financing

Ontario has been moving aggressively toward a renewable future that is both profitable and sustainable. To that portfolio of financing options Ontarians have taken an interest in PACE (Property Assessed Clean Energy) financing. Fresh from the 2010 Ontario Community Power Conference it is clear that Ontarians would enjoy a bit more information on how this program works, and why it might be a good fit for green energy proponents.

First, how does PACE work? Or at least, how has it worked in the United States?

Sunday, November 21, 2010

ClimateSpark Seeks to Challenge Communities to Reduce Carbon

As the world’s national governments prepare to gather for the first post-Copenhagen United Nations Climate Change Conference in Mexico later this month, sub-national and regional governments are moving ahead with low carbon initiatives on their own. One of the most recent examples is the Low Carbon Economic Strategy plan published by the Scottish government last week. It is an attempt to focus the government’s approach in exploiting Scotland’s natural resources and competitive advantages towards the creation of 60,000 new green jobs by 2020 and grow its economy.

Closer to home, the City of Toronto is attempting to leverage the power of social networking to help the city mitigate its impact on climate change. The Toronto Atmospheric Fund (“TAF”) launched its ClimateSpark Challenge on November 3, 2010 in an effort to discover and nurture low carbon solutions.

Tuesday, November 16, 2010

An Historical Review of Ontario's Electricity Sector by Paul McKay

On Monday, November 15, 2010 attendees at the 2nd Annual Community Power Conference were fortunate to hear investigative reporter and author Paul McKay commemorate 100 years of community power in Ontario with an informative and insightful speech.  As a member of that audience, I thought it was important to put Paul's message in the public realm so that all Ontarians can better understand the value and importance of their investment in sustainable energy through the Green Energy and Green Economy Act (2009). Paul's latest book is Atomic Accomplice:  How Canada Deals in Deadly DeceitWhile you wait for your copy to arrive, I hope you will read his speech, reprinted here in its unedited entirety:

Canadians are widely reputed to be a peaceably pragmatic lot, not prone to claims of revolutionary high drama, divine destiny, or prima donna self-promotion. We can't claim a Paul Revere, a Joan of Arc, a Donald Trump or Lady Gaga.

Instead, we have Banting and Best's quiet discovery of insulin, Dr. Norman Bethune's battlefield blood transfusion kit, Alexander Graham Bell's crackling telephone, Massey-Ferguson tractors, the RIM Blackberry, the Tim Horton's drive-thru - innovations which succeeded because they worked.

So it may be tempting to assume that a condensed version of Ontario's 100-year history of electric power might be worthy of only a bored yawn, or an early exit for an advance coffee break.

I am here to convince you otherwise.

Friday, November 12, 2010

A Bright Idea: Energy Services Agreement

Versions of this entry can also be seen at Tyler Hamilton's Clean Break blog (http://www.cleanbreak.ca) and here at Energy Management (http://www.energymanagementcanada.com).

Introduction

Energy retrofits of industrial and commercial buildings have recently proven to be one of the more popular initiatives for Canadian landlords and tenants (“project proponents”) seeking to brandish their green credentials or, simply enough, to save money. However, comprehensive retrofits can be quite costly with high initial capital costs and long payback periods. Incentives such as the federal government’s ecoENERGY Retrofit, BOMA Toronto’s Conservation and Demand Management (CDM) $60 million fund and Toronto Hydro’s Business Incentive Program have been attempts to make some of these investments more palatable to building owners and operators.

Unfortunately, for energy efficiency enthusiasts, these programs are generally limited-time offers and may not coincide with building maintenance or budget cycles. (In fact, both the ecoENERGY Retrofit and the BOMA Toronto CDM programs will be shut down by March 31, 2011.) What other options does a cash-strapped business have to conduct electricity conservation projects on their properties? One solution that is currently overlooked, but may prove more appealing as incentive programs are phased out, is employing an Energy Services Agreement (“ESA”).

Friday, November 5, 2010

Community Power Developments in Canada

Background  

In a previous post, I discussed the importance of embedding acceptance for the objectives of Ontario's Green Energy and Green Economy Act (Ontario) (the "Act") within communities. Only by developing widespread support for renewable energy would the province be able to ensure enough support is entrenched to weather future storms and transfers of political power.  Recent developments suggest the province is on track to incorporating local communities in this transformative change.

Ontario's Track Record

Developing community-owned renewable generation is an objective of the Act and a major goal of the Feed-in Tariff ("FIT") Program. Early reviews of the effort by the Ontario Power Authority ("OPA"), which administers the FIT Program, suggest it is realizing some considerable headway in this regard. It has signed contracts for 264 MW of community renewable generation and an additional 120 MW from Aboriginal renewable generation according to an October 12, 2010 report.

Energy analyst Paul Gipe has stated that once these projects are completed, "Ontario will have the largest installed base of community-owned renewable generation in North America, surpassing community ownership of renewable generation in Minnesota." This could put the province on track to have the largest installation of community-owned renewable generation outside of traditional powerhouses Denmark and Germany. However, there is still a palpable sense of uneasiness among the sector's most enthusiastic supporters who see limited financing options and low returns as two significant barriers for these groups to overcome.

Thursday, November 4, 2010

Wakulat | Law to Participate at Power Conference

Thanks to the jolt provided by the passage of Ontario's Green Energy and Green Economy Act last year, a variety of newcomers have taken on leadership roles in bringing clean, green and distributed energy to the province.  Chief among these varied groups is the Ontario Sustainable Energy Association, which is a province-wide, member-based non-profit organization dedicated to supporting the development of Community Power projects and renewable energy. It includes an eclectic membership of private citizens, cooperatives, farmers, First Nations, businesses, institutions, consultants and municipalities.  Though not necessarily a "newcomer" since OSEA was a key member of the Green Energy Act Alliance, it has most definitely expanded its role and influence since the Act was introduced.

OSEA is also responsible for putting on the only Community Power-focused conference in Canada, if not the world.  The second annual Community Power Conference will take place November 14-16, 2010 in Toronto, Canada.  It will bring together approximately 600 delegates from the above-mentioned groups along with a selection of international speakers and participants from such places as Australia, Brazil, Denmark and Japan.  One of these special guests includes Fabio Rosa, who is a Brazilian social entrepreneur focused on promoting rural electrification and the use of sustainable energy sources. His inspirational story was featured earlier this year on PBS' series The New Heroes:



I am a proud supporter of OSEA and in order to demonstrate my commitment to grassroots energy generation, I have dedicated at least two days per week since mid-August to volunteering with the amazing folks planning the conference.  The commitment and passion of OSEA staff, volunteers and advisors has given me hope that despite the learning curve and challenges of developing community power in Ontario that progress will continue to be made.

Our communities are already benefiting from ground-breaking work by groups such as the Toronto Renewable Energy Co-Operative, Pukwis Energy Co-op and the Neighbourhood Unitarian Universalist Congregation, to name but a few. They have demonstrated despite the imperfections of the current Green Energy Act and Feed-In Tariff Program, that successful Community Power projects are possible in Ontario.

Thus, it is with great pleasure that I will be participating with OSEA's co-organizer, the Association of Power Producers of Ontario as a moderator for a panel in their Power Networking Centre.  APPrO is holding its conference alongside OSEA which will be the 22nd Annual Canadian Power Conference. It will take place on November 16-17, 2010 and its theme is Making Green Sustainable: Responsibly Rebalancing the System.

If you would like to work with these groups or attend the conference, please contact me and I can plug you into the right people.  It is only by working together and supporting one another that we will truly embed an ethic of conservation and renewable generation in our communities.

Thank you,
Rob

Wednesday, November 3, 2010

California Midterms: Reading the Tea (Party) Leaves

This posting follows a previous post discussing the potentially far-reaching impact of California's midterm choices on, not only the U.S., but also North American climate change mitigation efforts.

California's midterm election results are in and it appears voters have handed climate change proponents a mixed but generally positive message:
  1. Governor:  Democratic candidate Jerry Brown's return to the governorship came at the expense of former eBay CEO Meg Whitman and her spending record of US$141 million on the race. Brown holds a position that is generally seen as more favourable to continuing the development of the state's climate change policies than Whitman would have been. He has expressed the view that "adjustments" may be required but has pointed out that maintaining investor certainty is key to continuing California's leadership in cleantech.
  2. Proposition 23:  Climate change proponents can exhale (and continue to buy offsets for those exhalations) thanks to an overwhelming rejection of Prop 23.  Prop 23 was largely funded by oil companies, and proposed suspending the Global Warming Solutions Act of 2006 - a timetable to bring California into compliance with the provisions of the Kyoto Protocol - along with a suite of programs designed to promote innovation in cleantech. Thus, this will be welcome news to Silicon Valley technology companies who have invested heavily in greener technologies. It is also good news for California's partners in the Western Climate Initiative such as the Canadian provinces of B.C., Manitoba, Ontario and Quebec who are moving forward with the development of a linked set of cap-and-trade systems for greenhouse gases.
  3. Proposition 26:   The fly in the otherwise green ointment, is the passage of Prop 26, which changes the state’s constitution by requiring cities, counties and the state legislature to have a 2/3 vote instead of a simple majority to increase or enact a fee. It has been dubbed the “Polluter’s Protection Act.” The goal is to reverse the 1997 California Supreme Court unanimous decision in Sinclair Paint Company v. Board of Equalization which upheld a fee on paint producers that would help pay for children at risk from lead-based paint. The court found that such a fee is not a tax but a regulatory fee that could be imposed by a majority vote. Prop 26 also contains a provision that the legislature is not allowed to pass revenue-neutral bills that raise some taxes but lower others, which is a key plank in many cap-and-trade or cap-and-dividend schemes.  A more comprehensive analysis by three UCLA professors explains the impact of Prop 26 on pollution prevention measures generally and climate specifically.  The upshot is it will be trickier to implement the Global Warming Solutions Act. 
Generally speaking, this is all relatively good news for climate change mitigation efforts in California and more broadly across the continent.  It may simply require more creative thinking on the part of the California state legislature or its Air Resources Board (ARB) in maintaining progress in this area.

In fact, the ARB is not wasting any time as it has recently issued its proposed greenhouse gas cap-and-trade program building on the conceptual framework released in November 2009. The 45-day public comment period on the regulation opened November 1, 2010 and closes on December 15, 2010. In addition, ARB staff will present an overview of the proposed program to the Board at its November 18, 2010 meeting. The ARB will then hold a public hearing to consider the cap-and-trade program on December 16, 2010 following the comment period.

Tuesday, November 2, 2010

Ontario's Solar Incentive Cutbacks: FITting in the Bigger Picture

Earlier this year, the provincial Government of Ontario came under heated criticism when its industry regulator, the Ontario Power Authority, abruptly proposed a rate cut to its microFIT (Feed-in Tariff) program. Coming just nine months after the program launch, the proposal was to scale back the tariff rate for ground-mounted solar PV installations from 80.2 cents per kWh to 58.8 cents per kWh. After a month-long consultation process in which industry proponents argued vociferously against the move, the Ontario Power Authority compromised and settled on a rate of 64.2 cents per kWh while essentially banning the practice of commercial aggregation under microFIT.  

There was considerable concern that the OPA's process as opposed to the actual decision could serve to  undermine investor confidence in the province's much-larger FIT program designed for big producers of energy from sources like the sun and wind. However, it is interesting to note that the OPA decision fits a wider trend affecting FIT programs on a global scale. Presumably still recovering from the Great Recession, many other governments have also reconsidered their financial commitment to renewable energy generation.  Some in a much less adroit manner than Ontario.  For example:
  • Germany:  Both the leading exemplar of how to develop a FIT program and also perhaps how to make effective adjustments on the fly, the government is teaching the German solar industry how to adapt to a much less lucrative home jurisdiction. Following an intense political debate, the German Bundestag decided to invoke a mid-year reduction to its solar FIT program. By early July politicians had agreed on a two-step reduction, with reductions taking place on July 1 and October 1, 2010. For a comprehensive summary of the changes check out the very thorough German Energy Blog.
  • Australia:  At the other end of the competency spectrum, we have the state Government of New South Wales (NSW). Overnight and without warning, NSW slashed its rates from the highest to the lowest in the country. The NSW Solar Bonus Scheme was introduced via legislation in 2009 and provided a FIT tariff rate of 60 cents (Australian) per kWh but starting October 28 is only offering 20 cents per kWh. Similar to the OPA, NSW found its program to be more popular than it anticipated and felt it needed to rein in its long-term financial obligation to renewable energy generation. And like Ontario, local industry has been in an uproar, suggesting the change will eliminate jobs and investments.
  • Spain:  On an even more serious note, the Spanish Energy Ministry has initiated a probe of over 9,000 cases with an eye to any potential fraud by proponents. It has already forced a new deal on 907 installations requiring that they accept 32 euro cents per kWh instead of the 46 euro cents to which they were originally entitled.
  • Italy:  In another sobering situation that goes beyond solar, the Italian government has become involved in embezzlement investigations of alleged criminal organizations that have attempted to take advantage of various renewable incentive programs. 
Abengoa Solar Platform, SanlĂșcar la Mayor, Sevilla (Photo by me!)
Despite all this seeming gloom, there is at least one international bright light for solar proponents. The penny-pinching coalition government in the United Kingdom announced a couple a weeks ago that it would improve the efficiency of its solar FIT rates at the next formal review. An attempt will be made to refocus tariffs on the most cost-effective technologies in 2014-15.  Leave it to the Brits to be true to their word.

One last point on the issue of FIT cuts is that proponents should keep in mind that these programs are actually designed to embed rate cuts at predictable intervals. The point of these programs is to provide the boost needed to get renewable technologies to be cost competitive with more established, but dirtier, energy options. As industry moves along their cost curves, the idea is to pass the savings on to the broader market and not have industry capture excessive returns. The question at this point is how best to provide predictability and incorporate public consultation into this decision-making process.  The partial answer in Ontario has been to create an Advisory Panel for the microFIT program which will hopefully ensure smoother price transitions in the future.

Without a doubt, there will be further incentive cutbacks as FIT jurisdictions adjust to the market responses they experience. Ontario appears to be safely applying a middle-of-the-pack approach to its adjustment process, but there is hope that it is starting to work towards being an international leader in working and communicating with its stakeholders.

Keep smiling,
~Rob

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