When Ontario residents think about the potential for offshore wind farms in Canada, they likely conjure up images of fields of turbines dotting the Strait of Juan de Fuca or the Bay of Fundy.
Prior to the media coverage over the past year, they would have been unlikely to think of the Great Lakes as one of the most promising areas for wind development in Ontario.
In particular areas, the wind regime in Ontario’s portions of the Great Lakes is impressive and the waters shallow enough to plan for some of the largest offshore wind farms in the world. Notwithstanding the potential, this industry is certainly in its infancy in North America, including in Ontario.
Despite the constant refrain of the business community about the necessity of maintaining consistency in policies and incentives in order to avoid chasing investment out of the sector, the Ontario government and its power purchasing body, the Ontario Power Authority, have made several changes recently to programs and requirements for the renewable energy sector, including those relevant to offshore wind developments, that have angered project developers and raised doubts within the finance community.
The amendment to the very popular feed-in-tariff program to provide a significantly lower rate for small ground-mounted solar projects stemmed from an overwhelming response and the perception that developers were taking advantage of an unintended quirk in the pricing model.
However, the proposed rule restricting wind developments to areas greater than five kilometres from shore appears to have been a response to criticism by environmental groups about the effects of the largest turbines going up near human and wildlife populations.
When the Ministry of Natural Resources announced in January 2008 that it would be taking new applications for offshore wind projects, the provincial government explained that the previous moratorium period had involved completing significant study of their potential, the establishment of key partnerships, and an in-depth analysis of certain social and ecological values.
Further support for this sector came with the price of 19 cents per kilowatt hour for offshore wind development, which raised the interest of some significant players in the global renewable energy industry, as well as companies like Toronto Hydro.
Less than a year later and not even eight months after the ministry gave approval to Toronto Hydro to build an anemometer to test the near-shore wind resource in Lake Ontario, the industry is reeling from the announcement of a proposed requirement that no turbines go up within five kilometres from shore, which effectively wipes out the Toronto Hydro project and makes its recent investment in testing equipment redundant.
The government has issued a discussion paper, posted the requirements for public comment, and promised consultation sessions this fall. Part of the justification for this geographic restriction is that certain states along the Great Lakes are considering similar rules.
Nevertheless, the U.S. government granted the industry a major victory this spring with the approval of the Cape Wind project in Massachusetts at the same time as Ontario was reversing course under pressure from environmentalists.
While the mix of federal and state control over offshore wind projects in the United States constitutes a significant drag on development in this area, with the Cape Wind approval, President Barack Obama’s administration has signaled it’s serious about encouraging such sources of electricity.
So why did Ontario reverse course? The change appears to be a manifestation of the tension within the larger environmental movement between those seeking to replace the most polluting sources of electricity with cleaner renewable energy facilities and more stringent environmentalists who are suspicious of the large industrial wind developments proposed on and offshore in Ontario.
The Liberal government would like both of these groups to support them in the 2011 election. It also wants to avoid driving the reactionary crowd that rises to oppose many new wind projects into the arms of the Progressive Conservatives.
The discussion paper on the proposed restrictions states that the five-kilometre shoreline exclusion zone is a result of the Ontario government’s commitment to protecting inland water bodies and ensuring safe beaches, drinking water, food, and fish, as well as preserving the province’s natural and cultural heritage.
Project proponents are asking why this commitment didn’t come into play earlier, which would have allowed them to plan developments to avoid the now-restricted near-shore areas.
Others note that while the restriction is clear that no wind development will occur within five kilometres of shore, the documentation explains that site-specific factors may require that a project be located even further away, which results in greater uncertainty among those considering making an investment.
When the provincial government introduced its Green Energy Act in order to expand renewable energy production, encourage conservation, and create jobs, it touted the possibility that Ontario would increase employment in new green sectors as a way of emerging from the global recession and manufacturing slump.
But it now appears that many U.S. states actively encouraging development may challenge Ontario’s early lead in the pursuit of offshore wind energy opportunities in the Great Lakes.
What can Ontario lawyers do to help their clients navigate the changing landscape in this area? Unfortunately, there are no guarantees in the renewable energy field, but a good lawyer practising in this sector should pay attention to the critics of the industry as it appears the provincial government will continue its attempts to keep both the proponents and opponents of wind happy.
Aaron Atcheson is a partner and national clean-tech group leader at Miller Thomson LLP who has worked on wind projects in Canada, the United States, and Ireland since 2002.
