Richard Ivey School of Business

Richard Ivey School of Business

February 24, 2009 15:04 ET

New wind power sector study finds Green Energy Act not bold enough

Ontario seen as risky for renewable energy investments

Attention: Business/Financial Editor, Environment Editor, Energy Editor, News Editor, Government/Political Affairs Editor LONDON, ON--(Marketwire - Feb. 24, 2009) - The Ontario government was wise to address NIMBY roadblocks and unveil the Green Energy Act yesterday to encourage renewable energy investment, according to a utility regulation expert studying why provincial renewable power policies have yet to meet their potential.

However, the Act doesn't go far enough by failing to include long-term targets for renewable capacity and leaving decision-making to Ministers.

In their new Ontario wind power study, Guy Holburn, Associate Professor, and Charles Morand, researcher, Richard Ivey School of Business, recommend the Ontario government enact bold legislation on renewable energy, with long-term capacity targets, to attract wind developer investments.

Holburn and Morand surveyed 63 wind developers and studied past policies to determine why previous provincial initiatives to increase green energy - including a feed-in tariff that guarantees the Ontario Power Authority will purchase from renewable electricity suppliers at fixed prices - have failed to meet targets.

"Ontario has been considered a risky jurisdiction for renewable energy investors. The new Green Energy Act removes some of the uncertainty around municipal permitting and grid connection policies," said Holburn, who specializes in utility regulation and stakeholder management. "However, the Act does not establish long-term targets for renewable capacity. Instead it leaves key decisions on targets and power pricing in the hands of the Minister, who can easily change policies if political priorities shift."

According to their study, "Regulatory Risk and Private Investment in Renewable Energy Technologies: A Study of the Ontario Wind Power Sector", 4-1/2 years of Ontario government initiatives on green energy have produced mixed investment results in the wind power industry. Less than 50 per cent of the original 2004 target for renewable investment by 2007 was actually achieved.

Holburn and Morand attribute this to policy-making that is conducted outside of the scope of formal legislative and regulatory processes.

While the Ontario Power Authority is responsible for implementing renewable energy regulatory policies, the Minister of Energy and Infrastructure has extensive authority to control it by issuing directives without the need for broad public consultation. Since Ministers change frequently, renewable policies have repeatedly been adjusted or abandoned through new directives and orders. The Green Energy Act further broadens Ministerial powers - exposing policy even more to political pressures.

"Developers rate regulatory policy stability as one of the weakest aspects of Ontario's business environment," said Holburn. "Concerns over policy stability and regulatory risk have led developers to invest in other jurisdictions or to price in a risk premium here in Ontario - implying higher rates for consumers. The Green Energy Act should go further by delegating more policy-making authority to independent agencies and limiting the scope for Ministerial directives."

For more information, please contact Guy Holburn at 519-661-4247 or gholburn@ivey.uwo.ca; or Charles Morand at 226-448-0339 or cmorand2@uwo.ca.

About the Richard Ivey School of Business, The University of Western Ontario

The Richard Ivey School of Business at The University of Western Ontario (www.ivey.ca) offers undergraduate (HBA) and graduate (MBA, Executive MBA and PhD) degree programs in addition to non-degree Executive Development programs. Ivey has campuses in London (Ontario), Toronto, and Hong Kong. Ivey recently redesigned its curriculum to focus on Cross-Enterprise Leadership - a holistic issues-based approach to management education that meets the demands of today's complex global business world.

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For more information, please contact:
Dawn Milne, Communications Specialist, Richard Ivey School of Business, 519-850-2536, dmilne@ivey.ca

IN: ENERGY, ENVIRONMENT, POLITICS

Contact Information

  • Dawn Milne, Communications Specialist, Richard Ivey School of Business
    Primary Phone: 519-850-2536
    E-mail: dmilne@ivey.ca