Ian Rowlands examines the ways in which electricity generated by renewable resources (like solar and wind) have been encouraged in the province of Ontario (Canada) during the past 20 years. September, 2015.
>> Thanks for coming out today, to this event. There are a number of cosponsors that I just want to acknowledge. The Environmental Law Society, the Climate Centre, the Political Science Department, the Program in the Environment, the Energy Institute and Michigan's Energy Law Association. And I realize that those of you in my class know me. I am Sarah Mills. I'm a postdoc here in the Center for Local State and Urban Policies. And CLOSUP, the Center for Local and State Urban Policy, is one of the primary sponsors putting this on today. Our director of CLOSUP Barry Rabe has-- is gone for the academic year but has come back to introduce his friend Ian Rowlands here. And so, I want to turn the floor over to Barry, and then to our speaker for today.
>> Thank you Sarah. Hey, good morning. I hope to too many fines this year but I'm delighted to be here for this. The question of producing energy in this case producing electricity had been thinking about the environmental consequences, something we're thinking a lot about at the Center these days. And there are just a great number of issues even facing Michigan given the long-term planning considerations the electricity sector has this thing called possible routes toward compliance with the clean power plant. It's also emerging in other jurisdictions in the US but also internationally and we tend to think about half abundant cases internationally we might be thinking about Germany, Japan, China and yet there isn't international case right on our border with the Canadian province of Ontario. We are indeed fortunate to have one of the leading scholarly experts on energy and environment issues in that jurisdiction as well as around the world. Ian Rowlands has written-- fought for in extensively on these issues in the United States and the European Union particularly in the United Kingdom but also in Canada and then very, very heavily intensively involved in energy policy development in that province for a number of times for a number of years. He's a professor in Department of Environment and Resource Studies at the University of Waterloo a relatively short period [inaudible] campus. He is also the Associate Dean for Strategic Initiatives and the faculty and the environment at University of Waterloo. Remember you also may know him by a really wonderful piece he wrote about 80 years ago which really framed the theoretical terms, the evolving Ontario energy debate or electricity debate and explaining why policy transitional is occurring so rapidly. Why in some cases people without a change of government they were substantial shifts in policy, a very large major industrial products that has a lot of energy and issues in environmental considerations as well. And so what we here are getting today is an overview of that evolving case and I'm just really delighted. Please join me in welcoming Professor Ian Rowlands.
[ Applause ]
>> Thank you very much. Thank you very much for coming out this morning for the talk. Thank you very much to the organizers for the invitation. I'm delighted to be here with you today to share a few thoughts about what's going on in Ontario with regard to as the title suggest, promoting renewable electricity in the province. So, just a quick word to begin about that commute that I was delighted to make my home university I'm from the University of Waterloo in Canada about 220 miles east of here. And it's just under 60 years old home to 20-- 30,000 undergraduate students and about 6000 graduate students. And what we are known for nationally and internationally is our engineering school, our math school as well as a very extensive system of cooperative education where students combine the classroom experience with the workplace experience. We've done a lot of work and have a lot of spirit of entrepreneurship in the innovation there as well. And in the faculty of environment where I'm based the five units are interested in looking at exploiting opportunities and responding to challenges on a range of environment and sustainability issues. So that's just something about the University of Waterloo. And I've just got a few slides about the context between Michigan and Ontario as I thought about this lovely state that's hosting me today in my home province of Ontario as well. As I put a few numbers on the slide and they're behind me now, I was struck by a number of the similarities between these two sub-national jurisdictions. They're approximately the same number people live in the state and the province. The economies are approximately the same size and anyone will know with the plunging Canadian dollar these days that Ontario numbers getting closer and closer to the US number unfortunately. And the economies, both economies have had to deal with post-2000 changes in the manufacturing makeup of the economic base and responding to those challenges as well. Ontario is a little bit larger in terms of land area but most of our population is in the southern part of our province. And there are a number of Michigan-Ontario links as well. I mean, someone based in Ontario I'm struck that we are very dependent upon you for our trade links, you are our largest exporting location, you are our largest location from which we import goods. Up to a quarter of our trade is with the State of Michigan as well. The Ambassador Bridge which connects Windsor and Detroit is the busiest entry-- very busiest crossing between Canada and the United States as well. And we've got a long history of cooperation where the state and the province that have primary stewardship for the two Great Lakes, we border more of the Great Lakes than any other state or province as well and not surprisingly of course the international joint commission has its Great Lakes regional office that is headquartered in both Detroit and Windsor. And I must admit I'm a bit of a sports fan as well so I'm intrigued by other connections. We on Ontario produce and nurture hockey players quite well and there's a chap called Kyle Quincey who is on defense for your Red Wings and we help with that a little bit. And there is this man called Steve Yzerman who I guess has done more for your Red Wings over the years than anyone has done for my Maple Leafs for many, many yeas. So, Yzerman grew up in the city I grew up in, I wish I could say I taught him his hockey skills but know nothing to do with that. So we've helped you out with that and indeed you've helped us a little bit with baseball as well. So, I'm a Blue Jays fan and the gentleman who's played catcher for the Blue Jays more than any other Blue Jay in history comes from the great State of Michigan and indeed his learned how to say out and about properly and has continued his Canadian connections and he now manages our national baseball team has taken us to the World Baseball Classic, the World Baseball Cup and Gold at the recent Pan Am Games, beating the Unites States in the gold medal game so wonder if his citizenship wonder if he'll have to be and fully Canadian now I'm not sure about that. And then of course most timely is here's a gentleman who spent a year with you, if you've got a baseball-- any baseball fans here a chap called David Price who made the trip down the 401 in July and we like how he looks now and I guess all I can say is thank you, thank you, thank you. Because 22 years is a long time and we get to play meaningful baseball in October. So, there you go. Let me bring it off the sports and back to the area that I'm looking at and that is with regard to electricity. And I'm struck by the connections between our two jurisdictions as well. So we are physically connected in terms of electricity exchanges by interties in the Sarnia-Windsor area. And we do have exchanges at times that make sense for Michigan and Ontario of electricity. Annually it's something of the order of six and a half terawatt-hours which is relatively small in the overall portfolio but can be done at meaningful times conserved to support each other's systems. And it's also the fact that we share some characteristics and that we both have hybrid portfolios in our electricity supply systems. So as we think about the electricity services, we're taking advantages of right now the lights and the projector. In Michigan you've got a system whereby coal and nuclear are important but you've got a hybrid of resources and in Ontario as well. Unlike some other Canadian provinces that are solely dependent upon hydropower, we've got a-- hybrid supply mix whereby nuclear power is quite important, hydropower plays a role but there's a number of other elements, number of other resources that are important there as well. There are other similarities and I just flagged this because you may well be interested in the Michigan issue and I very much appreciate Barry's introduction thinking about the way in which different jurisdictions can learn from each other. And I've just flagged on the slide there a few facts that both of us are sitting in federal systems whereby we have national governments that have particular jurisdiction on energy systems, we've got state or provincial governments and then we've got increasingly local communities wanting to exercise right and have their say for understandable reasons. We've got the roles of regulations. We've got some market elements as well. We've got concerns about energy security, about societal priorities. And generally there's lots and lots of discussion about the sustainability of energy systems and I'll say one or two more words about that in just a moment. So given all that context this is what I'd like to do over the next 30 minutes or so, 35 minutes in my discussion, and that is to introduce you to the ways in which renewable resources and here I'm primarily thinking things like solar and wind, how they're being encouraged in the province of Ontario during the past two decades. So I'll provide a little bit more context in a moment and then I'll look in particular at two periods of policy making and politics. I'll pick up on one that dates from the earlier part of this century, the early 2000s and then a second one that is much more contemporary during the past five years. I'll say something about the prospects and then during our last 25 minutes, half hour is I very much look forward to the discussion and hearing what you want to come back on as I continue to learn about Michigan example in the way in which the two jurisdictions may be able to speak to each other and learn from each other as well. So, a little bit about electricity system sustainability and this could of course be the subject of a lecture in itself but I thought-- I sense one of-- it's similar to my home back in Waterloo. Many in this room may be coming from different programs, different institutes and so on and will be having different reflections, different starting positions on this debate. What I'm interested in all this is I'm interested in electricity services. A lot of times I find in energy issues, a lot of it has been supply oriented. You go to energy statistics and perhaps the first page you will see will be some, as I had them as well, some supply numbers. But as I tell me undergraduate students when talking about energy, no one invites friends over to their house and say, "Look at this barrel of oil I just bought. Isn't it beautiful? And I've got some coal in the bedroom and if you're a good guest I'll bring it out and we can have a look at." No one cares about the supply commodities. They're interested in the transformation of it to get the services that energy can provide, so interested in the warmth in that room, interested in the lighting, interested in the means to communicate with one's phone, so on and so forth. So I'm intrigues by an electricity system whereby we have generating stations that are getting resources from perhaps nearby or further field. Transformation is going on there perhaps combustion and so on, long distance transmission over high voltage lines and then within communities the voltage is stepped down and it's distributed to end users. This may be industrial customers. It may be commercial customers, institutional or households as well. And then what are the sustainability consequences of providing those services? And yes, these electricity systems that we have out there often centralized where you've got major large power stations and then the load is distributed out to different load centers. That's done us very well for a century and we've gotten a lot of well-being. But we're seeing that there are sustainability consequences of some of those systems with regard to coal-fired power stations, climate change is the one that comes to mind. Greenhouse gases are being emitted in the combustion of coal to generate electricity and that has consequences for all of us. And with regard to nuclear power stations, predominant in my home province, there's amongst other issues, long-term management of the waste. So we're imposing burdens upon future generations to be vigilant in looking after waste disposal. So these are the kinds of externalities [phonetic] that impose obligations upon others, others in space in the sense of other jurisdictions around here down in the air shad or simply sharing the atmosphere or others in time in the sense of future generations. And that's encouraged a number of people to think about transformation of electricity systems and introducing efficiency measures to a greater extent and introducing renewable resources to a greater extent as well. My focus today is upon renewables but the last couple of slides will show that I've done some work on efficiency and very happy to come back with regard in the discussion if anyone wants to pick up on anything there. So that's just one table setter if you will about thinking about the entire electricity system and the sustainability aspects of it and the way in which our conventional system exist, they brought us much wealth, much joy but there are these challenges associated with them. So people are thinking about of these market imperfections whereby perhaps renewables will not arise spontaneously or naturally, we may need to encourage them in some ways. And a lot of times, communities around the world, jurisdictions around the world have thought of developing what are called quantity-based measures or price-based measures. And in a nutshell, a quantity-based measure a government will decide part of our electricity system we're going to reserve for particular kinds of resources often renewable resources. We'll carve out a bit, 5% maybe of the system for those kinds of resources and they will have to compete between themselves to get access to it. In the United States that's often called the renewable portfolio standard, in my last figure I looked at was that something of the order of 30 states plus the district of Colombia have some kind of renewable portfolio standard or a quantity-based measure. We don't necessarily know how much it will cost but we'll know how much we get. The flip side of it is often called the price-based measure. We will offer a particular-- for often a premium price for renewable electricity and then like Kevin Costner said perhaps, "You offer it and you see who comes." If you built it they will come. If you offer a price you see how many people will take advantage of that and build new windmills, build new solar facilities. And this has been as I'll talk about in a minute or two very popular in Europe and though less popular in the US that I've read that at least four states have some kind of feed-in tariff whereby you are rewarded for constructing and in the end we don't know how much we'll get but we know what the price level will be. That's just a little bit of context and now I'd like to go on and talk a little bit about the Ontario issue. And Ontario is an-- I'd like to say a nice case study because we've seen it all in some ways. We had in a Canadian sense a relatively right wing market oriented government during the latter part of the 1990s and the early part of this century that basically said, leave it to the market. If people want renewable electricity, we understand that it won't arise spontaneously because of these market imperfections but the good people on Ontario will dig deep into their pockets, pull out some money and pay more for it. So people will buy green power as it was often called in the debates if they wanted to. Uptake and I can talk more about this if anyone is interested in. Uptake was relatively modest. Those of you doing research perhaps will study that it's one thing when a surveyor asks someone, "Are you willing to pay more for green electricity?" It's altogether another thing when the bill comes and saying, "Instead of paying 12 cents a kilowatt-hour, are you willing to pay 15 cents of kilowatt-hour?" "Oh, I think I hear my phone ringing, I better leave." And people usually don't make that commitment to sign. One wonderful methodological approach I saw was a surveyor said, "Would you pay more for green power, and if you answer yes can we have your credit card number and expiry date for when we have green power we'll start debiting you immediately." And that's-- That got perhaps some more real response as well. Our conservative government in Ontario left it to the market in that way. They had a relatively late conversion to some kind of RPS in the early part of this century. And then the liberal government brought in a renewable-- green power standard and their own variation of green powered standard which was like a renewable portfolio standard. Three years later we flip to a kind of feed-in tariff. And then if I do my math about seven years after that we went back to some kind of renewable portfolio standard whereby now we've got a mixed landscape. So over the course of 20 years I won't say we've seen it all because that would mean we should not and we should close down our imagination, we shouldn't-- we should be thinking of new approaches. But we've seen lots of things. And I'll talk a little bit about that of that one transition from going from the leave it to the market and into-- sorry, going from a renewable portfolio standard to a feed-in tariff. And then I'll talk about the more recent transition whereby if you have the reintroduction of RPS and we now have this more mixed landscape out there. So, with that context, a little bit of that first transition I'm talking about. From a renewable portfolio standard we had a new government come in, in 2003 that basically said we're going to adopt a renewable portfolio standard through a request for proposals approach. But then three years later the same government as Barry noted. The same government said, "We're taking a different approach now. We're going to bring feed-in tariff and indeed we're going to give 11 Canadian cents for wind, 42 Canadian cents for solar as well." And as a researcher and one who server wonders, gosh why did that happen? Why did we have that kind of policy shift over three years, what was the politics involved? And as I and others have reflected on it it's been very interesting to see that during that three year period, '03 to '06, there were a few things that were happening concurrently that serve to, I think I say on a few slides to have the stars aligning properly to allow a shift. And first of all we saw the way in which the problem was defined to be somewhat different. In the earlier days of electricity debates in Ontario, the problem was about local air quality. These coal-fired power stations which we used to have are causing our kids to get asthma and causing us to have to-- not exercise on our smog days, on our smog alert days. So the electricity system problem was framed as an air quality problem to a great extent. We had a coal phase-out whereby we had one of the most significant North American changes in climate-- in greenhouse gas emissions. What had been about a quarter of our generating portfolio was eliminated from our supply portfolio over the period of about a decade and thus the framing of the issue as a health problem receded a bit as well. So then what was the problem after that? It became a bit of a supply gap problem. When planning an electricity system one takes a long-term view because one has to go through planning procedures, construction and so on, you can't all of a sudden tomorrow have a new power plant. Planners in Ontario were looking through a horizon and seeing a gap between anticipated supply and what the demand they thought would be. And what's going to fill this gap? The coal-fired power stations aren't there anymore. Another framing was about economic development possibilities that might be associated with renewable energy. Maybe we could have wind and solar as engines of local economic development in some ways. How would the benefits be shared from a new kind of resource in the portfolio? So these kinds of problems wee being increasingly part of the discourse and increasingly I'll argue in a second consistent with how renewables could rise to that challenge. There was also again the perfect timing a new policy was being talked about, new for Canadians and new for North Americans at that time. As I think I've already suggested, the renewable portfolio standard or sort of the conventional approach in North America. That's what one thought of when one thought of government-- sub-national government action to encourage renewables. But there are these strange voices coming from Europe talking about this think they call the feed-in tariff that the Danes, those in Denmark had a great success with. Those in Germany were experimenting with and others in Europe as well. And a number of local NGOs in Ontario brought over European speakers to talk about this experience and to try to add this language to the debate about don't simply do a projection of what an RPS would be all about. Think about this different policy approach as well. And the third level of timing that was useful was that the liberal-- The government that came in, in '03 was having some political problems with its conventional approach to encouraging renewable energy. That chap up there who doesn't look too happy is a wind power developer and also a major donor to the government political party. So when he got a big wind contract, the press went a bit not sort of saying, "We've got cronyism going on and these new people in power are just like the old"-- what does one often say? "The old guys we threw out, guys and gals we threw out." So there was this sensitivity about being captured by special interests. And as the RPS was being offered it was slowly turning into all wind all the time. Wind being cost-effective compared to some other renewable resources at this time was winning a lot of the request for proposals the tenders that were out there. And there was suggested that there might be-- we need more diversity in the portfolio if nothing else to avoid some of the NIMBY-ism [phonetic] that's going on. So all of these factors came together in the action of a political entrepreneur serve to exploit the language from the article, some of you read the open policy window to weave those things together to allow a literal, to encourage, catalyze, allow the government of the day in 2006 to bring in a feed-in tariff that government wanted to do something different to avoid the same pitfalls that, you know, befell the previous government. There was all of a sudden this new offering of a new policy idea that could be tried out and be innovative in a North American setting. And this individual, Paul Gipe of US based wind entrepreneur who just hop into be covering for a maternity leave from an NGO in Ontario at the time saw those start are lining and was a key catalyst in making that policy change happen. I'm intrigued. I've done some work in political science. I'm intrigued by the ways in which policies and politics interact and dove my engineering training encourages me to do a rational act or model approach. I know that some times things aren't that neat and tidy and that it's a bit of a messy soup in some ways and things got stirred and it's amazing how it taste if I can mix my metapores. So that's my first of few reflections on the first policy change from '03 to '06 as we went from this interest in an RPS to feed-in tariff. And the second policy change I'll spend a few minutes on, I'll call the push-back. And this is-- I'll take it from 2009 and to 2013. In 2009 might be the pinnacle of interest in the feed-in tariff. We had the 2006 RESOP policy introduced. We had that more formalized in 2009 where we had the introduction of, my typo up there it's the Green Energy and Green Economy Act. And that included, you thought 40 some odd cents for solar was nice. That included 80.2 cents per kilowatt-hour for solar. If you look at your bill for electricity, my bill in Ontario might be something of the order of 14 or 15 cents per kilowatt-hour. So a dramatic premium price for a solar which if you had the up from capital could envisions a pay back period of seven years. It was a 20-year contract then but-- so years 7 to 20 were like gravy, were like flow of resources for you. It also included a domestic content requirement whereby in order to qualify for the feed-in tariff, at least half of the components had to have been made in Ontario. So this was the, my typo, Green Economy part of the Act. It was meant to encourage that economic development [inaudible]. But just four years later, renewable portfolio standards were back on the agenda and today we've got this mixed landscape of some feed-in tariffs and some RPS. So again I'm intrigued by what happened during those four years that you had this as I'm calling it up the top a push-back. Well, a lot of similar kinds of factors arose then and the way in which the issue was framed, I think I mentioned earlier we have these frames of economic development in jobs and indeed to encourage support for feed-in tariff this notion that farmers could lease their fields to generate revenues from wind as well as their revenues from their crops. That frame was being challenged by different kinds of frames. And one of the frames was the health issue. That is, a number of people living by wind turbines were arguing that their health was being affected negatively perhaps by the flicker, perhaps by the vibration, perhaps by other factors associated with the presence of the wind turbines. They were saying that their health was being affected and in turn they weren't able to sell their houses-- to move away because property prices were declining as well. This catalyze the activities of a large NGO which mobilize that the law of the rural community in opposition as well. And I've got a colleague down the corridor at Waterloo who's very interested in metaphors and language so I just love the title of the article at the bottom before, industrial wind turbines. And that's a phrase that captured a lot of attraction in Ontario more recently. I thought windmills were like Dutch people and big nice shoes and smiling and birds flying. What it bird. But anyway, you know those sorts of things that they were nice things. Industrial wind turbine suggested to me sort of satanic, demonic, awful things whereby we've got greediness and dirtiness going on. It's certainly the case their language has been powerful on the Ontario debate in the way in which different frames are out there. Our provincial and national governments have endeavored to do literature surveys and reviews, our medical officers with health to look at the state of knowledge. There has been no definitive assertion that wind turbines caused these sorts of problems of people are experiencing but certainly the case the people themselves saying, these things are real. I'm also intrigued in the explanation by the interacting levels issue. So, I'm sitting here in Michigan in a federal system, Ontario is a federal system as well. Canada is the country but our constitution gives a lot of power on energy issues to the provinces. And during the previous era, the province of Ontario took that literally and did a lot of decision making in our provincial capitol which is Toronto. Added to the fact we had a very charismatic energy minister, those of you who know anything about Ontario, George Smitherman, who is very powerful, very-- a larger than life personality. Critics called him a bit of a bully on a China shop but when he had an idea about how to take a file forward he would want to take it forward. Critics again said he went on a tour to Europe and discovered religion and that religion was feed-in tariff and renewable energy, came back and made it his mission to push this through. And part of that some saw was that decision making should be a way from local communities and be centralized within out province. So there was a general feeling of disenfranchisement at the local level. And this was exacerbated by what were seemed to be some sweetheart deals done by our provincial government. One big-- One was with Samsung. You may have a Samsung phone, I'm hoping you have a BlackBerry, whatever. And I'll say, "What is this thing you call Blackberry?" You may have a Samsung phone there, Samsung and the Korea Electric Power Consortium whereby our government assured a particular price for electricity that would come from the facilities that they would make, promise to premium price and promise particular access to the transmission system. Supporters of this said, "We've been doing this with automobile manufacturing plants for years it's called economic development." Critics of this deal said, "It's a secret deal that is not going to Canadian or Ontario resources, it should have been tendered more publicly." So there was a broader sentiment of this, again, lack of accountability or democracy there. The local level feeling it as being left out. Interesting federal and international developments as well. Our friends in Europe and Japan launched a lawsuit, launched a case in the World Trade Organization against Ontario, against Canada because of the domestic content requirement saying, "It was unfair that in order to qualify for the feed-in tariff you had to ensure the particular amount of the components were made in Ontario." That violates to the trade lawyers in the room, the national treatment obligation that you will treat all suppliers the same that are parties to the gat. And so Japan supported by Europe brought this to a tribunal and after a decision and an appeal, the tribunal found against Canada, against Canada saying, "You had to get rid of your domestic content requirements in the law." We had been able to experience it for about five or six years, have gotten some benefit from it but very interesting that you had this international impact upon a state/provincial decision making procedure. Canadians in the room the additional level of intrigue is that you had a national conserve of government that had to represent the provincial liberal government in this international trade dispute because WTO deals with Canada as a whole, so the joys of our confederation most definitely. So this was adding to the environment and these sorts of things combined to result in our provincial election in 2011 our reigning, our ruling liberal government was reduced to a minority in our parliamentary system. So it had less ability to get its ideas through. And in immediate aftermath of the election it as thought the whole energy was part of the reason why the liberal's majority was reduced to minority. So the good feeling if there had-- and there had been good feeling about the original policy was dissipating and retreating. After that 2011 election the concerns continued. We had our so-called gas plant scandal whereby during our 2011 election there were local-- there was local opposition to two natural gas fired power stations in two urban, suburban communities. Often you need natural gas fired power stations located closer to load because of the demand there they'll come in as picker units in some ways. Longer story short, each of these two gas plants that were being built were in marginal writings, marginal election areas. So the government agreed to move both of them at huge cost during the election. In the aftermath it ended up costing close to a billion Canadian dollars because of the decision to move those two gas plants. And that's why the head of the Ontario power authority Colin Andersen doesn't look too happy because he appeared to before multiple committees trying to explain that. And there was the whole issue about the way in which government for its own political lens was interfering, communicating with an agency as well. So again, this just added to the whole political dislike for the energy file and later on to that I've got ridden smart meter expenditures which we could talk about for quite awhile were one of the few jurisdictions in the world where all households are obliged to have a smart electrical meter and we're obliged to be on time if you use rates. And that was not handled as effectively as some thought it should have been and there was a backlash against that. Ontario experts in the crows will recognize the eHealth scandal, the Ornge scandal as well. There was no shortage of scandals but perhaps you go anywhere in the democratic world, I mean, anywhere in the world there's probably no shortage of scandals. There was lots of this brewing in the Ontario after the election. And another frame was that renewable energy was simply too costly. Electricity costs were going up generally in Ontario. We had traditionally been a relatively cheap power jurisdiction attracting larger industry. We had to deal with 2008 global financial collapse, layered on that electricity cost were going up so we're no longer relatively cheap in a Canadian comparison or even a Northeastern, North American curve comparison. A lot of reasons why cost went up but renewable electricity was at least some part of that but receiving a lot of that element in the popular press. If someone is going to get 80 some odd cents a kilowatt-hour for solar panels on their roof for 20 years, someone else has to pay for it and some of that accounts for larger electricity prices. I then want to say, "Well what about the air quality and health impacts of the coal-fired power stations? And we could talk about internalizing the cost for quite awhile as well." The government, the minority government of the day are premier resigned we had a new premier win come in. Election was on the horizon for that. What did she do? I guess I call it-- She was humbled and she adapted. So she revised the feed-in tariff approach in Ontario, amongst other things, lowering rates. So what was once that 80 odd cents is now 29 cents for rooftop solar, so they've come down a fair bit. Engaged communities a lot more. You get a price adder if you engage what we call in Canada first nation's communities, aboriginal communities. If you engage community groups, if you engage municipal governments so that there is that incentive of getting out of the Toronto shell and talking to people and communities to a much greater extent. She put cops on capacity so that when the feed-in tariff system was filled up, it could not go on and on and add to increasing cost, and she ensured that there would be regular reviews of prices in other elements as well. She also heard the message an encouraging regional planning to a great extent. I live in a province where we have 70 local distribution companies. Do you think that's bad? We used to have 325 local distribution companies. We've got a lot of players at the local level and for a number of years they simply took marching orders from, again, centralized offices in Toronto. With a reform of our electricity system there is more participation at the local level whereby players from the communities and others can get engaged, there can be experiments for renewable energy, citing strategies for conservation demand management at the local level as well. She also merged two key institutions and one of them was the Ontario Power Authority which was out government affiliated agency that looked at planning over a 25 and 30 year time horizon. And then we had our, as you call them down here RTOs or ISOs, our independent electricity system operator which looked at electricity planning on a minute, hourly or daily time horizon. What kinds of people hangout in these two organizations? Much more of a planning policy approach, much more of a market economics approach. And it's very interesting as you've seen the two were mandated together by the premier and a merger and you can talk to the people, Chrysler and Mercedes, Daimler and Chrysler about mergers and so on. My reading from afar is that as I write OPA plus IESO equals approximately IESO know that's kind of culture won in that battle. So we're seeing a sense of the way in which markets play a role in electricity planning. I think it's much higher rather than a long-term planing approach. So we are seeing this blend of the two approached whereby you've got a feed-in tariff continuing to exist with caps with encouragement for community engagement and you've got a renewable portfolio standard involved. You've got over a hundred offers of supply now in the IESO's inbox and they're going to think about how they proceed with that. And in Ontario in our prospects we've got a long-term energy plan, interestingly our premier got her majority back in 2014 being humbled and adaptable might have been a good thing for her but for what variety of reason she was successful and now has up to a five year term from 2014 to 2019. So we're thinking the sentiment about the long-term energy plan not withstanding my earlier comments about the importance of markets. There is a desire to increase renewables to some extent and its thought that this sort of piece me away in a bit of RPS a bit of it will do it as well. And we've got a federal election going on. I want to smile because we've got controversy being added because when our prime minister called the election it was revolutionary because it was going to be a long campaigning period and it was I think seven weeks is our campaigning period and then come down here and, yeah, yours is a little bit longer I gather down here. We've got on October 19th the federal election. I continue to stand by my point that our constitution gives the provinces the main issue on energy but it's certainly that energy in terms of pipelines and so on is a discussion in the federal election and climate change is a discussion as well. And the way in which that could have knock on effects through to electricity policies across our country will be important. My last couple of slides, I'll just say a couple of things as we look at the prospects, the sorts of things that are on our minds and our research group in sustainable energy policy at UW. And I put in two broad areas that we're interested in policy elements, policy debates and issues and then I've got the second one following this. Two representative projects that we're looking at, one is we're intrigued by this notion of the way in which vulnerable households or low income households might be being affected by smart grid developments. So I also say things like time with use rates, the internet of things, connected homes, terms you may be familiar with. We're fascinated by the work going on in each of those areas. In the internet things, connected homes, smart grid and so on, a lot of very bright people are being stimulated by wealthy educated early adopters to try some really cool things. Great. We need the innovators and the pioneers to push the agenda forward. On the vulnerable household side, a lot of advocates are doing critical work because thousands of people in Ontario and elsewhere were faced a decision of heating or eating at the end of the week. So they're having to do-- meet energy poverty issues on a day to day basis. Our tentative hypothesis is that great work being done in both areas to advance agenda and to make things better but they're not talking to each other. And what might smart grid and/or energy poverty agenda being-- going forward be that relates to the other and thinking about insuring the parts of our society are not left behind. And the other one we're doing some work on is we're intrigued by the way in which our local distribution companies, again, these are the companies that get the wires in to the buildings in our communities. We've got three in our community of Kitchener in Waterloo Cambridge each of them has about 40 to 80,000 customers. They are municipally owned by our local governments. We're intrigued by the fact that we're seeing changes in our electricity system, what some are calling the utility death spiral. In some places in Ontario, new developments are being constructed. And traditionally, local distribution companies would say, "Oh, look at that new development." There's going to be 50-- 500 accounts there and we'll be able to do 500 service changes and 500 delivery charges. Get the wires ready boy and girls we're ready to take hold. But all of a sudden people are developing these 500 accounts and pulling them themselves in a mini grid and saying, "We're-- We've got some storage on site, we've got some solar on site, we've got some various energy elements on site." "Mr. and Mrs. Grid, we don't need you much anymore. We've just got this one wire. We'd like to use you as the insurance policy in case things don't go right." So the utility all of a sudden has lost a bit of its revenue base and often it's more affluent revenue base and all of those-- and the cost of maintaining the grid which is no less falls upon the backs-- fewer backs, fewer customers and perhaps less wealthy costumers as well. What's the business model for our local distribution companies going forward? And we're also interested in interventions in a smart grid world, interventions in the sense of people in their homes and businesses if you give them more information do they react in more "positive ways"? So we're intrigued by technology and home displays for technology. We're intrigued by different kinds of pricing systems, critical pricing so on and so forth. We're interested by electricity audits that might be able to be done to help people understand time of use rates. And we're intrigued by how that encourages a sustainable society as well. So I will wrap it up there just by saying that I hope to have covered some things that are interest you and I'd be happy in a minute to come back in the discussion on anything that strikes a cord and to learn about Michigan and things you're interested in and being intrigued by the way in which things in Ontario have unfolded. My contact details are there should you wish to continue a conversation on any part of it or get a copy of the slides or anything, I'd be happy to share them with you. So thank you very much, look forward to the discussion.
[ Applause ]
>> Well, thank you very much Professor Rowlands. I think that you've definitely hit on a lot of the things that I know are important to the people in this room not just to kind of filling in gaps and knowledge about our neighbor to the northeast I guess and understanding different options as we try to move towards a more sustainable energy system but also the theoretical groundwork so trying to fit this messy policy arena into kind of understanding-- into a framework that helps us understand why policy went in a particular direction, a particular time and understand the relationship between the different levels of government, so thank you. We have lots of time, 30 minutes for questions. So, I will call on people and I will leave it to Professor Rowlands to answer. We have this fifty microphone here so as long as you talk loud enough so that other people in the room can hear you it will definitely pick you up. Let's see. Go ahead.
>> OK. As far as the solar panels on houses go I know down the road there's a return on your investment with that. Is it financially feasible in today's day and age for the government to maybe subsidize to help out people get them on their roofs or is that only for the people that have the money to do it now? I know they're very expensive, so is that policy say that's in talks?
>> Yeah, so great question there. I guess what I take from that is there-- does the government have the-- is it in the government's worthwhile to get that on board? And I guess the immediate thing to respond is what breath of view is the government's definition of "worthwhile". So I would feel very strongly that solar panels in Ontario are attractive because of when they can generate electricity and where they can generate electricity. So on our system in Ontario, the when is important. You may find this surprising but traditionally we're a summer peaking system, not withstanding all that hockey player discussion and so on. Our highest demand for electricity is traditionally in the summer, air conditioning demand because of some elements of climate change, population growth, increased wealth, and because newer subdivisions are moving to natural gas heating in the winder as well so we don't have a lot of electric heating. All that to say, solar fits very nicely with that high demand period. When do solar panels produce the most? On the hot summer sunny afternoons. When is demand the most? On the hot sunny weekday summer afternoons as well. And location is important that I told you the problems of locating a gas fire power plant in these urban and suburban areas and people got their-- were upset about that. Putting solar panels on the roof, I won't say it's unequivocally acceptable but it's easier to do it in a modular way to get it within the congested area instead of thinking about building new transmission lines that go into it. So if governments have-- doing the cost-benefit analysis a jurisdiction like ours is thinking about the broader benefit. I would think you'll be able to encourage the incentive of broader understanding if we're going to make everyone pay the same for electricity in some ways, we want to incentive in that way. If it then displaces fossil fuels in some ways, maybe we'll be able to get some carrying credits associated with it, maybe we will get some local cleaner air as well. It's not 80 cents worth, I fair them to say. The government no longer can force Ontario-- you to buy from an Ontario manufacturer so the attraction of the job creation has gone down a bit but there's still a premium value there. I think that's a long way of mildly answering your question but is that helpful there?
>> Yeah. I appreciate it.
>> OK, great. Thank you.
>> Any questions?
>> So, in one of the tables at the beginning of the presentation, you had the energy portfolio for Ontario with something like I think 62 or 63% in your power.
>> I'm just curious. Does that reflect any new build out of nuclear energy in the period since the old phase-out or during?
>> That's a great question. And the answer is no. So we've-- In Ontario we've gone through three eras, now I'm thinking about the hundred year period. We've gone through that first era of hydropower, Niagara Falls, iconic so and so forth. I smiled because when I lived in New York for a number of years my electricity bill would arrive and I'd say as a good Canadian does, "Oh my hydro bill has arrived." And everyone looked at me sort of, "Is this Canada speak for water or-- What's going on here?" I mean, it's so much part of our company's, Quebec Hydro, Ontario Hydro, Manitoba Hydro and so on. So we have the hydro period, we had the thermal period where the coal-fired power stations were built up. Then we had our nuclear period which was of the order of the '60s to the '80s. Back in the days when I think the famous quote is, "It will be too cheap to meter nuclear power well." In answer to your question, nuclear-- and so no, there was the refurbishment in the 1990s and there has been one refurbishment that I think would have gone ahead anyway recently. New build is on the agenda now thinking about whether that will be part of the future. Our electricity demand is flat or going down a bit. The two big wild cards in many people's minds are to what extent will electrification of heating occur and electrification of mobility. Those are two big demand areas which presently are supplied in Ontario by natural gas and oil products respectively which are both contributing to greenhouse gases. So, if we get a system shift in the movement towards that kind of electricity demand, the nuclear issue will have to come to the forward to a greater extent. If we continue on our slow decline I'm thinking the government will be able to just sort of put it on hold for continue to put on hold for awhile.
>> Any questions?
>> So you mentioned offset credits, current offsets with Ontario joining Quebec's market. I'm not familiar with the details but does-- do you expect that to have much of a boost for renewables?
>> Yeah. And I'm not familiar with the details as well and rather than being an ignorant academic not keeping up with things which I may be, I think it's also the fact that this is so recent that the government announce this part of Pan Am celebrations in the July elements in Ontario and the devil will be in the details as it comes. It'll be very interesting to see the extent to which there are-- having conversation this morning there are aggregators of carbon credits and electricity space and you've got 5 million customers for electricity. How do you account for a decarbonization of that system? So it's a great question there. I don't know at this point. I just simply know that Ontario-Quebec conversations are going on at-- I'll say on unprecedented extent at least over the past decade or two. We've got two provincial leaders who seem to get along well with each other, we've seen ideologically be able to speak at the same kind of language so there is lots of intriguing conversation going on there.
>> So you mentioned the health push-back about went to terms. And I know in some other places there's also been health push-back against smart meters, there's a wireless radiation. So I wonder if that given that it's mandatory, can't opt out. Have-- Has there been a lot of talk about that in Ontario?
>> That's a great question. We've been involved in a project where some colleagues have taken the lead in looking at the way in which smart meters has been framed through the national media and through key inform and interviews as well. In British Colombia the health issue of smart meters has come to the floor and it has been an important framing of smart meters out there. And more recently I think in Scotch when they burst into flames occasionally which has been wonderful for the promotional materials that the smart meter companies put out I think. To answer your question on Ontario, not as much so and it's-- I'd say the two elements that are the foremost in the framing are, one, the cost, and two, the privacy. So on the cost element the opposition party in the last-- the 2011 election called them the tax generating machines and would inevitably have some elderly individual at the kitchen table saying, "She had to vacuum at 3 in the morning or she would go broke," not withstanding it's how we use rate exchange at 7 in the evening but still it makes for good theater. So there's very much the cost element and then the privacy element as well. This notion that smart meters are recording what you're doing. They're-- For security concerns if you always go Canadian images go curl on Tuesday nights. It will be that all of a sudden they see your garage door opener going up at 7 o'clock and down at 10 o'clock so there can be sentiments as to what's going on in your household.
>> And so I want to say a number of you submit some really great questions, but you're welcome to ask. Go ahead.
>> With the national election coming up, how much does that sort of political dialogue effect the national mode because, I mean, for instance here it must be-- it seems like there's still no consensus over-- I mean, obviously there's no consensus. I mean, once, I won't even acknowledge what kind of change exists. So I'm just wondering how that dialogue look in Canada and how the press nationally--
>> In climate change in particular?
>> Yeah. Climate change, so we have-- So this is our Prime Minister Stephen Harper from the Conservative Party of the Canadian right of the spectrum, Elizabeth May is our Green Party leader and at parliamentary system, the Green Party is one of the 330 seats right now, her seat in DC. This is Justin Trudeau son of Pierre, the late Pierre Trudeau our former Prime Minister, he is with the Liberal Party which is our Center Party and this is Thomas Mulcair from our New Democratic Party our left leaning party. And so, Prime Minister Harper took as out of Kyoto where the-- I think the only country to have withdrawn form the Kyoto process. We have submitted a target as part of the Paris Process though with his political support tied up in Alberta, tied up in energy supply projects, the oil science and pipeline, it's thought that his-- in his Copenhagen pledge about six years ago will not come to fruition. He-- They are not climate change deniers as I believe some in the American debate perhaps are but they're not enthusiast. And the interesting experiment is our NDP party says that they will adapt a national cap and trade approach if they are elected to form a government. And then Mr. Trudeau, his predecessor ran on a carbon tax two election ago, elections ago and did not do well at all. He is hedging his bets a bit more. In good Canadian ways we'll say that the provinces will take the lead and suggest that he'll be happy with right now we have taxes in cap and trade systems within our provinces. It's sort of, a bit of a black box as to how he'll melt those together. And the greens of course I think they're most aggressive in a lot of these areas. The intriguing thing right now is that these three, the three gentlemen there are each pooling 30%. And so each of them is set to gain something like a 110 seats in our parliament and it's a very close selection which we haven't seen before. But in our televised debates climate change inevitably comes up and it's more and does not, does it exist or not, I think it's more about the cause of inaction versus action. Thank you.
>> A few years ago Ontario went online with the [inaudible] water scale solar farm. What sort had been the operation experience? There's a lot of lessons that could be learned from that and-- but it's hard to extract any coverage of what's actually happen although it works and what people think about it.
>> Yeah. And you're talking about one solar farm in particular?
>> It's the big one that was in--
>> Near Sarnia?
>> Yeah, I think its Sarnia. I don't remember exactly.
>> So for us in Ontario? Yeah and I'd be happy to-- I don't know exactly. We've got some colleagues who have working with our engineering colleagues who have looked at the technical side of it and looked at the integration of large scale, and in my mind when I think of large scale I think of 10 megawatt farms and above thinking about the ways in which they intergrade into a power system. It's certainly in the case that we-- when we work with partners on strategies, utilities are often part of the mix and our large transmitter will say it can be a challenge physically integrating renewables, the harmonics of the wind, so the wind turbines, the kinds of electricity you're getting in the system. It's certainly a case about you saw the province of Ontario previously, this large expense, the ways in which our renewables may be far away from our load centers and trying to manage that transmission in a proper way as well. It's led to so-called orange zones where you cannot apply for feed-in-tariffs if you're in a transmission congested zone because the hallway is already full for movement. With regard to the performance of it, capacity factor in Ontario is something of the order of I think 12 to 14% so something is rated at 3 kilowatt an hour you think do the 3 kilowatt times--
[ Inaudible Remark ]
Across the province as a whole?
>> No the target.
>> Yeah the 15% load factor were down.
>> I'm happy to tell you that this climate was unusual than the last scale and that's why we just don't know how a lot of work.
>> Yeah, and I think there's been much more discussion now in calculating the feed-in tariff that 29 cents I talked about making a reasonable return for the investor given the climatic conditions that we have here. And the 80% was not reflecting that. The 80 cents, I'm sorry, was not reflecting that. It was very generous. And the government of the day I think would say it had multiple ambitions to try and create local economic development and so on. So, when you talking about performance I think it's a great question and I guess I immediately think about the grid performance from a system operator way as well as the individual panel performance as well when you're thinking about, "If I'm gaining paid per kilowatt-hour what's my radiance resource available to generate that?" Yeah, thank you.
>> Go ahead.
>> My question relies to the-- this is kind of for investors thinking about investing in [inaudible] with all these policy changes happening everything few years, I imagine that shows investment to some extent.
>> So I'm wondering how that's being dealt with and the extent to which it hasn't shown in the last quarter.
>> Yeah. So, just-- I'm sensing from the quality of your question and you know is I'll just say it loudly as well. As I talked about the feed-in tariffs reducing, of course whenever one enters the game you're guaranteed that price through the duration of your contracts. So, it's not that the goal oppose are metaphorically moving during it but you are exactly right with the rules changing, all of a sudden that certain-- the prices will be down. I don't have an interest in building a production facility their all of a sudden because demand is going to go down because the feed-in tariff is down as well. So, I've got those two responses coming to my mind in the one sense because of the long-term nature of the contracts there has been that assurance that operators have been engaged but because of the declining prices and the WTO ruling. There is certainly been the chill for locating manufacturing facilities. We've seen a number of those that arose during the '09, '10, '11 "glory days" of renewable energy manufacturing. We were hit hard by the global financial crisis of '08 so a number of thing-- a number of locations were looking to retool themselves as well. There is a chill over them because all of a sudden that guaranteed market is no longer available. So, it has affected most definitely. And one thing if time were limitless I'd love to get my head around a bit more as well is the broader trade cases going on with acquisitions of Chinese dumping of solar panels and those sorts of things as well. Pretty question, thank you.
>> So, I know a lot of countries are reluctant to act on climate change and carbon emissions when they see their neighbors not doing so. So, I'm curious how the conversation has changed in Canada since the release of the great power of United America?
>> Yeah. So, the first part of your question I thought-- I thought you're going in one way. I'll just say one quick thing in response to it. I mean, one thing I often here in Canada is that, "We're only 0.5% of the world, what can we do when it's global issue and so on," and of course our remissions are above that share more like one and a half or 2% and then of course tragedy of the common and so on and so forth. With regard to the clean power plant, I know it's certainly affected our neighbors elsewhere to a significant extent, so I'm thinking of our friends in Quebec and Manitoba who see the US as a major export market and thinking about how this will impact their ability to my most understanding of it get credit for their hydro sort of facilities or wind facilities as the case maybe. Ontario because we're much more self-contained we have that little bit of exchange. Often you are kind enough to take our electricity when we're generating too much of it because where the nuclear base load which we can't turn off and we need to send it somewhere so that's why the kilowatt-hour price if you did the math was much better from what we buy for you than from what you buy for us. So, I'm thinking that's more some other regions that will have more of it but being north of the border, whatever goes on the US has huge ramifications for us all the times so I think it'll be on the agendas irrespective. Thank you for that.
>> Any other questions? We probably have time for one or two more. Go ahead Ben.
>> When you showed the portfolio the other portfolio from Ontario, I'm not sure that coal was basically negligible product?
>> Is that unique about Canada? And I'm wondering if [inaudible] wanted to phase-out coal fire power plants. Was the lack of Michigan alliance on coal trade helpful in that because I also think any politician in United States will get anywhere of saying that they wanted to phase-out coal in the United States.
>> Yeah. So one thing that was in our favor comes in mind is we're not a coal mining jurisdiction. So we were a coal using jurisdiction but not a coal mining jurisdiction, whereas for example Nova Scotia which has some coal fire power stations, Scotch and Alberta are the three provinces that come to mind that have extensive use of coal fire power stations. Nova Scotia does have a history of coal mining there for instance. And so, in the Ontario case here you're spot on over the past 10 or 15 years it's gone from a quarter of our portfolio to zero. And that was a challenging move it was this confluence of concerns about local air coal and the fact that we did not have that mining sector that was impacted as well that I think open the door to the possibility. My-- From a distance I love your reaction as well from a distance of perspective on the US politics often that there is coal mining associated with it as well which can be part of the mix but maybe not always. Cost comes in to another thing.
>> I'm not really sure about every state. I know there are some states that are-- had really strong coal mining address. But for example Michigan, you show like something like 60% of the energy comes from coal. Just simply to meet that demand, I don't think it's-- it would be very realistic for any politician to say that they want to phase-out coal and any kind of conceivable time scale.
>> Yeah, whereas ours is less than a quarter in a nongrowing electricity environment as well. Good point.
>> All right, well thank you if you can again. And thank you for--
[ Applause ]