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Scrap wind turbine content rules, GE urges

One of Canada’s biggest suppliers of wind turbines says content requirements that force companies to make renewable energy equipment in local plants are counterproductive and should be eliminated.

Simon Olivier, general manager of sales for General Electric GE-N Canadian renewable energy business said in an interview that the content rules now in place in Ontario and Quebec are “not natural.” In Ontario, 50 per cent of the content of large wind projects must be sourced in the province after the start of 2012, while in Quebec the requirement is 60 per cent for many projects.

British Columbia and Nova Scotia are also considering some kind of local content requirements.

No other power generation product has to face those same kind of rules, Mr. Olivier said. Nuclear plants, hydro dams and gas-powered electrical generating plants can use materials from anywhere they want.

Local content rules, particularly at the levels called for in Ontario and Quebec, clearly raise the cost of generating power, he said. The company would prefer “open and free trade around the globe,” he added.

Still, General Electric has become one of Canada’s main suppliers of wind turbines by complying with the rules that are in place. It meets the rules in Ontario and Quebec partly by subcontracting to local parts suppliers for components such as turbine towers and blades. It also makes components at its own plants, including generators (in Peterborough, Ont.) and transformers (in Stoney Creek, Ont.).

GE said its 1,000th wind turbine in Canada will be installed next month at a wind farm in Quebec. It has machines in Ontario, Quebec, Nova Scotia and Alberta. Only Vestas Wind Systems A/S, a Danish company, has more wind turbines in Canada.

Ontario’s local content rules, and the rest of its renewable power policies, were in doubt until last Thursday’s provincial election, because the opposition Conservatives said they would toss out the province’s Green Energy Act if they won. But the victory of the incumbent Liberals likely guarantees that the law will stay in place. The government says the rules have drawn dozens of manufacturers to Ontario and created thousands of jobs.

Mr. Olivier said the most important elements to ensure that a sustainable renewable industry is established in a jurisdiction are clear, transparent processes, and long-term energy policies. But forcing industry suppliers to meet local content requirements is not productive, he said.

Consistent long-term government policies – in all countries – would help eliminate the boom-bust cycle that has affected the wind turbine market, Mr. Olivier said. When tax credits and other support mechanisms have been in place, particularly in the United States, it has created a huge backlog of orders. But the orders dry up when the credits run out.