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Why it makes sense to cancel wind and solar contracts in over-powered Ontario

The cost and source of Ontario’s electrical power has been a hot topic for years, but happily for the PC government, it had dropped from the headlines. That is, until Energy Minister Greg Rickford was forced to defend the cost of cancelling 750 wind and solar contracts.

It ought to have been easy, because not going ahead with the extra generating capacity is the most rational thing the PCs have done on the electricity file. Ontario already generates more power than it needs and it sells the surplus at a loss. A 2017 study by the Ontario Society of Professional Engineers estimated that exporting power at big discounts cost Ontario up to $1.25 billion over two years. Adding more wind and solar would make that problem worse while doing nothing to make Ontario’s already-green power generation system greener still.

In Ontario, 86 per cent of power comes from emissions-free hydro and nuclear power. Wind provides seven per cent of the province’s electricity, with solar and biofuel contributing less than one per cent. Gas plants produce six per cent of power and act primarily as a backup for wind and solar, when it’s not sunny or windy.

That’s the power production, but a look at the capacity of the system should lower enthusiasm for more wind and solar. Wind makes up 12 per cent of the province’s generating capacity, nearly double its contribution to power produced. The most interesting number is natural gas, which could supply 27 per cent of the province’s power. This sector was massively overbuilt by the former Liberal government and at great cost. Less than 25 per cent of the province’s gas generation capacity is used.

Ontario could introduce more wind and solar, but it would do nothing for emissions because that power would be replacing either hydro or nuclear. Besides, more wind in the province’s baseline power supply would mean more natural gas needed for back up, too. In environmental terms, the PC government was inarguably right when it decided to cancel unneeded wind and solar projects.

Thanks to some digging by the NDP, we now know the estimated cost of killing the power deals is $231 million. That figure created a furor on the opposition side of the legislature, but the math is pretty simple. The unneeded power would have cost ratepayers $790 million. Not buying it produces a net saving of $559 million. It would have been foolish to pass up that opportunity.

It’s fair to say the government played down the cost of the cancellations and did its best to keep the figure secret. If the goal is to cancel contracts as cheaply as possible, it’s probably not wise to announce that you have a bag of money to dispense.

It’s a pity the $231 million will have to be spent, but it would not have been necessary had the previous government not signed a raft of wind and solar deals simply for green optics.

Lacking support from either logic or arithmetic, the opposition parties saw their opportunity to grab headlines when Rickford made reference in the legislature to Germany, another jurisdiction with enormous enthusiasm for wind power. As Rickford noted, wind power in Germany has been heavily subsidized, but is now facing increased public resistance. The blowback has stalled Germany’s emissions reduction plan.

This is not a popular story line with those who think costly government policies can fix the emissions problem, but the facts are not in dispute. The information could have been gleaned from recent articles from the Financial Times or PBS, but Rickford referred to an online source called Climate Change Dispatch. There was nothing novel in the website’s article, which was a summary of a piece in Focus, a leading German news magazine.

The thing with Climate Change Dispatch is that the site does not unquestioningly accept the current climate change consensus and says “global warning alarmists have embraced climate change as a religion and not as a scientific endeavour.”

As if to prove the point, opposition leaders essentially accused Rickford of heresy for even glancing at such material. NDP leader Andrea Horwath said Rickford’s reference was “shocking,” and showed that the PCs were lined up with climate change deniers. Not to be outdone, Green leader Mike Schreiner said Rickford’s choice of reading material was “incredibly reckless and irresponsible.”

In his own defence, Rickford argued that he has long made a habit of testing his own ideas by studying the views of those who differ. If that’s a flaw, it’s certainly not one shared by his political opponents, whose unquestioning endorsement of anything green is the kind of thinking that got Ontario into its power mess.