On January 21, 2010, the McGuinty government announced that it has signed an agreement with a South Korean consortium to bring green energy and green manufacturing jobs to Ontario’s economy in accordance with the policy objectives of The Green Energy and Green Economy Act, 2009 (the GEA). The deal provides that the consortium, led by Samsung C&T Corporation and the Korean Electric Power Corporation, will invest $7 billion in the province, build 2,500 megawatts of renewable energy generation in the form of wind and solar, and to create more than 16,000 jobs in the province. These jobs will be in constructing, installing and operating the renewable energy projects as well as direct manufacturing jobs.
The province has also agreed to pay the consortium $437 million in incentives through the Economic Development Adder if the consortium builds four manufacturing plants in the province. It is anticipated that the plants will manufacture wind turbine towers and blades, as well as solar inverters and modules. The plants are expected to be built between 2013 - 2015 in separate phases, and the incentives are tied to the manufacturing plants being built on time. The incentives will result in an additional $1.60 being added annually to each consumer’s electricity bill across the province over the lifetime of the generation contracts.
The deal has a term of 25 years, in hopes of establishing a firm base for a green manufacturing sector in Ontario for many years to come. The products manufactured at these plants will be available for use in Ontario and will assist other renewable energy developers to meet the domestic content requirements of the GEA’s feed-in tariff (FIT) program, as well as for export across North America.
The renewable energy generation projects built by the consortium will also qualify for the premium being paid for renewable energy generation in the province pursuant to the FIT program. If all 2,500 megawatts are built, the projects will provide enough electricity to light up more than 580,000 homes in the province. Construction is expected to occur in five phases, with the first phase scheduled to be completed in 38 months. The deal required the province to reserve capacity on the transmission grid, which was accomplished by the Ministerial Directive issued to the Ontario Power Authority on September 30, 2009 setting aside capacity in Chatham-Kent, Essex and Haldimand for the first phase of the consortium’s development. Transmission for subsequent phases will depend on the consortium’s ability to deliver the manufacturing plants.
Many locally-based developers and manufacturers are claiming that the consortium has been provided with an unfair competitive advantage in the green marketplace. Many of the criticisms are that there was no “openness and transparency” as is required for all other players in the marketplace. Did the government provide priority access to the grid for the consortium? Or was the government just trying to jump start the green economy that they promised would be built through the introduction of the GEA? Or was this an attempt by the government to compete with the “Buy American” policies of the United States and woo international manufacturers to our jurisdiction? These are all questions that will be addressed in due course as the consortium begins operations in Ontario over the next few months.