The details are out. Premier Dalton McGuinty announced today that he has signed an agreement with a consortium led by Samsung C&T Corporation and the Korea Electric Power Corporation that will invest $7 billion in Ontario and will generate 2,500 megawatts of wind and solar power.
While a copy of the deal does not yet appear to be public, a government backgrounder identifies some of the highlights:
- the consortium will build 2,500 MW of renewable generating facilities in Ontario: 2,000 MW of wind farms and 500 MW of solar (based on capacity allocation reserves ordered by former Minister Smitherman, the bulk of these projects will likely be in Southwestern Ontario);
- some of these facilities will be connected to new or upgraded transmission assets, which helps to justify the $2.3 billion that Hydro One previously announced it would spend on grid upgrades;
- the consortium has agreed to build 4 new manufacturing facilities in the province, one for each of the following types of component: wind turbine towers (to be in full operation by March 31, 2013); solar inverters (March 31, 2013); solar module assembly (December 31, 2013); and wind turbine blades (December 31, 2015);
- if the consortium meets the above deadlines, its wind and power projects will become eligible for an undisclosed "economic development adder" ("EDA"), which is a premium on the already premium per-kilowatt-hour FIT prices. The total cost of the economic development adder over the 20-year lives of the wind and solar farms is projected to be $437 million (net present value);
- the four new plants are expected to employ 1,440 people directly and to result in another 700 direct jobs at parts plants (not owned by the consortium);
- the government expects that these 2,140 direct jobs will result in an explosion of indirect green collar jobs (presumably including engineering, technical, construction, maintenance, financial, legal, consulting, and other types of related jobs). The government pegs the total job growth at 16,000 over six years, although it has yet to elaborate on its calculations (or explain what portion of those jobs will be counted towards its "50,000 green collar jobs in 3 years" promise).
Samsung is obviously pleased with the deal. According to the Toronto Star, Sung-Ha Chi, president and CEO of Samsung, praised McGuinty "for creating a welcoming climate for green energy investment." The Premier's new Minister of Energy and Infrastructure called the deal "a huge achievement for Ontario" and highlighted that "these projects will help clean up our air and replace dirty, coal-fired generation as well as bring more green-collar jobs to communities across the province."
However the deal has attracted significant controversy, particularly over the last 24 hours. Others in the industry are upset that Samsung is getting a special deal in what was supposed to be a level playing field for renewable power developers in the province. The "economic development adder" will certainly provide the consortium with an additional stream of revenue (that can be further leveraged) that other developers will not enjoy.
Ratepayers are also concerned that the Samsung deal will drive their electricity bills up even higher. The government estimates that the economic development adder will result in an average residential bill increase of $1.60 annually (or 0.1%). While this may appear minor, it is only part of a larger increase that will be driven by the OPA's Feed-in Tariff program and the substantial investment by transmitters and local distribution companies in grid modernization (starting with Hydro One's $2.3 billion investment, mentioned above).
According to the CBC, noted energy observer Tom Adams calls the government's job projections a "crazy fantasy." Opposition parties are expected to call on the province's auditor general to review the value of the deal for Ontario taxpayers.