Green power an expensive failure

A recent study, conducted by respected energy economist Gerry Angevine for the Fraser Institute, found that Ontario residents will pay an average of $285 million more for electricity each year for the next 20 years as a result of subsidies to renewable energy companies.

A recent study, conducted by respected energy economist Gerry Angevine for the Fraser Institute, found that Ontario residents will pay an average of $285 million more for electricity each year for the next 20 years as a result of subsidies to renewable energy companies.

By the end of 2013, Ontario household power rates will, with exception of P.E.I., be the highest in North America and will continue to accelerate while most other jurisdictions see rates level off. Even more alarming for the province’s economic competitiveness, businesses and industrial customers will be hit by almost $12 billion in additional costs over the same period.

Such is the legacy of the provincial government’s 2009 decision to establish “feed-in” rates ranging from 80.2 to 44.5 cents per kilowatt-hour (Kwh) for solar power and 13.5 cents/Kwh for wind power. These solar feed-in rates average 11 times the 5.6 cents/Kwh paid for nuclear and 18 times the 3.5 cents/Kwh for hydro generated power. The wind power rates are more than twice as high as nuclear and four times those of hydro.

Besides the enormous direct cost of these huge subsidies, there’s also a big hidden cost for expensive fossil-fueled standby facilities because the wind doesn’t always blow and the Ontario sun certainly doesn’t always shine.

Faced with rising consumer reaction the provincial government recently announced modest feed-in rate reductions, but those do nothing to change the results of the Fraser study, since thousands of contracts already approved have been guaranteed these higher rates for the next 20 years.

Premier Dalton McGuinty has predicted that the subsidies will propel Ontario to world leading position in green power technology, creating thousands of jobs. Sadly, the Fraser study shows quite the opposite as the province’s already beleaguered manufacturing heartland sees a former electricity cost advantage transformed into a competitive millstone.

Ontario isn’t the only place where grand green power dreams have turned into a nightmare.

Several European countries began doling out subsidies nearly a decade ago.

Germany has given away $130 billion, mostly to solar power companies. Yet solar power makes up a minuscule 0.3 per cent of German power supply, while doing virtually nothing towards the original objective of reducing greenhouse gas emissions. Last February, Germany’s minister of Economics and Technology announced a pullback from green power subsidies stating that the cost was “a threat to the economy.”

Spain also poured cash into solar and wind power subsidies with little to show for it except a $25 billion increase in this financially crippled nation’s debt.

Meanwhile, British consumers have grown increasingly outraged over paying some $700 million a year in wind farm subsidies that produce less than 0.5 per cent of power demand.

In the United States, green power companies have received more than US$4 billion to build wind farms as part of the Obama administration’s massive job stimulus program. A recent Wall Street Journal investigation found that the projects created a total of 7,200 temporary construction jobs at cost of US$600,000 per job, and 300 permanent jobs at a whopping US$14 million per job.

The administration also awarded grants and loan guarantees to solar power companies with pretty rickety business plans. Last September, California based Solyndra LLC sought bankruptcy protection after receiving US$535 million in federal loan guarantees to build a new solar panel factory. And, earlier this month, Solar Trust filed for bankruptcy after failing to meet the terms a US $2.1 billion federal loan guarantee to build what was to be the world’s largest solar power generation plant.

It’s not only power consumers and taxpayers who have been hit by the green power mania. In a February 24 article headlined Perfect storm hits green energy stocks; the Globe and Mail reported that 10 wind and solar equipment makers in China, India, Europe and the U.S. have seen the price of their shares collapse by 86 to 98 per cent since 2008; as a combination of ineffectual environmental benefit, escalating power costs and debilitating government deficits drive a precipitous drop in the outlook for green power subsidies.

The lessons of the green power debacle are clear: for governments, forcing consumers and taxpayers to subsidize any business almost always leads to economic damage and political unpopularity; for investors, companies living on government subsidies will die when they stop.

Gwyn Morgan is a Canadian business leader and director of two global corporations.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Erika Fetterly, owner of EFP Studios, recently launched the Let Them Have A Voice campaign. (Contributed photo)
Central Alberta photographer’s campaign aims to give youths a voice

An Innisfail photographer is giving a platform to young central Albertans so… Continue reading

Chopped Canada-winning chef Pete Sok is trying to focus on the future as he reopens Boulevard Restaurant and Lounge in the Holiday Inn on Gasoline Alley during the pandemic. (Contributed photo)
Red Deer’s celebrity chef looks past the pandemic with new restaurant opportunity

Pete Sok is reopening Boulevard Restaurant — and betting on the future

The Red Deer Rebels hosted the Medicine Hat Tigers in the first game of the shortened 2020-21 season on Friday. The two teams faced off again in Medicine Hat Saturday (Photo by Rob Wallator/ Red Deer Rebels)
Red Deer Rebels fall to Medicine Hat Tigers on Saturday

Tigers 7 Rebels 2 The Red Deer Rebels have lost two straight… Continue reading

Alberta has 1,910 active cases of COVID-19 as of Wednesday. Red Deer is reporting five active cases, with 108 recovered. (File photo)
Red Deer reports 25th COVID-19 death

415 new cases identified provincially Saturday

Red Deer science-communicating dogs Bunsen and Beaker helped save a missing pet recently. The two dogs have more than 80,000 followers on Twitter. (Contributed photo)
WATCH: Red Deer science dogs help save lost pet

Red Deer science-communicating dogs Bunsen and Beaker helped rescue a missing pet… Continue reading

Alberta Premier Jason Kenney speaks during a news conference in Edmonton on Feb. 24, 2020. It’s budget day in the province, and Kenney’s United Conservative government is promising more help in the fight against COVID, but more red ink on the bottom line. THE CANADIAN PRESS/Jason Franson
Alberta Premier slams vandalism after slur painted on MLA’s office window

EDMONTON — Alberta Premier Jason Kenney is condemning alleged vandalism at the… Continue reading

Canada Pension Plan Investment Board President and Chief Executive Officer Mark Machin waits to appear at the Standing Committee on Finance on Parliament Hill, in Ottawa on Tuesday, November 1, 2016. Executives who engage in so-called "vaccine tourism" show both an ethical disregard for those less fortunate and a surprising lack of business acumen, experts argue. THE CANADIAN PRESS/Adrian Wyld
Vaccine tourism is both unethical and bad for business, experts say

Executives who engage in so-called “vaccine tourism” show both an ethical disregard… Continue reading

Edmonton Oilers' Jesse Puljujarvi (13) and Toronto Maple Leafs' Justin Holl (3) battle in front as goalie Jack Campbell (36) makes the save during second period NHL action in Edmonton on Saturday, February 27, 2021.THE CANADIAN PRESS/Jason Franson
No Matthews, no problem: Minus NHL goal leader, Maple Leafs blank Oilers 4-0

Leafs 4 Oilers 0 EDMONTON — The Maple Leafs knew even with… Continue reading

The Pornhub website is shown on a computer screen in Toronto on Wednesday, Dec. 16, 2020. THE CANADIAN PRESS
Pornhub policies reveal legal gaps and lack of enforcement around exploitive videos

OTTAWA — Serena Fleites was in seventh grade when a sexually explicit… Continue reading

Sean Hoskin stands on a neighbourhood street in Halifax on Thursday, Feb. 25, 2021. Hoskin was diagnosed with COVID-19 almost a year ago with symptoms that still persist. Some provinces have established programs to deal with long-term sufferers but Atlantic Canada, with relatively low numbers of patients, has yet to provide a resource to assist them. THE CANADIAN PRESS/Andrew Vaughan
On East Coast, exhausted COVID-19 ‘long haulers’ hope specialized clinics will emerge

HALIFAX — On evenings when Sean Hoskin collapses into bed, heart pounding… Continue reading

Ottawa Senators goaltender Matt Murray (30) stands in his crease as Calgary Flames left wing Andrew Mangiapane (88), left to right, defenceman Rasmus Andersson (4), Matthew Tkachuk (19), Mikael Backlund (11) and Mark Giordano (5) celebrate a goal during second period NHL action in Ottawa on Saturday, Feb. 27, 2021. THE CANADIAN PRESS/Sean Kilpatrick
Calgary Flames beat Ottawa 6-3 to end Senators’ three-game win streak

Flames 6 Senators 3 OTTAWA — The Calgary Flames used a balanced… Continue reading

Crosses are displayed in memory of the elderly who died from COVID-19 at the Camilla Care Community facility during the COVID-19 pandemic in Mississauga, Ont., on November 19, 2020. The number of people who would have died from a COVID-19 infection is likely to be much higher than recorded because of death certificates don't always list the virus as the cause of a fatality, experts say. THE CANADIAN PRESS/Nathan Denette
Death certificates don’t accurately reflect the toll of the pandemic, experts say

The number of people who would have died from a COVID-19 infection… Continue reading

A health-care worker prepares a dose of the Pfizer-BioNTech COVID-19 vaccine at a UHN COVID-19 vaccine clinic in Toronto, Thursday, Jan. 7, 2021. A single dose of Pfizer-BioNTech's COVID-19 vaccine is barely enough to cover the average pinky nail but is made up of more than 280 components and requires at least three manufacturing plants to produce. THE CANADIAN PRESS/Nathan Denette
From science to syringe: COVID-19 vaccines are miracles of science and supply chains

OTTAWA — A single dose of Pfizer-BioNTech’s COVID-19 vaccine is barely enough… Continue reading

Most Read