Green Energy Manufacturing Gets a Head Start from Ontario Government and Samsung
January 22, 2010
On January 21, 2010, the Ontario Government announced an agreement to continue its drive to build a renewable energy future in Ontario. The deal will see major manufacturers of renewable power implements set up manufacturing hubs in Ontario and create thousands of new jobs. A consortium lead by South Korean industrial giant Samsung will invest $7 billion to generate additional wind and solar power in the province. In return, consortium members will receive incentive payments for this investment. The Globe and Mail reported: “Samsung will receive $437million in incentive payments over the 25-year life of the deal if it fulfills its obligation to create 16,000 jobs.” (Link to Globe Article)
The Green Energy Act implemented a feed-in-tariff (FIT) system in Ontario, providing a guaranteed price premium for power produced from renewable sources. Samsung will be able to take advantage of this price premium as well as the other incentives outlined in the deal.
Some commentators feel that this deal gives an unfair advantage to foreign companies and the money could be better spent helping domestic companies create a renewable energy future in Ontario (as evidenced in the Globe article referenced above).
Others applaud the government’s decision, saying that investment from established companies is needed to sustain a viable long-term market in the province.
A bit of background helps us understand why this might be so:
The provincial government’s green energy act was touted not only as an environmental and renewable energy program, but also an initiative aimed at creating thousands of new “green” jobs. The government has therefore implemented strict requirements of “domestic content” in order for renewable energy projects to qualify for the generous price premiums under the FIT.
In order to comply with the requirements for domestic content set out in the FIT contract more renewable energy manufacturing will need to be developed in Ontario. By luring established manufacturers and major players in the global renewable energy industry, Ontario may be setting the stage for a more reliable industry here at home.
Bringing in some global players to use local labour and local materials could be a very good move. On the other hand, it’s a risky move that may restrict a domestic renewable energy market from developing effectively. Only time will tell.
More information can be found in the Media Release the Ontario Government’s website.
