BUSINESS REPORT: Ontario’s Thriving Green Economy
By Jenny Vickers
From the January/February 2012 issue
The Canadian province of Ontario, which sits right across the border from one of the world’s biggest clean energy markets, is fast becoming a vanguard for renewable energy. But this hasn’t occurred by chance; it is the result of two very significant factors: generous green investment incentives offered through Ontario’s Green Energy Act and a high feed-in tariff to accelerate investment in renewable energy technologies.
Enacted in May 2009, Ontario’s Green Energy Act legislation was passed to expand Ontario’s production of renewable energy, encourage energy conservation and promote the creation of clean-energy jobs. The law created new energy-efficiency standards and a “one-stop” streamlined approvals process for renewable energy projects. It is also helping Ontario move towards its goal of replacing coal-fired generation by the end of 2014, which is expected to reduce greenhouse gas (GHG) emissions by up to 30 megatons—the single largest GHG reduction initiative in Canada.
A critical component of the Act is its feed-in-tariff (FIT) program. Considered one of the strongest programs in North America, the FIT program offers a guaranteed long-term pricing structure many times the current market value for electricity for producers building wind farms, solar power, renewable biogas, and water power.
Since the launch of the Green Energy Act and FIT program, the province has created more than 20,000 jobs and attracted more than US$19.5 billion in renewable energy investment commitments.
The largest single commitment is a US$6.8 billion investment by South Korea’s Samsung C&T Corp that will generate 2,500 megawatts of wind and solar power and lead to more than 16,000 new green energy jobs. In addition to Toronto, Windsor and Tillsonburg, where Samsung will produce solar inverters, wind turbines and blades, the company announced it would manufacture solar modules in London, Ontario, creating 200 new green energy jobs in that city.
Thanks to these announcements, the province is fast outpacing other renewable energy markets. In just over two years, Ontario has almost doubled its wind generation and become second in North America, just behind California and ahead of New Jersey, for solar generation—and a number of new announcements are expected to help the province soar to number one.
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Ontario’s Solar Industy Facts
- Market Potential. North America represents the world’s third-largest solar PV market.
- Smart, skilled workforce. Excellent training programs.
- Generous government incentives. $500 million AMIS and $250 million Emerging Technologies Fund.
- Substantial cost advantage. Lower operating and research costs reported.
- Sophisticated R&D infrastructure. Access to hundreds of world-leading researchers.
- Exceptional R&D tax credits. One of the most generous in the world.
In July 2011, MEMC Electronic Materials, Inc. and Sun Edison, North America’s largest solar energy service provider, announced the creation of approximately 400 new manufacturing jobs at a facility in Newmarket, Ontario. The town of about 75,000 is located about 25km north of Toronto.
Flextronics International Ltd., the Singapore based electronics maker that owns the plant, will use the expanded workforce to build solar panel components for SunEdison and its partners.
“We are very pleased to be expanding the number of green jobs in the Town of Newmarket through the partnership with global leaders in renewable energy such as MEMC and SunEdison,” said E.C. Sykes, President, Industrial and Emerging Industries at Flextronics. “We are committed to providing clean tech manufacturing solutions and we look forward to contributing to the growth of the Cleantech industry here in Ontario.”
The decision to base photovoltaic (PV) module manufacturing in Ontario as opposed to southeast Asia, where SunEdison and Flextronics have a preexisting manufacturing partnership, was made in part to be compliant with the domestic content requirements of Ontario’s FIT program.
In May 2011, Magnum Pv announced it will partner with Schmid Technology Systems to bring the world’s most advanced solar manufacturing technology to Ontario. Magnum Pv began production of high-efficiency solar photovoltaic (PV) modules on its state-of-the art manufacturing line in Brampton, Ontario in October.
Brampton is a critical player in Ontario’s green industry, with 94 companies employing 4,046 people in its Green Sector, over 2,100 employees in the Green Service Provider sector, and over 1,700 employees in the Green Manufacturing and Development sector.
“Brampton has proved an ideal location for us in the past thanks to its logistical and economic advantages,” said Andre Nazarian, president CEO of the Magnum Group of Companies. “Magnum Pv sees new opportunities for local partnership with the City of Brampton and its local utilities for developing clean energy in our community.”
Magnum Pv and Flextronics International join a host of other solar projects that are helping to create thousands of green energy jobs in the province including Ontario Solar Provider (OSP), which provides businesses and farms with solar arrays; ATS Automation Tooling Systems, which produces solar panels for residential, commercial and industrial customers; and Celestica, which supplies solar panels to solar power developer Recurrent Energy.
Brampton is also becoming a hotbed for the development of environmentally friendly vehicles. In August 2011, Magna International Inc., the largest automotive supplier in North America and a top five global supplier, announced it is spending $430 million to research and develop electric-vehicle technology in Brampton, a move that will create more than 700 jobs. Ontario is contributing $48 million to help fund 19 R&D projects over the next six years. The projects include developing concept electric cars, parts for hybrid vehicles, metallic components, alternative energy and ways to improve fuel efficiency.
“We are delighted to receive support from Ontario to pursue our goal of transitioning Canada’s automotive design, engineering and manufacturing toward the clean economy,” said Don Walker, CEO of Magna International.
Magna, which is well known for the development of the battery-powered compact Ford Focus, joins several other green vehicle companies that are helping to kick-start the electric vehicle industry in other parts of Ontario, including Toyota Motor Manufacturing Canada Inc., which is building the electric version of its RAV4 crossover in Woodstock, Ontario and Dana Holding Corp., which is investing $37 million to build heat exchangers for batteries at a plant in Cambridge.
According to the provincial government, Ontario’s vision is to have one out of 20 cars in Ontario electrically powered by 2020.
Ontario is also working to establish itself as a global smart grid market leader. Ontario’s smart grid will enable the more sophisticated use of the electricity system, improve service and enhance reliability. In early 2011, the province launched a $50 million Smart Grid Initiative to enable research, capital and demonstration projects. The Smart Grid Initiative will help grow even more clean technology jobs across the province while attracting companies offering complimentary technologies.
In March 2011, GE Canada, a recognized leader in the development of innovative clean energy technologies, announced it is building a $40 million R&D center in Markham, Ontario, to create smart grid technologies for use in Ontario and around the world.
With help from a $7.9 million grant from the province, GE plans to spend $18.5 million to develop next generation smart grid devices at its new 200,000 square-foot facility, creating 150 new jobs.
“The jobs will be a combination of research and development, commercialization and manufacturing. We also expect additional jobs to be created for suppliers and in construction,” said Elyse Allan, president and CEO of GE Canada.
The smart grid center is intended to become a Canadian destination for companies and countries seeking to upgrade their energy systems. The center will also include expanded manufacturing facilities for GE’s Smart Grid Automation products, which will relocate from Calgary, Canada.
“Through this important partnership, we are creating jobs and establishing centers of excellence for Ontarians in high-growth sectors of the economy,” said Sandra Pupatello, Minister of Economic Development and Trade. “The global demand for clean technologies is increasing and today, we’re taking another step forward in establishing Ontario as a market leader.”
Overall, Ontario has created a business-friendly climate chock full of green incentives that are not only benefitting the environment, but also attracting significant investment and creating thousands of jobs.
Winds of Change in Canada
- Canada’s wind-energy industry installed 1 gigawatt (GW) of capacity in 2011, bringing the nation’s total to 3,549 MW.
- An additional 12,000 megawatts (MW) of wind-power generation capacity are expected to be added by 2015.
- Two-thirds of Canada’s wind-energy capacity is generated by three provinces, Ontario, Quebec and Alberta. Wind energy has expanded tenfold in Canada over the last six years.
- So far, Ontario’s green-energy initiatives have helped create over 20,000 jobs and are on track to create 50,000 jobs.
- Since 2009, more than 30 businesses have announced they are setting up or expanding plants in Ontario to manufacture parts for the solar and wind industries.
- Transmission constraints may be a hurdle to expansion of green energy usage in Ontario, which has a population of 13 million.