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Canwest News Service
MONTREAL – Provincial rivalry in the wind-energy sector between Quebec and Ontario won't help develop Canadian expertise and export potential in a growth industry, according to some manufacturers.
In Quebec, wind-farm developers must guarantee the expenditure of at least 60 per cent of total wind-farm costs in the province while the comparable figure in Ontario will be – by 2012 – 50 per cent. The goal for each province is to create a homegrown supply chain, jobs and expertise.
But manufacturers such as multinationals REpower Systems and Siemens Canada argue that a stronger Canadian supply chain would be created if the two central Canadian provinces had a system whereby manufactures in one province got credits, or some sort of formal recognition, in the other.
"It would be beneficial for each province … and avoid duplication for manufacturers," REpower's Canadian director Helmut Herold said Tuesday during an interview at an industry conference in Montreal.
His company, which is to supply about 477 turbines to five Quebec wind farms, recently opened a sales office in Toronto.
Herold raised the issue last week with senior staff in Ontario's department of economic development.
But he is not alone in wanting local-content rules harmonized between Quebec and Ontario. Other German-based giants, such as Siemens, which has a transformer plant in Trois-Rivieres, Que., support the idea as do industry newcomers such as Quebec-based turbine manufacturer AAER Inc.
And the push for revamped local-content regulations system will likely gain strength amid industry uncertainty generated by the $7-billion green energy pact Ontario signed with Samsung Group, industry insiders and observers say.
The Samsung pact, announced last week, "appears to have changed the rules of the game somewhat" for those wishing to do business in Ontario, the head of the Canadian Wind Energy Association said.
When Ontario implemented its Green Energy Act last October, it promised "open and equal access" to to energy transmission lines as well as a guaranteed premium for green energy producers, association president Robert Hornung said.
"This deal is inconsistent with a number of those principles," he said.
The 20-year deal provides South Korea's biggest conglomerate with initial access to 500 megawatts of transmission capacity on Ontario's electricity grid, space that is currently limited and in high demand. Samsung's access will increase to 2,500 MW over time, Hornung said.
Reserving a large block of capacity for one developer "has made the remaining pie smaller for all developers," he said.
In addition to lots of capital, wind farms need access to transmission lines to take the power to consumers. The Samsung deal has raised uncertainty as to how Ontario will make transmission reservations in the future and investors are not comfortable with uncertainty, Hornung noted.
"In Ontario, it is a very grey zone right now" with respect to how renewable energy projects will roll out, said Renaud Marc-Antoine, business and development manager for Enercon Canada Inc. which is also to build turbines for Quebec wind farms.
"In Quebec, the government is tough, but the rules are extremely clear," he said during an interview at an event put on by the Canadian German Chamber of Industry and Commerce.
A melding of local-content regulations in Quebec and Ontario would allow companies to enjoy economies of scale and "totally makes sense," AAER's chief financial officer Eric Phaneuf said in a telephone interview.
His company, which also recently opened a sales office in Toronto, has a 400- square-foot plant in Bromont, Que., "and it doesn't make sense for use to duplicate that in every" province or state in which AAER wants to do business, he said.
Montreal Gazette
lmoore@thegazette.canwest.com
