Britain, Nova Scotia cut subsidies to green energy over cost concerns 

Nova Scotia and Britain have announced plans to cut subsidies that encouraged small-scale renewable energy projects, amid worries that the support programs have been pushing up electricity prices.

In early August, Nova Scotia said it will end its “community feed-in-tariff” program, which paid high prices for power generated by local renewable projects – most of which were wind turbines. Declaring Comfit a success in getting individuals to invest in small-scale community projects, the government said adding more capacity would “negatively impact rates.”

At the end of August, Britain’s Department of Energy and Climate Change made a similar announcement, saying it is proposing an end to its feed-in-tariff for small-scale renewables early next year. It too was a success, the government said, but “costs exceeded our projections” and action had to be taken to “limit the effects on consumers who ultimately pay for renewable energy subsidies.” Most of the British projects under the program involved solar panels.

In an era when governments are increasingly under pressure to trim greenhouse gas emissions and to embrace the new economy of renewable energy, cutting these kinds of supports may seem counterproductive. But they mark an increased sensitivity to consumer concerns over electricity price increases.

Warren Mabee, a geography professor at Queen’s University in Kingston, said the changes in Nova Scotia and Britain are mostly driven by the desire of governments to manage electricity costs. The subsidy programs were set up as a way to kick-start renewable energy generation, he said, and were designed to be so attractive that many individuals and organizations jumped in to take advantage of them. “The downside is that they are costly on a per-kilowatt basis and are arguably less able to keep costs down compared to industrial-scale solar or wind, which has successfully moved towards much cheaper generation,” Mr. Mabee said.

But lawyer Thomas Timmins, who heads Gowlings’ global renewable-energy practice group, said the rise in electricity prices in most jurisdictions has little to do with subsidies for green energy. “There is a lot of mythology surrounding renewable energy procurement and the cost of power,” he said. “But the fact is that modern-day procurement of renewable energy doesn’t have a material impact on power prices.”

Other costs, such as building new power lines and upgrading old power plants, are far greater contributors to electricity prices, which have not actually risen much on a global basis, he said.

Still, Mr. Timmins said, with solar and wind power getting close to “grid parity” – meaning their costs are similar to other forms of power generation – there is less incentive for governments to provide subsidies to individuals, investors or larger developers.

In Ontario, the government has maintained a feed-in-tariff-based subsidy program for the smallest renewable projects, but eliminated it for larger ones.

In Nova Scotia, a key factor that changed the approach to small renewables was the decision to import power from the Muskrat Falls hydroelectric project in Labrador, now under construction. That will be a huge factor in pushing the province toward its goal of getting 40 per cent of its power from renewable sources.

Nova Scotia energy researcher Brendan Haley said the province’s commitment to take Muskrat Falls power has allowed it to say, “We don’t need any more renewables to meet the target.”

However, he said hydro power would actually mesh well with solar and wind generation because the flexible nature of hydro makes it easier to incorporate variable power from wind and sun.

Cancelling Comfit “is a blow to domestic energy activity,” he said. Without it, “it is hard to know how we will maintain those capabilities within the province.”

Over all, the province will lose momentum in its renewable sector, Mr. Haley said, and will no longer get the benefit of local initiatives that were often innovative pilot projects. Many of these generated substantial community participation, where local residents not only helped design and manage the projects, but also invested their own money.

Typical of these projects is Colchester-Cumberland Wind Field Inc., a small wind farm owned by several hundred residents near Tatamagouche, in the northern part of Nova Scotia. The four-turbine project will pay its first dividends to the shareholders in January.

CCWF president David Stevenson described the Nova Scotia government’s move to end the Comfit program as a “hesitation,” but noted that it was “a marvellous success” in bringing wind turbines to rural areas. Indeed, the Comfit program surpassed its goal of getting 100 megawatts in operation.

It was also very successful in getting individuals to participate, and the province has thus avoided much of the intense resistance to turbine development that has occurred in Ontario, he said. “Across the province we have a much more positive attitude towards wind energy than we had before.”

Mr. Stevenson said he had hoped the government would extend the program to help support solar projects, but that will not likely happen. Still, Nova Scotia has become a hotbed of grassroots innovation involving electric vehicles and conservation projects, which will go ahead whether the government is supportive or not, he said.

Community resistance

One reason some governments subsidize small-scale renewable energy projects is to try to encourage community involvement, support and investment. If a community is not on side, the conflict between developers and project opponents can be intense.

That’s been the case at Amherst Island, a 20-kilometre-long rural enclave in Lake Ontario near Kingston. Local politicians, many residents and conservation groups have been battling for years to kill a project, planned by a subsidiary of Algonquin Power & Utilities Corp., to build 26 large wind turbines on the island. The local mayor and member of provincial legislature were vehemently opposed, a grassroots opposition movement sprang up, and even author Margaret Atwood weighed in against the plans.

Still, the project was given conditional approval by the province in August, prompting vows to appeal, and a declaration from a consortium of nature organizations that “owls and eagles, swallows and bats will soon run a deadly gauntlet of wind turbines along eastern Lake Ontario.” The project, they said, will damage one of the province’s “crown jewels of nature.”