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Ontario to Follow Germany in Renewable Energy Failure

Brady Yauch — Energy Probe — March 21, 2014

Germany has been experimenting with its renewable energy law for 14 years and is now highlighting its failures. Ontario, which copied that law, will likely do the same. 

Ontario passed the Green Energy Act in 2009 in a bid to create a thriving renewable energy sector that would provide low-cost energy, thousands of jobs, new investment and a competitive business environment. Yet residents of Ontario need to look no further than Germany – the economic powerhouse of Europe – which passed a similar law in 2000 to understand why the Green Energy Act will fail to deliver on its promises.

According to analysis by a government-appointed commission on research and innovation, the law, known as the Renewable Energy Sources Act, has stymied innovation, produced power at times and levels that are unnecessary, failed to demonstrably create new jobs and burdened low-income households. In its annual report to German lawmakers, the Commission of Experts for Research on Innovation concluded that the law had “serious shortcomings”, had “failed as an industrial policy instrument” and was a “costly” means to reduce emissions.

Like Ontario, the German law offers renewable energy producers – ranging from wind mills, biogas and solar producers – a guaranteed rate for their power through a Feed-In Tariff (FIT). This ensures that these producers receive a premium for their generation – which, like in Ontario, is significantly higher than the market price for that power.

But, according to the report, the FIT ensures that technologies receiving a high premium – such as solar – attract too much investment and, as a result, “too much solar power is being produced.” Rather than allowing the cheapest forms of renewable energy to take hold and provide renewable power, the FIT ensures that investment will flow to those technologies receiving the largest government handout – not those that make the most economic sense.

And because the law requires grid operators to connect renewable energy producers – no matter the cost – to the grid, those producers are able to “disregard” the cost of such connections. In doing so, renewable energy producers pay little attention to the demand for their output, the report says – meaning they dump electricity on the grid when few consumers have any use for it, yet are still being paid higher-than-market prices for that output.  Continue reading here….

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