What impact will the Samsung agreement have on other renewable energy projects?
As you probably know, the province of Ontario has signed a $7B deal with Samsung. Although the contract and its precise details are secret, Samsung has reportedly agreed to build 2500 MW of renewable energy generation and to try to arrange to have renewable energy equipment manufactured in Ontario.
The most troubling aspect of the deal (beside the price) is its impact on the availability of transmission for other renewable energy generators.Lack of transmission / distribution capacity is a major (“the major”?) obstacle to renewable energy generation in much of the province. This is why the 1022 feed in tariff applicants are waiting with bated breath for their TAT and DAT assessments- if there is room for them on the grid, the FIT tariff should guarantee them a lot of money. It may be harder to get room on the grid that it will be to obtain their renewable energy approval.
The Samsung agreement will be implemented in five phases ending March of 2013, and December of 2013, 2014, 2015, and 2016 respectively. Before the FIT application window opened, 500 MW of transmission capacity in Haldimand, Essex and Chatham-Kent were already reserved for what is now Samsung’s Phase I, approximately 20% of the available capacity in those areas. This reservation does not raise a real issue of unfairness, because it was public before the FIT process began.
Now, however, the 1022 FIT applicants, plus the 3000+ micoFITs, have proposed well over 8000 MW of renewable energy projects, likely far more than the existing grid can accommodate (especially because transmission capacity in the Bruce Peninsula was almost all promised to the Bruce Power nuclear plant). FIT rules state that this capacity will be allocated to qualifying applicants, basically in the order of their date-stamped applications. Grid capacity evaluations are underway, and FIT contracts are supposed to be offered to qualifying applicants by the end of March.
But the province has apparently also promised Samsung “priority access” to another 2000 MW of transmission, for Phases 2 through 5 of its contract. What does that mean for everyone else in the queue?
Sources at the Ministry of Energy and Infrastructure insist that the “assurance of priority access” promised to Samsung will not interfere with the current FIT contract allocation process, even though the FIT process could allocate all available transmission capacity. They plan to “work with” Samsung to identify sites where Samsung can obtain its priority access, perhaps through construction of additional transmission lines. They note that Hydro One has been directed to proceed $2.3 billion of new transmission lines. Samsung projects might improve the economic case for new lines in some areas, thus benefiting other projects nearby.
It is difficult to assess this claim without access to the contract language. Hydro One did finally obtain environmental assessment approval of its “Bruce to Milton Transmission Reinforcement Project” in December, about four decades after the line was first planned. The line will take at least two years to build, but that is usually the easy part.
It has been exceedingly difficult to obtain approval for new transmission lines in Ontario since the Environmental Assessment Act came into force. See: A Long, Sad Story: Siting Transmission Lines in Ontario. Since then, it has become even more difficult to site new lines: property values are higher, populations are denser, there are more legal routes for opposition, and First Nations issues have powerfully resurged. The new Bruce to Milton line was approved, but it follows an existing route.
Ontario has already had one experience of facing huge damages by promising a private developer (Bruce Power) access to transmission lines it had not built. As a result, renewable energy developers were frozen out of large parts of the province. Will the Samsung contract be different?