Ontario expects to cover the total cost and provide "a reasonable rate of return" for investments in green energy projects through decades-long contracts with fixed electricity prices.
The government said it is the first program of its kind in North America.
Solar, wind, water, biomass, biogas and landfill gas producers, including individual homeowners, will all be eligible to sell their power to the provincial grid under the program, one of the four final components of the Ontario Green Energy Act announced by Premier Dalton McGuinty Thursday.
"The tariff will make it easier to get financing and access to the energy grid," McGuinty said at a new conference in Toronto Thursday. "These rules will give investors the confidence they need to help build tomorrow's green economy."
The other components include:
A requirement that wind turbines be located at least 550 metres from residential homes – farther away than anywhere else in Canada, the United States and eight European countries.
A requirement that at least 25 per cent of the goods and labour for Ontario wind projects and 50 per cent for solar projects come from Ontario.
- The establishment of an office to help developers, communities and municipalities get the required approvals for their green energy projects.
The act is already law, having gained royal assent in May, which means most of the new rules went into effect as soon as they were announced.
The government predicts that the entire Green Energy Act will generate 50,000 direct and indirect jobs in Ontario.
Wind rules get mixed reviews
The new rules about the location of wind turbines are part of the renewable energy approval process that became law Thursday. Wind farms with six or more wind turbines or noisier models must be located even farther from homes than 550 metres. Exceptions will be made for turbines located near an existing source of noise such as a highway.
Some people had lobbied for stricter rules, complaining that noise and vibrations generated by turbines cause health problems. However, the wind energy industry has said there is no evidence in peer-reviewed science journals that such noise causes adverse health effects or bothers people as much as other noise.
Premier Dalton McGuinty said Thursday that the new turbine rules will be the toughest in North America but "will not unreasonably deter new investment, so that we can together create jobs in this new green economy."
Bart Geleynse, managing director of Prowind Canada, said the rules won't affect his company's plans to build a 10-turbine wind farm in the village of North Gower, now part of Ottawa.
"We were placing wind turbines that distance away from homes in any case," he said.
But Glenn Brooks, city councillor for the area, said some European countries require 1.5 kilometres between wind turbines and homes. He argued that studies supporting Ontario's new setback distances have not yet been done.
"They're going to fast-track wind turbines … without looking at the health related issues, and that ought to be a concern of everyone," he said.
Solar array ban on farmland
Individuals, communities, businesses, schools and hospitals that want to sell renewable energy to the grid under Ontario's new feed-in tariff program will be offered 20-year contracts (40 for hydro projects) and guaranteed prices of 10.3 cents per kilowatt-hour for landfill gas projects larger than 10 MW to 80.2 cents per kWh for residential solar rooftop projects 10 kW or smaller. A bonus will be paid for aboriginal and community projects to encourage participation.
However, the regulations will ban all except very small ground-mounted solar arrays (100 kilowatts or less) in the two highest-quality classes of farmland or in designated specialty crop areas.
"We think our best agricultural land should be preserved for the purpose of agriculture," Smitherman said.
Solar farms of up to 500 megawatts will be allowed on about 2,400 hectares of slightly lower quality class 3 lands as part of projects that have already seen significant investment, Smitherman added.
The Ontario Power Authority will start taking applications on Oct. 1, 2009, and expects to sign the first contracts in early December.
According to the Ontario Sustainable Energy Association, which represents and supports community-based renewable power projects, similar programs have been successful in various European countries and have even been adopted in regions of China and India.
Kristopher Stevens, the association's executive director, said in a statement that the Ontario program provides "great incentives" for green energy projects, while streamlined regulations remove existing barriers.
Ontario content for wind, solar to rise
However, the group was disappointed in the rules regarding Ontario content for wind turbines and solar panels.
"The 25 per cent is only expected to promote local construction jobs and transmission components, not the turbines themselves as hoped," it said in a news release.
The government said it plans to boost Ontario content requirements to 60 per cent for solar on Jan. 1, 2011, and 50 per cent for wind on Jan. 1, 2012.
McGuinty also faced questions Thursday about whether the new rules would hurt federal government efforts to fight the U.S. 'Buy American' policy. That policy requires public works projects funded by the U.S. federal stimulus package to use only U.S.-made iron and steel. The premier responded that there was no comparison.
"They are permitting zero per cent Ontario content. In one case here in Ontario, we would permit up to 75 per cent U.S. content," he said. "We're not saying we're going to do everything, but we are going to lay claim to a significant portion of the work and the jobs that are going to be made available to us because of this legislation."