Clement/Thibeault $billion negligence: Henvey Inlet Wind

Five years one-hundred and fifty-three days ago the Ontario Power Authority offered a feed-in tariff (FIT) power contract to Nigig Power Corporation for a 300 megawatt capacity industrial wind facility. The project now is referred to as the Henvey Inlet Wind Project.

At the time the contract period was 3 years and the World Trade Organization was yet to rule against provincial sourcing of material.

The project was kept alive by, as much as anyone, faux conservative Tony Clement. A known proponent of wasteful spending within his riding, Clement announced a $3 million gift to advance the project last July – at about the time the project absolutely positively should have been cancelled due to 4 years of absolutely no progress despite an expected in service data of 2014:

“Our Government continues to make strategic community investments designed to enhance the participation of Aboriginal peoples in their local economies. This project will stand for many years to come as a source of great pride and economic opportunity for the residents of Henvey Inlet First Nation.”

The Honourable Tony Clement

Some math might be of service for anybody capable of using math considering supporting Clement’s ambition is the Conservative Party of Canada – and perhaps even for Ontario’s new Minister of Energy, Glenn Thibeault, to recognize the damage he can do simply by ignoring the ratepayers interest in stale old contracts – as his predecessor did with this project.

But first…

Late in 2014 Henvey Inlet formed a partnership with Pattern Energy Group – Henvey Inlet brought its rich FIT contract, and American Pattern is probably to bring everything else – including “both construction and long-term debt financing.”

Should the project proceed under a FIT contract that should have long ago been revoked, Pattern is likely to build turbines with an annual capacity factor well above the 30% often cited back in 2011 (when the contract was signed) – a recent release from Samsung, for another project in which Pattern was the functioning partner, expects a 40% capacity factor, but it’s not clear if the wind resource is as good in the Henvey Inlet project area.

One last piece of information before running some numbers: this year, on March 10th, 5 years after the Henvey Inlet FIT contact offer (with a 3-year to service date expectation), the results of a Large Renewable Procurement (LRP) were announced with wind contracts having “a weighted average price of 8.59 cents/kWh” ($85.9/MWh).

I’ll use the LRP price to measure the negligence of not cancelling the FIT contract to recognize the failure of the proponent to deliver generation when promised.

If the wind resource isn’t good for this project, the waste of not renegotiating the contract at the latest rates may only be $1 billion – but more likely it will be closer to $1.2 billion.

Given the low value of wind in Ontario, just pulling the FIT altogether, and thus protecting the ratepayers’ side of the neglected contract, would save $2-$3 billion over the next 20 years.

This ain’t just another gazebo Clement supports getting built!

Glenn Thibeault is new to a portfolio he has no apparent qualifications to be in, but that’s no reason to assume he is incapable of protecting ratepayers. This is simply a matter of meeting with legal council and asking one simple question:

can this be killed?

And then killing it.

There will be a constituency, of very few, angered were Minister Thibeault to act responsibly – but he’d avoid being grouped in with irresponsible politicians -like Tony Clement.

 

 

 

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