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Wind Energy in Ontario

Rapid global warming and atmospheric pollution is considered to be the most important
world wide environmental problem (Baird). This occurs in the atmosphere where some
types of gases absorb thermal energy emitted by the planet in order to cool itself and
shortly afterwards releases it towards earth instead of letting the heat escape to space.
This phenomenon of interception of outgoing energy by atmospheric gases and its release
as heat to increase the temperature of the atmosphere is called the greenhouse effect
(Baird). Scientists have identified that the main culprit of global warming is increased
concentrations of carbon dioxide in the atmosphere. Global warming has many
deleterious effects on the environment and human health, and in order to combat it, the
Government of Ontario has introduced wind energy as a method of generating electricity
without carbon dioxide emissions (Nishimura). Wind energy has long been used to drive
mechanical devices where in the Netherlands windmills were used well into the twentieth
century to grind grain and pump water from low-lying areas into the sea and in Africa
windmills are used in rural areas to pump water from wells (Osborn). Over the last
several years, the price of electricity in Ontario has risen dramatically and critiques blame
wind energy for the rise, but further investigation shows that the reasons are varied. Other
than climate change, high oil and gas prices have contributed to the policy of encouraging
wind power development (van Kooten). This supports the creative destruction hypothesis
that the creation of new products and production methods simultaneously destroys the
market power of firms that are wedded to existing products and older ways of doing
business which in this case is firms burning expensive fossil fuels to generate electricity
which further pollutes the environment and leads to the global warming.
Brief introduction to enhanced global warming:
Measurements of air trapped in ice-core samples from Antarctica indicate that the
atmospheric concentration of carbon dioxide in pre-industrial times was forty percent
lower than 2010 (Baird). Much of the considerable increase in anthropogenic
contributions to the increase in carbon dioxide concentrations in air is due to the
combustion of fossil fuels chiefly coal, oil, and natural gas. Furthermore a significant
amount of carbon dioxide is added to the atmosphere when forests are cleared and the
wood burned in order to provide land for agricultural use. This sort of activity occurred
on a massive scale in temperate climate zones in past centuries when immense
deforestation accompanied the settlement of the southern Canada (Baird). Overall,
deforestation accounts for about a quarter of the annual anthropogenic release of carbon
dioxide, with the other three quarters originating mainly with the combustion of fossil
fuels. In fact water is the most important greenhouse gas in the Earths atmosphere
because it produces more greenhouse warming than any other gas; the reason that water
vapour is not considered a reason for the enhanced greenhouse effect is because the its
concentration is a determined largely by the atmospheric temperature and weather
conditions (Baird). The concept of positive feedback is important in understanding why
carbon dioxide emissions should decrease. The rise in air temperature caused by carbon
dioxide heats the surface water and ice which causes more evaporation to occur which
causes additional global warming. The effects of enhanced global warming are

detrimental. Precipitation has increased in most areas, but decreased in others which have
led to both floods and droughts. Furthermore extreme weather has become more common
such as heat waves and hurricanes; winters have become shorter by eleven days in the
northern hemisphere (Baird). In Canada average temperatures have risen one degree per
decade recently, resulting in an earlier date for the last frost and significant thawing of the
permafrost. The Earths ice cover is shrinking fast. About ten percent of the worlds snow
cover has disappeared and sea ice in the Arctic has decreased by about nine percent per
decade (Fortier).
Wind power and its feasibility:
Winds are air flow that result from the tendency of air masses that have undergone
different amounts of heating, and that therefore have developed unequal pressures. Air
naturally flows from regions of high pressure to those of low pressure. Wind power
harnesses these flows to generate energy much like a hydroelectric station collects energy
from a river current. In recent decades, the large scale generation of electricity by arrays
of huge, high-tech windmills gathered in wind farms have become feasible (Adelaja). The
most efficient and largest commercial wind turbines currently are 5 MW units. About one
thousand Canadian homes can be supplied with electricity from a 5 MW system on
typical hot afternoons, when the power draw peaks due to air-conditioner usage. Off all
the form of renewable energy (other than hydroelectricity) wind power is the most
economical. The cost per megawatt of large onshore windmills is about two million
dollars, or almost six million per average delivered megawatt, since they operate on
average at one-third their rated capacity. The price for new wind-power supplies is
comparable to that of new conventional sources such as coal and nuclear fired power
plants and will probably be lower if any realistic costs associated with the environmental
impact of conventional sources are assessed in the future (Baird).
Government subsidies, taxes and wind power:
The negative externalities of enhanced global warming led the Ontario government in
2009 to pass the Green Energy Act (Nishimura). The stated objectives of this plan are to
attract new investment, create jobs and better protect the climate. Since in Ontario one of
the primary emitters of carbon dioxide are power plants that burn fossil fuels the
government has expanded the program of renewable energy generation (such as wind
power) through introducing subsidies called feed-in-tariff (FIT) (Yatchew). This
program pays a premium of fourteen to nineteen cents per kilo watt hour. The response to
the FIT program has been very strong and in the first twelve months since its launch on
October 1, 2009, the program received applications for 15,000 MW of renewable supply,
equivalent to approximately 43% of Ontarios electricity generating capacity. This
enthusiasm by wind electricity producers is not surprising because they expect that with
the gradual elimination of fossil fuel burning power plants, renewable energy can
command a higher future price of electricity (Wong).
A new type of tax proposed by the Ontario governments in order to reduce carbon
emissions is the carbon tax or the cap-and-trade mechanism. With this mechanism in

place, a certain dollar per ton tax is levied for emissions. Carbon tax mechanisms are
imposed in some European countries, including Sweden (CDN$127/t) and Finland. Taxes
have been proposed all throughout Canada, but as of yet it has only been implemented at
the provincial level, in Quebec ($15/t) and British Columbia ($30/t) (Holburn). This
mechanism works because carbon taxes increases production costs which means that at
each price point less thermal electricity is produced.
Comparing the true cost of using fossil fuels:
The price per kilowatt hour that one pays for is not the true cost of electricity generated at
a thermal power plant since peoples health deteriorates as more carbon dioxide is
emitted in to the air. Introducing wind energy would have possible externalities for
Ontario. Air pollution caused by coal-fired power plants has been identified in the late
1990s as a severe problem. Ontarios coal-fired power plants led to a drastic deterioration
in the provinces air quality leading to ill health and death amongst Ontarios citizens
(Nishimura). In 1998, the Ontario Medical Alliance, in cooperation with the Ontario
Clean Air Alliance, issued a paper where it declared that air pollution will cost Ontarios
health care system and economy more than one billion Canadian dollars and result in
approximately 1,900 deaths per year. Another example in Ontario is the risk of Lyme
disease which affects more than 20,000 people a year in the United States. Its found in
highest levels in north-eastern states (Nishimura). Under moderate global warming
scenarios postulated by 2020s, the projected range of the tick carrying the disease will
reach the most heavily populated part of Ontario (South of Georgian Bay in Lake Huron).
I. scapularis (the vector for Lyme disease) populations are already established in the
Carolinian Forests of southern Ontario and these forests are also likely to spread
northwards with climate change (Ogden). The pace of northward spreading of these
forests is not likely to be limiting on the spread of I. scapularis, which are clearly capable
of surviving in the coniferous woodlands of northern Ontario. Since the population of
Central Canada is larger than north eastern United States, it can be reasonably estimated
that more than 10,000 Canadians a year will be infected with the disease per year further
putting a large pressure on the healthcare system (Ogden).

Wind power and high electricity bills:

A concern of the movement towards more wind energy has been the steady rise of
electricity prices in Ontario to support the FIT program. Another reason for the rise in
electricity rates is the domestic material requirements for constructing a new wind farm
(Holburn). The reason that domestic materials raise the price of electricity is because
local manufacturers cannot achieve economies of scale that larger firms are able to reach
because the Canadian market size is relatively small. In 2010, electricity prices rose by
approximately fifteen percent. By the end of 2015 they are projected to increase by fortyfive percent, half of which increase can be attributed to FIT program. On November 18,
2010, in an effort to defuse consumer concerns, the Provincial Government introduced
the Ontario Clean Energy Benefit, which would provide ten percent benefit to help
consumers manage rising electricity prices for the next five years (Wong). Furthermore

the intermittent nature of wind energy means that many more transmission lines have to
be constructed to cope with the sudden surge in electricity when the wind blows hard. In
its recently released Long Term Energy Plan, the Ontario government identified five
priority transmission expansions to be completed within the next seven years to enable
4000 MW of new renewable generation. The Board expects that about 7000 MW of new
transmission capacity will be required to connect renewable generation resulting from the
FIT program (Wong). More wires and transmission lines add further fixed costs such as
maintenance workers required for the upkeep of the lines and substations. A third reason
that the price of electricity is rising even through more electricity is produced is because
the demand of electricity has dropped after the closing of energy intensive heavy
industries after the 2008 recession and as of now they have yet to return (van Kooten). In
general wind energy requires huge fixed cost requirements, which means that as sales and
quantity produced decreases the unit price increases rapidly.
Another reason for the high prices is consumer tastes in the production of wind electricity.
Not-in-my-backyard-ism (NIMBY) could add up to $436 billion in costs worldwide
(Holburn). People perceive that having wind turbines close by would devaluate their
property prices and thus consumers want these turbines to be built far away from
population clusters. Costs and cash outflows are important for wind projects, so delaying
the generation of positive cash flows can significantly reduce internal rates of return.
Risks for producers are increased if activist NIMBY groups erect local development
roadblocks (Holburn). Large firms usually have the capacity to hire dedicated
government relations staff to represent their positions, while smaller firms are more likely
to rely on industry associations such as the Canadian Wind Energy Association to
advocate collectively on their behalf (nudging). These activities create additional costs
for developers that will lower investment returns from productive assets and aid in the
raising of prices. New technologies (super conductive wires) for the long distance
transportation of electricity can help lower costs in the future since significant losses of
electricity occurs when electricity travels for long distances in wires (Baird).
Efficiency of wind power and mitigating the unreliability of wind power:
The province has in excess of 35,000 MW of installed capacity as of 2015. Peak demand
is approximately 27,000 MW and annual energy produced is about 150 tWh (Nyboer).
Nuclear generation presently constitutes about 31% of the provincial installed capacity,
hydroelectric electricity provides 21%, coal generates 17%, and oil/gas about 24%. Wind,
biomass and landfill gas together contribute the remaining 6% of capacity. Yet despite
these capacities, nuclear accounts for 55% of annual energy produced and hydraulic
contributes another 26% (Nyboer). Typically, less than 10% of generation is coal-fired
and approximately 10% is from oil and gas and newer renewable sources of energy are
negligible. Though this might show that renewable sources of energy are inefficient, in
reality the use of electricity is more complicated. For example a typical electric plant has
to serve tens of thousands of homes and business and is expected to deliver an
uninterrupted supply of electricity 24 hours a day, seven days a week. The problem is that
massive changes in energy demand occurs over the course of a day from weather factors
to consumer preferences (van Kooten). Electric companies try to minimize the costs of

providing for such large variations in demand by constructing power plants with the
lowest operating costs which also have the highest fixed costs in terms of construction.
For example if the maximum capacity of a large power plants can produce energy can
produce 500 megawatts, but when demand rises to 550 megawatts one solutions would be
to build two 500 megawatt plants, but this would be very wasteful since these plants will
be very expensive. Energy and capital is used most efficiently if a different mix of
generation technology is used such as a ten 5 megawatt wind turbines along with the
original high capacity power plant.
Ontario has uranium reserves of over half a million tonnes which could be used to
generate vast quantities of emissions free electricity (Bone). For example a 1000 MW
nuclear reactor requires 100 tons of uranium per five year cycle; if Canada utilizes the
reserves for a hundred years, then there is enough uranium for 250 1000MW nuclear
reactors which would double Canadas current generation capacity (Bone). Not only
would wind sufficiently augment nuclear energy, but economically add both land
(uranium ore) and capital (power plant) to rapidly expand Ontarios production
possibility curve.
New opportunities created by renewable energies:
The future economic potentials of wind energy are enormous in Ontario. There is an
abundance of wind resources in the Great Lakes region and it represents a cleaner
alternative to coal or natural gas (Adelaja). It has been estimated that 1 MW of onshore
wind generation is worth US$656,000 in the first year of operation and about US$37,000
per year thereafter in terms of economic development and job creation. When there are
severe droughts, as might occur with climate change, hydropower is likely to be less
reliable and other sources of clean energy especially wind will have to take up the slack.
There exists considerable potential for wind energy to supply a significant fraction of the
future electricity of many regions of Ontario, especially remote locations. This will be
good for the economy since new lands productivity is increased and will further led to
more developments in the underdeveloped Northern Ontario (van Kooten). In places
where generators frequently serve as a power source because electricity from the national
grid is inaccessible -- diesel might be the main source for electricity, as is the case in
many mining sites in Ontario, with fuel transported many hundreds of kilometres by road.
Wind energy replaces expensive diesel power with, in the case of a grid with maximum
load of 2.85 MW and diesel generating capacity of 3.75 MW, associated saving
amounting to 5.517.5% of electricity costs, or some $1.5 to potentially more than $10
million per month (van Kooten). This money spent on fuel could be thought of as an
opportunity cost where it could be better spend on improving productivity and the
welfare of the people.
By itself wind power cannot generate all the electricity needs of Ontario, but along with
clean nuclear energy, it can greatly augment the grid network during times of peak load.
The cost of wind electricity is not as high as one would think if one considers the long

term environmental impacts of global warming due to carbon dioxide emission from
burning fossil fuels. The cost of wind energy is not inherently high, but the electricity
generation companies have a cost structure with high fixed costs which leads to higher
costs if the level of production drops. Furthermore consumer tastes to place wind turbines
far from population centers raises the electricity rates. Wind energy, like pubic education
or vaccination has huge positive externalities that massively outweigh the short term
Works cited:
Adelaja A. Assessing offshore wind potential. Energy Policy 2012; 42: 191-200.
Baird C. Environmental Chemistry. W.W. Freeman and Company, 2012.
Bone R. The Regional Geography of Canada. Oxford, 2014.
Fortier D. Degradation of permafrost beneath a road embankment enhanced by heat
advected in groundwater. Can. J. Earth. Sci 2012;49;953-962.
Holburn G. Policy risk and private investment in Ontarios wind power sector. Canadian
Public Policy 2010; 36: 465-486.
Nishimura K. Grassroots action for renewable energy: how did Ontario succeed in the
implementation of a feed-in tariff system? Energy, Sustainability and Society
2012; 2: 2-11.
Nyboer J. A Review of Renewable Energy in Canada. CIEEDAC, 2009.
Ogden N. Climate change and the potential for range expansion of the Lyme disease
vector Ixodes scapularis in Canada. International Journal of Parasitology
Osborn D. Driving Forces Behind Wind. IEEE power & energy magazine 2011; 11: 6074.
van Kooten G. Economics of wind power when national grids are unreliable. Energy
Policy 2010; 38: 1991-1998.
Wong S. Long-term effects of feed-in tariffs and carbon taxes on distribution systems.
IEEE Transactions on Power Systems 2010; 25: 1241-1253.
Yatchew A. Ontario feed-in-tariff programs. Energy Policy 2011; 39: 3885-3893.