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Idled solar plant puts Ont. Liberal Leader McGuinty on his heels

It was a small bump on an otherwise smooth ride along the campaign trail for Liberal Leader Dalton McGuinty. But it has highlighted big questions about his ambitions to transform Ontario into a clean-energy powerhouse.

A solar-panel manufacturer that Mr. McGuinty touted as a success story during a campaign stop earlier this week was forced to acknowledge on Friday that it has temporarily shut down production because supply outstrips demand for its products.

The news was a stark reminder of the market forces that confront jurisdictions at the forefront of supporting renewable energy on the backs of electricity consumers. It is not easy for regions in North America to create jobs when Chinese companies that can produce solar panels more cheaply are gaining an edge. The European economic crisis has also cut demand for solar cells.

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In Ontario, Mr. McGuinty is staking the province's economic future on manufacturing everything from electric cars to solar panels and wind turbines. In the renewable-energy sector, he is luring companies to the province with lucrative incentives that provide them with a guaranteed revenue stream for 20 years.

Mr. McGuinty plans to continue with his plans to create 50,000 jobs in the clean-energy sector if he wins a third term on Oct. 6. He spent the first 10 days of the campaign telling this narrative by visiting manufacturers of solar panels, electric cars and towers for wind turbines. All of these stops are meant to show his government's progress on job creation.

"Here in Ontario, we are on to something," Mr. McGuinty said on Tuesday at Eclipsall Energy Corp., where he was flanked by employees clad in white smocks and hairnets. "We are not prisoners of our present."

But this narrative was rudely interrupted on Friday when a newspaper reported that Eclipsall had halted production because of slow demand. The solar-panel maker opened last July in Scarborough, a suburb of Toronto, and has 85 employees.

The news put Mr. McGuinty on the defensive for the first time during the campaign. He was asked by reporters in Windsor, where he was visiting a wind-tower manufacturer, if the Eclipsall employees were there just for the benefit of the television cameras.

The fact that Eclipsall has stopped production is actually "great news" for the company, Mr. McGuinty said. "They went through their inventory quicker than they expected."

Progressive Conservative Leader Tim Hudak said the episode shows that the Liberals' clean-energy policy is a failure.

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"Something has gone wrong here," he told reporters at a campaign stop in Toronto. "Dalton McGuinty's flagship company is actually an empty shell."

Eclipsall said in a statement it expects to ramp up production next week. The company did not say when the plant was idled, but said it was in production the day Mr. McGuinty visited.

Mr. McGuinty is using his clean-energy policies to present a stark choice for voters: They can either prosper under the Liberals or they can go backward under the Tories.

The province's renewable-energy industry is still in its infancy. The Tories and the New Democrats have criticized the Liberals over a "sweetheart" deal with South Korean industrial giant Samsung Group. The company is receiving incentive payments over and above the revenue paid to other clean-energy companies as well as preferential access to the province's transmission grid. Mr. Hudak has vowed to cancel the deal if his party forms the next government.

"They oppose that contract," Mr. McGuinty told employees on Friday at CS Wind Corp. "They oppose this plant. They oppose your jobs."

With a report from Steve Ladurantaye in Toronto

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