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McGuinty powers up a compromise on renewable energy plan

Workers at Silfab, an Ontario-based company specializing in photovoltaic technology, manufacture solar panels at a facility in Mississauga.

Kevin Van Paassen/The Globe and Mail

In a move that may be too little and too late for its rural Ontario critics, Dalton McGuinty's government is set to compromise on some of the most controversial aspects of its green-energy strategy.

According to government and industry sources, the long-awaited review of the province's feed-in-tariff strategy – to be released next week – will significantly lower the premiums that have been used to attract wind and solar energy development.

More important, for aggrieved communities in southwestern and eastern Ontario, it will restore some degree of municipal authority over where wind turbines and solar panels are placed. While stopping short of a veto, it will nevertheless be something of a concession that Mr. McGuinty's Liberals have gone too far in using 2008's Green Energy Act to steamroll over local opposition.

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The catch is that the new process will apply only to future contracts. And most of the available capacity will be used up by projects that have already been approved, but not yet been built.

Even taking into account "attrition" – projects that have been green-lit, but ultimately fall through – the government estimates that existing contracts put it 75 per cent of the way toward its goal of 10,700 megawatts of alternate energy.

As a result, energy bills will continue to spike sharply during a building boom expected to last for the next three to four years, as the government keeps paying 13.5 cents per kilowatt hour for much of its wind power, and 64.2 cents for solar. (At present, the peak rate paid by Ontarians is 10.8 cents.) While some municipalities may be appeased by the government's gesture, others can be expected to make futile calls for the new rules to be applied retroactively.

As that unfolds, the Liberals will begin trying to answer perhaps the biggest question about their green-energy plans: What happens after the gold rush?

As a jobs policy, the Green Energy Act has always hinged on the idea that it will establish Ontario as a clean-tech hub, serving other jurisdictions' needs after its own have been met; otherwise, it will just have involved subsidizing temporary work. But while his province has certainly been ahead of the pack in North America, Mr. McGuinty has struggled to explain why other provinces or U.S. states would rely on Ontario if they eventually commit to green energy, rather than try to create jobs of their own.

Starting with the feed-in-tariff review, sources say, the government will try to turn the conversation in that direction. And within the next couple of months, Energy Minister Chris Bentley and Economic Development Minister Brad Duguid will launch a strategy to convert the short-term green-energy efforts into long-term industrial growth.

To some extent, the aim remains to continue making wind turbines and solar panels, or at least components of them. But particularly when it comes to overseas markets, it's improbable the province will be able to compete with cheap labour elsewhere. So it appears an equal or greater focus will be on trying to export expertise, including how to integrate alternate energy into the power grid. From there, it will try to expand the scope of the knowledge it can sell abroad – including its experience with implementing smart meters.

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Having lured clean-tech investment with its energy investment, the government will also attempt to broaden that into other, seemingly unrelated green industries, such as the manufacturing of electric cars.

No doubt, there will be considerable skepticism about the ability of the Liberals to make good on any of their ambitions. But that will be the test of whether the province has gotten value for the billions of dollars it has invested in green energy. And more than the largely symbolic concessions to be announced next week, it's Mr. McGuinty's best hope to convert some of his critics.

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Political Feature Writer

Adam Radwanski is The Globe and Mail's political feature writer. More

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