Is there No Way To Impeach This Ontraio Government for Gross Mismanagement ?
From Terence Corcoran of National Post
Last week’s financing deal for the Kingston Solar power project received a warm reception among investors and renewable-energy enthusiasts. The recently completed $633-million note issue, at 3.57 per cent, was hailed as “a landmark occasion” and one of the largest renewable energy deals in Canadian history.
Kingston Solar consumes much more land to produce a lot less electricity — at a much higher cost
No doubt a lot of city-dwelling investors in Canada and the United States gobbled up the notes. Matt O’Brien, president of Connor, Clark and Lunn Infrastructure, which led the issue on behalf of Samsung Renewable Energy, said “the financing was a reflection of the scale and quality of the project and the strength of its ownership group.”
Not to take away from the skills of the ownership group, but, as bond-rating agency DBRS pointed out in its report on Kingston Solar, the glue that holds the deal together and without which Kingston Solar could not raise a dime, is the “strength of” a 20-year contract it has with the Ontario government guaranteeing payment of $457.30 for each megawatt hour of electricity produced by the project’s 425,000 solar panels sprawled across 824 acres of former farmland on the outskirts of Kingston.
The official spin on Kingston Solar and other such projects sounds oh-so-pretty economically and environmentally, but a brief synopsis of the land-use, corporate and financial aspects of the project might be instructive for city dwellers bedazzled by the allure of cheap, clean, green solar power.
Start with the rather mundane business of land use. As we are constantly reminded, we need increased density and less sprawl to leave more room for nature, green space, greenbelts and farming. But the Kingston Solar project, now in operation, takes up more than 800 acres of green land to generate what Samsung describes as “enough clean power for approximately 17,000 homes.”
If Kingston Solar’s 425,000 solar panels were located in downtown Toronto, they and associated facilities would consume more than a square mile of the city’s core, from King to Wellesley and Sherbourne to near Spadina — all to provide power to 17,000 households. In other words, it would take as much land to provide solar power as it would to house the same households in Toronto (see Box 1 in the accompanying map).
For another comparison, downtown Toronto — as defined by city planners — currently includes more than 100,000 households. To provide those residents with solar power would require a solar farm with a footprint equal in size to all of downtown (see Box 2 on the map). That calculation does not include the electricity consumption of Toronto’s large commercial and service industries, which would require another massive solar farm.
Kingston Solar’s giant footprint compares with another facility. David Dennis, professor emeritus at Queen’s University, reports in a recent blog post that another Kingston power supply, the Lennox gas plant, has a capacity of 2,120 MW and is now being upgraded to 3,000 MW, all on maybe 100 acres of land. Solar power on that scale would require maybe 30,000 acres of land or about 120 square kilometres.
Kingston Solar consumes much more land to produce a lot less electricity — at a much higher cost. Ontario ratepayers will pay Kingston Solar 45 cents per kilowatt hour for electricity that could be purchased from the Lennox plant at maybe 11 cents.
The costs for 17,000 households are high. Over the course of the 20-year term of the Kingston Solar notes, Ontario ratepayers will be paying back $633 million in principal and another $200 million or so in interest charges. The 20-year total, upwards of $850 million, works out to about $50,000 (in current dollars) for each of the 17,000 households.
In addition to more than $200 million paid to the international investors who bought the notes, the Kingston Solar cash takes off in many directions to enhance the profits of companies such as Samsung and other solar suppliers and investors. To build Kingston Solar’s 800-acre solar farm, the developers ran up $492 million in bank debt. That will be repaid out of the proceeds from the note issues. Other payments, according to the DBRS rating report, include $82 million in a “swap breakup fee” and $51 million for an “equity distribution.” Somewhere in the deal, the owner of the 800 acres is also being paid rent over 20 years, at which time the lease is up.
The only real financial incentive to do any of this is the Ontario government’s power purchase agreement to guarantee payment of a feed-in tariff to subsidize solar power. If there were no tariff, there would be no solar farm and no $850 million in guaranteed cash flow from which a large number of people are benefitting.