Ontario’s phase-out of coal-fired electricity generation is the biggest single reduction of Canada’s greenhouse-gas emissions. And it’s something that no party at Queen’s Park seriously proposes to reverse. It’s also, however, a success that’s often combined in the popular debate about electricity policy with the other side of the Liberal government’s ambitions: the expansion of renewable-electricity sources in Ontario’s power grid, particularly wind power. This is largely erroneous — coal-fired power plants were mostly displaced by expanded nuclear capacity or by “demand destruction” after the 2008 recession.
That’s an important point to keep in mind as the government and, likely, voters debate the future of Ontario’s energy policy. The government has announced a new round of procurements, and it’s not outright refusing to consider wind power. But Ontario’s grid is already one of the cleaner ones worldwide, and adding wind power won’t displace the dirtiest fuels, like coal and oil, for the simple reason that we don’t burn those fuels for electricity anymore.
So what’s the value of wind power in 2024? A new paper published by the Macdonald-Laurier Institute suggests that its costs outweigh its benefits by a substantial margin. Author (and previous TVO Today contributor) Edgardo Sepulveda says, in short, that the high prices used to lure wind-power merchants to Ontario more than a decade ago cost far more than wind adds to our power system in value.
“Historically, wind has not been a good deal for Ontarians as a whole,” Sepulveda said in a phone interview on Monday. “It may have been a good deal for wind developers, but it wasn’t a good deal in terms of the price actually paid or in terms of avoided emissions.”
Not only does wind power not displace the dirtiest fuels, but its relationship to natural-gas generation is complicated: Sepulveda finds that wind power doesn’t consistently correlate with either Ontario’s electricity demand generally or with natural gas specifically. That means it’s not displacing the last major source of fossil fuels in Ontario’s power grid effectively. And things aren’t likely to improve in the near- to mid-term, Sepulveda says, as Ontario looks for new sources of clean electricity.
The correction that’s needed is for Ontario to pay less for the power that wind farms generate — a lot less. Instead of the current $151, Sepulveda calculates that each megawatt-hour of wind power is actually worth $46. He acknowledges that number could go up if proponents adopted a higher estimate for the costs of carbon pollution. But precisely because wind isn’t displacing fossil fuels very much, that carbon cost needs to be extremely high. Even if the province doesn’t opt to build new wind turbines, it will have to decide what to do with existing farms that are coming to the end of their contracts in coming years. They could be re-contracted at a lower rate, though Sepulveda acknowledges that many of them might opt to decommission their turbines entirely if they’re offered $46 per megawatt-hour.
In the meantime, the high cost of Ontario’s electricity — which is due to more than just wind-power contracts — is being subsidized by taxpayers to keep the costs off hydro bills. (TVO Today’s Steve Paikin has written repeatedly about the fiscal madness of all this.) Sepulveda isn’t antagonistic to climate policy or clean energy sources, and while he advocates for nuclear power, he does so in part through a progressive political lens: Ontario’s nuclear fleet is publicly owned and unionized, in contrast to its renewables.
“The idea that anything negative can be said about wind isn’t very common [among progressives],” says Sepulveda. “We have to think about what wind is, rather than the idealized version of wind that many people have.”
There’s a more fundamental point that goes far beyond the energy domain and represents a warning for policymakers of all stripes.
“There are real, material constraints,” Sepulveda says. “And we have to make sure we have a clear-eyed view on the benefits and costs of our clean-energy options — and our options generally.”
When they embarked on their green-energy ambitions in the 2000s, the Liberals didn’t imagine that the policy would end up being so politically radioactive that it would play a substantial role in consigning their party to purgatory for at least two election cycles. They did, however, fail to heed warnings, including some that came relatively early on. When then-auditor general Jim McCarter reported in 2011 that renewable energy was going to be the primary factor behind rising electricity bills for the following decade — and that billions could be saved by being slightly less generous to the renewable-energy sector — the Liberals spent years either denying it was true or denying that it was a real problem. By the time they started to take the problem seriously, it was too late: by fall of 2016, the costs couldn’t be obfuscated or argued any longer. Worse still, desperate attempts to course-correct (like 2017’s Fair Hydro Act) arguably only made things worse.
In a time when affordability is maybe the single most salient political issue, it’s worth remembering across every sphere of policymaking that there are real costs to the choices governments make — and that neither political spin nor good intentions are a sustainable long-term answer to imposing economic pain.
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