The Ontario-Samsung Deal: Good or bad?

On January 21, the Ontario Government announced a $CDN 437 million economic incentive for Samsung C & T and Korea Electric Power Corporation (KEPCO) to manufacture and install up to 2.5 GW of wind and solar farms in Ontario.

Many people have asked us if we had a personal opinion, and there seems to be some expectation that we’d be opposed to the deal.

There have been many who’ve expressed anger at the preferential treatment given to Samsung, ranging from the Canadian Wind Energy Association, to the Association of Power Producers of Ontario, to conservative and even liberal Ontario cabinet members (the government is currently liberal). There’ve also been many commentators who’ve lauded the government’s ability to attract almost $7 billion in investment from the South Korean consortium, who approached George Smitherman, then Minister of Energy and Infrastructure, with the proposal about 18 months ago.

The big question seems to be: will this deal be good for Ontario?  Steve Paiken asked this on The Agenda last week to his four guests, who seemed divided two-for-two on their answers: Tom Rand, Cleantech Advisor at the MaRS Innovation Centre, and Kristopher Stevens, Director of the Ontario Sustainable Energy Association (OSEA), were generally positive about the future economic returns of the deal, and the precedent it set for green energy development in Ontario.

Some disclosure: we recently became members of OSEA.

Taking the opposite view, Randall Denley, business journalist with the conservative-leaning newspaper The Ottawa Citizen, and Norm Rubin, Director of Nuclear Research at the independent think-tank Energy Probe, painted the deal as simply bad business: driving up higher energy prices for Ontarians over the long term; decreasing the total number of jobs in Ontario (when accounting for jobs lost in the rest of the economy that would allegedly subsidize these ‘green jobs’); setting the foundation for a ‘branch plant economy’ (Randall’s evocation of that 1980s scare word); undercutting local renewable energy producers; and not, directly at least, even reducing the province’s GHG emissions (Norm).  In short, they had an arsenal of criticisms, some less valid than others.

It’s fair to say that handing over an initial 500 MW of grid capacity to Samsung does take away from the available capacity for Ontario-based wind and solar manufacturers and developers; “it’s a chunk” as Brad Duguid, current Minister of Energy and Infrastructure, said to Paiken.  And it may be more worrisome if similar deals are made in the future.  But whether the deal is good or bad for the Ontario economy remains to be seen, and really depends on how it’s carried through by the Ontario Government.

If the deal means that Samsung is taking a big chunk of a finite pie, then the result may be another Spanish solar market collapse: large companies, supported by heavy government subsidies, using on-hand technologies for immediate financial gain.  This formula didn’t lead to sustained job creation or much innovation.

But if the policy is to carefully increase Ontario’s capacity for renewables, and to support these with dispatchable, cleaner back-up sources – like natural gas (more on this later) – then the chances are better that we’ll create a sustained domestic industry that leads in cost and efficiency.  Personally, I think that it’s a good deal, and I can say that as an employee of a solar company that isn’t taking a cut.

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One response to “The Ontario-Samsung Deal: Good or bad?

  1. when r we going to develop resdenial solar power,affodable to average person have been using systen for 30 yrs. lets get real folks single home solar units will be the most cost effective way to go. excuse loiwer case,onlyhave use of left hand.