A special deal between the international electronics giant Samsung and the Ontario Premier’s Office may have been signed last week. The deal appears to contain elements that fundamentally undermine the Ontario Power Authority (OPA) and its Feed-In Tariff (FIT) process. Elements of the deal also appear to increase the degree of protectionism creeping into Ontario electricity policy.
Informal reports as of September 24 noon indicate that Samsung may have secured a substantial price premium (up to $30/MWh for solar and $10/MWh for wind, with payments indexed to domestic content) over the FIT price for large wind (500 MW immediately and 1.5 GW later) and solar developments (500 MW).
One estimate of the net present value of the extra cost to Ontario ratepayers above the FIT price is $500 million.
In addition, Samsung may also have secured preferred access to available transmission capacity. If true, this measure would bump other developers down in the priority list for grid connection. Samsung is not thought to have been active in developing a sufficiently large portfolio of development opportunities in Ontario to be able to capture all of the benefits of the alleged deal though internal projects. Any requirement that Samsung accelerate development to be able to cash in on the extra subsidies would appear to provide opportunities for wind fall profits for developers with sufficiently mature projects to be able to meet Samsung’s new contract-based opportunities.
The OPA Board was briefed on this deal last week and apparently considers that it would indicate to potential developers that the OPA is no longer the power system development administrator. There are questions as to whether Energy and Infrastructure Minister Smitherman has been reluctant to share details of the arrangements with cabinet colleagues.
Samsung may have made commitments with respect to manufacturing development in Ontario, but no details have yet emerged.
At a time when there are serious public concerns in Ontario with respect to untendered government contracts of $25,000, it is noteworthy that there is currently no public tendering process for renewable power development.