CED Co-op President, Brian Unrau
Recently, I was part of a renewable energy panel at the Centre for International Governance and Innovation. The discussion focused on Citizen Involvement and Promotion of Renewable Energy Sources. Our special guest for the event was German Renewable Energy expert Arne Jungjohann.
This was a great evening to reflect on what “citizen involvement” means. How can businesses in the renewable energy industry increase community involvement, and what barriers are we facing?
There are a number of differing viewpoints on what comprises citizen involvement. When it comes to government, especially, municipal governments, I have frequently come across the mindset that government represents the people. Therefore government ownership and involvement is akin to community ownership and involvement. I think there is a distinction that must be made that government owned is not direct enough citizen engagement.
Another viewpoint can be related to the process that is currently underway to sell up to 60% of Hydro One. Now as a company that is listed on the TSX, this is considered a public company. We as citizens now have the opportunity to invest in and own a piece of Hydro One. Theoretically, through shareholder activism, we have another lever for citizen involvement and engagement. Again, I think this is a stretch, and doesn’t represent the heart of what is meant by citizen engagement.
This brings us to what I will call the grassroots community ownership, and renewable energy co-ops like ours. The co-operative business model has been around for more than a century. I believe it represents the original crowd-funding model. This is social enterprise at its core. It is the coming together of the people of the community, pooling resources, and accomplishing together what an individual could not. It is organizations like our co-op that I believe represent the level of citizen involvement that is needed.
In some ways, it was a good thing we didn’t completely know what we were getting into when we started CED Co-op. Generating electricity and feeding it to the grid is already a heavily regulated process governed by the Ontario Energy Board. Add to this the complexity of signing power purchase agreements (our FIT Contracts) with the provincial government as the counter party. Then try to do this within a community organization, entering into the securities game under the watchful eye of the Financial Services Commission of Ontario. Finally, layer in Federal legislation as we worked to become RRSP and TFSA eligible for investments. It has been far more complex to start-up our organization than I dreamed it would be.
In getting where we are today, to comply with various pieces of legislation, we have had to put in our articles of incorporation restrictions on the types of business we do, limiting ourselves to the generation and sale of electricity from renewable sources. This requirement to generate and sell electricity means that we are not allowed to participate in many of the technologies that need to accompany renewables in order to achieve a high penetration. Some examples are energy conservation and retrofits, energy storage in its various forms, demand response, load shifting, thermal energy, and bio-fuels. Even within the shift from Power Purchase agreements such as our FIT Contracts to the natural market of net-metering, the regulations do not make room for third party ownership, which means that our co-op can’t participate in net-metered electricity generation right now.
Another barrier we come up against as we try to increase renewables penetration is something known as the 7% rule. For distributed or embedded generators such as the systems we install, there is a regulated limit that caps generation on any given feeder to 7% of the lowest level of demand on the line. Often, the calculation is based on consumption late at night on a Sunday, when very little electricity is being used. As a solar generator, we would never be producing power at this time of the night, yet we are limited to 7% of that threshold consumption in terms of how many solar installations can be connected to that line. As long as this barrier is in place, we will not be able to achieve a high level of embedded generation. We will not be able to produce renewable electricity where it is consumed.
One thing I have learned in meeting with members of our co-op and asking for their investments is that a very small minority are willing to put their money into projects simply because it is the right thing to do. By and large, it is the returns that are the driver in making the investment decision. Helping make the transition to a renewable energy system is a nice bonus.
Another mindset that I encounter among the general public is the belief that renewable energy is the reason electricity prices have skyrocketed, and the transition to renewables just isn’t worth the cost. Electricity has become a lightning rod in the political landscape. Electricity prices have risen significantly over the past decade as major investments in energy transmission have been made. This has enabled the bi-directional flow of energy and shut down our coal fired generation. A lot of press has been given to the topic of affordability for electricity. I won’t go into detail about benefits that have been realized. However, I do want to touch on the idea of affordability.
From the 2015 household spending data from Stats Canada, we see that the cost of electricity represents 1.5% of household spending. Only 1.5%. This means for the average household, of the $234 spent each day, $3.47 per day goes towards electricity. Even when we drill down to the expenditure of the bottom 20% of income earning households, electricity still only represented 2% of household spending at $2.19 per day. This lowest quintile spent nearly the same amount on alcohol and tobacco ($2.17 per day), that they spent on electricity.
These same households spent almost twice as much on gas for vehicles as they did on electricity ($3.86 per day on gasoline, almost 4% of spending), despite being some of the heaviest users of public transportation. In Ontario, in 2016 we continued to see 2/3rds of all new vehicle sales were trucks, SUV’s and vans. Why are we focusing on electricity as 2% of our spending, while we pour money into inefficient gasoline vehicles?
I think these are two of the most straightforward comparisons we can make. Is there anything easier to cut out than spending on vices like alcohol and tobacco? With active and public transportation options available, why are we driving so much? Do we really need that full size truck for 90% of our trips? There are plenty of ways to live more affordably. Electricity prices are simply an easy political target, one where we can shift the blame to someone else instead of examining our own habits.
As we think about promoting community involvement in our energy industry, we need to understand what exactly “citizen involvement” means, encourage renewable generators and remove policy barriers, and reframe personal electricity costs in the big picture of spending, rather than using them as a political wedge.