Law Times

Law timeS • September 19, 2011 FOCUS Green energy fraught with risks Challenges abound despite government support BY JULIUS MELNITZER For Law Times R enewable energy, while fi rmly at the forefront of today's business thinking, is nonetheless a nas- cent industry in Ontario. According to Linda Bertoldi of Borden Ladner Gervais LLP's Toronto offi ce, nascent in this case means fraught with risk. "We're talking about the risk inherent in new technology it- self, fi nancing risks, market risks, regulatory risks, and completion risks, to name just a few," she says. "From a technology point of view, it's not yet clear whether the wind energy industry has a suffi cient understanding of the impact of the country's extreme weather on its turbines, and from a market perspective, it's not clear whether even many of our newer buildings have the structural capability to support rooftop solar systems." Although the feed-in tariff (FIT) program has proven a tre- mendous catalyst for renewable energy, challenges remain. "Th e challenge is to get a supply chain in place that can deliver durable high-quality product for 20- and 40-year FIT contracts," Bertoldi says. Otherwise, Ontario's boom- ing market alone doesn't tell us whether there's enough of a mar- ket in the rest of North Amer- ica that Ontario manufacturers can access. At the same time, the coming election in Ontario could lead to regulatory changes ADR developments Continued from page 9 sound relationship between it and judicial proceedings. Another signifi cant de- velopment is the introduc- tion of collaborative prin- ciples into the construc- tion ADR toolbox. "In short, it's a way of mediating without a me- diator," Glaholt explains. "Th e process involves a close collaboration of ex- perts, lawyers, and client to put clients in the best position to settle a case on a business footing." Th e process is cross- disciplinary and also draws on the collaborative expe- rience in other areas, such as family law. "But collaborative dis- pute resolution is not for every case because it is heavily dependent on re- lationships of trust and goodwill among parties," Glaholt says. "It works best in highly competitive industries where clients know they'll have to do business with each other in the future." www.lawtimesnews.com that might have a devastating ef- fect on the industry. "You've got to remember that Ontario's renewable indus- try is a construct of government policy," says Michael Barrett of Bennett Jones LLP's Toronto offi ce. "A lot of European and Asian concerns who made sub- stantial investments and com- mitment were left high and dry when the Ontario government signed its deal with Samsung because it meant that other de- velopers might have a lot of dif- fi culty connecting to the grid." Indeed, even manufacturers with their sights on Canadian markets beyond Ontario must take into account the diff erent systems that exist in the various provinces. "Ontario has the FIT system; Quebec has an open bid system; and Alberta has a merchant market in which renewable energy is treated just like gas and other conventional sources of energy," Barrett notes. In terms of fi nancing, ven- ture capital for early-stage tech- nologies is in notoriously short supply. But when it comes to project fi nancing, the picture is mixed. Life insurers and for- eign banks, for example, have become quite comfortable with the risks of wind power. "Th e fi nancial commun- ity has to some extent accepted wind projects, but solar is still new to them and so far the lend- ers who have come forth have tended to be European banks with experience in their home jurisdiction," Bertoldi says. In other words, Canada's big banks have had diffi culty ad- justing to the realities of the re- newable energy market. "Th e Schedule I banks are dis- inclined to park their money for the typical 20-year duration of a power purchase agreement under because operations and mainten- ance are relatively straightforward once a project comes online," Barrett says. Th en there's also commun- ity risk arising from ratepayer backlash. "Th at's really happening as evidenced by in Ontario, Green energy developers face a multitude of risks, says Linda Bertoldi. the FIT program," Barrett says. Construction risk, featur- ing large capital costs, is as high for renewable energy as it is for conventional power. "On the other hand, unlike conventional energy, renewable energy doesn't have much post-construction risk the Kent Breeze wind farm proceedings, and it makes de- velopers concerned about their planning cycles," Barrett says. "Are they all going to have to build in a six-month appeal period after permitting before construction can start?" While there has been a pro- liferation of residential and small commercial rooftop solar projects, challenges abound even here. "Finding an installer who knows what it's doing and who understands the regulatory re- gime is a bit of a challenge," Barrett says. PAGE 13 NEW EDITION CONSOLIDATED ONTARIO INSURANCE STATUTES AND REGULATIONS 2011 CONSULTING EDITOR: ALAN L. RACHLIN Get convenient access to the most current insurance law – all in one practical resource. WHAT'S NEW IN THIS EDITION This edition includes updates to the latest legislation and regulations, and additional forms such as: • Statutory Accident Benefit Dispute Resolution Forms • Personal Automobile Forms • Garage Automobile Forms It also includes a Table of Concordance for insurance law across Canada. 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