Mothballed Ontario offshore wind farm to cost Canada $28M
NAFTA tribunal rules against Canada, hands down bill for unbuilt energy project originally planned for Lake Ontario
TORONTO—A NAFTA arbitral tribunal has ruled against Canada in a case filed by U.S.-based Windstream Energy LLC over a stalled offshore wind farm planned for Lake Ontario.
Ruling that Ontario treated the company inequitably, the tribunal imposed damages of $25.1 million and $2.9 million in legal costs under the trade agreement’s dispute settlement framework. Despite originating in Ontario, the case pitted Windstream against the Government of Canada.
The company’s director, David Mars, called the decision an “appropriate first step at remedying the challenges we have faced.”
The dispute stretches back to 2010 when Windtream and the Ontario Power Authority (since renamed the Independent Electricity System Operator) signed a power purchase agreement for a 300 megawatt project off the Wolfe Island Shoals in Lake Ontario under the original Feed-in Tariff program. The 120-turbine project was then put on indefinite hold in 2011 when the province placed a moratorium on offshore turbines, citing the need to further study the technology’s impacts.
Despite ruling in Windstream’s favour, the tribunal awarded a fraction of the $568 million in damages the company sought. Still, it is the latest in a long string of costly energy-related missteps and controversies in Ontario over the past decade. Amid increasingly hydro costs, the province halted plans to hand out another round of renewable energy contracts last month.
For its part, Windstream said it is still looking to develop the project.
“We look forward to working with the Government of Ontario to build this project in accordance with the contract,” Mars said.
Despite the optimism, there is little indication Ontario is prepared to lift the moratorium on offshore development. The cancellation of the planned round of renewable contracts also means any large clean power development in Ontario has been put on hold.
Offshore wind has evolved into a huge business in land-starved Europe, but has yet to set down roots in North America. The first U.S. offshore project was recently completed, but there are currently no offshore projects in Canadian waters.