"There's a lot more incentive for municipalities to want to participate," said Chiarelli.
"They actually now can participate as joint venture partner or a minority partner, and their participation creates a higher likelihood of the project being approved."
Proponents of large scale green energy developments will have to work with municipalities as part of a new competitive process before they can ask for approval from the Ontario Power Authority.
Those that actually partner with a municipality will be given top priority for approval, while those that don't get local participation stand little chance of getting the go ahead, said Chiarelli.
"If they don't have a pre-arrangement with the municipality, they will go way down on the list and won't likely win the contract," he said.
Critics pounced on the announcement as all show and no substance, because municipalities won't have the power to veto new energy projects.
"The Ontario government's announcement of changes to the renewable energy program is an empty gesture," said Jane Wilson of Wind Concerns Ontario.
"Communities all over the province have said they are not willing hosts to wind power projects, and the real problems of health impacts and reduced property values."
The Progressive Conservatives said the fact there is no municipal veto means the changes to the green energy act won't help local governments.
"You could still have wind farms that a municipality doesn't want forced on the community, even under these new guidelines," said Progressive Conservative energy critic Vic Fedeli.
"A municipality can control where they put a Tim Horton's, but not where they put a 500-foot-tall wind turbine."
The New Democrats said the Liberals angered many smaller and rural communities by not giving them a say about the location of giant wind turbines, which cost the party seats in the 2011 election when they were reduced to a minority government.
"The government made a big mistake by cutting local voices out of the mix when it came to the siting of green energy facilities," said NDP Leader Andrea Horwath.
"They're trying to address a problem that they created, and we'll see if it works or not."
Premier Kathleen Wynne said she hoped the changes would address the concerns of local politicians who fumed about their lack of authority under the green energy act.
"It's true that there's not a veto power involved in this process, but we always have to balance the greater good with the local good," said Wynne.
"So I hope it meets the needs of the municipalities, but we're going to work on it and my guess is it's going to change over time."
The feed-in-tariff program for so-called "micro" and small green energy installations will remain in place, with priority points awarded to projects that are led by, or in partnership with the local municipality.
The province is looking for another 900 megawatts from micro and smaller green energy projects over the next four years, and hopes to get participation from municipalities, universities, school boards, hospitals and industry, added Chiarelli.
There will also be changes to increase the tax assessments on wind and solar projects, which will mean more tax revenue for municipalities, he said.
Environmentalists applauded the move to generate more electricity from green sources.
"This sends a clear signal that Ontario intends to remain a leader on renewable energy," said Gillian McEachern of Environmental Defence.
On Wednesday, Chiarelli announced the province would eliminate another key part of its Green Energy Act requiring up to 60 per cent made-in-Ontario content in wind and solar projects to comply with a ruling from the World Trade Organization.
Ontario intends to comply with the WTO ruling, said Chiarelli, but is confident the province's manufacturing base for green energy components is strong enough now to survive without the regulation.
Japan and the European Union had argued Ontario's incentives for green energy were illegal because they discriminated against foreign firms, a complaint that was upheld by the WTO.