That guideline sounds reasonable...until you realize that it is a total arbitrary and useless piece of beaurocracy. How many offshore wind projects does Ontario really expect to get proposals for? How many players are even capable of owning, operating, or constructing such facilities? 5 km is meaningless, but what it does is provide an excuse for someone to avoid having to make a common sense decision.
IMO 5 km is indeed arbitrary but also somewhat reasonable, as it seems the closer the windmills are to populated areas the more objections they get. By historical standards, 2-4 km is very, very close for offshore windmills, but 10 km is not as big of a deal.
There have actually been many potential sites proposed in Ontario as listed in that Helimax study, and a large proportion of them would be located greater than 5 km offshore, and would provide higher wind speeds and more consistent wind speeds to boot.
I suspect that arbitrary 5 km number is also partly the Ontario government's easy-way-out solution to the Toronto Hydro windfarm fiasco, but nonetheless I do think it's justified. The fact that the Toronto Hydro proposal had the windmills at 2-4 km from shore is one of the reasons I oppose it. It's just too damn close. If it were 10 km offshore, I might support it... well if there were better and more consistent wind speeds. The proposed site by Toronto Hydro is not a 1st tier and probably not even a 2nd tier option in terms of wind speed and reliability and therefore the ROI will be low.
The only reason IMO Toronto Hydro wants that very, very close offshore site is that it's really the only site they have access to, and someone in the executive there wants the PR. The anenometer installation was Toronto Hydro's method of bypassing the Helimax report commissioned by the Province of Ontario, as Toronto Hydro could spin their own anenometer results any way they wanted. Now, the Ontario Ministry of the Environment has headed off Toronto Hydro at the pass by introducing this arbitrary, but ultimately reasonable, restriction on proximity to shore. Kudos to them.
BTW, the guidelines in the UK are also 5 km. So, it's not as if there is no precedent for this number.