Update on Ontario’s planned feed-in tariffs
It’s been nearly five months since I wrote in the Toronto Star (and posted) about Ontario’s intention of introducing a European-style feed-in tariff — also known as a Standard Offer Contract — for operators of smaller-scale renewable energy systems (on left see picture of German solar farm).
The idea behind a feed-in tariff is that the government creates a simple set of rules and a standard contract that makes it possible for farmers, schools, community co-ops and even homeowners to sell wind, solar and biomass power into the provincial grid at a fixed premium. Doing so would spark use and deployment of renewable energy technologies and help displace fossil fuel power as the province shuts down its coal-fired plants.
At the time, then Energy Minister Dwight Duncan said he was fully behind such an initiative, which would rank as the most progressive in North America, and planned to make an announcement about it that September. “We shouldn’t miss the boat,” Duncan said.
Well, that announcement was never formally made, and since then I’ve received many inquiries about what’s going on and when something concrete will be announced. So here’s an update on the situation, from what limited information I have:
* It is known that last August the ministry instructed the Ontario Power Authority and Ontario Energy Board to investigate a workable pricing scheme and look at policy changes that would assure non-discriminatory access to the grid.
* While Duncan never formally announced the province’s plans, he did refer to them in a handful of public speeches since the Toronto Star article appeared. Those within his office said they didn’t feel it was necessary to put out a formal public notice.
* In the months that have passed, the OPA has since come back with a draft pricing scheme, which the ministry is currently reviewing. One source at the ministry said the OPA’s suggestions on fixed premiums are based on economic considerations alone, and don’t take into account the province’s willingness to sweeten the pot a bit to stimulate greater deployment of renewable energy systems. Ultimately, the final decision is political — the OPA’s recommendations are merely used as guidance.
* Rumour has it that the sticking point right now is how to set the premium for solar photovoltaics, and there’s even speculation that the province may exclude solar technology altogether. The ministry apparently is hesitant to include systems that are smaller than 500 kilowatts, which would essentially exclude all homeowners from taking part in the program, since the average home is 4 or 5 kilowatts at best (I think the largest residential system ever installed in Canada is 8.5 kilowatts). Consider that the largest commercial solar PV system in operation today in a city such as Toronto is less than 50 kilowatts. A 1 megawatt system is planned for the Exhibition Place, and while it would be the largest so far in Canada, it won’t be built for a couple of years. I suppose the ministry’s thinking is that operators of small solar PV systems can still take advantage of net metering, which unfortunately doesn’t offer a premium on the energy or any other incentive for that matter.
* There’s also speculation that the ministry, on top of setting a minimum size for PV systems (assuming it doesn’t exclude them altogether), is considering a fixed premium of 20 cents per kWh, versus the 67 to 83 cents per kWh initially proposed by the Ontario Sustainable Energy Association.
* OSEA was expecting the government to publicly outline its Standard Offer Contract plan last week, but so far there’s been no news. Melinda Zytaruk, general manager of OSEA, believes the ministry will come out with something in early February. “It seems they are going to be doing some more work on it after all, and we are hopeful that our patience will pay off and the continued work will produce a better policy,” she told me in a recent e-mail.
I can understand the concern from both sides, and perhaps the best outcome will be some sort of compromise: Say, 40 cents per kWh on systems no smaller than 50 kilowatts, below which the net metering policy already kicks in. It would still exclude homeowners, but given homeowners would likely use most of the solar energy they produce anyway, I’m not so sure they would have much left to sell back to the province. I would prefer to see a rebate program, similar to that recently passed in California, that would spark deployment among homeowners.