Continental first: Ontario proposes ambitious feed-in tariffs for wind, solar, biogas/biomass and hydro

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  • 80.2 cents per kilowatt-hour for rooftop solar.
  • 19 cents for offshore wind of any size (first jurisdiction in N.A. to set price)
  • 13.5 cents for onshore wind of any size
  • 14.7 for biogas under 5 MW.
  • 44.3 cents for 10-MW-plus solar, sliding to 71.3 cents as projects scale down to 10 kilowatts.

The government will commence eight-week consultation process and expects to have the prices in effect this summer. More to come….

UPDATE: Here’s an article I just filed to the Toronto Star’s Web site. It contains more info regarding the proposed tariffs. Ontario introduced basic feed-in tariffs two years ago under its standard offer program, but project size was capped at 10 megawatts. The new advanced feed-in tariff program lifts the cap (though solar is still capped at 10 megawatts). It also offers higher prices for smaller projects, such as community-based wind and solar projects or residential solar. Most groups seem happy with the pricing with the exception of large solar developers, who despite getting a 2-cent increase to 44 cents per kilowatt-hour still argue it’s not enough to make projects economical (especially if you factor in poor Canadian-U.S. exchange rate and persistently tight credit markets).

Of course it remains to be seen whether this new feed-in tariff structure, despite being generous and being first on the continent, will be enough to attract investment, development, manufacturing and jobs. Curious to hear viewpoints on this.  Michigan introduced a bill last year that proposed similar advanced tariffs but it never got passed. Hawaii has proposed less ambitious tariffs, but Ontario’s will be first to go into effect and will be the most ambitious to date.

29 thoughts on “Continental first: Ontario proposes ambitious feed-in tariffs for wind, solar, biogas/biomass and hydro”

  1. A mountain of investment will follow this great initiative. Ontario will benefit big time. Sure we are all going to pay more for electricity but this will mean lots of good paying manufacturing, engineering, construction, marketing, and research jobs. The Ontario Energy Board was going to significantly raise the price of electricity in the near future anyways.

    Ontario will export the new technologies that will follow to the four corners of the earth and be the envy of all civilizations.

    I would like to commend our Premier Dalton McGuinty and Minister George Smitherman; who apparently is wasting taxpayer money by encouraging his local constituents to educate themselves about this epic legislation in an act of self agrandizment.

    I commend you both for having the courage to be good leaders. Thank you from the bottom of my heart.


  2. Well, I wish you guys in Ontario the best of luck, but 80¢ for a single kWh of rooftop solar on a 20-year contract?

  3. My prediction is that very little will be sourced in Ontario. Quick buck artists will flood us with US or off shore sourced equipment, and we will be paying dearly for this folly. The market will get saturated quickly. No one will risk his money to do R&D or manufacturing in Ontario, because by the time they are ready with a product, all available government funding will be spent. If anything, the increased cost of electricity will drive another nail in the coffin of Ontario manufacturing.

  4. Having co-authored the 2007 SolarShare Report which looked into the economics of PV and feasibility of developing a community-owned PV project, I can assure you that indeed, 80 cents (or thereabout) is needed for the owners of residential rooftop PV systems to have any sort of reasonable payback. Anybody who says this isn’t the case is welcome to try to find fault with the figures of our report, available online and

    The other tariffs proposed for larger rooftop PV projects are not far off either, but I agree that based on a recent PV pricing workshop staged by the GEAA and CANSIA, with the current exchange rates the groundmount PV prices must be much higher. The big boys that rushed in to get RESOP contracts for huge ground-mount projects are without exception now having difficulty (witness Opti-Solar and First Solar).

    Regarding higher consumer prices for electricity, look at Germany. Their equivalent program has had these results: increased electricity prices for the average family of CDN $40 – $50 per year, yet created more than 240,000 jobs, likely to surpass Germany’s complete automotive sector employment within 2 years. Here, I hope I’m not repeating what Tyler has already said previously.

    Simply looking at the effects on electricity prices tells just a tiny part of the story, just as it does for generation from nuclear and fossil fuels. For these by the way, who covers cost overruns? The taxpayer and the rate base. In the case of renewable energy projects? The project owner. A lot less externalities to be considered as well (i.e. pollution, GHGs, spent fuel disposal, Tritium releases, etc.)

    With tweaks, this program is a fantastic breakthrough by George Smitherman and he is to be applauded. Let’s hope that it gets passed into law, then let’s get on with creating new jobs and greener electricity.

  5. INSANITY!!!! This almost seems unreal. So now that we have a fixed price on renewable electricity, lets see how much CO2 is worth in Ontario.

    The average price for all these feed-in tariffs is about $0.29693 per kWh.

    Ontario’s electricity generation produces 0.675 tonnes of CO2 per MWh. (source: bullfrog power calculator)

    So: $296.93/MWh divided by 0.675 tonnes of CO2 (avoided) per MWh

    Equals (drum roll): $439.90 per tonne of CO2

    That is not a bad price for a tonne, considering you can get a tonne of CO2 for 15 Euros or so on the European market.

    Damn, let’s get this carbon market going!

  6. This is such great news… to think that such progressive legislation is getting passed in my home province seems like a dream come true, I have alot of respect for Smitherman and McGuinty for putting this into law. I can say one thing for sure… I will be pushing for solar pv real hard in my condo and will most certainly have a couple of panels up when we move into a home in the next couple of years. Wicked… can wait!

  7. I think this is great. What the naysayers may be forgetting, is that there are powerful psychological implications, as well as the supposedly rational market implications.

    First, there’s branding. This plan will probably get a bit of attention, and renewable energy, as we all know, is a very dynamic field right now. THese tow things will help to create the impression of Ontario as a “centre of innovation” with a supportive, forward-looking government that is willing to move on an issue where everyone else in N America seems stuck the mud. This plan will encourage the existing Ontario companies, it will encourage our universities and graduates, and it will reassure investors, quite apart from the direct investment resulting from the tariffs.

    Second, there’s consumer psychology. Let’s say that 500,000 suburban households are incentivised to put up rooftop panels. Then that’s 500,000 people who are suddenly made acutely aware of their own electricity use, and who will start to pick the low-hanging conservation fruit that’s increasingly available to homeowners. And it’s 500,000 customer who will likely become model participants in future conservation measures enabled by a smart grid. These (free) benefits should be weighed against the costs of the tariff.

    Finally, it’s morally correct to address climate change. Yes, it’s morally responsible to do so in the cheapest, most effficient way possible, and there’s the possibility that this program isn’t particularly effective. OK, but critics are plentiful, while jurisdictions actually doing something about climate change are few. The critics would be more convincing if they could point to things that actually work, rather than grumble that things might not. Even if this plan turns out to be a total flop at generating investment at home, it would still be worth doing because of the moral factor. Unlike economic models, for humans it would be crazy–quite literally–to ignore the moral factor.

  8. Quite frankly its wrong to create incentives for the generation of extremely inefficient electricty. As Darklamp points out, its extremely expensive in terms of carbon reduction.

    The only way to deal with global warming is to create a cost for carbon, be it through taxes or cap and trade. That way for any given expenditure, the saving will be maximised. The best and cheapest way to cut CO2 is efficiency, not eyewateringly expensive roof top solar.

    This is just politicians playing up to the cameras with someone elses money, and the impact of lobbying.

    Imagine how stupid we are all going to feel, paying 80 cents per unit in 5 years time when new technology can do it for ten.

  9. If predictions of 50,000 jobs in 3 years are accurate, then 80 cents per kWh is justified. Ontario originally experimented with half-hearted effort with 42 cents per kWh. No less than the eminent scientist Dr. David Suzuki pleaded with Ontario to copy the German model of Canadian 76 cents per kWh. But they stuck with 42 cents thinking that was enough. Guess what, investment flowed to Germany, not Ontario. If you were an investor, where would you rather place your money, where it will earn 42 cents or 76 cents? Any rocket scientists out there?

    But the best proof of the foregoing argument is Arise, an Ontario corporation based in Cambridge, Ontario. When Arise built its manufacturing plant, where did it place it? You guessed it, Germany!
    Where did the jobs go? In Ontario? Go figure.

    Thing is, these figures were not just picked out of thin air. For weeks, the Ministry of Energy conducted public consultations. Minister Smitherman even went to Germany and Spain to personally observed why and how their systems are so successful. That’s why he is so confident of his statistics. At 80 cents per kWh, the 50,000 jobs will follow. Ask Spain. Ask Germany.

    You can not argue against success, can you?

    Manny Bade

  10. Eric Childs and Clean Future Energy have hit some very important points. The awareness is very critical and as well as, the fact that efficiency is more cost effective.

    But this type of incentive will probably only last for the short term. Once people realise they can reduce their consumption to increase their own renewable production (making more money) you have both points aforemention working together.

    This is when the need for nuke power will reduce and the Ontario government will be stuck with a $14 billion stranded asset. They will be forced to get rid of the renewable incentive to pay off the nuke debt.

  11. I was wondering re the rooftop solar if anyone had some quick math on the economics. ie how much to install this on the roof of a typical cottage (1500 to 2000 sq feet), what the typical capacity factor is in Ontario (ie does the sun shine 20% of the time in the Kawartha’s), and can anyone sell back to the grid or does the utility have to install special equipment for a home or cottage owner to be able to sell back to the grid?

  12. Good so far. Any word on the possibility of an incentive for metered, certified thermal production? i.e. offset heat? More efficient, more impact.

    But then Enbridge would sell less, and it’s easier to shush OPG than the private gas companies.

  13. The feed-in tariff sound great and will surely create a demand for renewable energy. Wind energy holds considerable promise, according to the web-site Solar panels will also take off once the new tariffs kick-in.

    However, I’m concerned about where all this money is going to come from. Will the consumers have to pay more for their electricity?

  14. This is utterly insane. The creating jobs scam is a total sucker trap. i.e.give the rich a huge tax cut (Bush & Cheney) – look at all the jobs that will be created when they buy expensive yachts with that money. Hiring people to dig a hole and another bunch to fill it in creates jobs. That doesn’t strengthen an economy. Creating an industry that cannot survive without huge subsidies will ultimately fail – doesn’t this sound a lot like subsidizing the Big3 to produce cars that people don’t want? Solar & Wind will always be too expensive to be a significant energy supplier.

    To have an industrial society, we need energy prices less than 6 cents a kwh. That means Hydro & Nuclear – the only clean options – Nuclear being the only option of unlimited potential. If the Ontario government had half a brain they would push hard for an industry of small factory produced nuclear power plants like the Hyperion (25 MWe) @ $1400 per kw electrical & $500 per kw thermal – around 1.5 cents a kwh or the LFTR (liquid thorium fluoride reactor), also around 2 cents a kwh.

    The energy intensity of Canada is 34 cents GDP per kwh. With the renewable energy costs of 15-40 cents per kwh, it would lead to economic collapse, once cheap fossil fuel energy runs out – AND IT WILL RUN OUT! FOOLS!

  15. NW – You’re right. Well, in the right direction. The part you miss is that our existing energy producers are and have been subsidized for years, whether in tax breaks, depressed feedstock prices or, the big one, not having to pay for their waste streams. And to hint that nuclear is not subsidized is just silly. I’ve heard about the small nukes (my nuclear science professor was an advocate – 15 years ago), but until they’re proven, safe, with a (positive) track record AND you account for waste, etc. then why not explore the option of relatively stable, proven solar??

    Putting solar on a level playing field with the established technologies will help create (and sustain) jobs – I’m rather depending on it.

    I’m sure you’ve read “Hot, Flat and Crowded” – might be time to give it another perusal…

  16. NW talks about subsidies. Nuclear has always depended on colossal subsidies to arbitrarily make the price of electricity low. All homeowners in Ontario are aware of the debt retirement charge they pay which is around 7% of our electricity bill. Nuclear depends on taxpayer dollars and could not do business without us covering the extreme liability of cost over runs and safety risks.

  17. NW – there is no place on earth where nuclear has been done without massive subsidies.

    These can take the form of government financing, or legislative limitations on liability (hence reduced insurance costs), environmental risk underpricing or non-pricing, or all of the above. Usually, all of the above.

    If it actually were the right solution, it wouldn’t have needed massive subsidies all along.

    Nuclear is the biggest scam going.

  18. The 80cent only for less than 10KW. in the current marketing, the installing fee for 10KW need 100,000CAD. which consider the mentain fee, other fee, the electricity you used, you even can get the investment back in 20 years. Even you get it back, the ROI is very very low.

  19. SOLAR vs. NUCLEAR? Here are the statistics

    According to the U.S. Federal Energy Regulatory Commission Presentation in June 2008, the cost of building a nuclear reactor in 2008 is US$8.00 per Watt. At the normal rate of 80 U.S. cents per C$ that would translate to C$10.00 per Watt. A 1,000 MW reactor therefore will have a budgeted cost of C$10 Billion. Now, with CANDU’s past records of cost overruns, this amount could easily double to C$20 Billion, by the time the reactor is commissioned.

    Now we have to cost in the O&M. Operations and maintenance of a nuclear facility is not cheap. Remember that you cannot hire technicians at $10 per hour. These are nuclear scientists that have to be paid millions of dollars per year. Figure in the containment cost of nuclear waste, the pond that holds the contaminated cooling water so it does not get back into Lake Ontario, etc, and you have billions of dollars in O&M over the 20 year life span of a reactor.

    Then there is the future cost of cleanup when the reactor is decommissioned. Here’s report I gathered from Times Union:

    Nuclear cleanup to cost billions
    State-funded study puts almost $10 billion price on effort at West Valley Nuclear Plant, New York
    By Brian Nearing, Staff writer of the Times Union, First published in print: Wednesday, December 3, 2008

    True we are paying 6 cents per kWh, but the real cost could be up to a $1.00 as subsidized by the Ontario Government, with all the above hidden costs.

    Now, how much does it really cost Ontario to pay 80.2 cents per kWh for its target of 100,000 solar homes? At a maximum 10 kW per home, that would translate to 1,000 MW of installed capacity (equivalent to 1 nuclear reactor) producing 1,200,000,000 kWh per year. AT 80.2 per kWh, that would cost the Ontario Government C$962.4 Million per year, or C$19.248 million in 20 year OPA contracts. That’s less than the cost to build a nuclear reactor, without the O&M and the costly decommissioning costs. And with time value of money since the cost is spread out in 20 years, that would actuall only cost the Ontario Government C$12 Billion in today’s Dollars.

    Plus it would create all these 50,000 jobs!

    Now tell me, does solar seem more costly than nuclear?

    Manny Bade

  20. Tiger says it will take 20 years to recover investment on solar PV. That’s because the cost he quoted is for $10 per Watt. My European supplier has a tracking concentrator system that will lower the cost to $2.65 per Watt for the panels and with inverters, balance of system and installation the overall cost is as low as $5.00 per Watt. At this cost, the owner does not have to pay out of his own pocket. With a 5% bank loan, it will be positive cash flow all the way to 20th year.
    Manny Bade

  21. I was very excited about the offering for smaller micro projects until I found out about the Ontario content rules. I am a renewable energy dealer in North eastern Ontario. This was what I have been waiting for after neing in the business over 10 years. Unfortunatley to my knowledge there aren’t any solar module or inverter manufcaturers in Ontario. The only one that comes close dosn’t qualify as they source their cells offshore and only assemble them in Ontario. It will likley be 3 years before we can get a plant or plants up and running. Those who manage to start manufacturing first will likley charge huge prices running the startup costs to the consumer with modules in short supply to satify demand. It is admirable that the Ontario government would like to encourage buy in Ontario, but this leaves me and others like me waiting for another three years. I would think the domestic content should be lifted and a rebate be offered for Ontario content. We need to create the market now and get up and running. Those of us that have been in the business from installers, distributors and manufactures have been ready to meet the demad for years now. Lets get this wonderful opportunity going!
    I see that TransCanada is building a huge gas fired generating plant in Ontario and I don’t see that they are required to use natural gas made in Ontario.
    Was this an oversight or by design?
    Rick Guthrie
    Temiskaming Independent Energy

  22. Rick Guthrie is absolutely right. I was talking to other dealers and they are scrambling right now. Nothing solar really significant is manufactured in Ontario. Even the frames and brackets are made elsewhere (China specifically). Our solar 5x concentrator has a definite advantage price-wise since it can be sold to consumers at less than $3 per Watt – including the brackets and frames. The installation can qualify as Ontario content, but what about the inverters? Wow, after waiting for months this is what we get. As Rick says it may take us 3 years before we can really start in earnest, unless the government reverses this rule and give rebates to Ontario made products. That makes more sense.

    Manny Bade
    Poulek Solar Company Ltd. – Canadian Operation

  23. It’s strange but I have spoken to three suppliers of PV systems and they all say that they can meet the 40% content rule for microFIT projects. I think if someone invested heavily in foreign product, they are going to find it more difficult to meet the new rules. But if the rules were easy to meet with exsitng suppliers – how would they encourage new manufacturers to locate here?

  24. Yakman has a point. After all, the government promised 50,000 jobs. So, if the 40% content rule is not to be strictly enforced, then how can they achieve this goal?

    Yes, I have talked to other suppliers, and they are saying that they too can meet the 40% domestic content rule. The tracking is the key (brackets and frames). These are more seasoned suppliers who have installed PVs for years even before the FIT and the RESOP had been around. That time there were no Chinese made brackets so they had to make their own. Now, all they need to do is go back to making their own – meeting the 40% content rule and giving jobs to Canadians, not exporting it somewhere else.

    Manny Bade

  25. I have been in the solar thermal business since 1985. The gov’t had a dhw program that paid 50% of the cost of a system in the 80’s . So a bunch of companies started up and made systems . As soon as the program ended the companies close because the price doubled. Anytime the gov’t gets involved ,it creates a false market. These subsidies won’t last forever even if you think they will — they won’t, a different party gets in or budget problems. We do not get involved in any gov’t programs and we have been in business for 24 yrs. We produce our own dhw system for less than than the gov’t subsided one . The only way solar will thrive is consumers buying solar not gov’t subsidized solar. In the solar pool business it is not subsidized and does the best. Our sales have increasesd 10-20 % each year and NO GOV’T.

  26. I agree with Steven S. I think people are better off utilizing a certain technology because it suits their needs and not because it is actively promoted or subsidized by the government. Solar thermal and wind power are much more accessible to the general public. A person may make more money selling pv power than they will selling their wind power, true, but wind power technology is much more low-tech, which I love, and, therefore, much easier to repair and manufacture then photo voltaic panels. It makes more sense for people to set up a solar thermal system to heat their water and homes. Combine this with a few small wind turbines (I am partial to vertical axis, myself, they are easy to make) with a capacity of 100W each, include a battery bank for storage, then replace all your bulbs with LED and use electricity more efficiently in general. It is possible to produce enough electricity to run a house and buy only that little extra that you may require on occasion. Free Power.

  27. I’m just trying to get some sort of idea of what Ontario Hydro pays a producer for 1 Mwh to understand how it would be possible to produce electricity and sell it to Hydro
    Tyler Baylis

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