Industry starting to jockey around Ontario market

Since Ontario’s feed-in tariff program was launched last week, and with the first applications being accepted Oct. 1, there has been a handful of announcements that suggest the new program — despite controversy around local content rules, wind setbacks and land restrictions for solar — is beginning to achieve its intended effect.

Wind developer AIM PowerGen announced yesterday that it has been purchased by International Power PLC, which said Ontario’s Green Energy Act and feed-in tariff program represented a “good basis for long-term investment” and was a “key driver of our interest in AIM.” The value of the deal was disclosed by IPP as $189 million (Canadian). Said David Timm, vice-president of strategic affairs at AIM: “They very much believe that with the Feed in Tariff  Ontario ‘is open for business’  and intend to make a big commitment in the province.”

Earlier, Canadian Hydro Developers said it had purchased the rights to develop 4,400 MW of wind offshore in Lake Erie. The Ontario government also disclosed it’s in advanced talks with Samsung C&T about bringing wind and possibly solar manufacturing to the province to support their interest in developing renewable-energy projects in the region. GE is also making moves, as are a number of local companies — Everbrite Solar, CWind and Sustainable Energy Technologies.

While the wind side shows some promise, the solar side looks more troubling. “There may be some jobs gained with manufacturing potential coming to Ontario, but they may be dissuaded from doing so if the government is restricting the development of a solar market through distorting land and domestic content requirements,” Rob Miller, vice-president of development at solar developer Axio Power Canada, lamented in a recent e-mail. “FirstSolar, EDF, SunPower, GE (solar), to name a few, I think some of these companies might be sitting on the sidelines and giving Ontario a pass for now in terms of new investment in FIT, and deploying capital elsewhere. Realistically, Ontario is still a small market, and if the government wants to attract manufacturing the typical way to do this is with tax incentives for building factories, grants, R&D credits.”

He may have a point. I dropped an e-mail today to Nanosolar co-founder and CEO Martin Roscheisen, asking whether he was still interested in the Ontario market. He replied promptly. “Yes,” he wrote, “but one doesn’t build factories overnight and at a moment’s notice.  We’ll see how the market develops and holds up and take this into consideration as we expand capacity.” It may indeed be that solar manufacturers aren’t prepared to take the chance just yet with certain restrictions on solar development, including and most importantly the development ban on Class 1, 2 and 3 (in most cases) agricultural lands.

But it’s still early days and there could be much policy tweaking to come, so stay tune.

3 thoughts on “Industry starting to jockey around Ontario market”

  1. I would like to share the suggestions that I submitted to the OPA with the readers ….

    To the OPA ”

    I have some feedback and suggestions on the Domestic content rules. I have also written into my MPP and cc’d the Energy ministry .

    The current Domestic Content rules as stated are a real impediment to a successful launch of this program and creation of Green Jobs in Ontario. I will focus my feedback on the microFIT for Solar PV.

    A) Initial requirement to meet 40% Domestic Content.

    Issues
    1) There is presently only 46% content available to achieve the 40% based on the current available sources of PV modules and Inverters. The 9% for mounting systems is even an issue if they are part of the Solar Panel package

    Solutions
    1) Make items 4 and 5 add up to 40 % for the initial requirement so that projects are not limited by the currently available sources of materials. This will give time for more Ontario based sources to come online. Part of my rational is that the government’s stated intention is to create “Green Jobs” and most of the jobs will be created in the installation and overhead part of the supply chain. The rules should not serve to artificially limit the investment or end customer sales.

    B) Requirement to meet 60%. Domestic content by Jan 2011

    Issues
    1) There is not enough time available for companies to meet Ontario Domestics content.. New factories would need to come online with-in the next 12 months to ensure adequate supply.
    2) When sources are limited, it will reduce competition and invariably increase prices of components.
    3) The definition of item #1 (Solar PV Modules) is too narrow and I believe not achievable within the stated time frame. This could lead to a gap in the program whereby projects coming online in 2011 could not meet the domestic content rules.

    Solutions
    1) Extend deadlines by 12 months or more to meet 60%, or
    2) Redefine “Designated Activity #1” . It is not realistic for Ontario to expect that solar cell production can come on line in 12 months. This requires a huge capital investment and planning time. More realistic is to request that Solar Panels, rather than the Solar Cells be assembled in Ontario. To this end there is already precedents in the industry where Solar panel manufactures have set-up shop in the regions that are consuming the panels. There has also been in the industry, outsourcing of the Solar Panel assembly by the OEM’s to Contract Manufactures. Ontario has several contract manufactures with facilities in the province of Ontario that could start-up production with-in 12 months. This would bring much needed work to this industry.
    3) The qualifying percentages for “Designated Activity #1” can be revised so that a portion is given to assembly and a portion to the solar cell content.

    Joe Ragno, P. Eng

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