German solar industry, EU not happy with Ontario local content rules

Ontario’s decision to require local labour and gear for 40 to 5o per cent of a solar project’s content has ruffled some feathers in Europe.  The province’s government created the Made-in-Ontario rules in parallel with the design of its feed-in tariff program for renewables, which for solar PV pays up to 80.2 cents per kilowatt-hour. That’s a hefty premium, so to justify it to Ontario ratepayers (who will ultimately be picking up the tab) the government created the local content rules as a way to tout the economic benefits that would come from increased investment and green-job creation.

Germany’s solar industries association, BSW-Solar, doesn’t like that very much. It has issued a position statement to its members, including some of the biggest solar PV module manufacturers in the world, urging them to raise their concern with Canadian and Ontario authorities. A European Union trade delegation also raised the issue during trade talks in Ottawa last week. Technically, however, I’m not so sure Ontario’s rules violate World Trade Organization agreements, as BSW-Solar claims. For one, the rules only apply to a portion of a project — not 100 per cent — so this doesn’t preclude any specific product made in Europe. Second, Ontario has not signed onto any WTO agreement regarding product procurement, and it’s doubtful whether this issue falls under a procurement scenario.

And let’s face it, even though Germany didn’t have specified local content targets, this is a cultural given. And because Germany was a first mover in Europe, and to a large extent globally, it really didn’t have to compete with many jurisdictions. It’s likely that BSW-Solar is worried that the German government’s plans to start lowering subsidies for solar will draw attention away from Germany and toward jurisdictions such as Ontario. It will, however, be interesting to see if this issue gets elevated to being a formal complaint filed with the WTO.

4 thoughts on “German solar industry, EU not happy with Ontario local content rules”

  1. I can’t understand how Ontario can be opposed to the Made in America provisions in the US economic recovery plan and have their local content requirements.

  2. So what. Show me the country that doesn’t employ some form of protectionism. We all love free trade…when it applies to the others.

    The made-in-Ontario provision is totally justifiiable–the German solar industry should understand that better than anyone: it was born with a massive subsidy in its mouth. At this stage in the game it’s completely reasonable to support the industry and to receive for that support a nice little jobs creation program. The Germans are being stupid. Clearly it’s a win-win situation: they’ll still get the business….business that probably wouldn’t exist but for the local content rules.

    Hopefully this is just silly businessmen paying their dues at the altar of the free market, and that they’ll smarten up and recognize the opportunity they’ve been given.

  3. I don’t see how the local content rules can be any more objectionable to free-market free-trade ideology than the feed-in tariff subsidies. As you explained it Tyler, if the government pays a premium, the government wants to recoup expenditures.

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