My Clean Break column this week takes a critical look at the Ontario government’s decision to lower the price it pays for small ground-mount solar systems under its much-celebrated feed-in-tariff (FIT) program. The controversy centres on “microFIT’ solar projects less than 10 kilowatts in size. The program offers to pay 80.2 cents per kilowatt-hour for clean electricity from these small solar projects, whether or not they’re rooftop-based systems or systems that are mounted on the ground. However, since the program was launched last October the Ontario Power Authority has been flooded with applications — more than 16,000 in total so far — and more than 80 per cent of those applications are for ground-mount systems.

Bogged down with four times the volume than initially expected and worried that ground-mount projects were getting a far too high return on investment, the government (and by association its not-so-independent power authority) went knee-jerk. It declared earlier this month that the ground-mount microFIT rate will be cut to 58.8 cents and that 10,700 applications will be tossed out, meaning developers that still want to go ahead with ground-mount projects under the new rate will have to reapply.

Now, 58.8 cents may be fair, but as you’ll read in my column, the tariff rate is beside the point. This is about the Ontario government being an untrusted partner. This is about dozens of solar businesses that feel betrayed by a government and program that encouraged them, based on earlier tariff guarantees, to set up shop in Ontario. The entire point of a FIT program is to provide a reliable, long-term rate for electricity that gives investors the confidence they need to invest and create jobs in Ontario. This tariff “tweak,” as Energy Minister Brad Duguid called it, may be just a small part of the overall FIT program, but what it shows is that the program — the way it’s being managed — can’t provide the certainty that investors need; it can’t be relied on. The mistake the Ontario government is making is to think that it’s doing everybody a favour by creating this FIT program and that people participating in the FIT should just shut up and not complain — i.e. they should be happy they’re getting what they’re getting. That, unfortunately, is an arrogant position to take. If the government were a private business, it could be taken to the Competition Bureau for engaging in false or misleading advertising.

It may be that microFIT ground-mount solar projects are likely to get too high a return on investment based on the 80.2-cent tariff. But by agreeing to that tariff nine months ago, that’s a mistake the government made and should live with — at least for the applications received so far. Retroactively changing it is politics at its worst. As one applicant expressed to me in an e-mail, “Any future business plan or proposal by this administration is dead in the water. Who would trust these people to keep their word?” he wrote. “The whole thing reminds me of the Ally TV commercial where the slick businessman rips off innocent kids.”

Indeed, where will the government renege next? Maybe it won’t. Maybe it will. We don’t know for sure. What we do know now is that it has, demonstrating it could do it again. I’m hearing that the government is inflexible with its position. They’re likely to regret it, and what would be a shame for all.

Tags: Duguid, microFIT, ontario

This entry was posted on Tuesday, July 20th, 2010 at 10:30 am and is filed under Uncategorized, green politics, ontario, solar. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.