Ontario’s solar market is boomin’ baby.

California-based market research firm iSuppli came out with a report today that forecasts rapid growth of solar PV installations in Ontario, though warns of a bottleneck in production during the first half of 2011 as developers struggle to meet stricter local content requirements. In 2009 Ontari0 had 69 MW of installed PV, but iSuppli said that will grow by 272.5 per cent to 257 MW in 2010. Stricter rules requiring 60 per cent local content will kick in next year, however, and that will create a supply crunch that slows down growth until the last quarter of 2011 when local manufacturing catches up with demand. As a result, we’ll see growth of 75.5 per cent in 2011 as installations climb to 451 MW. In 2012 we’ll see that number climb past 600 MW.

Mike Sheppard, a PV analyst with iSuppli and author of the report, says companies that have set up local manufacturing in Ontario will benefit the most during the 2011 crunch. According to an iSuppli press brief, “Firms like Canadian Solar, SMA, Fronius and Silfab are stepping in to meet the demand for local solar components, building module and inverter manufacturing facilities in Ontario.”

Sheppard acknowledged that Ontario’s decision to shut down all coal plants by 2014 and its introduction of a Green Energy Act and feed-in-tariff program are driving the explosive growth in PV. He called Ontario’s FIT program “North America’s first comprehensive guaranteed pricing structure for electricity production from renewable fuels sources including solar PV, bio-energy waterpower and wind.” The program, according to iSuppli, “could have a major influence throughout North America.”

This is a positive evaluation, but I don’t think it’s as positive as it could be. As I outlined earlier, module manufacturers alone are setting up local production facilities with a combined annual capacity of more than 1,000 MW. Not all will be built, but iSuppli seems to think that actual installations will be limited to between 150 and 200 MW a year. If that ends up the case, we could end up having some major oversupply issues in Ontario by the end of 2011. But given the huge volume of FIT applications being received by the Ontario Power Authority and amounting to potentially several thousand megawatts, I’m wondering if iSuppli is low-balling its forecast.

The Ontario government and its energy planner, the Ontario Power Authority, sparked a big firestorm after announcing last month that they wanted to reduce the feed-in-tariff rate for small ground-mount solar PV projects to 58.8 cents per kilowatt-hour from a very rich 80.2 cents. The move caught many off-guard, and while there was a lot of grunting about the reduced rate, most were unhappy with the sudden and arbitrary nature of the announcement, which undermined the business plans of many companies that were participating in the program in good faith. Bottom line: it undermined confidence in the entire program, even though from a megawatts perspective it only dealt with a tiny portion of green power.

After a brief consultation period it seems the government and Ontario Power Authority took the industry’s complaints to heart, even though my own sources told me just recently that the government was being pig-headed and planned to stick with its proposal. In the end, they caved in to pressure — a very smart face-saving move, I might add. The price reduction will still take place, but it will be reduced to 64.2 cents, not 58.8 cents, and it won’t apply to anyone who applied to the program before July 2, 2010, meaning the OPA plans to honour the original 80.2 cents for those who meet that cutoff. This decision is a big gesture, because the plan under the original proposal was to only honour the 80.2 cents for those minority of projects that had already received a contract or conditional offer. That means the more than 10,000 applications that were going to be tossed out (with project proponents forced to reapply under the new rate) will now be honoured at the 80.2 cent rate so long as they applied before July 2.

There’s a small catch, however. Commercial aggregators will no longer be allowed to participate in the microFIT program, but will still be able to participate in the larger FIT (10 kilowatts and up) program. The government didn’t like the idea of aggregators merely leasing rooftops and then building and owning the systems, saying it defied the spirit of the program, which was to get households, farmers, communities, First Nations, etc… to participate directly on their own. I have to say, I *completely* agree with them there.

The OPA also announced it will be establishing a new advisory panel that will provide advice on program evolution, including the two-year FIT review process. The advisory panel will be made up of industry, academic and other stakeholders. I should point out that an attempt will be made to accommodate commercial aggregators of smaller projects, but it will be done outside of the microFIT program using a different set of rules to be established partly by the new advisory panel.

“The OPA has received almost 19,000 microFIT applications since the program was launched less than a year ago. More than 6,100 conditional offers have been sent to applicants and almost 800 microFIT projects are now feeding clean energy into Ontario’s grid,” according to the agency’s release today. “The OPA is working to respond quickly to microFIT applicants. Most ground-mounted applications that have been submitted will be processed by the end of September.”

Kudos to the government and OPA for putting meaning back into the word “consultation.” Showing a willingness to listen and change direction restores confidence in the process and the program, and the fact an advisory body has been set up to avoid future surprises can only help.

Following the manufacturing announcements from Siemens and Canadian Solar, I figured I would investigate who else plans to build (or has built) manufacturing facilities in Ontario to take advantage of the feed-in-tariff program and to comply with associated local content rules. In the previous post I mentioned module maker Solar Semiconductor, inverter makers Fronius and Enphase, and an alliance between Bosch Solar and Sustainable Energy Technologies. Here is a partial list of other plans that are in the works, some more advanced than others, and surprisingly they total more than 1,000 megawatts of annual capacity that, you can bet, will never fully materialize:

1. ATS Automation did say it would bring some of its Photowatt module making capacity to Ontario, and it has delivered. It started making product in May and has built a 100 megawatt line that will be officially announced in a few weeks.
2. A company called Heliene Canada, operating out of Sault St. Marie, is making solar modules as part of a partnership with Helios Energy of Spain. Capacity is reportedly 30 megawatts with possibility of expansion to 80 megawatts. I’m awaiting to hear from the company to see whether they’re actually producing modules yet. UPDATE: Heliene CEO Martin Pochtaruk just informed me that manufacturing starts next month on a 50-MW capacity line “probably increasing during 2011.” He said 45 jobs have been created.
3.  Solar Source Corp. plans a module making plant that will start with 30 megawatts of annual capacity and grow to 120 megawatts. and initially create 150 direct local jobs. It is part of a partnership with HHV of India.
4. Spanish module maker Siliken Group has said it will build a 50-megawatt a year capacity module line that will create 150 jobs. It expects it to be operational before end of 2010.
5. Woodbridge, Ontario-based SolGate, the only maker of solar panels in Ontario that pre-existed the Green Energy Act, has expanded its production line from 6 megawatts to 25 megawatts a year.
6. OpSun Panels Inc. has said it will build a 50 megawatt PV panel production line in Ontario. It already makes mounting systems, but says it plans to begin panel manufacturing by spring 2011.
7. There’s also Everbrite Solar, which wants to make thin-film panels somewhere in Kingston, Ontario. These guys have kept a low profile since announcing plans back in March 2009 to invest $500 million in a 150-MW capacity plant that would create 1,200 direct and indirect green collar jobs. I’m told they’re still targeting a 2012 factory opening, but I’m unclear whether the size of the plant or number of projected jobs have changed. An announcement of some sort is expected “within a few weeks,” I’m told by a source close to the project. UPDATE: Everbrite is aiming for 120 MW capacity in 2013 that will ramp up to 150 MW a year later.
8. Also, a company called Canasia Power Corp. announced just last month it plans to build a 50 MW capacity solar module plant in London, Ontario, that will employ 100 people, with an expectation to expand the plant to 200 MW and eventually employ 500 workers. It hasn’t announced a schedule for the build, but interestingly, plans to export most of its output to Asian markets, though I assume some will be made available for Ontario.
9. Also announced last month, Quantum Technologies (parent of Asola) and Evergreen Power Ltd. have formed a manufacturing joint venture that will see 30 MW of solar modules made in Ontario each year.
10. UPDATE: I was contacted today by another company that has announced plans to build PV module manufacturing capacity in Ontario. The company is Silfab SpA, based out of Italy and supported by strategic partners SAS and PanAsia (Sunrise). The company announced in June that it would build 120 MW of annual capacity in two stages — the first 60 MW completed by the second quarter of 2011 and the second 60 MW finalized by the end of next year. The output wouldn’t just be for Ontario, as distribution is planned for all of North America. “Our facility will employ 70 people initially, with an additional 40 workers at full capacity,” according to an e-mail from Silfab CEO Franco Traverso.

The above are just related to solar module manufacturing (assembly), and together they total about 715 835 megawatts of annual manufacturing capacity, including plans for future expansion, but this assumes they all pan out. Add 200 megawatts announced by Canadian Solar and 150 megawatts envisioned by Solar Semiconductor and we’ve surpassed well over 1,000 megawatts a year of capacity, just in Ontario. “We’re still waiting to see shovels in the ground,” said one Ontario official who is monitoring the market. “The question is whether these things break ground. If they’re going to supply product by spring 2011, they will have to make that decision soon.” My own view is that 1,000 megawatts is overkill and that many of these factories will never be build. We’ll be lucky if we can get a few hundred megawatts built. Still, it’s encouraging to see such a healthy pipeline so far.

On the inverter side we’ve also had announcements from Magnetek (production by fall 2010), SMA Solar (promising 100 to 200 jobs), and Schneider Electric (which bought Xantrex some years ago). Mounting-system company Schletter has announced plans to manufacture in Windsor as well. I’m sure there are more, but that’s the list I’ve compiled so far.

Canadian Solar announced today that it plans to establish the country’s first solar module manufacturing facility in Guelph, Ontario, just an hour or so northwest of Toronto. The new facility will be capable of making 200 megawatts of solar modules a year and will create 500 new jobs for the region. The announcement wasn’t a surprise. Canadian Solar told me shortly after Ontario’s feed-in-tariff program was launched that it planned to establish manufacturing here to comply with the province’s local content rules. But the commitment, now official, brings good news to a government trying to justify the high prices ratepayers will end up paying for solar, wind and other clean energy sources under the feed-in-tariff program.

There was more positive job news the day before, when Germany’s Siemens AG announced plans to build a wind-turbine blade factory in southern Ontario — the first in the province — as part of a deal to supply 600 megawatts worth of wind turbines to Samsung C&T, which under a deal with the province of Ontario has agreed to develop 2,500 megawatts of wind and solar projects (2,000 MW of it wind) by 2016. “The implementation of this agreement will create up to 300 ‘green collar’ jobs and up to an additional 600 construction and indirect service jobs over its term,” according to a press release announcing the deal. Like the Canadian Solar announcement, we knew it was coming (even though we didn’t know Siemens would be involved) but it’s nice to finally see some specifics related to job numbers and the kind of manufacturing that will take place.

Here’s the government’s press release, which — no surprise — touts both the Canadian Solar and Siemens announcements and claims that FIT contracts issued to date mean thousands of new jobs. “The 694 clean energy contracts already announced are expected to create approximately 20,000 direct and indirect green economy jobs over five years and about $9 billion in private sector investment,” it reads. Of course, once your start throwing in “indirect” jobs you can pretty much make up whatever numbers you want. Still, there’s a buzz in Ontario and despite some fumbles — such as the lowering of the price for small ground-mount solar systems, which has created a political shitstorm — we are seeing substantial investments (or commitments to invest) in the province. We’ll have a better sense of the true numbers after the first quarter of 2011, when many of these new facilities are expected to be operational and when stricter local content rules for solar go into effect — that is, when local content requirements for solar projects less than 10 kilowatts in size jumps from 40 to 60 per cent, and for larger solar projects from 50 to 60 per cent.

Last week, Austrian electronics company Fronius International announced it was establishing a solar inverter manufacturing site in Mississauga (just west of Toronto) that would produce 50 megawatts of inverters annually and, once operational by the end of the first quarter 2011, will employ about 100 people. “Ontario is one of the most important markets of the future for Fronius,” said Romuald Goure, managing director of Fronius Canada. (more…)

One of my recent Clean Break columns looks at attempts to lower the cost of hydrogen production, with specific reference to a project at the University of Ontario Institute of Technology. UOIT professors Greg Naterer and Ibrahim Dincer are attempting to building a machine that can create hydrogen from sunlight and water by simulating photosynthesis, an approach based on research conducted at Virginia Tech. Researchers there, led by Professor Karen Brewer, have developed a super molecule that acts as a photocatalyst. When sunlight is shined on water containing this catalyst, it breaks the hydrogen-oxygen bond and releases the hydrogen for collection. Photocatalysts offer a low-energy approach to breaking this H20 bond, compared to steam-methane reforming or electrolysis, but the problem with past efforts is that the catalysts were consumed in the process. This creates the need for a constant supply of catalyst, which can become costly. The photocatalyst developed by Brewer’s team is not consumed — it can be recycled over and over again, which is why the approach shows so much promise. It has been demonstrated to work in the lab, now UOIT has been charged with building a prototype machine that can demonstrate the technology at scale. It has received $900,000 in funding from the Natural Sciences and Engineering Research Council (NSERC) and Toronto-based Phoenix Canada Oil Co., which owns the rights to Virginia Tech’s technology. For more detail check out the article.

There are many efforts to turn the sun’s energy into fuel — such as hydrogen, syngas, etc. – and the U.S. Department of Energy recently committed $122 million toward such research. Indeed, Professor Daniel Nocera at MIT has been leading the charge, and is now involved with a company called Sun Catalytix which is aiming to commercialize a process invented by Nocera. If we can figure out how to produce large amounts of hydrogen in a clean and low-cost way it can lead to affordable energy storage and, some day, even fuel for transportation.

I got into a little exchange with Prof. Naterer about the potential for hydrogen-powered transportation. In my column I wrote that “Hydrogen-powered cars might not be in the cards for the next two or three decades.” This may be a bit of an exaggeration, but maybe not. (more…)