Not that this comes as a surprise, but in case you thought the PCs plan to be gentle on the green energy file if elected, think again. Below are comments made on Dec. 19 by Progressive Conservative MPP Monte McNaughton, representing Lambton-Kent-Middlesex. McNaughton was speaking at a municipal council meeting, during which he outlined how his party, if elected this year, plans to obliterate the province’s feed-in-tariff program, including reneging on thousands of projects in the queue. It seems the PCs don’t just want to get rid of the FIT program, but are hostile to wind and solar power altogether and plan to alter course dramatically, starting with a moratorium on all green energy development. This would include a big commitment to build new nuclear reactors at a time when there is nothing but controversy around the high cost and long-term dangers of the nuclear option. In other words, the PCs would bring Ontario’s grid back to the dark ages with a false promise that doing so would cause electricity prices to fall, which couldn’t be further from the truth. As usual, McNaughton spews mistruths about the high cost of wind and fails to mention the much higher cost of going nuclear.

TRANSCRIPT of EXCERPTS:

Snipped this map from the Ontario Power Authority’s two-year FIT program review. Here are some key takeaways from the review:

• Solar prices are coming down, and in some cases way down. Small rooftop and ground-mount installs (under 10 kw) will see the FIT rates fall roughly 31 per cent . Large ground-mount systems of 500 kilowatts or higher will see rates fall by 21 per cent.
• Wind of all sizes will see rates drop by about 15 per cent.
• Other renewables, such as hydro, biomass and biogas, will remain the same.
• Going forward, FIT prices will be set when contract is offered, not at time of application.
• It’s being recommended that the government review supply and demand at end of 2013 and consider rising its green energy targets.
• Up to 50 megawatts of contract capacity is being reserved for hydroelectric.
• FIT rate reviews and adjustments will now take place annually.
• Regulatory approvals are being streamlined in some areas.
• Projects with a minimum of 15 per cent equity participation from aboriginal groups or communities will get extra points that give them priority in the queue. More points go to projects that have municipal or aboriginal council support.
• 10 per cent of remaining FIT contract capacity will get set aside for projects that have a minimum of 50 per cent community or aboriginal ownership.
• It looks like programs that offer supportive funding for community and aboriginal projects, such as the Community Power Fund, will get a boost based on recommendations from fund manager and program administrator.

A lot of coverage of this is making it seem like the government is reacting to rural protest against wind and solar farms, and unfounded public concerns about higher energy costs due to green energy. This is partly true, such as with the move to give communities more say, to encourage greater community participation, and to set aside capacity for projects with community ownership. These are all good moves. But the reduction in solar and wind prices, that was all to be expected. This is how FIT programs work — prices are supposed to come down over time. Even for solar, many in the industry seemed prepared to accept a reduction of around 25 per cent to reflect lower technology costs. The 15 per cent reduction for wind is also fair, in my view. My own opinion, however, is that large-scale solar should have seen greater reductions, and small rooftop rates should have seen lower reductions. MicroFIT solar installations, taken together, are still so small that they barely register in the overall price mix. Large solar projects benefit from economies of scale, do have a much greater impact on electricity prices, and should have taken a slightly larger rate haircut.  There’s also the fact that small rooftop projects aren’t controversial and make it possible for more citizens to participate in Ontario’s energy future.

What I didn’t see in this review was a much-needed call to accelerate transmission build-out and upgrade distribution systems with an eye to modernizing our electricity system — i.e. building a smart grid that makes the system more efficient and can accommodate more renewables. This entire area, in my view, has been neglected. There was also no talk of creating FITs for geothermal heating/cooling and solar thermal, and no talk of moving larger projects — particularly large wind projects, of say 20 megawatts or more — to the RFP model we used to use. Also, no talk of trying to work energy storage into the mix. At the moment, the FIT program discourages experimentation with solar because wind and solar producers aren’t penalized for producing energy during off-peak times when we don’t need it. The failure to come up with a FIT rate that differentiates between peak and off-peak times won’t lead to the kind of innovation we need.

One small note: It was good to see that domestic content rules are being created for concentrated solar thermal technology. The absence of these rules has made it difficult for Toronto-based Morgan Solar to participate in the FIT program.

Here’s my latest Clean Break column in the Toronto Star:

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By Tyler Hamilton

Ontario’s new Energy Minister Chris Bentley has much to learn over the coming weeks about the province’s complex energy file, and hopefully with that learning will come some genuine listening.

It’s tempting to think that the Liberal win earlier this month was a vote of confidence in the government’s green energy strategy, warts and all.

But one could just as easily argue that the outcome of the election would have been very different if PC party leader Tim Hudak hadn’t taken such an extremely negative position against the Green Energy Act, the feed-in tariff (FIT) program and associated initiatives.

Voters, by and large, are supportive – and many quite proud – of Ontario’s green energy vision. They see that it’s the direction we must take. They also see economic opportunity by heading in that direction, if done properly. For this reason, it appears most voters weren’t prepared to let Hudak hit stop and press the rewind button.

At the same time, the fact that the Liberals only squeaked ahead in the popular vote seems a clear message that the approach behind the vision needs some fixing – and fast.

For one, the ball has been dropped on energy conservation. We know that the cost of programs that help us reduce energy consumption is much less than building new power supply. We know that investment in energy efficiency has a much faster payback, represents a permanent reduction in carbon emissions, and is a significant job creator.

We also know that widespread support for energy conservation is the best way to help ratepayers cope with rising electricity rates. After all, who cares if the rate goes up if the monthly bill stays the same?

Yes, the smart grid will help us take control of our energy use, and smart meters can encourage us to shift when we use electricity. All of this helps, but it doesn’t encourage us to use less electricity. It’s not true conservation. And trust me, we waste a lot of energy. There’s much to conserve.

The Liberals have also paid a lot of lip-service to helping seniors and those on fixed-income cope with rising energy bills, but what’s lacking is meaningful action. The Clean Energy Benefit temporarily slapped on everyone’s bills is not an answer, nor is an end-of-year tax credit on a bill that’s paid monthly.

Another fix is needed with the FIT program itself. The rate structure is terribly out of date, and the Ontario Power Authority is already late in launching its two-year review of rates paid out for solar, wind, small hydro and biomass projects.

The rates under the FIT program were first announced in early 2009 and designed to assure a “reasonable” return on investment – about 11 or 12 per cent—for developers. The problem is that technology costs shift over time, sometimes dramatically. Solar is a case in point.

A recent report from the U.S. Department of Energy’s Lawrence Berkeley National Laboratory concluded that the average pre-incentive cost of residential and commercial solar PV systems fell 17 per cent last year and a further 11 per cent in the first half of 2011.

“Solar cell prices around the world have gone down significantly,” Paco Caudet, general manager of solar module maker Siliken Canada, told me this summer. “We have brought down costs over the last five months alone by almost 30 per cent.”

You hear the same story over at Celestica, which is manufacturing solar panels and inverters in Ontario for other companies looking to comply with local content rules.

Mike Andrade, the company’s senior vice-president, echoed Caudet’s view. He said the original solar FIT rates were based on a price for panels and inverters that is now 30 to 40 per cent lower. “Developers can make a fine return on investment at a much lower FIT rate than we have now,” he said.

Yet we continue to wait for rate adjustments. In retrospect, the two-year review was a mistake. Rate structure reviews should be done annually so the program can more quickly adapt to a changing marketplace.

We might also want to ask: should developers of multi-megawatt solar projects and large wind farms be booted out of the FIT program entirely?

After all, the program was created so community cooperatives, small businesses, farmers and homeowners could participate more easily in an electricity system previously dominated by the big developers, who were the only ones with the resources to take part in a competitive bidding process.

The level of community participation hoped for just hasn’t happened under the FIT, and this may explain why the McGuinty government had such a poor showing in rural Ontario ridings. People in many of these ridings are feeling like big projects are being imposed on them and that they have little say in the process.

European studies show that there is less resistance to projects when those in the community feel they have part ownership and a voice that will be heard. The FIT needs to move in that direction.

Not to say we still won’t need the big projects. But developers of these should be required to bid against each other so that Ontario ratepayers are assured the best deal.

And that, in a nutshell, is the problem we have so far: a great green vision, but not necessarily the best deal.

There’s much room for improvement, but first the government has to recognize the need.

Tyler Hamilton, author of Mad Like Tesla, writes weekly about green energy and clean technologies.

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.