I had to do a double-take. The world’s largest maker of thin-film solar modules, a company approaching $4 billion in annual sales and with a market cap of $8 billion, is getting nearly half a billion dollars in loan guarantees from the Export-Import Bank of the United States to develop seven solar projects totaling 90 megawatts in southwestern Ontario, Canada. According to the bank, the transaction constitutes the “largest financings in history supporting U.S. solar-energy exports to any country.”

“The Bank’s support was needed because viable long-term financing for these projects was not otherwise available in the commercial marketplace,” according to First Solar’s press release.

Wha? What a load of crap. There’s low risk to First Solar in doing these projects. It’s a large company with a strong balance sheet. It already has built more than 100 megawatts of solar in Ontario so it now has a track record. And, on top of that, it is being guaranteed 42 cents per kilowatt-hour under a 2o-year power purchase contract secured through Ontario’s older Renewable Energy Standard Offer Program (RESOP). As history indicates, it is building these projects then turning around and flipping them for an immediate profit, yet it will have 18 years to pay off the low-interest loans secured with the help of these loan guarantees. This company doesn’t need the help. If I were a U.S. citizen, I’d want these guarantees directed at companies that did need it or at least to projects in regions that carry less certainty and more risk.

This deal also highlights a big problem in Ontario. First Solar, when it’s done, will have built more than 200 megawatts of solar in Ontario but not as part of the feed-in-tariff program. You see, it hates the feed-in tariff program and supports protests from Japan, the EU and the U.S. against Ontario’s local content rules. Yet, ironically, it has been the most to benefit in the Ontario solar market. You see, all of its contracts were secured under the older RESOP program. This program had no local content rules, so First Solar brings very little with respect to job creation in Ontario. It’s painful to see at a time when Ontario has lured 18 solar module manufacturers with its newer FIT program but has failed to turn huge demand into finished projects connected to the grid. The Ontario Power Authority has offered contracts to more than 1,300 solar projects in Ontario but so far only 10 megawatts are in operation because of footdragging by Hydro One, an overly bureaucratic environmental permitting process, and political uncertainty — no thanks to Tim Hudak’s pledge to kill the program if elected.

Behind the scenes, however, First Solar continues to build away, using solar gear manufactured across the border in Michigan and apparently under no time restrictions (unlike conditions of the FIT program). Meanwhile, First Solar’s costs have dropped dramatically in the four or five years since it secured its power-purchase agreements under the now-discontinued RESOP program, yet it will continue to rake in 42 cents for every kilowatt-hour it produces. Its profits will be huge, thanks to a poorly designed RESOP program that didn’t build-in time restrictions for projects and local content requirements.

On both sides of the border, somebody is being had. Ontario boasts having the largest solar PV installation in the world in Sarnia, but that site has absolutely nothing to do with the FIT program. It was built with little Ontario content, it was sold to a natural gas company (Enbridge), and now that construction is done there is little to tout in terms of local job creation.

The FIT program, by comparison, is a gem with respect to the conditions it places on developers. The RESOP, at least with respect to solar, has proven a disaster in retrospect. First Solar is laughing.

I remember it was just a few years ago when it was a big deal to see 1 megawatt of solar installed across ALL of Ontario, let alone single projects.

Toronto-based renewable-energy developer SkyPower Corp., along with joint-venture partner SunEdison, formally announced the activation and grid connection today of a 9.1 megawatt solar park near the tiny Ontario town of Stone Mills. Their project, called First Light I, becomes the first multimegawatt-scale solar park in Canada to go live.  Two more phases are in the works — First Light II and First Light III — which will add 7.8 MW and 10 MW, respectively.

First Light I takes up 90 acres, equivalent to 50 Canadian football fields (i.e. they’re larger than those pansy NFL fields). All three phases totalling about 26 MW will cover 290 acres and be composed of 130,000 solar panels. These projects are backed by 20-year power purchase contracts obtained under Ontario’s former Renewable-Energy Standard Offer Program, or RESOP. That means the companies can sell power from the projects into the Ontario grid at 42 cents (Canadian) per kilowatt-hour. And because it’s not under the new Feed-In Tariff (FIT) program, it doesn’t have to comply with new local content rules.

First Solar and EDF are in similar situations under the RESOP — 42 cents and no local content restrictions. EDF started construction in June of its 23.4 MW project in Arnprior, Ontario (near Ottawa), while First Solar (which acquired the Ontario project pipeline from OptiSolar earlier this year) has been busy in Sarnia with more than 10 megawatts already installed. Today, it was announced that natural gas and oil pipeline giant Enbridge Inc. of Calgary was purchasing 20 megawatts of First Solar’s Sarnia pipeline for something close to $100 million. Enbridge also indicated that it’s interested, potentially, in doing more deals with First Solar, which has about 80 MW of projects in Sarnia and more than 200 MW under contract across province with the Ontario Power Authority.

In other news, expect Samsung to build about 100 MW of solar in Ontario — potentially. The company, which has signed a “framework agreement” with the province of Ontario (whatever that means), appears ready to develop 500 megawatts worth of wind and solar in the province. The hint came this week, when Energy and Infrastructure Minister George Smitherman directed the power authority to “hold in reserve” 500 MW of transmission capacity for a certain “proponent” doing some business dealings with the government — i.e. Samsung. The government is giving Samsung the royal treatment because it has also indicated plans to manufacture wind and solar products in Ontario to meet its own and other developer demands.

Sounds good, unless you’re a developer being booted further back in the transmission-connection waiting queu. Expect some vocal pushback. (check out my Monday column for more on that).

For more details read Toronto Star article here.

A lot of attention has focused on OptiSolar’s 550 megawatt PG&E project being transferred to First Solar. What hasn’t been discussed in all the media coverage, however, is what this means for the 200 megawatts or so of OptiSolar projects being developed in Ontario, specifically around Sarnia.

The Ontario projects are the first ones announced by OptiSolar and are the most advanced. Already shovels have hit the ground and a couple of megawatts have been installed and are connected to the grid. A spokesman for the Ontario Power Authority told me that the procurement contracts can easily be transferred from OptiSolar to First Solar. “The status of the contract doesn’t change. The developer really just has to give us written notice of the change,” said Jim MacDougall, manager of the agency’s distributed generation program.

A spokesperson from First Solar, who didn’t want to be named or quote, said the company is committed to all projects but didn’t have much detail because the deal is not yet closed. First Solar has said it will develop the projects and, in some cases, sell them later to an independent power producer or utility.

The value of the Ontario contracts alone is not insignificant. Based on Ontario’s solar profile, I calculated that 200 megawatts pays out $84 million (Canadian) annually. Over the 2o-year term of the contract, that’s $1.68 billion.

Will be interesting to see how things change when First Solar picks up the reins.

Nice to see some positive news for a change. The stock jumped 8 per cent today and is up 71 per cent since reaching its low in the fall. Still, it’s off by more than 50 per cent since July so there could be some good upside. No wonder the company has cleared the way to repurchase its own shares.