Tag Archives: FIT Program

In major policy shift, government lets Ontario Power Generation bid for large renewable projects

lakeviewIt’s been eight days since Ontario Energy Minister Bob Chiarelli directed the province’s power authority to eliminate large renewable-energy projects from the feed-in-tariff program and design a competitive procurement process that will get the best deal for ratepayers. We knew this was coming, as Chiarelli said as much in a speech a couple weeks earlier. What we didn’t know is that the energy minister would direct the power authority to let Ontario Power Generation bid for these large projects (see page 3, third paragraph of directive).

This is a major policy shift, and I’m surprised it hasn’t received any coverage in the mainstream Ontario media. OPG is a crown corporation. Under its 2005 agreement with the Ontario government, “OPG will not pursue investment in non-hydroelectric renewable generation projects unless specifically directed to do so by the Shareholder.” Instead, OPG’s mandate has been to maintain its fossil fuel, nuclear and hydroelectric fleet of generation, and pursue new large hydroelectric projects. The reason for this restriction was to limit OPG’s clout in the marketplace and give independent power producers a chance to establish a foothold in the generation mix. The decision to let OPG bid for all large renewables — including wind and solar — is significant for a number of reasons:

  • This is getting close to what the Ontario NDP said it will do if elected. According to the NDP’s energy policy, “We will maintain the feed-in-tariff for small and community-based projects” and “for new larger projects we will move towards public ownership” through OPG. The Liberal government isn’t proposing complete public ownership of large renewables, but it is letting OPG bid for some ownership in a competitive process. Could this be part of a compromise that won it NDP support for the provincial budget?
  • Independent power producers, I would imagine, aren’t very happy about this. They will assert that they can’t compete against a giant like OPG that just happens to have the government in its corner. Is it a fair fight? Maybe not. But will it get the best deal for ratepayers? Presumably, yes.
  • Having OPG compete for renewables will create more opportunities to develop renewable resources in remote areas, and to partner with aboriginal communities. OPG has experience in this area, and many private developers are too risk-averse to go into these markets. They prefer to go after the low-hanging fruit, even if the orchard isn’t located in the best area.
  • Letting OPG compete in renewables could turn the Power Workers’ Union into an ally over time. Right now, renewables mean competition with union jobs. The PWU doesn’t like that — the fact that jobs at coal-fired power plants are being phased out and there is a significant threat to nuclear jobs as well. Renewables could be a path to save OPG jobs.
  • On that note, could letting OPG get into large renewables also be a signal that the province under this government is going to abandon efforts at building new nuclear reactors?
  • Finally, as a crown corporation, OPG can be directed to do things that other private developers would never take on — such as experimenting on a large scale with energy storage technologies, and being a test bed for energy innovation coming out of the province. Indeed, it would be interesting if OPG was directed to set aside a certain percentage of profits for R&D and to support pilot projects.

So that’s why I think this latest government directive is significant and should get more attention. Perhaps I’m reading too much into this, but my gut tells me no. I’ve long argued that OPG should be able to compete for large renewable energy projects. It’s something the Society of Energy Professionals, a shareholder in the nuclear business of Bruce Power, has called for since at least 2007. Many will complain, and for good reason. If a giant like OPG is to compete for these projects, how do we make sure it’s a fair competition? Will the process be transparent? Reasonable questions, but not a reason to not do it.

From the horse’s mouth: the Ontario PC plan to abandon green and go nuclear

mcnaughtonNot 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.
But you can read for yourself where the PCs stand by reading excerpts of his comments below:


On PC plans to get out of FIT contracts…

…we realize that when we make the commitment, we’re not going to build them, if they’re not built. So scrap the 50,000 projects that are in the queue.  We realize that there is going to be a cost, our lawyers have told us that there are opt-out clauses and we sure as hell are going to pay those out because it’s going to be cheaper to pay them out than to honour contracts for 20 years. So we’ve been clear that we will not going ahead with however many projects are left, if we’re fortunate enough to form the next government after the next election. But clearly there will be a cost associated with that, but it will be cheaper to buy them out than to honour them for 20 years.

Secondly, I guess we’re not going to know the entire extent of all of these contracts signed until if we form government, until we actually get in and take office. That’s why we’ve been clear that in the 24 hours after the election, we’re going to call for a moratorium. But we are going to call for a moratorium almost immediately so we can figure where the hell things are at and how deep a hole energy has gotten us into.

We have been extremely clear that we are are going to end the wind & solar projects across this province. We’re going in a completely new direction. We’re not going to continue abiding by the special interests that are at Queens Park every single day of this government. We’re taking Ontario down a completely new path and we’re not going to continue what’s been going on the last 10 years. We’ve been crystal clear about it. We’re going to really explore Hydro. We’re going to expand nuclear … which isn’t that popular in a lot of corners. But we are going in a different direction including part of our energy supply is going to be buying energy from other jurisdictions.

Election outcome in Ontario doesn’t mean green energy strategy doesn’t need some fixin’

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


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.

How to create (and destroy) a solar PV export industry, Ontario-style

Been away on vacation and largely unplugged, so apologies for the content dead zone for the past week. Just to get things started again, here is my Clean Break column from last week’s Toronto Star. It takes a look at both the real potential of creating a solar PV export market in Ontario and the many reasons it will now be an uphill struggle. See below:


Tyler Hamilton

Here’s a question I get asked all the time: Can solar modules made in Ontario compete in a global marketplace?

Many have their doubts, and those doubts are grounded in reality. The solar photovoltaic modules coming off Ontario assembly lines today are probably not going to find many customers in Europe or the United States.

The key word being “today.”

But give it two or three years. That’s the answer I get from manufacturers that have set up shop in this province, lured by a generous renewable energy purchase program that pays top dollar for electricity produced from solar panels.

We can get our costs down, they say — just give us the breathing room to do it.

That was the whole point of the province’s feed-in tariff (FIT) program. It was designed to provide above-market incentives for the first few years, after which rates would fall, owing to declining technology costs and manufacturing efficiencies that come from volume production.

Knowing the party won’t last, many Ontario manufacturers would ostensibly work to drive down their costs to where they could sell product in the United States and Europe at a globally competitive price-point.

All of that, however, was based on some assumptions. First, most manufacturers assumed a certain demand. Second, they assumed the Ontario grid could accommodate that demand. And third, they expected the program would survive long enough to follow through on their business plans.

The demand part happened. Ontario’s FIT program has resulted in contract offers for more than 1,300 megawatts of solar, exceeding most market forecasts. For example, Spanish solar-module manufacturer Siliken established a plant in Windsor based on the expectation that there would be a need for 400 megawatts of solar panels annually in Ontario.

But things fall apart after that. The program has been in effect for nearly two years, and so far only 10 megawatts worth of large projects have been built and injecting electrons into the grid, according to the latest figures from the Ontario Power Authority.

This may be a bit confusing. The province boasts the largest solar PV facility in the world in Sarnia, rated at 80 megawatts. How could we have built only 10 megawatts?

It turns out most of the solar development in Ontario over the past two years is the result of an earlier initiative, one that didn’t have domestic content rules. In other words, no manufacturers had to lay roots in Ontario to tap into market demand. That’s why panels for the Sarnia project came from U.S.-based First Solar and were made in Michigan.

The newer FIT program does require some domestic content, which is why we now have 18 solar manufacturers in Ontario. To their frustration, they see big demand for their product but their customers can’t get approval to connect their projects to the grid. No connection means no purchase order.

Manufacturers, for good reason, blame Hydro One for dragging its feet. In the meantime, assembly lines have been shut down and employees have been laid off until projects start flowing. Not the kind of environment in which product costs can be reduced and efficiencies gained.

“We came here thinking we could use the local market to support us while we brought our factories up and wrung efficiencies out of systems, getting us closer to competing against our brothers and sisters in China,” says Milfred Hammerbacher, president of Canadian Solar Solutions, whose parent company operates primarily out of China.

“We thought it would be achievable. But we needed two years to get to that level, and right now we’re just not getting that cushion. In a start-up operation where you have two or three of your lines not being used, there’s no way you can come close to being competitive (globally).”

Canadian Solar is committed to getting through this rough patch, as is Siliken. Many, however, are thinking seriously about packing up their bags and moving back home to their corporate parents.

It doesn’t help that Ontario Progressive Conservative Leader Tim Hudak wants to cancel the program if elected, pulling the rug from under a promising industry that’s already off balance. Thousands of jobs are at risk, as well as an export sector that — despite the spears we keep throwing at it — still has the potential to thrive if we’d let it.

“We set up in Windsor with the intention to serve the northeast of the U.S.,” says Paco Caudet, Siliken’s general manager in Canada. He just sold his flat in Spain. “I plan to stay here.”

It’s a courageous attitude. Still, why do we make it so easy for them to come, then turn around and make it so difficult for them to stay?

Tyler Hamilton, author of Mad Like Tesla, writes weekly about green energy and clean technologies. Contact him at tyler@cleanbreak.ca

New PV test facility to launch north of Toronto to compare Ontario-made panels

Here is my Clean Break column from this past week’s Toronto Star:


Ontario has its own modern-day Stonehenge.

Didn’t you know?

Walking through a field of wild grasses and flowers at the Kortright Centre in Woodbridge you can see it as you approach: an organized display of majestic, sun-worshipping structures.

Instead of mysteriously erected stones dating back to 3,000 BC, however, these structures are solar modules mounted on tall poles or laid out on racking systems. The Kortright Centre calls the area PVPV, which aims to become country’s premier facility for testing and showcasing made-in-Canada solar technologies.

“We call it Solarhenge,” says Paul Luukkonen, who as sustainable technologies co-ordinator at Kortright is leading the PVPV initiative.

The centre is located on 325 hectares of woodlands, a little northwest of where Highway 400 and Major McKenzie Dr. intersect. There, about 130,000 visitors a year can go on hikes, watch wildlife, taste maple syrup or participate in one of dozens of practical workshops focused on renewable energy.

Owned and operated by the Toronto and Region Conservation Authority, it also has the space to grow. When the province introduced its feed-in-tariff program to encourage the deployment of renewable technologies, including solar power, Luukkonen and his team saw an opportunity.

Before the program, there was only one company in Ontario making solar panels, a Woodbridge-based firm called SolGate. With new local content rules in place, more foreign manufacturers have started setting up assembly operations in the province. Luukkonen figures there are now about 18 brands of solar photovoltaic panels made in Ontario, and that number is expected to grow.

“Problem is, we’ve been seeing a lot of funny promises from companies about the return on investment from their panels and how much energy their systems provide,” says Luukkonen.

For example, research from Natural Resources Canada indicates a typical 1-kilowatt solar panel can produce 1,161 kilowatt-hours per year in southern Ontario, yet some manufacturers and developers are claiming their products can produce up to 1,500 kilowatt-hours – on par with Los Angeles and Mexico City.

“Out of concern for sustainability of the industry, we want to make sure these salespeople are giving consumers realistic expectations,” adds Luukkenon, explaining how the PVPV initiative came about.

The plan now is to launch a facility that will test Ontario-made panels side by side at the same angle of exposure to the sun. Using the latest data-collection equipment, PVPV technicians will measure panel performance under a variety of conditions, taking ambient temperature, wind, snow fall and light conditions into account.

“Everything that qualifies to be sold in Ontario under the feed-in-tariff program, we want to test it and make that information available in an unbiased way to the consumer,” says Luukkenon. “We’re trying to instil consumer confidence with this third-party verification.”

Data will be publicly posted at on a monthly basis.

The test facility won’t be formally launched until September, but the first of several large racking systems designed to carry the panels is already taking shape.

Eclipsall Energy, which has a 120,000-square foot manufacturing facility in Toronto, and Heliene, manufacturing out of an 18,000-square foot facility in Sault St. Marie, are among those expected to cough up the $12,000 annual fee to join the testing program.

“Obviously, the more we have the more value that brings to this project,” says Luukkenon. “Another purpose here is to provide a showcase for Ontario-made technology and manufacturing for the tens of thousands of people who pass through each year.”

Manufacturers would be wise to join, even at the risk of having their panels rank at the low end of the pack. Those who don’t join will be sending a signal to developers and consumers that they don’t want their equipment being closely inspected.

“It will sort out who’s confident in their product and who’s putting crap out there while trying to capitalize on the current situation,” says Luukkenon.

And nobody, when they’re dishing out tens of thousands of dollars, wants to purchase crap.

Tyler Hamilton, author of Mad Like Tesla, writes weekly about green energy and clean technologies. Contact him at tyler@cleanbreak.ca