I’ve heard from a few different sources now that Ontario may be considering imposing a moratorium on solar PV contracts issued under the feed-in-tariff program, and while any future backtracking by this Liberal government wouldn’t surprise me, I don’t think there’s any substance to these rumours. I may be wrong, but this appears to be a clear case of echo-chamber amplification. Sure, the Libs made an incredibly stupid decision by imposing a moratorium on offshore wind development. I say stupid for a number of reasons. One, it used the “lack of science” as an excuse to pull back, even though the previous moratorium on development was lifted precisely because the Ministry of Natural Resources said it was satisfied with the studies — the science – that had been done. Suddenly that science wasn’t good enough? Lame.

Two, it would have been more justifiable to impose another moratorium if the government had let developers keep the sites they had fairly secured. Instead, the government took the sites away and told developers that when the moratorium was lifted they’d have to start from scratch. Not a way to make friends of industry or to make investors feel comfortable in Ontario. It simply made zero sense to go that far, unless of course it was politically motivated — a likely explanation that is no comfort to the developers who put millions of dollars on the line and lost it all.

So, clearly the panicky Liberals are prone to making stupid decisions when under pressure by an opposition party that knows how to press its hot buttons. Will this be repeated for solar? If it was, it would IMHO completely sink the Liberal party heading into this upcoming fall election — particularly if it targeted small solar PV projects covered under the microFIT program. For larger projects, there is technically a moratorium in place. It’s called transmission restrictions, and it means only so many projects can be built in this province until transmission capacity is expanded to accommodate more. There have already been more project contract offers than the transmission system can accommodate, so really the throttle is the pace of transmission updates and the government, through Hydro One, controls that throttle. Better to make this fact clear to voters than to declare a moratorium that does nothing else but prove the Liberal party is on the run from a progressive energy plan it should be proudly promoting, with chest out and head held high.

For the record, I asked the Ontario Power Authority about these solar PV moratorium rumours and the agency flatly denied that a moratorium was coming. “OPA is not planning a moratorium for the FIT/mFIT program,” said spokeswoman Kristin Jenkins in an e-mail. “Right now, we are going through a process to issue contracts for the new Bruce to Milton transmission line which Hydro One recently received approval for. The developers that are eligible are the ones in the Bruce and West of London transmission areas on the FIT priority ranking list.  These developers did not receive contracts in the past because there was not transmission capacity.”

I asked as well about the planned two-year review of FIT pricing. Jenkins said the process will start in 2011, but she could offer no specifics on when. ”We will carry out the required two-year program review in 2011, but a date has not yet been set to start that,” she said. The sooner the better. (note: I deleted a paragraph from the original version of this post which messed up the dates of the upcoming review, leading me to an unnecessary rant. My apologies for the mistake for those who read an early version).

I’m reposting a recent entry from the blog of Ontario’s Environmental Commissioner, Gord Miller, to put Ontario’s green energy strategy – largely, its feed-in-tariff program – in perspective. Conservative pundits, anti-wind groups and other angry birds in the province like to point out how green energy is hurting hard-working families, but this is far from the truth. Natural gas and nuclear contracts contribute more, and while Miller recognizes that over the next few years green energy costs will represent a larger portion, that’s not the case today or in the near future so all the scare-mongering is just a blatant attempt to mislead voters and steal votes. Here’s how Miller lays it out:

There has been much effort made in the media to lead the public to believe that their electricity bills have been spiralling due to the cost of subsidies to wind and solar initiatives of our energy conservation programs.  The 80 cents/kilowatt hour (kWh) for solar is frequently cited as the greatest offender, even though that rate only applies to rooftop solar with a capacity of 10 kW or less. In total, such installations currently amount to just 34 MW out of the 37,000 MW of installed generation in the province.   Not mentioned are the subsidies paid to our private natural gas generators, or those paid to Bruce Power, when the market price doesn’t meet their guaranteed price (which is almost all the time).  The latter subsidies involve 70% of the global adjustment monies paid out, simply because they pay for the delivery of much more power.  In fact, the Ontario Power Authority paid out $1.35 billion in 2010 to meet gas and nuclear power purchase agreements.

So how significant are the subsidies to renewable energy and the monies paid for conservation in a typical residential electricity bill anyway?  To answer that we had better clarify what a typical electricity rate is per kilowatt hour delivered to your home.  There has been much confusion about that as well.

A typical electrical bill consists of a charge per kWh of electricity used, plus a charge for transmission and distribution, plus a fixed fee to the utility, plus a regulatory charge, plus a debt retirement charge, plus HST, less the 10% the Province has just given us in the clean energy benefit.  It is a complicated system to be sure. To get an estimate of a representative rate, we looked at a typical home that heats with natural gas and uses 800 kWh of electricity per month, and we compared that to a similar house with electric heat that uses typically 2500 kWh of electricity per month (averaged over 12 months).  Although the costs per month obviously varied ($105 vs. $303) the cost of electricity per kWh “all in” was the same, about 13 cents.

So how much of that is due to renewables and conservation?   In 2010, the Ontario Power Authority paid electricity resource costs of $317 million for conservation programs, and $269 million for renewables.  That is a lot of money – but you must realize that it is recovered over a total Ontario consumption in 2010 of 142 terawatt hours (that’s 142,000,000,000 kWh), which amounts to 0.4 cents per kWh (split roughly equally between conservation and renewable subsidies).  So the cost of conservation and all the renewable subsidies in 2010 amounted to 0.4 cents of the 13 cents we paid for a kWh in our homes.  A significant amount, perhaps, but hardly the bogeyman that it is so often made out to be.

In fairness, it must be acknowledged that this 0.4 cent amount will rise as more green energy comes on line in future years, but in 2010 that is what it was.  During these times when we are publicly discussing a long-term electrical energy plan, I think it is important to be honest about the current cost of electricity.

Now, I think we need to start moving larger-scale wind and solar projects to a competitive bidding process to keep FIT costs from escalating too much, too quickly, but clearly the impact today doesn’t justify what public outcry there has been.

Five years ago the thought of any company holding a solar PV jobs fair, let alone in a community such as Guelph, Ontario, would have been absurd. But since the introduction of the province’s feed-in-tariff program for renewables, combined with local content requirements, we’re seeing a flurry of activity as manufacturers and suppliers get ready for what’s expected to be a busy year.

Just the microFIT alone — i.e. rooftop solar PV less than 10 kilowatts — has seen more than 25,000 applications approved, while larger projects that have been given the go-ahead under the FIT are expected to add more than 1,000 megawatts of solar PV to the grid over the coming two or three years. On Friday, solar PV manufacturer Canadian Solar will be holding a jobs fair in Guelph, the location of its new module manufacturing facility. The company is looking to hire process technicians, general operators, logistic staffs, engineers and others, a true sign of the type of job creation emerging from the FIT program and, behind it, Ontario’s Green Energy and Green Economy Act.

“We have a long-term commitment to this important market, and have previously announced our selection of Guelph, Ontario as the site of a 200 megawatt solar PV module plant,” said Shawn Qu, president and CEO of Canadian Solar. “This facility will be Canadian Solar’s first feed-in-tariff domestic content compliant solar manufacturing plant in Ontario, and is expected to require approximately 500 people to run at full capacity.”

The jobs fair, again, will be held Friday, February 11 at Canadian Solar’s new facility at 545 Speedvale Avenue West in Guelph (see Google Map here) between 9 a.m. and 5 p.m.

The folks who get hired — these are the faces of the future workforce in Ontario. They need to be known. Job numbers need to be personalized. The FIT/microFIT program has its problems, but evidence of job creation is the one thing that will justify and sustain Ontario’s direction. Ratepayers and taxpayers want to see evidence beyond politicians touting numbers that can’t be verified. It’s time to bring faces to numbers, and give people a true sense of what these jobs mean for those entering the workforce and those with families to support who are trying to get back into the workforce. It’s not just manufacturing, either. It’s about the installers, the electricians, the tradepeople and others finding work in the solar PV area. It’s also about the many faces who are participating in the microFIT — farmers, community co-ops, schools, homeowners, aboriginal communities. This isn’t just about foreign companies coming in to the province to feast on generous subsidies. This is about average Ontarians choosing to participate in the future of a cleaner electricity system. This is the message that needs to be heard.

NOTE: To anyone who gets a new job in this sector, let me know. I’d like to hear your story and how green energy in Ontario helped you find steady employment.

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.

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.