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

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

By TYLER HAMILTON

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

My Clean Break column this week takes a look at Ontario’s decision back in February to put a moratorium — once again — on the development of offshore wind in the Great Lakes, and argues the province should reconsider development of this resource even if this time around it takes a more measured approached.

My own beef with the February moratorium is that the government cited environmental concerns that were supposedly addressed in a previous round of studies done prior to the lifting of the last ban in January 2008. At that time, Premier Dalton McGuinty announced that environmental studies had been done and, in his mind, “you can do it in a way that does not compromise ecosystems.” At that point, he fired a starting gun for industry and, to stimulate interest even further, the government included offshore wind in its feed-in-tariff program. Three years later — i.e. this past February — the plug was pulled once again. Turns out Ontario was jerking the industry’s chain.

Now, I can understand the desire to pull back a bit. One could easily argue that the government moved too fast by including offshore wind in the feed-in-tariff program. But why completely halt all development, indefinitely, especially when jurisdictions such as Ohio are pushing ahead? Why go so far as to tell all developers that if and when offshore wind is put back into play, they have to start from scratch (effectively rendering all past site-specific research and studies useless)? It made no sense.

Anyway, as you’ll read in the column, I think the government needs to reconsider its decision. Perhaps a way back into it is to start by focusing on a pilot project, maybe 50 to 100 MW in size, developed far enough offshore that it wouldn’t get the NIMBYs all worked up. This could be the basis of real-world study, during which new rules can be set making a distinction between near-shore and truly offshore resources, and bringing clarity to a new market craving guidance.

To simply sit back and let U.S. jurisdictions take the lead — and future manufacturing and job creation — isn’t fitting of a province with the most to gain from offshore wind development in the Great Lakes, and the most to offer.

My Clean Break column today reveals some good news for air quality in Ontario, and points out that 2014 is shaping up to be an important milestone for the province — in more than one way. Of course, we all know that the plan in Ontario is to stop burning coal for electricity generation by 2014, and we’re well on our way to achieving that target. We’ll get there through a combination of measures: putting more renewables on the grid, shifting some generation to natural gas, importing more hydro from Quebec, and raising the bar on energy conservation. On that last note, we could see some major reductions from industry if a new program being run by the Ontario Power Authority delivers the goods. Under the Industrial Accelerator program, the province will pay an industrial energy users (the big ones, connected directly to the transmission system) up to 70 per cent of the cost of retrofits that achieve big energy efficiency gains, up to a cap of $10 million per project. So far the agency has received 40 applications to participate in the program, and 200 projects in total have been identified. The goal is to eliminate the equivalent of 300 megawatts of electricity demand (and generating capacity) from the grid by the end of 2014 and, in the process, make Ontario industry more competitive.

Now, this bodes well for air quality in Ontario, but keeping in mind that on average 55 per cent of air pollution comes into southern Ontario from the United States, we heard more good news earlier this month when the U.S. Environmental Protection Agency finalized its Cross-State Air Pollution Rule, which goes into effect in 2014. That, in combination with other EPA initiatives, is expected to reduce sulphur dioxide emissions by 73 per cent and nitrogen oxide emissions by 54 per cent compared to 2005 levels. The rule, according to the EPA, “requires 27 states to significantly improve air quality by reducing power plant emissions that cross state lines and contribute to ozone and fine particle pollution in other states.” As EPA administrator Lisa Jackson said, “No community should have to bear the burden of another community’s polluters, or be powerless to prevent air pollution that leads to asthma, heart attacks and other harmful illnesses.”

Now, this wasn’t designed to protect Canadian provinces from smog-causing pollutants — it is meant to protect high-polluting states from less-polluting states — but the fact that Ontario is surrounded on its southern border by some of America’s biggest coal-using power plants, we can expect to benefit tremendously from this rule — assuming it doesn’t get derailed by legal challenges and continuing GOP insanity. I’m surprised, in fact, this didn’t get more coverage by mainstream Canadian media.

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).