Made in Ontario (logo from Pratish blog)

Every year, the Solar Canada conference brings together the key stakeholders in the solar photovoltaics (PV) industry in Canada.  Both the formal discussions during the plenary sessions and the informal offline discussions that that take place during the conference have a major impact on the direction of the solar industry in Canada.   As we approached the 5th anniversary of Ontario’s Green Energy Act, it appeared that many of the stakeholders were reflecting on the origins of the Green Energy Act, evaluating the impact of the Feed-In Tariff (FIT) program, and projecting on what the future of the FIT program will look like.

The FIT program was born out of 2009’s Green Energy Act with the purpose of creating a simple, streamlined method of increasing the grid-connected generation capacity of renewable energy sources (e.g. solar, wind, etc.) in Ontario.  In addition to displacing generation sources with high greenhouse gas emissions such as coal fired power plants, one of the goals of the FIT program was to create high value “Green Jobs” in the province similar to that achieved in Germany through their FIT program.  Five years later the impact of the Green Energy Act is highly politicized and controversial.  The three controversial aspects of the Green Energy Act that I will discuss in this blog are the local content rules, the FIT Price Schedule, and the intermittent generation of renewable energy sources.

In an attempt to create high value “Green Jobs”, the Green Energy Act required FIT projects to have 50% local (Ontario) content in materials and labour for their solar PV systems. This immediately drew harsh criticism and even a law suit from the EU and Japan over an unfair trade practice.  Ultimately, in 2013, the WTO ruled in favor the EU and Japan and Ontario has now removed the local content requirement from the latest version of the FIT program.  However, even putting aside the lawsuit and the WTO decision, some have argued that the local content rule was highly ineffective as the jobs that were being created in Ontario were not the intended high paying manufacturing or R&D jobs but rather temporary construction and module assembly jobs [1].

Another controversial aspect of the FIT program is the price schedule set for renewable energy sources.  The price schedule for the original FIT program in 2009 paid a very high rate for solar PV installations.  For example, for small scale (<10 kW) solar PV systems, the FIT program offered $0.802/kWh [2].   While the intent was to aggressively promote small scale solar PV installations, the drastic drop in the global price of PV modules that occurred shortly after the program begun created a bubble in the solar industry in Ontario.  While the later revisions of the FIT program have reduced the offer price for solar PV, down to $0.396/kWh for small scale (<10 kW) for small scale rooftop PV systems, the companies in the Ontario solar PV industry have struggled to adjust their business model to the changing offer price [2].

By their nature, renewable energy sources are intermittent.  Solar PV systems generate electricity only when the sun shines.  Wind turbines generate only when the wind blows.   Sometimes the time of peak generation does not match up with peak consumption.  This has been the case for wind power systems in Ontario.   In 2013, the Fraser Institute published a report which stated:

“Eighty percent of Ontario’s generation of electricity from wind power occurs at times and seasons so far out of phase with demand that the entire output is surplus and is exported at a substantial loss…The Auditor-General of Ontario estimates that the province has already lost close to $2-billion on such exports” [4].

Although other renewable energy sources such as solar PV have generation peaks that match very well with electricity consumption peaks, critics of the Green Energy Act focus on the mismatch of wind power generation with consumption patterns to suggest a fundamental problem with intermittent renewable power generation.

While it is clear that the Green Energy Act is not without its criticisms and controversy, it is important that one views the act in context prior to casting judgment.  The Green Energy Act is the first of its kind in North America and it has completely changed the landscape of the renewable energy industry in North America.  Prior to the Green Energy Act, the solar industry in North America was no more than a niche industry serving off-grid cottages, remote power generation, and academic show and tell projects.  Nowadays, solar PV is a mainstream technology and one would be hard pressed to find a Canadian who hasn’t seen a solar array or who doesn’t have an opinion on solar PV.  While the drastic drop in price of solar PV has had a major impact on the landscape of the solar industry, one cannot ignore Ontario’s leadership in developing the first streamlined FIT program in North America.   The Province of Ontario has been and continues to be a pioneer in the Renewable Energy industry in North America.  Of course, being a pioneer is not easy and growing pains and controversy are to be expected.

Pratish Mahtani

Pratish Mahtani
Ph.D. Candidate – 5th Year
Department of Electrical and Computer Engineering
University of Toronto

 

References

[1] Lorrie Goldstein, Green energy job claims are a farce, Toronto Sun, June 26, 2013.

[2] Ontario Power Authority.  Feed-in Tariff Program. Dec 2013; Available from: http://fit.powerauthority.on.ca/

[4] Kenneth P. Green and Ross McKitrick, Ontario’s Green Energy Act a bad bargain for Ontarians, Fraser Institute, July 4, 2013.