Solar in Canada: Telling the Good News Story

Adrienne Baker, Canadian Clean Energy Conferences
February 22, 2013 | 11 Comments

Provincial governments across Canada are assessing how to integrate solar into their energy mixes. The recent decline in costs for solar installations are making it more attractive for governments with Nova Scotia, Alberta, and Saskatchewan currently reviewing the potential of solar as part of their energy supplies. This makes it an opportune time for the solar industry, and renewables in general, to make a case for how this type of generation fits with provincial energy plans.

“We need to determine how we, as an industry, can work with policymakers to develop something that works for each particular province,” says Mike Dilworth, Vice President and Country Manager, SunEdison Canada.

Dilworth leads SunEdison`s Canadian operations which includes the development, construction and financing of its sizable contracted groundmount and rooftop backlog and the operations of its 65 MW Ontario installed base. He takes a pragmatic approach when asked about how the industry should position itself with policymakers by suggesting a collaborative approach which positions renewables as complementary to traditional energy sources.

“We have to understand that energy policy doesn’t have to be mutually exclusive as we consider key national energy policy issues such as securing export markets for Alberta oil. Renewable energy fits well within the context of a potential broad GHG emissions reduction effort and energy conservation plan, as well as provides important diversification to one’s generation mix,” he points. “It is important to have a diversified energy mix just as you would your investment portfolio.”

Driving Down Costs

Investment portfolios are familiar territory for Dilworth who spent 10 years working for investment banking firms in New York, focusing primarily on the power and utilities sector. He draws regularly from his experience on the Street in his current role where he looks at costs through a banker’s lens. “This is an extremely capital intensive business and when we talk about driving down costs, people forget that a big part of that is driving down not only the cost to build and operate but also the capital costs, including the cost of both equity and debt,” he says. “And in order to do that, the industry needs to continue to attract not only additional financiers but also to innovate on the financing structure side.”

Dilworth’s Street experience also includes significant M&A activity, which has served him well at SunEdison, given the company’s success in acquiring projects in the secondary market. “The Canadian market is still fragmented from a developer and supplier perspective, not unlike the global landscape” Dilworth observes. “The market in Ontario and globally will continue to rationalize with the continued intense focus on cost reduction.”

Solar in Ontario

Ontario, Canada’s largest solar market, has been affected by delays and uncertainty around the province’s Feed-In Tariff program. A lot of industry players have suffered as it is now two years since new FIT contracts have been awarded and some suppliers have left the market. Developers and suppliers are now looking for clarity on the timing for the large (over 500kW) FIT window and the processing of small FIT (over 10kW to 500 kW) contracts which were submitted on January 18 2013. The Ontario Power Authority, which administers the FIT program, intends to contract 200 MW of new small FIT projects some time in the second quarter and has received applications totalling around 800 MW.

While there have certainly been frustrations with the FIT, it’s important to recognize how the program has worked to establish a solar industry in Canada. “FIT created a sector from scratch and we now have somewhere close to half a GW of solar installed across the province, and with the build-out of FIT 1.0 projects, we will have another GW installed over the next two years,” says Dilworth. “That is an amazing accomplishment.”

Engaging on All Levels

At the time of this interview, Ontario is facing ongoing political uncertainty with some predicting a spring election which could place the FIT program in jeopardy. It is also unclear how renewables fits with the province’s long-term energy goals.

Ontario’s Long-Term Energy Plan (LTEP) currently calls for 10,700 MW of non-hydro renewables by 2018. When you take into account all of the renewables coming online with current FIT contracts, experts predict there is around 700 MW left to meet that 10,700 MW target. The relevancy of the LTEP is also in question with Ontario due to make decisions regarding nuclear refurbishments which could dramatically change the equation for other generation sources.

Dilworth recognizes the need for the renewables industry to engage with decision-makers at the local and provincial levels at this critical time in Ontario’s energy planning. “Industry needs to be active on the political and local levels,” Dilworth points. “One of the criticisms that renewable energy has faced with FIT is that there wasn’t enough municipal engagement prior to the siting of these projects, so it’s essential to engage local authorities, communities and neighbours,” he adds.

SunEdison participated in the Canadian Solar Industries Association’s Land Use Working Group appointed by then Ontario Energy Minister Bentley to address this issue with municipalities last fall and find common ground. “As a result of the efforts of that group, a market for small groundmount projects under FIT 2.0 continue to exist” Dilworth adds.

Promoting the Solar Story

“I hope that FIT 2.0 remains intact and contracts are awarded. But, realistically speaking, we need to move beyond FIT and educate the public and policymakers on the host of options available to implement and execute on a solar program, which are used around the world and in particular by our neighbour to the south. Ultimately the industry is looking for policy and programs that will provide stability and certainty and unfortunately in today’s environment that is not something we have,” comments Dilworth. “But we also need to do a better job as an industry of communicating the various benefits of solar.”

With many provincial grid systems facing congestion, solar as a form of distributed generation is one of its critical advantages, for example. Rooftop residential solar systems can help alleviate this congestion while helping avoid expensive transmission and distribution upgrades. Price reliability is another benefit of solar plants that guarantee stable prices vs. fluctuating prices for non-renewable fuels and its resultant electricity generation.

“The cost of solar will continue to come down and that will open up more opportunities for solar to have a role in provincial energy mixes,” predicts Dilworth. In addition, he sees opportunities on the horizon for powering remote communities in the Canadian North that are looking to get off diesel fuel. SunEdison has already had success electrifying rural communities in India with solar power. Lastly, the introduction of large-scale and commercially viable energy storage solutions could also be a game-changer for solar in Canada and around the world given the intermittency issues.

Editor`s Note: This thought leadership piece is the result of an interview with Mike Dilworth, Vice President and Country Manager, SunEdison Canada who leads all aspects of the company’s Canadian operations including the development, construction and financing of its contracted groundmount and rooftop backlog, the operations of its 65 MW Ontario installed base and all business development activities. This article provides insight into solar developments across Canada, the current state of the Ontario market and how to drive new opportunities forward.

Lead image: Canadian flag via Shutterstock

The information and views expressed in this blog post are solely those of the author and not necessarily those of RenewableEnergyWorld.com or the companies that advertise on this Web site and other publications. This blog was posted directly by the author and was not reviewed for accuracy, spelling or grammar.

11 Comments

Gerry Wootton
March 1, 2013

@mike - true: I'm referring only to the carbon footprint of electrical power generation in each province. Obviously, Alberta produces a lot of energy in other forms as well and has the highest total carbon footprint as a consequence; however, you can move Ontario up the scale if you include other products like cement. Nevertheless,Ontario produces more GHG from electricity production than any other province and could use much more clean energy development. Or, if you wan't to point the finger elsewhere, Alberta is the leader in per-capita GHG from electricity production. If you want to do better accounting, you can include GHG emissions in Alberta and Saskatchewan resulting from the production of fossil fuels which are burned in Ontario - this has the effect of slightly increasing Ontario's lead in GHG from power generation.

Mike Holm
February 28, 2013

How, when Alberta and Saskatchewan are both major fossil users, can we be first in carbon footprint. I assume you mean in aggregate not per capita.

Gerry Wootton
February 28, 2013

Most provinces need to get serious about renewable energy in any and all forms. Consider that electricity consumers in Quebec pay about half as much as consumers in Ontario, Ontario burns 20 times as much fossil fuel and produces 23% less electricity. What's the secret? Quebec relies almost entirely on renewable sources, produces substantially more electricity than it needs and has a healthy export business. British Columbia relies strongly on renewable sources and its consumers pay about 1/3 less than in Ontario even though BC generally has to import power from Washington and Alberta. One can find a strong correlation between electricity prices and dependence on fossil fuels. Albertans who depend almost entirely on fossil fuels also enjoy the highest electricity prices of all the southern provinces. Ontarians, assuming they next choose the Conservative party to lead them, can look forward to a similar level of enjoyment. They should be happy that power generation in Ontario already has the largest carbon footprint of any province with a 44% lead over second place. While Ontario is a major solar market, solar is only a drop in the bucket thus far; hopefully, the good news is much more not less.
While researching solar water and space heating, I noticed a strange anomaly: Canadian companies hold a substantial portion of the North American market but it is almost entirely an export business.

Gerry Wootton
February 25, 2013

Maury ... sorry, I forgot that the whole metering thing is a festering sore. Measurement Canada has the general impression that it has a duty to protect consumers from fraudulent or inaccurate sales practices and that consumers have a right to confirm the measurements on which their payment is based while the industry, as one might expect, disagrees. In one presentation, the industry association went as far as to claim that power is not necessarily the product of voltage and in phase current. The problem with smart meters is that they measure both time and usage which doubles the precision of metrology issue. At the same time, a simple cumulative record of consumption is inadequate creating a significant data management and records keeping issue. Measurement Canada asks that all of these things be qualified to a level of statistical precision and, given the relative level of experience data, that this be done rather more frequently than for the old electro-mechanical single data point meters. The industry take is they should be able to measure more, calibrate less and provide users with less feedback, particularly any data which could be correlated with billing data. An additional problem arises when data is lost and the utility simply fudges the numbers (there is a politically correct term for that process). When you introduce a second meter into the mix, things only get more complicated. There is a simple mathematical point that if one is going to make a billing on the difference between two meters, each must by more precise in order to maintain the same precision as a single meter in the result.
The industry take is simple, it costs money to provide accurate metrology and accounting. Also, precise reckoning exposes them to liability if a provable problem occurs.

Maury Markowitz
February 25, 2013

"Worse, by using dual meters with totally independent calibration, billing error exceeds the limits of the Weights and Measures Act"

Actually that's not quite true. I called the guy who wrote the original report on this (Michael@Measurement Canada IIRC) and had a good 1/2 hour chat with him. Quite the opposite of what the OPA claimed, his paper specifically states that behind-the-meter is fine, as long as you do a little accounting. When I told him what the OPA was saying, he got upset and fired off an email to them, which went nowhere.

I suspect the LDC's didn't want to have to do the extra accounting, so the OPA simply said "no". So now we have two problems: the expense of double metering (I've heard horror stories up to $8500) and that the panels are on the wrong side of the circuit to do automatic transfers... so no power during a blackout.

Believe it or not, this problem could also be solved by not having the generator meter measure dollars. If the meter measures "renewable energy credits" and then you get paid a certain value for those "RECs", that's perfectly fine under the WMA. Ahh, laws.

Gerry Wootton
February 25, 2013

Sadly, there's good news and bad news.
In Saskatchewan, the good news - a ample solar and wind resources; the bad news - the highest per capita carbon footprint in Canada. Saskatchewan does not have a FiT or true net metering scheme although they do allow DGs to dump surplus power onto the grid. There is also a modest incentive scheme for this sort of 'net metering'. For reference, southern Saskatchewan's solar resource is 1-1/2 times that of Germany.
In Ontario, the best resource is west of the Soo but, after years of indifference, resources in this area (including vast hydroelectric potential)is stranded. Small comfort is ready access to the Michigan peninsula, a healthy export market.
In Manitoba, the good news for solar is they aren't agin' it; but, government only encourages solar heating. PV, from the government's perspective, should use local battery storage.
In Alberta, the good news - the southeast has an excellent solar resource. The bad news - it is early days for solar policy featuring a net metering scheme for micro-generation with a less than commercial rate of return. Farmers are offered attractive cash rebates.
In Quebec, the news for renewables in general is very good, Quebec being over supplied and a major exporter of renewable energy. The bad news - well developed hydroelectric capacity minimizes the need for other sources. Also, it offsets the need for solar in eastern Ontario which being outside lake effect weather has a good solar resource. Nevertheless, Quebec has net metering and a modest program for solar heating and off-grid PV.
Overall, the good news for Canada is that most of the country has more than adequate renewable resources including solar resources near centers of population with the exception of Newfoundland and coastal BC. The bad news is that Canadians are excessive users of electricity with a large per-capita carbon footprint and a federal government which prefers bitumen export over renewable energy exports.

Gerry Wootton
February 25, 2013

FiTs are just PPAs; but pretending otherwise makes them fair game: detractors can rail about the value of a solar PPA without a whiff of complaint when natural gas peakers receive equally favorable treatment.
Ontario FiTs could have had a digression scheme like Germany recognizing that costs diminish as market grows and less incentive is required with increasing uptake; but this would have been of little advantage: whenever Germany schedules a digression, a myriad of politicians and the press put out that it is an indicator of failure even though digression is driven by success. The ugly facts of the Ontario approach are that bureaucratic delay and obfuscation are primary mechanisms used to limit growth and there is, as the article points out, a cap on total non-hydro renewable sources (and always has been) limiting it to a picayune portion of total generation. This is lost on the public and in particular the opposition Conservatives who must get their math done by chimps entering random numbers into a computer.
The two meter thing is a crock. Consider that customers were forced to pay for new smart meters to support TOU pricing and yet, they couldn't come up with a 'smart' meter capable of separately measuring line side and load side current. Worse, by using dual meters with totally independent calibration, billing error exceeds the limits of the Weights and Measures Act. Remind me again - what century is this?
In terms of solar resource, southern Saskatchewan has the best although parts of Alberta, Manitoba and northwestern Ontario are also quite good. This part of Canada has dual advantages of a preponderance of clear days and low ambient temperatures resulting in net solar energy production which is remarkable.
Ontario's policies are somewhat flawed in that they resulted in a proliferation of solar and wind development in regions with less good resources, in particular, with a determination to prevent wind power in the best locations.

Mike Holm
February 23, 2013

There are definitely things that can be done to reduce the cost of installs. If part of the goal, as stated by the govt, is to build up manufacturing of PV panels and equipment, there has to be some critical mass to start with. They messed up a lot by this on again/ off again program which isn't helping at all with this goal.

I don't care if the FIT prices as they are now stand but the evidence shows that this type of incentive works in building up momentum. We are a small market by manufacturers standards so it takes more incentive to get manufacturers to set up here. The promise of a minimum market size is important.

I too think the double meter is a stupid requirement but the utilities have to be dragged into this process and they won't make it easy, just look at the BS that Hydro One puts people through.

In the end we agree on the goal. BTW, the cancer analog isn't a good one because although the market is not putting the brakes on it, we can adjust things by having systematic reduction in rates. The payments as they are now are not going to cripple anyones bank account. It is still small potatoes.

Maury Markowitz
February 23, 2013

'the massive uptake we have had in the past few years is due the 10%+ ROI'

If you had a 10% ROI in your body, you'd call it 'cancer'. If you had a 10% ROI in your portfolio, you'd call it 'pre-bubble'. When you have 10% payouts in PV, the very first thing you should think is that something is seriously wrong.

When you have big growth it's almost always followed by big problems. And that's exactly what we have in Ontario now. I suspect that you would have happily moved some of your 2010/11 business to 12/13 if you could, no?

In any event, I think you've entirely missed the point of the rest of my post. I fully agree that we need an incentive program to promote PV.

What I disagree with is the form of the program we have, which has led to the boom of 2011, followed by the crash of 2012.

Any program led entirely from the top, with no automatic market resets, is doomed to have these sorts of cycles.

I am not alone in thinking this is a serious problem. Both CanSIA and OSEA have both proposed an automatic sliding-scale based on uptake, specifically to fix this problem and all of the political and business planning fall-out it causes.

I suggest that net-metering + buns is an even better solution, mostly because it dramatically lowers the cost of installation. If you have to have a second meter on the grid side, you're looking at thousands of dollars of install cost for *nothing*. Moreover, it eliminates any possibility of using the panels for a UPS.

I'm not inventing this myself, I'm just looking for success stories. NJ is a massive success story. And they did that without the political fallout, gold rush/crash, and the weird requirements of microFIT.

Is it too much to ask that we have a program that claims the same?

Mike Holm
February 23, 2013

Maury, I cannot disagree more. It may be enough of an incentive for some people to have a net metering system but the massive uptake we have had in the past few years is due the 10%+ ROI that is basically guaranteed by FIT. Until enough people look at solar as a mainstream technology, we will have to pay the piper just as the Germans have done. Note that they are now are nearly par and people are still putting in systems.

We do not have a general consensus even in the need for solar or other less damaging energy production methods. The NUC lobby industry is so strong that the current FIT program (for better or worse) is the best advertising we could possible get for solar PV. Remember that the cost to the average electric bill of the FIT program is only about $.02/month (I could be off a bit on this but not that much) so the real impact is minimal even with 10 times the installed capacity.

The Conservatives have no power policy that includes solar and the NDP has basically no idea what they are doing AND the leader sidelines the only real solar advocate in her caucus so it is left to the Liberals and a program, without which, you would probably not be employed in this industry.

When the acceptance is higher we will get to a lower cost but until then, the program must remain.

One thing to add, the FIT is probably the most "democratic" program out there to promote PV. With the changing attitude of some banks to lending almost solely on the return provided by the power produced, the barriers to entry have been lowered dramatically.

Maury Markowitz
February 22, 2013

"FIT created a sector from scratch"

... and then destroyed it.

The OPA has been reacting to the rapid changes in the PV world like the lumbering bureaucratic elephant it is, and invariably ends up being behind the curve and repeatedly gamed. As this process continued, and elections loomed, the response cycle got slower and slower.

We still need what we needed from the beginning - a rational plan for residential and small commercial systems that combines some form of net metering with a "bonus", like the NJ system. microFIT is simply small FIT, which is based on an industrial model of PPA's and ROI arguments. Homeowners don't want to hear it. They want to know what happens to their power bill, and with microFIT the answer is "nothing". And what they *don't* want to hear is that they have to pay tax on it.

Right now microFIT is paying 54.5 cents/kWh for rooftop. Power is running about 15 cents/kWh averaged but there's a TOU component that makes peak as high as 20 cents. So if we moved to a net metering solution we could immediately reduce the "fit rate" by 20 cents. But because 20 cents is no longer income, we can lower it further, say to 15 cents, and the end result is the same.

Finally, installing microFIT requires a separate meter. This costs thousands of dollars to install. By moving to net metering, this portion of the install is removed. So maybe go down to 10 cents bonus.

So now we're paying maybe 35 cents total for PV instead of 55, a figure no one will complain about. Yet the end result for the homeowner is close to flat.

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Adrienne Baker, Canadian Clean Energy Conferences

Adrienne is a director at Canadian Clean Energy Conferences. With degrees from McGill and Concordia, Adrienne Baker spent seven years in financial journalism reporting for and editing several publications including Investor Relations Magazine,...