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.
To add your comments you must sign-in or create a free account.