Fits and Starts: Ontario's Green Energy Growth

Adrienne Baker, Director, Canadian Clean Energy Conferences
January 25, 2011 | 4 Comments

A year and a bit into its ambitious feed-in tariff program, Ontario's renewable energy industries are growing steadily but political uncertainty and grid expansion plans remain top concerns for manufacturers and developers alike.

Since the launch of the FIT program in October 2009, several big wind and solar manufacturers have announced plans to set up or expand their operations in the province to capitalize on growing demand for Ontario-made products. Global manufacturer Canadian Solar is building a new facility in the town of Guelph that will be capable of manufacturing 200 megawatts of modules a year and create around 500 jobs. Some sixty miles down the road, Siemens is establishing Canada’s first wind turbine blade factory in Tillonsburg, representing a $20 million dollar investment and the creation of 300 jobs. South Korea’s Samsung is, of course, the largest foreign investor in the market to date with its $7 billion contract from the Ontario government to develop the province’s wind and solar industries.

Through the FIT program, Ontario is becoming a hot bed of green energy development, manufacturing and job creation. In December, Ontario Energy Minister Brad Duguid said he’d recently announced 1,700 clean energy jobs across the province.

The solar business in particular is seeing a surge in activity with new local content rules driving partnerships and investment. Starting this year, solar projects must meet a 60% domestic content requirement. Suppliers and manufacturers have responded by developing products and alliances to allow developers to meet the steep local content threshold. SunEdison, for instance, has begun deploying a locally-produced racking system for solar rooftop installations across the region. The company is also manufacturing fully-bankable solar PV panels in Newmarket, Ontario and has doubled production since December due to high demand.

According to data from Toronto-based ClearSky Advisors, prior to FIT’s launch, there were three solar manufacturers in the Ontario market: 6N silicon, SolGate and SatCon. Today, there are 18 module manufacturers, three of which are manufacturing through a local contract manufacturer and 15 inverter manufacturers, six of which are using local contractors. In addition, there are numerous racking/mounting manufacturers that have sprung up since the program’s debut.

Developments on the wind side are slower with many OEMs and suppliers looking for more certainty about the long-term viability of the program before investing. Along with Siemens, Vestas and GE Energy are very active in the region. In terms of new manufacturing facilities, India’s Suzlon Wind Energy is said to be eyeing the province as a possible venue but nothing definitive has been announced. Current wind manufacturing capacity in Ontario will not allow for developers to meet the increased local content requirement of 50% which kicks in next year. So the market needs more OEMs to set up and form partnerships with local manufacturers and service providers.

The big elephant in the room for Ontario’s green energy industries is the upcoming provincial election set for next October. The opposition Conservative party is currently leading in polls and has been making negative comments in the press about the future of the FIT program, which was passed by the current Liberal government. Ontario taxpayers are being subjected to diametrically opposed narratives in the media about the potential impact FIT will have on the provincial economy with critics blaming the program for energy rate hikes while supporters point to job creation and investment. Experts say some of the big players are waiting to see what happens next fall before making a sizable investment in the market.

The other big question is grid capacity. Developers and manufacturers are very concerned about the timing and extent of the province’s transmission expansion plans to accommodate renewables. There are over 250 renewable projects awaiting approval from the OPA which was supposed to begin a testing process last August. The Economic Connection Test (ECT) will determine which grid expansion plans will go forward allowing projects to connect. The timing for this test remains uncertain and with expansion projects requiring long lead times, developers are wondering when or if their projects will get a greenlight.

Despite this uncertainty, Ontario’s green energy industry is continuing to grow and there are plenty of opportunities for wind and solar manufacturers and service providers to play a role in building the local supply chains. The next few months are critical as FIT projects seek financing, transmission expansion plans become clearer and supplier arrangements are finalized. While the future of FIT will not be entirely certain until after the election, the future looks bright for Ontario’s renewable energy industries.

Adrienne Baker is a director of Canadian Clean Energy Conferences and produces the Ontario Feed-in Tariff Supply Chain Forum which takes place April 19-20 in Toronto.

4 Comments

Tim Gard
February 11, 2011

This theory that we can power our entire infrastructure as well as transportation is simply wishful thinking in the windmill industry alone. Adding solar panels to the mix hardly causes a blip on the energy cardiological EKG. And in spite of large amounts of cash funneled into nuclear energy, it is not a readily renewable energy. Nope, you are going to have to look much harder in the solar direction if you really want to see a viable energy solution. And not thin film. Rain, evaporation, condensation, rain is the answer. One of Solars great achievements. And with the Middle East figuring out that us dumb Americans are without their Muslim god, oil energy is going to get real expensive. It's time to quit goofing around and look seriously into a science that will replace energy on this planet forever without destroying her ecosystem, and maybe even correcting some of the damage already done. I am a scientist, and I do not have much of a sense of humor regarding stupidity mixed with greed, and this type of post angers some with those limitations, so this will be the only invitation you will get. Go to www.heavyhydraulicoscillation.com to see the solar answer to mans need for energy, and preview what the future holds for us all in regard to truly renewable energy. Enough energy to sustain all wants and needs of the American and Canadian people forever, as well as anyone else on the planet, Christian, Muslim, Judaism, Shinto, Buddhism, Scientology, Satanism, or whatever. Then maybe, just maybe, everyone will become calm in their tiny universal existence, and Peace will reign. Not.

Ron Tolmie
January 27, 2011

Ontario, like all of Canada, could very easily eliminate nearly all of the GHG produced from electrical power generation by using GHG-free means of heating and cooling our homes. 38% of the homes in Canada are heated by electricity and about half are cooled by wasteful AC systems. Switching to alternatives like stored heat and cold would eliminate both the GHG from power plants and the much larger GHG emissions from our furnaces. There are working examples of both very large and very small storage systems in use in Ontario but this option is being ignored by our governments.

Michael Keller
January 27, 2011

The picture with this article pretty much says it all. A solar panel in the rain on a cloudy day. A complete waste of money.

I sure hope the folks in Ontario wise up and vote the pin-heads out of office.

bernie li
January 27, 2011

Very good overview of the current state of the Ontario solar industry. You hit the nail on the head regarding the perceived stability of the Ontario FIT program which is impacting the speed of development of the renewables industry in Ontario. It is worthwhile bearing in mind that renewables are but one part of the solution to address Ontario's overall future energy needs, something that traditional mass media doesn't always mention.

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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,...