FIT for Ontario

Ontario signalled its intention of becoming a world leader in renewable energy a year ago when it launched a Feed-in Tariff program.

The program is the most comprehensive in North America and offers guaranteed, long-term prices for renewable energy producers. It provides reasonable rates of return to increase investor confidence and to make it easier to finance projects.

These provisions cover a broad spectrum of project sizes and renewable energies. This includes everyone from homeowners who want to put solar panels on their roofs to commercial operators establishing large wind farms.

And it’s not just solar and wind; biomass, biogas, hydro and landfill gas projects are also included in the program.

The FIT program was a success right from the start last October. The Ontario Power Authority has offered contracts to 184 larger projects (greater than 500 kW) totalling nearly 2,500 MW of capacity and a further 510 smaller projects across the province with a total generating capacity of 112 MW. As of August 20, more than 7,000 contracts have been offered for smaller projects under 10 kW–mostly rooftop solar systems–under the microFIT program.

The resounding success of the FIT program provided the first lesson and that is that ordinary Ontarians are eager to do their part to contribute to the reliability of the electricity system and to the fight against climate change.

The overwhelming popularity of the program drove home a second lesson: that organizations implementing a feed-in tariff program have to be prepared.

In particular, this applies to information technology. Organizations have to ensure that they have IT systems in place to deal with a crush of proponents, many of whom will file applications on the eve of a deadline.

There is also a need to have a regular review of the price paid to solar PV proponents to reflect the economies of scale as the industry grows.

Beyond this, however, the fundamental lesson the OPA has drawn in the past year is the need to ensure that the FIT program remains sustainable and that ratepayers in Ontario receive good value for the new clean energy they would be receiving. Robust consultation with stakeholders is a prerequisite, of course, and there will always be a need for flexibility in dealing with events.

By this summer, the OPA had received almost 19,000 applications under the microFIT program tailored for projects of 10 kW or less. The large majority of these were from proponents for ground-mounted solar PV projects who were applying in the same category as those who wanted to put up rooftop solar units.

Projects in this category were eligible to receive CAN$0.802/kWh (US$0.765) , a tariff that was set in the original rules to guarantee producers a reasonable rate of return over their 20-year contracts.

The OPA moved in August to create a new pricing category to reflect the lower costs of installing a ground-mounted solar project compared to those on a rooftop. The new price, which was determined after a 30-day consultation period with stakeholders, is CAN$0.642/kWh. We’re confident that this will allow proponents to earn a long-term return on equity of about 11 percent while also protecting ratepayers. On August 13, the OPA announced the creation of a microFIT advisory panel to be made up of industry, academic and other stakeholder representatives. Its first order of business is to make recommendations about contracting provisions for commercial operators proposing to bundle micro projects.

All the tariffs under FIT had been scheduled for review in the autumn of 2011 but we felt it important to respond to the circumstances to demonstrate that the microFIT program administration is fair and transparent and it will remain viable over the long term.

This last point is especially important because FIT is the cornerstone of the Green Energy and Green Economy Act, which was passed last year by the Ontario legislature and will pave the way to a carbon-free energy sector and create a green economy to provide employment for Ontarians.

This transition to cleaner power is well under way. In 2009, more than 80 percent of the province’s electricity came from non-emitting sources of power such as nuclear, water, wind, solar and biomass. Coal-fired generation will be eliminated in Ontario by the end of 2014.

Clean, renewable energy provided under the FIT Program will help keep the lights on in Ontario houses and businesses after the coal era ends and that’s why it’s important to ensure a strong, sustainable program going forward.

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