Ontario on Path to Become Solar Powerhouse of Canada

May 18 2006

By Paul Gipe

The following article appeared in an edited form in Private Power magazine. In November 2006 Standard Offer Contracts became officially available. The Ontario program is now up and running.

Cambridge, Ontario-Everyone was beaming when Ontario Premier Dalton McGuinty took the podium at Photowatt's assembly hall near Cambridge on March 21, the TV crews took their positions, reporters flipped open their notebooks, and the 200-strong crowd went silent. This wasn't just another photo-op. Those present sensed that this was an historic event.

McGuinty then went on to announce that the government of Ontario would launch an ambitious-some say daring--program offering standard contracts for the provincial purchase of electricity from anyone willing to install a solar panel on their roof, a wind turbine on their farm, or a biogas generator at their dairy that was less than 10 MW in size.

"We're taking a bold step that will allow hundreds of small, local, renewable energy producers to get into the energy market-providing cleaner energy that will help meet Ontario's needs today-and in the future," said Premier McGuinty.

The Premier was accompanied at the podium by Ontario's Minister of Energy Donna Cansfield and Canada's popular scientist and TV-personality, David Suzuki.

Cansfield, the driving political force behind the measure that adapts European electricity feed laws to North America, told the crowd that Ontario was "open for business" and was seeking to become the renewable energy powerhouse of North America.

Ontario is Canada's industrial heartland and it's here that the province hopes to lure wind turbine and solar cell manufacturers to produce products for the entire North American market.

A sometime critic of the McGuinty government's energy policy, Suzuki praised the Premier's announcement, characterizing the Standard Offer program as the "most progressive renewable energy policy in North America in two decades."

Indeed, not since California's Standard Offer No. 4 of the early 1980s has a state or province launched such an ambitious policy. Ontario's Standard Offer Contracts will pay more for wind, solar, biomass, and small hydro than any other program in North America, including Schwarzenegger's much ballyhooed program in California.

The announcement culminated a 2-1/2 year campaign by the Ontario Sustainable Energy Association (OSEA) for what the NGO calls Advanced Renewable Tariffs.

Still, critics note that the prices in the Standard Offer program are less than those proposed by OSEA in a report to the Ministry of Energy in early 2005. More worrisome, they say, is that the tariffs in the 20-year contracts, especially those for solar photovoltaics (PV) will not keep pace with inflation.

Under the province's program only 20% of the tariffs are adjusted with inflation. OSEA argued, unsuccessfully, that 80% of the tariffs should rise with inflation.

Wind Projects Waiting in the Wings

Thomas Schneider of Schneider Power fears that the tariff for wind is too tight under Ontario conditions. Ontario, says Schneider, is the most expensive jurisdiction in North America to build a wind project, as much as 30% more than other areas he asserts. Combine that with the low wind speeds typical of southern Ontario and the $0.11/kWh makes projects problematic. Nevertheless, Schneider will soon announce development of five projects under the Standard Offer program, assuming he can find financing.

Similarly, Ontario wind pioneer Glen Estill says "we need to see the rules and a workable contract" before projects can proceed. Estill's Sky Generation has two 10 MW projects in the hopper waiting for contracts.

Reportedly, commercial wind developers have ordered nearly 200 system impact studies from Hydro One. If true, there may be as much as 2,000 MW waiting in the wings for wind contracts.

The program will be administered by the newly created Ontario Power Authority. OPA's Manager of Renewable Energy, Jim MacDougal, says he expects contracts will be available by fall of 2005. "We hope we can move that schedule up," he says, but there are a number of issues that must be resolved.

Major Solar PV Growth Possible

Ontario's program is modeled after that in Germany where the staggering growth of the solar industry is a powerful display of how electricity feed laws can drive rapid development of solar energy. Germany installed $4 billion of solar PV last year most of that on home and farm rooftops. This follows the nearly $3 billion installed in 2004.

Germany has now overtaken Japan as the world's largest PV market and it's manufacturers now compete with Japanese suppliers worldwide.

In 2005, Germany generated 1 billion kilowatt-hours of solar electricity and the industry expects this to rise to nearly 3 billion kilowatt-hours by 2011.

Ontario consumes 150 billion kWh per year.

Germany now operates some 1,400 megawatts (MW) of solar generation, more than all the renewable energy contracts awarded in Ontario to date, and more than twice all the wind turbines currently operating in Canada.

More than 200,000 homes, businesses, and farms in Germany have installed solar panels and sell their electricity-for a profit-to their local distribution company.

In 2005, German farmers installed 200 MW of solar panels on barn roof tops. German farmers alone invested more than $1.5 billion in solar PV last year.

The solar PV industry now employs 30,000 in Germany.

Minister of Energy Cansfield hopes that Ontario's standard offer contracts for solar PV will create a similar boon, enabling homeowners and farmers to install solar panels on their roofs. With a strong demand for solar panels in the province, Ontario will provide a enticing market for both Japanese, German, and French manufacturers as well as stimulate development of homegrown companies such as Spheral Solar.

There is a strong pent up demand for solar panels in Ontario. Many homeowners have been waiting for the ability to sell power to the grid at a price higher than the net-metering rate. Ontario's Standard Offer program will pay $0.42/kWh for 20 years, the highest price for solar-generated electricity in North America.

The Canadian Solar Industries Association estimates that there is the potential for 1,300 MW of solar generation on roof tops in Toronto alone. Because peak solar generation occurs during sunny summer months when demand is highest, solar PV could greatly help Toronto meet its need for power.

Standard Offer Contracts Open to Everyone

Unlike other mechanisms used to develop solar energy, Standard Offer Contracts, what Germans call Electricity Feed Laws, elicits the active participation of its citizens and small businesses. Ontario's contracts will be available to any homeowner, farmer, or businessperson.

German homeowners typically install solar systems about 3 kilowatt (kW) in size, sufficient to provide two-thirds of the electricity used by an average German home.

German farmers install much bigger solar systems, typically 30 to 50 kW. This is similar in size to the 36 kW solar system installed by Toronto Hydro in 2004. Such large solar arrays generate 25,000 to 40,000 kWh per year in Germany.

Surprisingly, there's about 20% more solar energy in Ontario than in Germany.

As a result, the prospects for solar and wind energy development in Ontario are increasingly sunny. Yet the devil remains in the details.

Be Prepared and Become Active

Proposals by the Ontario Energy Board could squash the program before the first contract is signed. OEB has suggested that homeowners register as "power generators" and pay an exorbitant fee-every quarter. This provision alone would strangle the young Ontario solar industry in its cradle.

Moreover, demand for solar panels has never been higher and there's a shortage worldwide. If you're considering a solar installation, it would be wise to contact a dealer immediately and be prepared to place your order as soon as contracts are available. Solar dealers in Ontario could become very busy by fall.

Be prepared to act. Write a letter to Premier Dalton McGuinty acknowledging his leadership on launching Ontario's groundbreaking policy on renewable energy and ask that the Premier should direct the Ontario Energy Board to make the program work as simply and cheaply as possible. Then send a copy to your local newspaper.

Ontario is on the verge of a historic change in how it produces and distributes electricity. This will only happen if Ontarians are permitted to generate electricity and sell it at a fair price. Ontario's Standard Offer Program promises just that.

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