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September 10, 2013
Paul Gipe

Report Questions Both Ontario’s Nuclear--and Solar Prices


Even with High Solar Costs Mix of Conservation & Renewables Cheaper than Nuclear Mix

In a report released today, the Pembina Institute and Greenpeace Canada questions Ontario’s commitment to new and refurbished nuclear plants. The groups say that a mix of conservation and renewables would be cheaper than the cost of the Canadian province’s commitment to maintaining nuclear’s current 50% share of electricity generation.

The report is timely at the last remaining stronghold for nuclear power in the Americas. As nuclear plants are being closed in Quebec, California, and Vermont, Ontario is weighing the construction of two new reactors and refurbishing another eight aging reactors.

The groups have stepped into the middle of the debate on the Ontario government’s Long-Term Energy Plan (LTEP) where the cost and risks of nuclear and of competing renewables will be crucial in determining what resources will be best for the province’s future energy mix.

Renewable is Doable: Affordable and flexible options for Ontario's long-term energy plan examines various cost estimates for new nuclear plants in North America, including some of which have yet to be published. They find a consensus that new nuclear plants in Ontario—if built on schedule and on budget—would cost nearly $0.15 CAD per kilowatt-hour. The authors note that no nuclear plant in Canada has ever been built on schedule and on budget, nor have the most recent refurbishments in Ontario and New Brunswick.

Solar PV Tariffs—Where Does Ontario Stand

With the publication of FIT 3 solar tariffs and the high solar prices in the LTEP, observers wonder if OPA is simply working with out-of-date information, or if OPA has kept solar PV prices high for some other reason.

Feed-in tariffs are intended to change with each revision as market conditions change. If generation cost less than during a previous period, tariffs are reduced. If generation costs more than previously anticipated, tariffs are raised.

The worldwide cost of solar PV panels and inverters have fallen dramatically in the past five years.

The Ontario tariff for wind is down substantially since the FIT program was launched in 2009, as is that for landfill gas. Unlike the tariff for solar PV, the wind tariff is in line with that internationally. Ontario’s wind tariff is comparable to the “initial” tariff for wind in Germany and France. (At windy sites, both German and France substantially reduce the tariff after a fixed period of time.)

The tariffs for hydro, biomass, and biogas have all substantially increased in Ontario’s FIT 3, likely reflecting the poor take up of these technologies under the previous programs.

Nevertheless, tariffs for solar PV remain the most problematic of OPA’s FIT 3 tariffs. The tariffs have become a lightning-rod for the pro-nuclear lobby in Ontario, who argue that nuclear is cheaper than “renewables” and use the solar PV tariffs to make their point.

 

While Tariffs for solar PV in Ontario have fallen by nearly half since the program was launched in  2009, only solar PV tariffs in Japan and Switzerland remain higher. One could argue that Japan has embarked on a crash program to replace its nuclear plants and is willing to pay what it takes. Ontario has made no such decision and the current debate on the LTEP hinges on what the new generating mix in the province will cost.

Tariffs for solar PV elsewhere, as in Germany, have fallen faster than those in Ontario or Switzerland. Solar tariffs in Ontario for FIT 3 are nearly double those in Germany.

 

Ontario’s solar tariffs are also nearly double those in Great Britain, a nation with which Canada shares a strong cultural affinity. And while solar development in Britain has slowed considerably since the coalition government drastically cut the tariffs, solar continues to be installed. There is 1,600 MW of solar PV installed in Britain, nearly three times the amount installed in Ontario. (Britain’s population is about five times greater than that of Ontario.)

Renewables Still Cheaper Than Nuclear in Ontario

Fortunately, the report concludes that even with the much higher solar PV tariffs in FIT 2, a mix of conservation and renewables remains much cheaper at $0.104 CAD/kWh than a mix of new nuclear at $0.15 CAD/kWh with much less risk to the province and Ontario ratepayers.

Pembina concludes by noting that conservation and renewables can be added incrementally and gradually replace the province’s aging reactors. In contrast, new nuclear units will be added a decade after a commitment is made and come on line in a large block, making planning for future electricity demand and adapting to these changes more difficult than necessary.


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