CanSIA 2012-Aboriginal-led Solar Projects

During the Solar Canada 2012 conference held in Toronto, I went to several talks and panel discussions on issues facing the solar industry in Canada.  Given the current energy policies in Ontario, most of the discussion was related to Ontario’s feed-in tariff (FIT) program.  There were many interesting discussions on Ontario’s FIT program, including the financial breakdown of the program, the long-term future, the political and social element of the FIT, but the discussion that I found most intriguing was the panel discussion on Aboriginal-led solar projects in Ontario.

While the original FIT 1.0 program had some provisions to encourage Aboriginal communities to participate in the FIT by offering a higher off-take rate, the FIT 2.0 program has specific set asides and priority points for Aboriginal communities.   Given the limited capacity of the FIT 2.0 program, these priority points and set-asides have led many in the industry eager to partner with Aboriginal communities on solar installations. Before, I get into the potential socioeconomic issues with these partnerships, I want to give a brief overview of the FIT 2.0 provisions for Aboriginal communities.  In the FIT 2.0 program, a total of approximately 1 GW of more FIT contracts will be awarded.  Of this 1 GW, 50 MW or 5%, will be set aside for projects with greater than or equal to 50% Aboriginal equity participation [1].  In addition, in the FIT contract evaluation, 3 additional points will be awarded for projects with a minimum of 15% equity from Aboriginal communities and 2 additional points will be awarded for projects that have Aboriginal community support resolutions [1].  OK… I know that’s a lot to take in and reviewing the changing documentation for the FIT 2.0 program can lead to tunnel vision but the most important point to take from this is that the Ontario Power Authority (OPA) is prioritizing renewable energy generation in Aboriginal communities in a substantial and real way and they are requiring that the Aboriginal communities have a substantial (minimum 15%) equity in these projects.

Before I delve into the potential issues, I want to focus on the positives of developing renewable energy generation in Aboriginal communities.   Since Aboriginal communities are commonly in remote areas of the country, many are not serviced by the electrical grid.   For example, half of all communities in the Nishnawbe Aski Nation do not have access to the grid and thus are forced to rely on diesel generation [2].   This not only has impacts on the environment and quality of life in these communities, but is also a major economic strain with the electricity bill for some houses using electric baseboard heating being as high as $800 to $900 per month during the winter [2].  Establishing local renewable energy generation where the communities have a significant equity share in the project addresses all of these issues as now these communities have a form of electricity generation that has a low impact on the environment and can be a source of income for the community in the future.

While overall I feel that these provisions in the FIT 2.0 program are positive, there are some potential socioeconomic issues that can arise.  For one, with the limited capacity in the FIT 2.0 program, there will be many companies that will be eager to partner up with Aboriginal communities to develop solar projects.  For many of these companies, their interests and methods of conducting business may not be in line with that of the Aboriginal community and there are risks of some Aboriginal communities being exploited for the purposes of establishing a FIT contract.  Furthermore, the timelines and policies established by the OPA for acquiring a FIT contract will likely be more in line with the culture and practices of the partnering company rather than the Aboriginal community.  In fact, during the panel discussion, one member of an Aboriginal community suggested that they are not too concerned about deadlines and timelines in the span of weeks or months because their perspective is to view decisions made in the span of decades and generations.  Another important concern is that while the Aboriginal communities are required to have at least 15% equity in the project, this does not mean they have control over decision making.  This means that (potentially) a partnering company could dictate how and where installations are made.  This of course could have significant negative impacts on these communities and defeat the purpose of the provisions made in the FIT 2.0 program.

Overall, I believe the provisions for Aboriginal communities in the FIT 2.0 program are a positive and necessary step in the right direction but Aboriginal communities and the OPA need to review potential partnerships carefully to ensure the practices and interests of these communities are being considered.

[1]Ontario Power Authority.  Feed-in Tariff Program. Dec 2012; Available from: http://fit.powerauthority.on.ca/what-feed-tariff-program

[2] Faye, D. First Nations want Connection to Ontario Grid. March 2012; Available from:  http://www.northernontariobusiness.com/Industry-News/aboriginal-businesses/First-Nations-want-connections-to-Ontario-grid.aspx

Pratish Mahtani

Ph.D. Candidate – 4^th Year

Department of Electrical and Computer Engineering

University of Toronto

CanSIA 2012-Impacts of Ontario’s FIT 2.0 program

This plenary session was comprised of an introductory presentation and a panel discussion. The presentation provided an overview of the Ontario FIT program version 2.0, including the current status of the program, the benefits it offers to the province, as well as some of the challenges it faces. The following heated discussion invited several high level figures to participate. Among them were the current chair of the board of directors of CanSIA, as well as CEOs and technical VPs from several Ontario-based solar companies.

Regarding the future of solar PV generation opportunities in Canada, the introductory presentation pointed out that:

1. For Canada, most provinces continue to take a cautious approach regarding PV. Part of the reason can be understood by the abundance of other natural electricity resources such as hydro.
2. In future, some provinces may be able to justify uptake in solar PV generation if solar PV costs move closer to available resource options, and if PV can meet power system needs such as peak demand requirements, operational flexibility, load displacement, etc.

The panel discussion offered some heated debate over the current PV incentive programs, largely from the standpoint view of the policy makers. Here are some highlights from the panel discussion:

1. Currently in Ontario, the demand for PV systems is falling. The industry is facing over supply problems. And cost is going up. The uncertainty of future FIT programs is high. To counter these issues, panelists suggested:

-          Decrease price by improving equipment procurement process.

-          The industry has to try to gain more public support. The message delivered to the public should be more clear and persuasive, e.g. emphasizing solar PV’s role as the “peak shaver”, or benefits from reduction of the power transmission costs (due to the fact that PV power generation is highly distributed and usually geographically close to the end users).

-          Align solar with local needs.

2. There were also debates over the role of government. Someone from the industry described the current status of the PV industry in Ontario as “punching below the weight”.  The discussion then focused on what policy makers could have done better to increase the competitive advantage of solar PV in Ontario. Some comments or suggestions from the discussion:

-          Resources should be invested in the fields where 75% of the technology is happening, instead of investing too much into obsolete technologies such as nuclear power.

-          The incentive programs should be stable and transparent to attract investors. Not much time is left. We only have few opportunities ahead to get it right.

-          The PV industry should “punch together” as a whole, rather than everybody fighting on their own.

In the following Q&A session, the audience expressed disappointment over the various aspects of the Ontario FIT program, including the mismatch between the design of the program and project needs, as well as the CanSIA board election issues. In general, the solar sector in Ontario now seems to be at a crossroad, and this makes it logical to look backward to “fix” existing programs and incentives for PV generation.

Jingfeng Yang

Post-doctoral Fellow

Department of Engineering Physics, McMaster University

References:

1. http://fit.powerauthority.on.ca/home.html?q=what-feed-tariff-program

CanSIA 2012-State of the Solar Industry in Canada

Hello everyone! I was recently in Toronto attending Solar Canada 2012, a conference on the Canadian solar industry. The conference was put on by CanSIA “a national trade association that represents approximately 650 solar energy companies throughout Canada”. The conference featured panels of industry leaders discussing issues such as policy, market trends, and the future of the solar energy in Canada. I will be giving a brief summary of one of the talks I attended, which highlighted the current state of the solar industry. Panelists included Mike Crawley, President of International Power Canada, Doug Urban, Managing Director of Hanwha Solar Canada Inc. ,Mike Dilworth, Vice President and Country Manager of SunEdison Canada, Kerry Adler, Director, President and Chief Executive Officer, of SkyPower Global and Terry Olynyk, Director of Renewable Energy, PCL Constructors. Their discussion covered what the solar industry looks like in Ontario today, the issues that it is currently facing, both financially and politically, as well as what the future holds.

One of the most pressing issues that was brought up was the high level of uncertainty in Ontario’s solar energy market. Uncertainty scares away investors, and as a result less green-energy jobs are created, and the development of solar power slows.  Canadian solar manufacturers are currently on the lookout for the recent ruling from the World Trade Organization (WTO), which claims that Ontario’s Feed-in-Tariff (FIT) program, part of the Green Energy Act, violates international trade law “by unfairly pressuring producers of clean energy to buy hardware and services from companies located in the province.” [1]. To give a bit of an overview, the Green Energy Act stipulates that in order for a solar power producer to qualify for Ontario’s FIT program, 60% of the installation must be produced by Canadian manufacturers (this is the domestic content clause of the Act)[2]. This promotes the development of a solar manufacturing industry in Ontario.  The WTO ruling challenges this part of the Act. Ontario solar manufacturers fear that if Ontario complies with the WTO and removes the domestic content requirements from the FIT program, then they will not be able to compete with foreign manufacturers. Without the FIT program, and without the requirement for Canadian produced content, manufacturers would go out of business. This leads into another point of uncertainty, and that is the government’s stance on green energy. There is possibility of an election coming up next year, and in the previous election opposition leader Tim Hudak said that he would abolish the Green Energy Act entirely. Even without a change in government, the Liberal leader Dalton McGuinty is leaving office soon, and there is a strong possibility that his successor will have a different approach to green energy.  All in all, the level of uncertainty in the Ontario market makes investment quite risky.

The issue of uncertainty and the potential threat to Ontario solar manufacturers brings up a dilemma that was touched upon in the previous paragraph. Ontario solar manufacturers cannot compete with foreign competition (particularly China, who manufactures very cheap solar panels) without the domestic content clause of the FIT program.  In the opinion of some panelists, we are wasting our efforts propping up an industry that is not meant to be. By forcing solar installations to be manufactured in Ontario where it is more expensive to do so, the final cost of the installation becomes artificially high, which can discourage investment. By getting rid of the domestic-content clause, overall prices will be driven down and more people will be willing to install solar panels. As well, with increased installations there will be more jobs available to people. What we have here is a fundamental difference in vision for the future of the solar industry in Ontario. Do we want to prop up manufacturing in Ontario and further develop our green-energy sector, even if prices are driven up? Or do we want to scrap manufacturing, and instead focus on the cheap installation of solar energy? It is tough to choose a side. We want Canada to play an active role in solar energy on an international level, and having a strong manufacturing sector is a way to do that. However, the ultimate goal of solar energy is to provide clean power on a large scale, and the way to do that is by making is cheap enough that more people will buy it. In any case, the panel highlighted that one of the biggest questions in the next few years will be whether or not Ontario has a future in solar manufacturing.

Another point that was stressed by the panel was the need to communicate with the public. Solar energy creates jobs through manufacturing and installation, and there are financial benefits to those who own installed systems through the FIT program. These aspects need to be stressed to the public to help drum up support for the industry. Public support will ultimately lead to political support, which will strengthen the industry, and make it immune to changes in government. Looking at the energy sector as a whole, solar is at an advantage when it comes to public relations. Coal is polluting and dangerous to the environment and health.  Hydroelectric power is clean, but does irreversible damage to ecosystems. Nuclear power, while also clean and safe, still has a potential for catastrophic failure and its relationship with the public has always been strained; the accident at Fukushima is still fresh in people’s minds. Wind power is safe and clean, but often faces opposition from people who don’t necessarily have any grudge against it, but don’t want turbines built near their homes. This is where solar power stands apart from other power sources. It is safe, clean, renewable, and is more favourable to wind when installed near communities. Not to mention that it creates jobs, and through the FIT program average homeowners can make money from it. Considering all these aspects, acceptance of solar power is easy to sell to the public. With more money invested in advertising campaigns, we can rally more support behind solar power in Canada.

The use of renewables is growing across the world. Germany is leading the way, with over 24 GW of installed solar capacity in 2011 [3]. This accounts for almost 15% of their total power capacity. In Canada for 2011, solar accounted for only 0.01% of energy production [4].  Solar power is still in its infancy in Canada, and there is a lot of work to be done if we plan on becoming a world leader in renewable energy. Despite the uncertainty in Ontario’s solar industry, and in what the future may hold, one thing is for certain: solar power here to stay.

-Kevin Boyd, MASc Candidate, Year 1, McMaster University, Ontario

[1]. http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/wto-rules-against-ontario-in-green-energy-dispute/article5461941/

[2]. http://m.gowlings.com/knowledgecentre/publicationPDFs/20120615_Gowlings-Ontarios-FIT-Domestic-Content-Requirements_EN.pdf

[3]. http://www.energici.com/energy-profiles/top-10-reports/item/5075-solar-installed-capacity-2011

[4]. http://www.electricity.ca/media/Electricity101/Electricity%20101.pdf

Dangerous times ahead for renewable energy in Ontario

The events of the previous month have raised some serious concerns for renewable energy in Ontario and threaten the survival of the province’s flagship clean energy policies: the green energy and economy act and the feed-in tariff (FIT). First, the World Trade Organization (WTO) is set to rule against the domestic content requirements contained in the FIT. Second, the sudden resignation of Premier Dalton McGuinty over the mismanagement of the energy file has sent tremors throughout the province’s energy landscape. Additionally, delays in implementing the new FIT 2.0 framework, continued media assaults on PV and wind, as well as the growing backlash over rising electricity rates are propelling Ontario’s renewable energy strategy into dangerous waters.

On Monday, October 15^th the WTO ruling backing the EU and Japanese challenge against Ontario’s domestic content requirement was leaked [i]. This ruling will have implications for the longevity of the policy framework surrounding PV in Ontario as well as the regional PV industry. If the domestic content rule is struck down (pending a likely appeal), local module and balance-of-system producers will no longer be sheltered from foreign competition originating from low-cost manufacturers in Asia. In essence, this will expose domestic firms to the same market forces that have transformed the global PV industrial landscape over the last year or so. In turn, plant closures, consolidation and job loss are likely on the horizon. With the regional industrial development impetus for policy support removed, how long will the government continue to pay premium FIT rates for foreign-sourced renewable energy developments?

Adding fire to the flame, Premier Dalton McGuinty – a champion of the current green energy strategy – resigned on the same day as the WTO leak in the face of political fallout stemming from the costly cancellation of new natural gas units during the last election[ii]. His resignation reflects the dangers of tampering with the electricity system for political reasons and highlights the lack of a genuine long-term energy plan for the province. McGuinty’s resignation also poses challenges for the future of renewable energy support. With an election likely on the horizon, will the new Premier seek to distance his or herself from increasingly unpopular support for wind and solar? After all, the last election saw rural voters reject Liberal candidates in part due to wind opposition[iii].

Other issues have also plagued renewable energy policy in the province. Delays in implementing changes to the FIT scheme following the scheduled program review have created difficulties for the domestic industry and investors[iv]. A prominent PV firm has even entered into litigation with the province over the revisions[v]. Moreover, the last several months has seen a ratepayer backlash brewing over electricity rate increases and overgenerous incentives for wind and PV[vi]. Despite the fact that nuclear refurbishments and the rollout of natural gas are primarily to blame for rate increases[vii], the media continues to hammer renewables while giving nuclear and natural gas a relatively free ride.

In many ways, this situation was avoidable. An appropriate renewable energy policy framework with reasonable and justifiable incentives for emerging energy technologies would be far more resilient. The market-based policies in California point to the success of reasonable incentive levels. Although more moderate support may lead to fewer near-term job creation opportunities, it creates a more sustainable market, allowing for a greater degree of certainty for industrial actors and investors. Another key lesson that arises from this unfortunate situation is the need for a less politically interventionist approach to energy planning. An approach that is determined through market mechanisms or an expert bureaucracy with proper authority and regulatory oversight would be far more robust. Legitimacy needs to return to renewable energy support and energy planning in the province.

Daniel Rosenbloom

Research Associate in Sustainable Energy Policy

Graduate from the MA program in Public Policy and Administration at Carleton University

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[i] http://www.thestar.com/opinion/editorialopinion/article/1173543–rising-electricity-prices-have-little-to-do-with-renewable-energy

[ii] http://www.thestar.com/news/canada/article/1271913–premier-dalton-mcguinty-resigns

[iii] http://www.betterfarming.com/online-news/did-wind-turbines-blow-rural-liberal-seats-away-4561

[iv] http://solarindustrymag.com/e107_plugins/content/content.php?content.11382

[v] http://www.cbc.ca/news/canada/toronto/story/2012/07/14/toronto-solar-power-lawsuit-ontario.html

[vi]http://www.cbj.ca/mobile/business_news/canadian_business_news/ontario_electricity_subsidies_should_be_zapped_study.html

[vii] http://www.thestar.com/opinion/editorialopinion/article/1173543–rising-electricity-prices-have-little-to-do-with-renewable-energy

Interesting Year for Photovoltaics

Very interesting year for PV around the world. The ‘solar rush’, led by numerous support policies enacted in the second half of the 2000s decade, by the spectacular entry of China on the world market, and by a drive to produce ‘green jobs’ to revitalize the ailing manufacturing sector of several industrialized countries, has gone a little too fast for some markets. As is usually the case for rapidly expanding industries, it appears it is now time for a serious restructuring. Several large players have already gone belly-up. The PV industry, it seems, will look quite different in a few months from what it was at the beginning of 2012. The question is, of course, what will happen to the drive for PV installations as governments pull back support.

Germany, the hailed dean of renewable electricity expansion, has not escaped these developments, far from it. With an astonishing 28GW of installed capacity for PV electricity generation, Germany is also dealing with important changes in its own industry but also in its policy support. In June 2012, after three months of harsh debates on modifications to the EEG (the major piece of legislation supporting PV and other renewables), the German Parliament has adopted amendments that will affect not only PV deployment rates, but also the very way that PV is deployed across the country. Now that panel prices have dropped to a small fraction of what they were 5 years ago, and now that electricity generation from renewables (including PV) presents costs that are at parity with electricity retail rates in several regions, the German government is trying to shift gears. We are now at a junction, where PV deployment has ceased to be so hard and expensive that we do ‘whatever we can’ to pursue it. The Germans are now attempting to modify how developers and other actors see and think about PV electricity, not as a promising niche industry but as a full-fledged component of electricity markets.

These changes are intended to produce a different type of planning for PV installations, where developers are encouraged to seek means other than FIT support, and to think carefully about electricity markets when choosing where to site their projects. This is the step that comes logically after a successful FIT program. It will be fascinating to see how that market, which has shown in the past few years how impressively quickly it can change and adapt, deals with these new times. A short-term future that looks promising, and definitely interesting, as I said at the beginning. Stay tuned!

Yours truly,

Simon Langlois-Bertrand

PhD Candidate, Norman Paterson School of International Affairs, Carleton University

PV and Bureaucracy: An impossible balancing act?

As discussed in Jonathan Boulanger’s excellent blog post, the Ontario FIT program must learn from Germany’s example set before us and remain vigilant in changing FIT rates. On one hand, FIT rates cannot be too lucrative at the expense of the taxpayer. This was the case for the German market. On the other hand, FIT rates cannot be so stingy as to discourage continual investment in the solar market. This describes the current case in Queensland, Australia as per the recent article in pv magazine: http://www.pv-magazine.com/news/details/beitrag/australia–proposed-gross-fits-slammed_100008527/#axzz26pjjGSbz

Like the story of the German solar market, the Australian solar market has seen rapid growth in the last two years. As such, in the interest of the taxpayers, regulators are proposing to reduce FIT rates, as is necessary for sustainable growth. However, the current proposal reduces FIT rates to a point threatening the growth of the solar industry, thus defeating its very own purpose. Under the new proposal, businesses and households with solar arrays would be forced to sell electricity to utility companies at the wholesale price of 0.08 AUD/kWh, while buying electricity from the utilities companies at a retail price as high as 0.35 AUD/kWh. Russell Marsh from the Clean Energy Council creates an analogy which goes like this:

“What the Queensland Competition Authority has proposed is the equivalent of telling people they can’t just use the lemons growing on the lemon tree in their backyard – they have to sell the produce to a wholesaler for next to nothing, and then buy the lemons back at a premium from the supermarket” (Taken from http://www.pv-magazine.com/news/details/beitrag/australia–proposed-gross-fits-slammed_100008527/#axzz26pjjGSbz)

This proposal, while avoiding the problem that Germany faced, threatens to kill the growth of the solar industry by significantly reducing the incentive for purchasing solar to near nothing. In this proposal, why have a FIT program at all?

If anything, this case study along with the analysis of the Germany story in the previous blog post  highlights one thing:  the PV industry is at the mercy of bureaucracy. Legislation is perhaps the primary factor determining the sustainable growth of the local PV industry.  Grimly, the margin for error is miniscule. There is huge probability of the local PV landscape swinging from the extremes of either quenching the PV industry growth (current Australia proposal) or realizing enormous PV industry growth at significant expense to the taxpayers (German story). Getting FIT programs right is truly a delicate balancing act.

-Andrew Chia ( PhD in Engineering Physics, Year 4, McMaster University)

Lessons from Germany and Around the World

“Those that fail to learn from history, are doomed to repeat it” – Winston Churchill

This often quoted phrase reminds us that we should never take for granted the examples set by those before us. Whether it be foreign policy or invention, the lessons taught to us by history are equally important.

Since 2009, with the passing of the Green Energy and Green Economy Act (GEA), Ontario has started down a road first tread by Germany. The GEA was modeled after the evolution of Germany’s 1990 Electricity Feed-In Law, which was initially designed to promote small-scale wind and hydro electricity projects and later modified in 2000 and 2004 for solar energy. Following the first modification in 2000, Germany saw a 20 times increase in solar installations within 5 years and another 8 times jump by 2010. During this time, many German solar businesses were founded and flourished under an environment of heavy government subsidies.

So if everything worked out, then why aren’t more countries adopting feed-in-tariff (FIT) programs? After all, there are far more sunny locations than Germany. Unfortunately, Germany’s FIT program was far from perfect. The sudden increase in manufacturing, assembly, and installation of solar in Germany and other parts of Europe brought solar panel prices down sharply. This in turn made the FIT incentives in Germany even more attractive to investors leading to a larger installation than initially expected. This cost the German government more than anticipated, but more importantly, it left manufacturers with very thin profit margins while solar cells became a highly commoditized product.

As it was, the German solar market may have survived, but two major developments occurred: a drastic reduction in government subsidies and China’s entry into the silicon PV market. On one hand, Germany no longer had the political will to pay the growing FIT bill. The unanticipated drop in solar panel prices and the resulting surge of investor interest was more than many politicians could stomach and the FIT funding was sharply cut 30%. Almost simultaneously, China entered the silicon PV market, driving the cost of silicon PV sharply and evaporating the thin profit margins that German manufacturers were reliant on. This unfortunate combination of events has led the bankruptcy of numerous German solar businesses as well as other large solar corporations around the world.

Now as it stands in the 2012 market, the outlook for the German solar energy economy is mixed. While the installed capacity continues to grow at impressive rates and installation and operation corporations are flourishing, the health of the solar manufacturing industry is on life support. The latter industry is now forced to compete with China at the game they play best – high volume, low margin manufacturing. Worst of all, China has been accused of illegally dumping solar cells into the market at prices below cost, resulting in the US and Germany instituting tariffs on Chinese PV imports or incentives for buying home made products. As in most ultra-competitive markets, vertical integration has been the only way to maintain healthy profit margins by cutting costs normally accrued with middle-men suppliers.

With the brief history of solar FITs discussed, how can we best apply this knowledge to Ontario? Firstly, both the German and Ontario FIT programs have shown that they can be incredibly successful at encouraging investment in clean energy technologies; however, this occurs at the expense of the tax payers. In return, taxpayers should hope to expect the creation of jobs in an emerging industry as well as an increase in clean energy production capacity. In order to reduce the burden on the tax payers and for these newly created jobs to become stable and self-sufficient in the market, the FIT must be reduced gradually until the cost of solar energy reaches grid-parity. One particular lesson to learn from Germany was how sensitive the market will be to the FIT rate. If the FIT rate is left high and enough contracts are given, the high demand leads to large increases in manufacturing capabilities. When the FIT rate is then sharply decreased, the resulting decrease in production volume can lead to poor profitability. In other words, the Ontario government must be vigilant when changing the FIT rates so that abrupt swings in capacity are avoided. This vigilance should also include avoiding circumstances where no FIT contracts are awarded for extended periods, such as the 6 month freeze that began towards the end of 2011.

The second important lesson that Ontario can learn from both Germany and the other emerging solar markets around the world is to be conscious of the commoditization of solar cells and solar panels. The Ontario solar industry is primarily composed of solar panel assembly and installation, with the bulk of solar cells being purchased from abroad. There is some inherent protection against international solar panel manufacturers due to their bulky size leading to expensive shipping costs; however, increasing competition from highly efficient, vertically integrated solar corporations may lead to the gradual extinction of Ontario based solar businesses. Furthermore, while it may seem prudent for Ontario to produce its own home-grown vertically integrated solar energy corporation with Ontario based solar cell production, the recent dominance of Chinese solar cell production warns us otherwise. The relatively high cost of labor in places like Ontario or Germany compared with China are incredibly difficult to overcome (even with robotic assembly lines and 24/7 production). Therefore, if Ontario cannot compete on solar cell price, we must focus on quality – higher efficiency solar cells. More efficient solar cells not only reduce the number of cells required to reach a power production target, but reduce cost of the supporting equipment and installation costs. It is here where we may yet find our niche in this booming global market and it will be up to the imagination and innovation of Ontario engineers and business leaders to develop such a disruptive technology venture.

Jonathan Boulanger

(Year 4 PhD in Engineering Physics at McMaster University)

 

 

References:

http://www.npr.org/2012/07/10/156537940/foreign-policy-made-in-the-shade

http://www.foreignpolicy.com/articles/2012/07/09/made_in_the_shade?page=0,0

http://www.nextgenpe.com/article/Vertical-Integration-the-path-to-success-in-a-competitive-market/

http://www.mcmillan.ca/Ontarios-green-energy-feed-in-tariff-program-re-launched-and-revised

U.S. issues anti-dumping tariffs on Chinese made solar cells

Recently, Solar World and several U.S. companies filed a trade complaint against the Chinese solar cell manufacturers. They felt that the Chinese companies benefited from unfair subsidies and that they were ”dumping” their products on the U.S. market at an artificially low cost. This resulted in job loss and even bankruptcy for many U.S. manufacturers.

In response to these complaints, the U.S. department of commerce issued anti-dumping duties of 31 % to a specific group of Chinese companies (such as Suntech and Trina Solar) and a tariff as high as 250 % to all others, including some controlled by the Chinese government. Because of the surge of solar cell imports triggered by anticipation of the new tariffs, the department of commerce also announced that the duties would apply retroactively 90 days.

The Chinese are contesting the punitive tariffs and say that the competition was never unfair. Four major Chinese solar companies have recently formed the SEPA (Solar Energy Promotion Alliance) to combat the U.S. ruling. These measures are also meeting with opposition elsewhere. Some U.S. companies which depended on Chinese solar cell imports will be harmed by the ruling, and are claiming that the anti-dumping tariffs may actually harm the U.S. solar industry in the long run.

Some companies in the European Union, such as Wacker Chemie in Germany, are also firmly opposed to taking similar initiatives in the European Union. They say that historically, punitive tariffs only serve to strangle the industry as a whole and to encourage trade wars. According to them, a balanced competitive market can only be achieved through political negotiations. The EU has not yet taken steps to impose punitive tariffs on Chinese solar cells, however there is talk that several countries in the European Union, such as Germany, may do so soon.

-Hélène Antaya

(Chemistry, PhD, Year 2 at The University of Montreal)

References

1- http://www.pv-tech.org/news/anti_dumping_case_heading_to_the_eu

2- http://www.pv-tech.org/guest_blog/usa_anti_dumping_tariffs_what_will_change

FIT 2.0: What do the changes mean?

In attempt to give some perspective to industry stakeholders, CanSIA held a webinar titled “microFIT and FIT 2.0: What it really means for Ontario’s Solar Industry”, featuring several expert panelists. Some of the key points from that webinar are discussed below.

There is now a realization that not everybody who applies can receive a FIT contract. The system of “first come first serve” has changed to one where certain projects are given priority. This was most likely introduced for at least a few reasons.  Firstly, more stringent eligibility requirements will reduce the volume of FIT applications. Secondly, it ensures that priority access is given to those projects that are more likely to succeed, ie. those without community or municipal opposition. Lastly, this amendment will alleviate some of the negative criticism, particularly around community opposition to wind turbines that the FIT program has received.

The suggested annual pricing schedule review is likely to be an improvement. It provides industry with definitive dates and timelines and establishes when changes will occur, which is in contrast to the current situation. Furthermore, it allows the FIT program to more accurately reflect changes in the price of modules or system components.

The Deputy Minister has not yet released how the new pricing schedule was calculated and it is viewed as being somewhat harsh on rooftop PV <10kW. Some attendees of the webinar suggested this may have been a political move considering that the Liberal government received continuous negative criticism from the Progressive Conservatives for the 80.2 cents/kWh tariff. This large reduction may also reflect a shift in the priorities of the provincial government towards larger scale projects where electricity can be produced at a lower cost.

The previous application procedure has been acknowledged as inadequate. The adoption of a more streamlined approach which synchronizes application processing times with project size seems to be a positive step forward.

The running theme of the webinar seemed to be that “the devil is in the details” and currently there is much information that has been left out that will need to be clarified in the updated FIT Rules from the OPA. For example, how does one demonstrate community support of a FIT application? What about the issue of connection capacity, ie. how does 10,700 MW break down? What does that mean by way of area? Stakeholders need clarity of information, for example, tables published regarding where there is connection capacity. People should have access to this information before they go to apply. How was the pricing schedule calculated? How will the new point system work? The list goes on.

Looking to the future, the draft OPA FIT Rules should be released shortly and this should clarify much of the ambiguity of the current recommendations. However, the panelists cautioned not to expect new FIT contracts immediately, suggesting that it may not happen until the Fall or perhaps sooner for microFIT and other small-scale projects.

Through all the ambiguity one thing seems clear: while simple enough in concept, the FIT program is an incredibly complex piece of legislation requiring meticulous planning and foresight for an effective execution. It must balance the needs of all stakeholders and do so in the context of a dynamic electricity system with real physical limitations. The fact that the policy is far from perfect has been acknowledged but what must also be acknowledged is the sheer difficulty of designing it. While the FIT program policy is not yet mature, it is in the process of maturing. Hopefully that fact provides some solace to a strained solar industry.

-Erik Janssen

(Engineering Physics, MASc, Year 2 at McMaster University)

FIT 2.0 – What has changed?

The Ontario provincial government launched the ambitious Green Energy and Economy Act (GEA) in 2009 to encourage the adoption of renewable energy into the province’s electricity mix and to create a new sector of “green-collar” jobs. The largest component of the GEA is the Feed-In Tariff program (FIT). It allows any individual or community stakeholder to produce their own renewable energy and sell it to the local utility at a premium rate that is guaranteed for 20 years.

In terms of uptake, the program has generally been viewed as a success, with 2,000 FIT contracts and 12,000 microFIT contracts having been offered, totalling 4,600 MW of renewable energy. Furthermore, the province claims 20,000 jobs have been created since the program’s inception.

However, despite these successes, there currently seems to be a strong undertone of discontent in Ontario’s solar industry. It seems that the program has been on pause over the past several months, with new FIT contract offers being delayed. Furthermore, there are complaints about a lack of clarity from the provincial government on when this situation will be rectified.

Part of this delay is from the FIT program’s 2-year review that has been conducted over the last several months by the Deputy Energy Minister.  After having solicited feedback from various community stakeholders and private industry, the Ministry of Energy has recently finished a list of recommended FIT program policy adjustments to be adopted by the Ontario Power Authority (OPA). The document is publicly available at: http://www.energy.gov.on.ca/docs/en/FIT-Review-Report.pdf.

The FIT upgrade, unofficially dubbed “FIT 2.0,” has several changes but is stated to be a reaffirmation of Ontario’s commitment to clean energy.  Some of the more important changes are listed below:

• The program target of 10,700 MW of non-hydro renewable electricity procured is set to be hit by 2015 where the previous date was 2018.
• Instead of 2-year reviews, there will be an annual review of the pricing schedule in November of each year and changes will come into effect the following January.
• To streamline the FIT contract approval process, three streams, based on the size and impact of the project, are suggested. This will allow MicroFIT projects and small-scale FIT projects to get through the system quicker.
• Renewable energy producers should be given 18 months from the time a contract is offered to get their installation connected to the grid instead of the current three years.
• FIT projects with community, municipal or aboriginal support will be given priority and this will be evaluated using a new points system instead of the old system which was first come first serve.
• Tariffs should be altered according to a new schedule. Suggested reductions are greatest for solar PV. Hydro and bioenergy didn’t change and wind was slightly reduced. The highest tariff for roof-top solar <10 kW was cut from 80.2 cents/kWh to 54.9 cents/kWh, a reduction of 31.5%.
• More stringent land-use and zoning requirements for ground-mounted solar >10kW.
• Strategies for international expansion and export should be developed to ensure long-term industry survival.

The topic of what these changes may actually mean for the solar industry will be discussed in a subsequent post.

-Erik Janssen

(Engineering Physics, MASc, Year 2 at McMaster University)