As Ontario’s flagship renewable energy (RE) incentive program, referred to as the Feed-in Tariff (FIT), enters its third review, it is an appropriate point to assess several recent political and policy changes which have implications for the next iteration of RE incentives. In my previous blog, I wrote about the challenges facing Photovoltaics (PV) with respect to the World Trade Organization’s (WTO) initial ruling against Ontario’s domestic content requirements, growing economic turbulence in the RE sector, political adjustments within the provincial Liberal party  as well as other industrial and policy factors that have created uncertainty surrounding the future deployment and development of PV in Ontario. These events have had lasting impacts on the prospects of PV and continue to influence future policy engagement. In conjunction with prior developments, there are new pressures and policy changes which will have serious implications for PV. Do these changes point to positive change for the future of PV?

Foremost among these pressures is the fallout around the WTO decision. In May 2013, the final ruling by the WTO stated that Ontario’s RE policy framework was in violation of international trade law[i]. The decision established that the domestic content requirement, which requires that developers source a certain percentage of RE system components from Ontario companies in order to be eligible for FIT incentives, contravenes international trade agreements. Without protection from international competition, PV companies who have invested in Ontario face an uncertain future. Will PV panel manufacturers be able to compete with Asian firms? Which parts of the PV value chain will Ontario firms occupy? Will we purchase technology from overseas and focus primarily on project installation? These are just some of the questions left unanswered as the government begins to reinvent the FIT.

The provincial government has already communicated significant changes to the FIT, which may portent further revisions presently being contemplated. In June 2013, the government announced that large RE projects (>500 kW) would no longer fall under the FIT mechanism[ii]. Instead, these projects would be contracted using a competitive procurement process. The details of this process have yet to be articulated. Moreover, the annual cap for FIT contracts has been reduced from 250 MW to 200 MW[iii]. Aside from the FIT, the political administration has also renegotiated its deal to procure a significant quantity of RE from Samsung, cutting the contract from 2,500 MW down to 1,369 MW[iv]. From this, it would appear that a deliberate effort is being made to slow further RE procurement and deployment in the province.

Political pressures are also quite notable. First there is the continued uncertainty arising from a minority government situation, where opposing parties have stated they would either abandon[v] or seriously redesign[vi] RE policies. Second, controversial gas plant cancellations continue to plague the governing party, casting shadows over the energy file and the commitment to RE deployment[vii]. Lastly, and perhaps most importantly, there are still many unanswered questions regarding the future of nuclear energy in the province[viii]. If Ontario commits to build new nuclear reactors, there is little impetus to invest in RE and efficiency.

Together, the above factors indicate that there is increasing uncertainty surrounding the RE sector in the province. Recent developments suggest that Ontario is veering away from its commitment to an economy and energy system based on RE. So, the worst may have yet to come for PV in Ontario.

Danny Rosenbloom

Daniel Rosenbloom
Ph.D Candidate

Carleton University


[i] http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds412_e.htm

[ii] http://fit.powerauthority.on.ca/what-feed-tariff-program

[iii] http://www.mondaq.com/canada/x/244052/Environmental+Law/Ontario+Announces+the+End+of+the+FIT+for+LargeScale+Renewable+Projects

[iv] http://www.theglobeandmail.com/news/politics/ontario-cuts-back-on-green-energy-deal/article12718627/

[v] http://magazine.appro.org/index.php?option=com_content&task=view&id=2181&Itemid=44

[vi] http://ontariondp.com/en/setting-the-record-straight-on-the-ndp-and-renewable-energy

[vii] http://www.thestar.com/opinion/commentary/2013/05/10/power_plant_cancellations_green_energy_act_looms_behind_gas_plant_mess.html

[viii] http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/ontario-gets-two-nuclear-energy-options/article12877240/

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