As of July 1, 2010, the amount of applications for photovoltaic systems installed under the micro-generation feed-in tariff in Ontario, Canada, reached 16,000. The majority of these applications have been for ground-mounted systems and thus, the Ontario Power Authority (OPA) has designed a FiT cut for any systems of this kind of 10kW or less, to stop the pressure this will place on tax payers.
Several sources are now reporting that more than 10,000 solar applications in Ontario are on now hold as a direct result of this cut. The previous price being paid by the power authority was 80.2 cents per kWh of energy generated. This is one of the most generous FiTs in the world, which is one of the reasons the Ontario market has taken off so well in the past year. However, the FiT rate will now drop to 58.8 cents per kWh for all ground-mounted systems of 10kW or less. Without this cut, energy and infrastructure minister Brad Duguid said that Ontario taxpayers would have had a CAD$1 billion price to pay over 20 years. “(It) would have been irresponsible for us to have let it continue,” he said.
“The OPA believes the new price category is fair, reasonable, more accurately reflects the costs associated with ground-mounted projects and maintains the long-term stability of the program,” says Colin Andersen, chief executive officer of the Ontario Power Authority. “It enables the program to continue to meet its original goals and provides proper value to both generators and ratepayers.”
However, these cuts, as expected, have caused mixed feelings, and a great amount of uncertainty in the market. Some in the industry say it's unfair to change the rate after people have submitted proposals for a contract though the OPA and that applications already sent should still receive the original higher rate of 80.2 cents. Others are behind the cuts, agreeing that since the cost for small, ground-mounted solar installations have turned out to be lower than expected, the annual rate of return is around 25%, meaning that with the higher rate the industry would be “way out of whack,” and for which consumers would otherwise ultimately bear significant cost.
“We have a whole lot of unhappy customers right now,” said Bruce Knight, president of London-based Ontario Solar Farms, which designs, sells and installs ground-mounted solar installations.
Knight said the company has provided approximately 50 quotes to people who want a contract or are awaiting word on applications they've submitted while a large proportion have already invested money in their planned installation. Knight believes that the province should not be changing the price for applications which are already in the pipeline, “It's not the way normal business operates,” he said.
The planned price change was announced via e-mail on July 2 to applicants, causing uproar since the province had initially stipulated that it would review its terms and policies in September 2011. Yet since the OPA has been flooded with applications in recent months the decision had to be made to chop the subsidies.
The lucky few
The change will not affect micro-FiT producers who already have a 20-year contract at the 80.2-cent rate; the OPA has assured these people that they will continue to receive the original price. Installations of over 10kW will still receive the set amount of 44.3 cents per kWh.
The OPA has now begun a 30-day consultation period on the price change, however it looks very likely that this cut will go through as planned.