Posts Tagged ‘solar investment’

MicroFIT Changes Leave Farmers in the Dust

Tuesday, August 3rd, 2010

Proposed changes to Ontario’s feed-in tariff (FIT) program could leave some of the province’s farmers in the dust.  On July 2, Ontario’s Minister of Energy and Infrastructure, Brad Duguid, announced that the lucrative prices the program offers for electricity generated by small, ground-mounted solar installations may be reduced from 80.2 cents per kilowatt hour to 58.8 cents.

The FIT program began accepting applications for green energy projects in May of 2009.  The response was overwhelming, with the Ontario Power Authority (OPA) receiving more than 15,000 applications in less than a year and a half.  Most applications were for ground-mounted solar systems less than 10 kW, which fall into the microFIT category.  According to Duguid, the province has to scale back its pricing scheme in order to avoid footing the $1 billion required to cover the projects’ 25% rate of return over the next twenty years.

Rural Residents Lose Trust in the System

Agricultural land is prime real estate for green energy installations, and many farmers have installed or planned to install ground-mounted systems on their property.  One such farmer is Ed Kloosterman, who, with his wife, Alma, had applied for microFIT contracts to build 10kW of solar installations on four rural properties near Peterborough.    While the Kloostermans understand the province’s rationale for the price changes, Ed asserts that a lot of trouble could have been avoided if the government had more carefully worked out the economics of the arrangement beforehand.

Mark Banner, president of Diverse Green Solutions, Ltd., and vendor for solar company Omniwatt, says that while the price changes are a setback, they do not spell the end of Ontario’s solar industry.  At 58.8 cents per kilowatt hour, there is still a profit to be made from the technology and the microFIT.  What remains a problem, as Wendy Omvlee of the Ontario Federation of Agriculture points out, is loss of trust in the program.  While Ontario’s FIT continues to offer high prices for green energy, the province will have to work to restore the faith of businesses, homeowners, and rural land owners, and to assure potential applicants that in the future, they can rely on the OPA to stand behind its offers.

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Ontario Solar Incentive Program Faces First Major Hurdle

Monday, August 2nd, 2010

In early July, the Ontario Power Authority (OPA) dropped a bomb on the burgeoning solar generation community by reducing the rates it will pay to some microFIT solar projects by 27% – from 80.2 cents to 58.8 cents per kWh.  With more than 16,000 Ontario microFIT applicants currently awaiting approval, the move could make solar installations for many would-be rural power producers much more difficult.  In addition, decreased demand for microFIT projects could also place greater strain on solar panel manufacturers, suppliers, and training organizations.

It did not take long for the rate drop to make big waves in the industry.  Petitions and other criticisms sprang up within hours of the release.  The OPA and McGuinty government quickly felt the heat and moved to appease the dissenters, stating the rates would have been too profitable for microFIT participants and too costly for the Ontario taxpayer.  In essence, ground-mounted solar installations should not receive the same incentives as costlier rooftop PV installations.

Energy Sector Was Just Starting to Feel Solar Installation Boom

Since the launch of the microFIT program, countless businesses, households, and farms have gravitated to solar, hoping to generate profits from their PV investments.  A change to the tariff incentive could mean disaster for many of these businesses and start-ups.  One such company, Fritz Construction, reported losing 80% of its business within several days as a result of the microFIT change.  Sudden changes like these, especially at the dawn of a relatively new industry, make it very difficult for solar installers, suppliers, trainers, and power producers to budget and plan accordingly.

Solar Panel Ground-Systems Still Have Hope

Luckily, the rate cut will not take effect immediately.  The OPA has suspended finalization of the decision until August 3 so it can consult its stakeholders and solicit feedback from the field.  This provides time for the industry to regroup and lobby the provincial government.  Furthermore, the new rate proposed by the OPA of 58.8 cents per kWh may still provide sustainable margins to some solar power producers, as long as those installing systems can streamline training, installation, and other capital costs.

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