Utility bills in the province of Ontario have been steadily creeping upwards, placing a strain on households and increasing the production costs of industry. It’s bad for local residents and very bad for business. Worse still, many are predicting that bills could double in the next 15 to 20 years. Exactly who or what is to blame for this hydro mayhem remains a topic of hot debate. Several critics have leveled an accusing finger at the McGuinty government’s Feed-in-tariff programs, but are they really to blame?
The current state of affairs
As we move away from coal (the last plant will be closing in 2014), the province is relying heavily on nuclear power and, once extensive refurbishments have been completed, 80% of the province’s power will be provided by nuclear plants by 2030. Renewable energy constitutes a very small percentage of the energy pie (shared between wind, bio-energy and solar).
Currently underway is the refurbishment of two reactors at the Bruce A nuclear power plant. In addition, two new reactors are in the planning stages. The total investment into nuclear will be more than $33 billion which is said to fulfill the province’s energy needs until 2035. The project is already 2 years behind schedule. A 15% increase in consumption by 2030, as well as an aging nuclear fleet, has required the government to spend an enormous amount of money on refurbishments. It’s the cost of these refurbishments that must be borne by the long-suffering consumer.
Natural gas and nuclear facilities get large subsidies when market price falls below guaranteed price. This happens “almost all the time” according to the Environmental Commissioner of Ontario who goes on to say; “The latter subsidies involve 70% of the global adjustment monies paid out, simply because they pay for the delivery of much more power. In fact, the Ontario Power Authority paid out $1.35 billion in 2010 to meet gas and nuclear power purchase agreements.”
The cost of renewable energy
The Environmental Commissioner of Ontario released figures for what renewable energy costs the average household. “In 2010, the Ontario Power Authority paid electricity resource costs of $317 million for conservation programs, and $269 million for renewables. That is a lot of money – but you must realize that it is recovered over a total Ontario consumption in 2010 of 142 terawatt hours (that’s 142,000,000,000 kWh), which amounts to 0.4 cents per kWh (split roughly equally between conservation and renewable subsidies). So the cost of conservation and all the renewable subsidies in 2010 amounted to 0.4 cents of the 13 cents we paid for a kWh in our homes.”
In addition to the environmental benefits of renewable energy, the growth that these industries have created in Ontario has been invaluable. Private Sector Investment in Ontario will total over $21 Billion by 2018. There are over 60 manufacturers and over 1000 aboriginal community-based FIT projects are bringing much-needed revenues to Ontario communities. A recent study showed that the solar industry had been responsible for over $2 billion in investments in 2011 alone, creating an estimated 8,200 jobs. A number which will increase to 11,400 in 2012 with 25 jobs created for every megawatt of energy installed by 2018.
As the cost of resources increases, nuclear energy becomes more and more expensive as does natural gas. A recent review of the Feed-in-tariff program saw a 30% reduction of rates paid by the government. Most of this reduction was absorbed by the drop in prices for solar panels and other components. As renewable energy technology improves, solar power collection becomes increasingly efficient and cheaper. To blame our high hydro prices on renewable energy and specifically the feed-in-tariff programs is a fatuous representation of the true costs of electricity.
Feed-in Tariff rates change, but the program still offers investors an attractive ROI
As of March 15 2012, the Ontario Power Authority set new tariff rates for its FIT and microFIT programs. The solar installation industry breathed a collective sigh of relief as manufacturers and installers are finally able get back to work after months of delay caused by the tariff review process. With the first tariff review complete, the new rates see a reduction of 30%. Does this dramatic drop in revenue render Feet-in Tariff programs untenable?
New Feed-in Tariff rates for Ontario
A 30% decrease in tariffs may seem like a giant leap for some, but the incredible drop in panel prices helps to absorb most of this reduction. The reduction helps to create a renewable energy plan for the province that is sustainable and offers fair compensation for renewable energy. Rooftop mounted Feed-in Tariff systems of 10 kW or smaller will now receive 54.9 c/kWh and ground-mounted units of 10 kW will receive remuneration of 44.5 c/kWh. See a full table of pricing here. All applications submitted after September 1, 2011 will be subject to the new tariffs.
The 60% local content stipulation for those who wish to participate in the FIT and microFIT programs has meant that a growing local industry has been created. This industry of panel manufacturers and installers has floundered in the months it has taken the government to review the Feed-in Tariff programs. Thousands of jobs have been created and millions invested in the province to meet the demand created by these programs. The OPA has to price the programs fairly so that this burgeoning industry is able to survive. Tariff cuts may seem drastic, but they reflect the massive reductions in panel prices and the Feed-in Tariff programs remain viable for prospective applicants.
Prospective Feed-in Tariff applicants can still look forward to a 15% yearly ROI on both rooftop microFIT and FIT projects and 12.4% on a ground mounted tracking systems. If you are considering a unit, it may be pertinent to remember that the government will be reviewing tariffs every two years. It’s best to act now while tariffs are at a premium.
Feed-in Tariff in action
When SolarLine Power was asked to install a microFIT system on an apartment block, they met with some challenges. The 2.5 story building contained 6 apartments on three floors and the challenge was to maximize the total kW amount to the microFIT 10kW maximum. Other tenders were unable to design systems over 5kW due to weight limitations on the roof which could only safely sustain a total of no more than 5 pounds per square foot. The full quota of panels needed to be installed for the project to be financially viable.
SolarLine Power, a local Ontario solar panel installation company, designed a system for the flat roof that consisted of 36 solar roof panels (9kW) with non-penetrating ballast weighing approximately 3000 pounds over 855 square feet resulting in an average additional load of less than 3.6 pounds per square foot. Additional pales were mounted on a custom awning attached to the side of the building.
Solar System Size
11.4kWh DC – 8.78kWh AC (77% derate factor)
AC Output Average Over 1 year
Daily: 36 kWh
Monthly: 1,098 kWh
Yearly: 13,148 kWh
1 Month: $879
1 Year: $10,545
5 Years: $55,383
20 Years: $221,439
With a 15% ROI, the solar installation pays for itself in no time at all and then goes on to make the property owners a tidy sum. If you are considering a Feed-in Tariff install, it’s still well worth it. With the nest OPA review scheduled in two year’s time, its best to act soon.
Fly into any city and you will see a patchwork of rooftops that remain mostly unused. When you consider the fact that these sites receive more sunshine than the streets below, you realize that you are looking at the most ideal urban solar real estate money could buy. So why isn’t everyone rushing to install solar panels on their rooftops? Despite the dramatic drop in solar panel prices of late, the installation of solar PV systems remains beyond the means of many building owners. Now rooftop solar leasing offers you another option.
What is FIT and microFIT?
The FIT and microFIT programs are an initiative by the Ontario government to encourage home and business owners to install solar systems and sell their power to the grid. This means that building owners pay the same rates they always have, but sell their solar power to their local power company at a premium. To date, 2 500 medium to large FIT installations, and over 11 000 microFIT solar panel systems have been installed, supplying enough energy to the grid to power about 12 million homes. The microFIT and FIT programs will have created about 50 000 local jobs by the end of 2012.
A microFIT installation is a 10kWh solar system that is installed on your roof while FIT installations are bigger and can be free-standing. The power from the system is converted from DC power to AC power and then sent to the grid. The systems are safe and maintenance and installation of the system is handled by your solar panel installer.
Put Sun Money in your pocket
Whether you have a home, business or public institution, your roof may be in a prime spot for a solar installation. If you don’t have the capital or don’t wish to invest in a solar system yourself, you can rent your valuable roof space to a solar installation company. You can put ‘Sun Money’ in your pocket without lifting a finger or paying a cent.
Contact your local solar installation company if you are interested in leasing your roof. Solarline Power is a Toronto-based solar installation company. They are able to ascertain whether your home or business is suitable for a solar panel installation using satellite imaging.
How it works
If your roof is not shaded by other buildings and trees, is in good condition and is suitably oriented for a solar panel installation, the solar leasing company will start the process of applying to the Ontario government to receive a provisional license that will enable your solar panel installer to set up the system on your roof. Once a provisional acceptance notice has been received, the solar installer will set up the PV system on your roof. After inspections, the system will be hooked up to the local power supplier and your home or business will be supplying the grid with power.
The process of application is quite lengthy and complex, but if you are leasing your roof and have a good solar panel installer, they should take care of the paperwork for you. Once your system has been installed, you can begin to make Sun Money.
There are a number of contract options available to the prospective roof leaser. Contracts generally last for 20 years and add value to the property. The options available depend largely on your solar panel installer, but generally they include a monthly percentage of the income your roof generates, a large upfront once-off payment or a partnership where both you and the solar installer cover installation fees. Whatever you decide, making energy you can be proud of while adding significantly to your coffers with relatively little input on your behalf is a once-in-a-lifetime opportunity that you would be remiss not to take advantage of.
Feed-in-tariff system the most successful renewable energy policy worldwide, studies show
Development of renewable energy eases the high cost of fossil fuel and nuclear energy borne by governments worldwide. The green energy sector is one of the few actually creating new jobs in many of the world’s floundering economies. Both developed and developing economies are benefitting from renewable energy initiatives, the most smashingly successful of which is Ontario’s Feed-in-Tariff (FIT) system according to a recent REN21 study.
The rock star of the renewable energy industry, FIT programs have been so successful that over 75% of solar and 45% of wind energy is harvested through them globally. This makes them the most popular energy policy worldwide according to a recent study. Over 75 countries, states and provinces across the globe have instituted FIT programs in one form or another.
These policies vary to fit the landscape of the economies in which they are instituted, but one lesson is abundantly clear in all of them; the devil is in the detail. FIT prices need to be attractive enough to entice home and business owners to install solar panels, but this is irrelevant if access to the grid is not cheap and easy. Although most FIT programs claim to be modelled on the success of the German endeavour, none have reached quite such dizzying heights. The reason for this is that most residents do not enjoy the same easy access to their power grid as do the Germans.
If a German homeowner (let’s call him Fritz) gets approval for his FIT project, he need wait for connection to the grid only as long as it takes him to install his panels. That’s because Fritz’s microFIT system has priority over all other energy sources. Renewable sources of energy not only enjoy priority in Germany, Fritz actually has a “right to sell electricity to the grid”, according to Germany’s Renewable Energy Sources Act. This means that when Fritz gets approval for his microFIT installation (a process that runs as smoothly as a German auto) he can rest assured that his local electricity provider will be paying him an income in a couple of days. Failing to do so would be a violation of his rights.
MicroFIT tariffs are what attract investors from the outset. They range from as much as 88 cents per kWh in Switzerland to as little as 22.4 cents per kWh in Hawaii. Currently, Ontario residents enjoy a tariff of 80.2 cents per kWh, although this price is due for adjustment in the fall.
During the recent Ontario elections, rising hydro bills were blamed on the FIT and microFIT programs. This fatuous allegation failed to note that the average household pays less than 50 cents to solar initiatives. This is expected to rise to only 70 cents by 2018. This year alone, the solar industry contributed $2 billion and 8,200 jobs to the Province. The extensive refurbishments to nuclear and gas facilities currently underway in Ontario will double hydro bills in the next 10 to 15 years.
Although many Ontarians have successfully installed microFIT and FIT programs and are currently reaping the benefits of optimum FIT tariffs, others have had delays in getting their systems hooked up to the grid. In some cases, residents have invested in their microFIT systems only to be told that they could wait a year or longer before gaining access to the grid. This has occurred mostly in rural areas where archaic electrical infrastructure does not allow for the inclusion of residential solar systems. It is imperative that you get approval and check the connectivity of your local electrical provider prior to investing in a FIT system.
Too many solar installers simply install the system and leave homeowners to sort through the paperwork. The Province is making inroads into streamlining the system and catching up with the backlog of applications. In the interim, don’t let the horror stories put you off. Find a solar installer that will help you every step of the way. Solar installers need to help you to obtain building permits, authorizations and inspections. It’s best if your solar power installer has a licensed electrician who can inspect the system once complete.
Take advantage of our prime microFIT tariffs (second only to Switzerland’s) before they get revised. Owning your own microFIT system will make you money, add value to your home and contribute positively to the environment. Make your own energy. Put SUNMONEY.CA in your pocket today.
The solar industry has helped Ontario stay afloat during the financial slump. Private investment in the industry is expected to reach $12.9 billion by 2018. The success of this burgeoning industry is largely due to the province’s FIT and microFIT schemes. These schemes give incentives to home and business owners as well as farmers who set up solar arrays on their properties and sell the energy generated to the province at preferential rates.
A recent study showed that the solar industry had invested $2 billion in the province in 2011 alone, creating an estimated 8,200 jobs. A number which will increase to 11,400 in 2012 with 25 jobs created for every megawatt of energy installed by 2018, the solar industry is proving to be a real boon to the province.
Although many home and business owners are committed to switching to renewable sources of energy for the benefit to the environment, the FIT and microFIT incentives do make solar affordable to many who would not otherwise be able to install such a system. The ecoENERGY program provides rebates for the home owners who use solar technologies. These rebates are part of the government’s long-term energy plan which aims to reduce consumption by 14%.
The growing need for electricity will require the province to create new facilities and refurbish many of the old ones. By 2030, 70% of our electricity will be generated by new or refurbished nuclear facilities. The cost to the tax payer will be profound. Two nuclear reactors are already planned for the Darlington plant while 10 are being refurbished at Darling and Bruce power stations. The costs of these refurbishments will double hydro bills in the province by the time the project is complete.
Fall 2011 will see a review of the FIT and microFIT systems with an adjustment to tariffs issued to electricity producers. With an election looming in October, some political figure are blaming escalating hydro bills on the microFIT and FIT tariffs, threatening the future of these incentives and, as a result, the solar industry in the province. A study by ClearSky Advisors Inc shows that the cost of the FIT programs to residents of the province is expected to rise to 70c for a typical household bill by 2018. This amount is negligible when compared to the forecast of bills doubling thanks to refurbishments during the same time. The cost of installation and maintenance of solar systems is borne by the home or business owner making it one of the cheapest sources of electricity for consumers.
Solar energy becomes cheaper as technology advances and demand grows. The Ontario Power Authority also enforces a 60% local content law which stimulates growth of the solar design and manufacture. A recent breakthrough by the University of Alberta team (based on research from the University of Toronto) has lead to the viability of spray on solar technologies. Without the market interest in these technologies, Canada will not be able to be a market leader in the field.
The study shows the tremendously positive influence that the solar industry has had on the Ontario economy. The FIT programs have contributed to the growth of the solar industry in the province. Although revisions and adjustments of FIT tariffs is the natural progression of such projects, the programs themselves are well worth the investment. If you would like to take control of where your energy comes from, contact your local MP and voice your opinion. You should also investigate installing a solar system of your own. Use energy you can be proud of.