Hydro Bill Blues; is Ontario’s Feed-in-tariff system to blame?

May.07.2012

Are feed-in-tariffs causing higher utility pricesUtility 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.”

Are feed-in-tariffs causing higher utility pricesIn 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.

FIT for Life

October.27.2011

Feed-in-tariff system the most successful renewable energy policy worldwide, studies show

Ontario microFIT installationDevelopment 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.

installing solar panelsIf 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.

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