Green Economy at Risk with McGuinty Government’s Turnaround on microFIT

Photo: istockphotos/s-a-m

The Green Energy Act, passed by the Ontario Government last year, was a well-designed piece of legislation. It was helping to push the province’s energy supplies right into the 21st century. Through its feed-in-tariff (FIT) and microFIT components, business and industry, farmers, and individual Ontario homeowners had the opportunity to transform the current fossil fuel economy into a truly green economy. Understanding the toxic properties of coal-fired electricity generation, climate change, and peak oil, the province had made a head start on the long road towards clean electricity from renewable resources.

Retroactive Changes to microFIT Endanger Green Economy
On July 2, 2010, with little warning, the government announced that it was making, in effect, a retroactive change to the microFIT tariff regarding solar installations. Rooftop installations would still receive the publicized 80.2¢/kWh, but the more popular (and often more efficient) ground-based solar installations would drop to 58.8¢/kWh. This, according to the Ontario Power Authority (OPA), is because it is cheaper to install a ground-based system.

According to Adam Webb, President of Sentinel Solar, some of the 50,000 new green jobs promised in the Act are threatened. His company has invested $5 million in new equipment and product development and has hired 20 new people.

He states, “The OPA’s proposed rate change has already sent ripples of uncertainty and disappointment through the industry, with the real damage yet to be done. This rate change will cripple the industry before it has even gotten off the ground, not simply due to the fact that fewer ground mount systems will be sold, but because the trust and integrity in the program will have been lost…. The ultimate integrity of the program now hangs in the balance.”

Mr. Webb, in addition to extending an open invitation to the public to visit the facility in Woodbridge, Ont., created an online petition that was sent to the OPA and the provincial government. You can download results of the petition here.

Others in the industry echo his sentiments. Joe Vanderzand, of Endless Energy, is encouraging people to put pressure on their local politicians, fearing that the OPA consultation process is completely flawed. In effect, the timing of the announcement was done in such a way as to reduce the statutory 30-day consultation period to a little more than two weeks.

Andrea Horwath, leader of the Ontario NDP and an avid supporter of a green economy, was blunt in her criticism, stating that, "Unilaterally reducing the rate after thousands of farmers and other Ontarians have invested time and money in developing applications based on 80 cents per kilowatt-hour is unfair and unacceptable and that this wrong-headed decision undermines the economic and environmental benefits of solar power development in Ontario."

She continues, "The NDP will continue to press the government to reverse this decision and meet its promise to support the development of cleaner energy alternatives to coal and nuclear power.”

MicroFIT Designed for Individuals and Small Business
The FIT program was created to encourage the development of large-scale renewable energy projects, for example wind farms and solar installations, capable of providing several MW of clean power. Dalton McGuinty himself, ushering in the green economy, announced many of these projects in a speech in Cornwall. The microFIT program, on the other hand, was to cater to the needs of small businesses and individuals who wanted to participate in this “Greening of Ontario.”

Anyone prepared to install a generating capacity of 10KW or less could have participated in microFIT. Wind turbines, although very effective, are difficult to maintain in suburban and urban locales. There are certain safety considerations, and very specific setback limits from residential areas. A small solar installation, however, is completely noise free and far less visually obtrusive.

Solar Installation Ideal for the Homeowner
Solar power itself dates back to the beginning of the space age; solar installations have powered satellites since the first Sputnik was launched in 1957. Although the industry has a solid track record of efficiency and reliability, in terms of the large scale green power generation that will soon be needed world-wide, it is still in its infancy, and prices are too high for many would-be converts.

The microFIT would have broken down this price barrier. Nothing encourages research and innovation more than commercial demand for the product, and as demand increases, the price comes down. In the mid-70s, a scientific calculator cost over $100 retail (far more in today’s money, given 35 years of inflation). Today, one can find more powerful versions in a dollar store.

Any solar installation is a large capital investment, and economically speaking, it is only worthwhile if there is the promise of a payback. To allow an individual or farmer of limited means to make this investment, the microFIT tariff was set at a generous 80.2¢/kWh (roughly double the payout on a commercial-sized solar installation generating several MW). Obviously, it is poor economy to pay 80.2¢ for a commodity only to resell it for around 6¢, but there are other factors in play. The rate is guaranteed for 20 years – what will be the cost of electricity from the grid in 20 year’s time? Certainly much more than 6¢. Also, the amount of electricity generated from these early individual solar installations, in the grand scheme of things, is so minuscule compared to the terawatts of power the province uses daily that this extra “start-up” cost will be easily absorbed.

The most crucial aspect of this rate, however, was that it was encouraging the solar industry to invest and set up production right in Ontario, providing many of the 50,000 new green jobs the bill promised. Jacob Travis, Director of Ontario Solar Academy and Chair of Ontario Solar Network, comments that, "The FIT and microFIT are central to the province's push for a greener and more sustainable economy. To alter either could have untold consequences for the future."

Currently, there are about 16,000 applications for microFIT projects, of which 10,000 to 11,000 are for ground-mounted systems. The majority of these applications have still not been processed, despite the fact that some of these have been awaiting approval since last January. During the 30-day consultation period, no applications will be processed. Once processing restarts, all new contracts for ground-mount solar installations will only be approved at the new rate.