A Reality Check on the Ontario Power Authorities Decision to rescind their commitment to Ontarians, and change the MicroFIT rates for Ground Mounted Solar Systems. Written by Trent Bell
Their Facts: Initially, the OPA stated that the MicroFIT rates would not be reviewed until September 2011. The purpose was to bring stability to the market and to build an industry and 50 000 jobs in Ontario.
Our Reality: On July 2nd 2010, only months into the program, the OPA reneges on its promise and proposes a new price category. Ground mounted systems would have a separate pricing category from rooftop installations at a proposed rate of $0.588/kWh versus the current rate of $0.802/kWh. This single decision has stalled the entire green energy movement in Ontario has certainly done nothing to bring stability to the market.
Their Facts: The OPA states that the proposed new price category will better reflect the lower costs to install a ground-mounted solar PV project versus a rooftop project.
Our Reality: This is a total fallacy. Everyone in the industry knows the opposite is true. The cost of a ground mounted tracking system is approximately 30 percent higher than a comparably sized roof mounted system.
Their Facts: The OPA states that paying $0.802/kWh to the 9000 or so applicants for ground mounted solar systems is not fair to the Ontario rate payers.
Our Reality: If paying $0.802/kWh is not fair for Ontario rate payers, then it should not be paid to Roof Mounted Solar systems. What is the OPA going to do if they get 9000 applications for roof mounted systems?
Their Facts: The OPA states "the rate of return on equity must be consistent across the entire program to be fair to ratepayers and to developers. At the new proposed price, ground mounted developers can expect a return on equity of about 11 per cent, which is consistent with what rooftop solar developers and other FIT developers will receive.”
Our Reality: There is much more risk involved with ground mounted solar tracking systems. Wind, snow, and mechanical failure are just some of the factors that must be considered. Furthermore, The OPA never factors in the 1 percent degradation per year that all solar panels will suffer over the 20 year contract. In reality, using real world numbers, the proposed $0.588/kWh for ground mounted systems barely breaks even, and runs the risk of a negative rate of return over the 20 year contract.
Their Facts: The majority of ground mounted systems were to be installed in the country, on farmland. The majority of roof mounted systems are to be installed in the city. It is rural Ontario that is affected most by the MicroFIT price changes.
Our Reality: The Liberal base is in the city. Leaving the price for roof mounted systems at $0.802/kWh keeps the Liberal base happy. Much of rural Ontario is Conservative. Changing the price for ground mounted systems to $0.588/kWh short changes rural Ontario, with little risk of backlash at the polls for the incumbent Liberal party.
Their Facts: The MicroFIT program was designed to bring private equity into the green sector. All risk and equity is borne by the private investor. The program was to "efficiently and effectively procure electricity on behalf of ratepayers at a reasonable price."
Our Reality: If the OPA does not have a vested risk or capital investment in the MicroFIT program, then paying $0.802/kWh to all MicroFIT systems is either reasonable or not. It cannot be reasonable for the City of Toronto, but unreasonable for Joe Farmer.
Their Facts: The OPA states that applications for the MicroFIT program were much higher than they anticipated.
Our Reality: The OPA created this bottleneck. Applications for the MicroFIT program had to be submitted quickly so that they could be installed in 2010 to qualify for the 40 percent Ontario content requirement. In 2011, the Ontario content goes up to 60 percent. The only way to reach 60 percent Ontario content is to have panels that are made in Ontario. Currently Ontario does not have the capacity to produce near the numbers of panels needed, and an industry must be created to do this. Furthermore, the cost of production of panels in Ontario will certainly exceed the cost to produce panels in China and other countries. I anticipate that this will increase the cost of a 10 KW MicroFIT solar array significantly. In effect reducing the Return on Investment without the OPA's price change.
Their Facts: The OPA states the program was going to cost Ontario ratepayers an extra billion dollars over 20 years.
Our Reality: When the OPA throws out scary numbers like a "billion" dollars, they never show their math, and they never forecast the relative numbers over a 20 year period. If this were done, the amount of money the MicroFIT program would cost Ontario ratepayers over 20 years would not be nearly as significant. The OPA and the Liberal Government created the MicroFIT program. On the surface it appeared that they were sincere and wanted to be a world leader in creating a Green Ontario. Unfortunately it appears that the entire program was created for appearances only. If the OPA was really concerned with costs and numbers then they should have initially placed limits on either the number of applicants to the MicroFIT program, or more appropriately, to the total number of kWh the program was to support. Instead the program does not have limits, and the Liberal Government can continue on its program of tax and spend. Regrettably the MicroFIT program is going to tax all Ontarians, and spend in the cities, the Liberal base.
Trent Bell
trentbell@hotmail.com
http://stopmicrofitpricechange.blogspot.com/
