After receiving an avalanche of applications (over 16,000 in just eight months) for Ontario’s Feed-in Tariff (FIT) program, a new incentive for renewable electricity generation, the Ontario Power Authority (OPA) have proposed reducing the guaranteed price paid for ground-mounted solar power projects.
Frustration is building, and rightly so, with the OPA and the Ministry of Energy and Infrastructure over the surprise change in price. Currently, both ground-mounted and rooftop projects under 10kW are eligible for the 80.2 cents/kWh FIT rate. The new proposed category would reduce the FIT price for ground mounted solar projects to 58.8 cents/kWh (a 27% decrease).
As expected, the solar industry is overheating, but they are not the only ones calling foul. The Ontario Federation of Agriculture has voiced its concern demanding the minister restore the original rate as farmers stand to lose a considerable stream of income and have in some cases already made major investments. Today, the Ontario Environment Commissioner has publicly stated that Ontario's solar sector is being harmed by uncertainty around the microFIT. MicroFIT Action, a website dedicated to a petition on the proposed price change, has also popped up and a group called the Ontario Solar Network is hosting a town hall meeting tomorrow night.
The OPA claims that the current FIT price results in a higher than expected rate of return for ground-mounted solar projects. While their price assumptions could be correct, opponents to the price change argue that the process of setting the assumptions is not transparent. They argue that money has already been spent and contracts have been signed with landowners at the original price and developers expected to be rubber stamped by the OPA. They had no reason to believe otherwise. The integrity of the FIT program is itself being challenged as investors question whether or not the program will remain stable enough.
No one disputes that the FIT rates should be adjustable. In fact, FIT programs are designed to decrease over time as the prices of technologies go down. The Netherlands have an annual review. Germany uses predetermined regression in price and a periodic review. Portugal’s FIT price is linked with technology targets. Spain’s system uses a hybrid of these. Ontario was planning a two year review, but is changing the price abruptly at less than 12 months.
Ontario needs to stick to a program, not change the rules mid-game. If we do, people won’t want to play on our home turf.
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