Ontario green energy producers facing reviews, price cuts for new projects

By John Spears, Toronto Star

Solar power producers are bracing for price cuts of up to 25 per cent as Ontario reviews its renewable energy policies, according to industry insiders.

Energy Minister Chris Bentley says the review will formally be released next week.

“We’re all expecting to take a haircut,” said one solar developer – although the new prices will apply only to developments going forward, not contracts already signed.

At the same time, Premier Dalton McGuinty has already signaled to rural municipalities that he’ll give them some say in where controversial wind farms place their turbines.

The Liberals were devastated in rural ridings where wind was an issue – in part because the Green Energy Act tied the hands of local councils in dealing with wind developers.

“Legally, they have to come to the table. But they don’t need to listen,” said Mayor Bill Hill of Melancthon Township, which is dealing with several wind developments. “That isn’t fair.”

The impact of renewable power on Ontario’s power system is often exaggerated: Renewable sources other than water provided only 3.4 per cent of Ontario’s power last year; that’s expected to grow to 13 per cent by 2030.

But the prices paid for renewable power have become a political lightning rod for the Liberals.

The government had promised to review prices under its feed-in tariff (FIT) program for renewable energy when it was introduced in 2009.

Solar prices – which vary considerably depending on the size of the array, and whether they’re mounted on rooftops or at ground level – will take the biggest hit.

For example:

• Large solar arrays planted on the ground currently get paid 44.3 cents a kilowatt hour. Industry observers expect to see that drop as low as 33 cents, though it could be a few cents higher.

• Small rooftop arrays on commercial buildings now get 71.3 cents a kilowatt hour. Look for the low 60s, or even high 50s.

• Householders with very small solar arrays now get 80.2 cents a kwh. Expect to see that drop to the mid-60s.

Bentley refused in an interview to comment on pricing. But he said whatever new prices announced next week will apply to contracts going forward, not to those already signed, which typically have a 20-year term.

It’s no secret that solar costs have been dropping. A U.S. market survey found that the price of solar panels has dropped 40 per cent in the past year. Racks supporting the panels have also become cheaper and easier to assemble, lowering labour costs.

Renewable energy lobby groups themselves have accepted that lower prices are on the way.

The Canadian Solar Industries Association submitted a brief to the review calling for prices ranging as low as 35 cents a kilowatt hour for large, ground-mounted development.

Bentley said in an interview that the prices aren’t just about energy developers and consumers.

The Green Energy Act was also conceived to stimulate a new industry in Ontario, he said.

“It is an energy and jobs policy,” he said. That was a deliberate decision from the beginning. Sometimes that’s missed.”

To qualify for the premium prices, developers must source up to 60 per cent of their inputs from Ontario suppliers.

“We have an industry today where we didn’t have one two years ago – an industry not only of manufacturing but of planning, designing, locating these project,” Bentley says.

And the intent is to build an industry supplying renewable power developments not just in Ontario, but in export markets, Bentley said.

The debate over wind is less about price and more about rules. Wind farms currently get 13.1 cents a kilowatt hour for their power.

But local councils have no say in zoning or the location of wind farms.

Mayor Bill Hill in Melancthon – whose township has two large wind farms and is now contemplating a proposal for another – would like to have a role.

“I don’t think we want total control,” says Hill. “We want to be heard.”

“We’ve sat in living rooms of people’s houses, and they’ve said: When I’m sitting in my easy chair and I look out my front window, I’ll see that turbine, if you put it where you say you’re going to. But if you moved it over 50 feet, I can’t see that and it doesn’t bother me.”

Not all opposition would be that easily satisfied. But current rules provide no leverage pushing developers to make accommodations , Hall said.

The devil may well be in the bureaucratic details.

Wind developers first get a contract from the Ontario Power Authority, then move through an environmental permitting process.

Groups opposed to wind power worry that even if rules are changed, they won’t affect projects already in the approval pipeline.