Ontario Feed-in-tariff program set to change…

Ontario’s PM announced that the review of their FIT program has begun. They termed it “moving renewable energy forward”. That’s just code for “given the economic realities of the renewable energy industry and government priorities, we need to review how much and how we are investing in renewable energy to ensure its in line with true costs and our abilities and priorities”.

The reality of the solar power part of this equation is that costs have dropped like a rock, so why would the same incentives be required? This is simply applying common sense in that the same investor rate of return for solar power projects can be had with less incentives. The current IRR’s will be astronomical for anyone “grand-fathered” into old contracts with old rates. The key for the goverment is to keep the tariff rates attractive enough to continue to entice more investment, thus creating more jobs.

The fact that Ontario puts a content rule on its provisions is protecting an industry artificially. Prices in Ontario for panels are regularly about $0.20 more per watt than elsewhere in North America, and its all because of protection. Not really a free trade model, yet permitted under NAFTA.

I am predicting a 20% drop in FIT rates. Let’s see what happens in a few months when they have ended their consultations and announce the new program. You can bet that investment will come to a standstill in the meantime as people don’t like risk.


Leave a Reply

Your email address will not be published. Required fields are marked *