Lower solar incentive expected to hit industry hard

Tuesday, July 6, 2010

by BETTER FARMING STAFF

The owner of a Kemptville business that assembles and installs solar systems says he may have to lay off staff if the Ontario Power Authority follows through on a proposal to drop the price on some small-scale solar projects.

The new price is going to hit rural landowners and farmers very hard, warns Chris Weissflog, president of EcoGen energy Inc. “Maelstrom is a good word,” he says, pointing out that because of the space they occupy, ground mounted units are best suited to rural areas.

On Friday, the OPA and the provincial Ministry of Energy and Infrastructure announced rates for ground-mounted solar projects under the micro feed-in-tariff program (microFIT) would be reduced to 58.8 cents per kilowatt-hour. The price for roof top units remained at 80.2 cents per kWh.

Brad Duguid, provincial minister of energy and infrastructure, says the change in price corrects a loophole within the program for applicants to earn an “exorbitant” return on their investment. “That’s not what this program was set up to do,” he says, explaining the goal was to provide a fair return for proponents and at a fair price for consumers.

Had the previous price been allowed to remain it would have cost each Ontario family $5 to $6 a year for the next 20 years, he says. The program has to work for both proponents and consumers and “we have to stand up for consumers” when something goes out of whack with the new program. “This is one of those circumstances.”

The new price takes effect shortly after the expiry of a 30-day period to collect responses to the proposal. The consultation period begins this week and runs to Aug.  4. In the interim, ground-mounted applications won’t be processed although the authority will continue to accept them.

The authority will honour the old price on projects that have received conditional approval and apply the new one to those that have not yet received these. By the end of June, it had received 16,000 microFIT applications, of which about 78 per cent, or about 10,000, were for ground-mounted solar systems. The authority has processed 4,900 applications to date, of which 2,300 are ground mounts.

Weissflog says although they may generate more energy, ground mounted units are more expensive to install because they need more infrastructure. Nor do they generate a greater return on investment than roof top units, he says.

He also objects to the suddenness of the announcement. It seems “almost dishonest,” he says, adding that while it was well known that the rates would be reduced, next year was the timing the authority had discussed with industry.

Weissflog says the sudden price change will shatter confidence of a fledgling industry. The whole intention behind the demand creation and incentive programs “is to create a stable environment for business to function in,” he says.

His business has focused on offering ground mount units: “We’re going to get nailed.” Businesses such as his own won’t be the only casualties, he adds, pointing out that the Canadian manufacturers he buys from have invested heavily in developing ground-mounted solar tracking systems.

Morgan Cowl, SparkSolar’s vice president of operations, says his company is assessing the press release and trying to talk to government “to understand their thinking.” SparkSolar has partnered with Agris Solar Co-operative to pool panel earnings under the microFIT program and offer members a share of the annual surplus in exchange for a $20,000 investment.

Elizabeth McDonald, president of the Canadian Solar Industries Association, says the province should have taken action sooner to minimize the impact on microFIT participants. “We’re very concerned about the retroactivity,” of the new payment rate, she says, calling it “very unfair” to those who have already submitted applications to the program. “But we have to be cognizant of what the intent of the program was.” It was aimed at homeowners, farmers, small businesses and institutions.

Duguid says they acted “as soon as we could in terms of when the issue came to our attention.” He says the announcement should not have caught anyone off-guard. “We have been talking about potentially tweaking this with the industry for some time.”

The solar industry in Ontario is booming, he adds. “We’re one of the leading jurisdictions in North America when it comes to building solar and we’ll continue to be; this announcement doesn’t really affect that.” BF