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Ontario's Feed-In Tariff: A Primer

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Written by Christina Vasilevski

 

In September, 2009, the Ontario government announced an initiative that made it the most forward-thinking jurisdiction on the continent for renewable energy investments: the Feed-in Tariff. Part of Ontario’s Green Energy Act, the Feed-In Tariff program is meant to encourage investment in the green energy sector both as a way to improve the economy and canadian pharmavy generic viagra reduce the sommerakademie.probstdorf.at province’s dependence on non-renewable forms of energy. And small wonder that Ontario has hitched its wagon to the green energy sector’s potential: when similar tariffs were introduced in Germany, they lead to the creation of over 250,000 industrial and manufacturing positions!

But what is a Feed-In Tariff, and why has Ontario followed the lead established by several other countries, including Germany, Spain, France and Greece?

altA Feed-In Tariff (FIT) allows people to add renewable energy installations to their homes and businesses, and sell the energy they produce back onto the grid for higher-than-average market rates. In Ontario, this means that the Ontario Power Authority (OPA) will pay energy producers a special rate for renewable energy, although the rate depends on the size of the it's great! installation and the method of energy production. This rate is fixed for twenty years, and requires the producer to sign a contract.

The most important thing that determines the rate paid to producers is the size of the renewable energy installation. Those that produce ten kilowatts (kW) of energy or less are considered “microFIT” projects, and the rates and guidelines are geared to meet the needs of individuals and small businesses. Installations larger than that are covered under the regular FIT program. While there are many instances in which FIT and microFIT guidelines overlap, for the purpose of this article, I will only discuss microFIT rates and regulations.

The microFIT allows small businesses and viagra jelly for women homeowners to produce the following forms of renewable energy, and pays the following rates as of February, 2010:

Form of Energy

Price per kWh

Solar PV

$0.802

Wind

$0.135

Waterpower

$0.131

Biomass

$0.138

Biogas

$0.160

Landfill Gas

$0.111

(Source: http://microfit.powerauthority.on.ca/pdf/microFIT-Program-price-schedule.pdf)

 

altFor one thing, the program will only allow installations with a “nameplate capacity” of ten kW. Most solar installations actuallyhave a slightly lower energy output than what is stated on the panels themselves. Thus, installing ten kW worth of panels won’t necessarily result in ten kW worth of energy output.

For another, solar panels must meet what are known as “domestic content requirements” for qualification. That is, a certain amount of the components and labour used to create and install the panels must be sourced from within Ontario. For projects installed in 2009 and 2010, the domestic content requirement is forty percent of the total labour and materials required – for 2011 and all years afterward, this will jump to sixty percent. The OPA website breaks down the value of each type of material or labour contribution as follows: 

Domestic Content Contribution

Qualifying Percentage

Silicon that has been used as input to solar photovoltaic cells manufactured in an Ontario refinery.

10%

Silicon ingots and wafer, where silicon ingots have been cast in Ontario and wafers have been cut from the casting by a saw in Ontario.

12%

The crystalline silicon solar photovoltaic cells, where their active photovoltaic layer(s) have been formed in Ontario.

10%

Solar photovoltaic modules (i.e. panels), where the electrical connections between the solar cells have been made in Ontario, and the solar photovoltaic module materials have been encapsulated in Ontario

13%

Inverter, where the assembly, final wiring and testing has been done in Ontario.

9%

Mounting systems, where the structural components of the fixed or moving mounting systems, have been entirely machined or formed or cast in Ontario. The metal for the structural components may not have been pre-machined outside Ontario other than peeling/roughing of the part for quality control purposes when it left the smelter or forge. The machining and http://defi-pc.fr/cialis-generic-online assembly of the mounting system must entirely take place in Ontario (i.e. bending, welding, piercing, and bolting).

9%

Wiring and electrical hardware that is not part of other designated activities (i.e., items 1, 2, 3, and 5 of this table), sourced from an Ontario supplier.

10%

All on- and off-site labour and services. For greater certainty, this designated activity shall apply in respect of all contract facilities.

27%

(Source: http://microfit.powerauthority.on.ca/microFIT-Program-Rules/Eligibility-requirements/Domestic-content.php)

 

While these requirements are meant to spur economic investment in green energy and to create jobs, they have been a great cause of concern for manufacturers in Toronto. Because all of the installation labour will happen in Ontario by default, each project automatically meets the 27% labour requirement. However, the manufacturing capacity still isn’t available in Ontario to fulfill the remaining 13% requirement now, or the remaining 33% requirement in 2011.

altSoon after the FIT rules were announced, the OPA hosted a teleconference for stakeholders on September 28, 2009. During this meeting, the OPA stated that its domestic content rules were determined in collaboration with several other government ministries, industry suppliers, and agencies in other provinces. However, the domestic content rules are seen as too stringent for such a budding policy – the manufacturing capacity for elements such as the raw silicon, inverters, or solar panels themselves just isn’t present in Ontario at the moment. In particular, stakeholders in the FIT didn’t find out about the domestic content regulations until program itself was launched in September, 24, 2009. Notifications about these regulations were handled poorly to the extent that people who installed rooftop solar panels to take advantage of the microFIT prior to the official microFIT launch date have now found themselves ineligible to receive any sort of money through the microFIT at all.

On top of this, those who have applied for a microFIT contract have had to wait as long as sixty days before obtaining a conditional offer from the OPA. Because of the timelines involved, the window for new installations to meet the 40% domestic content requirement before 2011 becomes increasingly smaller – and out of reach for many.

 

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