Rural anger forces Grits to cancel plan to cut back on solar projects

The Ottawa Citizen: Lee Greenberg - August 18, 2010

Ontario's Liberal government has reversed an unpopular decision, allowing thousands of small solar projects to go ahead at a heavily subsidized rate.

The move comes after the government was inundated with applications to participate in a green energy initiative that promised to pay huge returns -- 80.2 cents per kilowatt hour, nearly 20 times the market price of power from all sources -- to new small solar projects.

Energy minister Brad Duguid says the original intention of the government's "microFIT" program was to encourage small rooftop solar installations. When proponents realized how profitable bigger ground-mounted solar operations could be, they rushed to join the burgeoning green energy market.

The government balked at that promise in early July after being inundated with nearly 19,000 applications, largely from rural residents.

"Because of the great rate of returns available because of ground-mounted solar initiatives, it was swamping the program," Duguid told the Citizen this week.

On July 2, the province tried to dampen enthusiasm for the program, announcing through the Ontario Power Authority that it would only pay those early adopters 58.8 cents per kilowatt-hour.

That broken promise prompted a backlash in rural Ontario, where many residents had planned on installing small solar operations to supplement their income.

"They felt a little blindsided, because they had made their business decisions based on 80.2 cents. They bought their infrastructure based on those numbers," says Bette Jean Crews, president of the Ontario Federation of Agriculture, a group that lobbied heavily against the reduced prices. "There hadn't been any warning on this. We were concerned farmers would not be able to trust the government."

Resistance in rural Ontario was so strong that it reportedly threatened the re-election chances of nearly two dozen Liberal MPPs.

Late last week, Duguid changed course again, announcing the government will honour the original rate of 80.2 cents per kilowatt-hour for all projects registered before July 2. Applications received after that date will now be paid a rate of 60.4 cents per kilowatt-hour.

The new rate is dramatically higher than the current market price for electricity, which has averaged 4.02 cents per kilowatt-hour in Ontario since the beginning of the year.

It is unclear how much the exorbitant rates, designed to spur investment in green energy, will affect household electricity bills in the future.