TIMES-REFORMER: MONTE SONNENBERG - July 20, 2010
The province's decision to reduce the rate it will pay for small, ground-mounted solar-power projects has proven to be highly disruptive.
Thousands of would-be producers -- many of them farmers and rural residents -- have been forced to scrap their plans in response to the change. This has created repercussions for suppliers of solar infrastructure and financial institutions that have arranged financing.
"I'm, of course, disappointed,
as are many members of the farming community," says Wendy Omvlee of Nanticoke,
the Norfolk- Haldimand-Brant representative to the Ontario Federation of Agriculture.
"Surely they had to have done the math. It's extremely disappointing and
a big concern. How can we ever again put our faith in any other offer they might
Energy minister Brad Duguid caused an uproar July 2 when he announced that the Ontario Power Authority will only pay 58.8 cents per kilowatt hour for electricity from small, ground-mounted solar projects of 10 kilowatts or less.
The province originally committed to 80.2 cents per kilowatt hour. The lucrative terms prompted more than 15,000 applications. The 80.2 cents per kilowatt hour payout still stands for roof-mounted projects because they are more expensive to set up and maintain.
Duguid says the price had to come down on ground-mounted projects, otherwise the province would have to find $1 billion over the next 20 years to cover these generators' annual rate of return of 25%.
"That would have been irresponsible for us to have let it continue," Duguid said.
Contractors fortunate enough to lock in 20-year contracts at 80.2 cents will be paid in full. But more than 10,000 applicants who were awaiting approval have had to revisit their plans now that the payoff has been slashed. Many have aborted their projects because the business model is no longer viable.
Last week, OFA demanded the province "restore credibility to its Green Energy initiatives by honouring the terms already agreed to for production of solar energy."
MPP Toby Barrett spoke with a group of local farmers and entrepreneurs in Haldimand in the aftermath of Duguid's announcement. Many were preparing to get into solar generation in a big way. One young businessman had arranged $100,000 in financing from a local bank before Duguid changed the rules.
"He's done," Barrett said.
"He indicated to me that he had to walk away. He pencilled it out at 80.2
cents. He can't do it at 58.8 cents.
"These people were upset and bewildered. They thought they were dealing with the Province of Ontario, not some fly-by-night carpetbagger who tries to strip the trees out of your bushlot. Dalton (McGuinty) just pricked their bubble. He just pulled the plug. Even with the 58.8 cents, will this be good for 20 years? When will the province change the rules again?"
Mark Bannister of Vanessa is president of Diverse Green Solutions Ltd. and an agent for the clean energy equipment vendor Omniwatt Fuel-less Energy. While the province has slashed the rate of return on small solar projects, Bannister says there is still decent money to be made at 58.8 cents per kilowatt hour. Solar kits that meet the province's micro-fit criteria are available at a price that will produce an annual rate of return of 12.6% over 20 years.
"The micro-fit ground-mounted solar projects are not dead in the water," Bannister said. "There is a method of keeping them viable. There is still an opportunity here for farmers. At 58.8 cents a kilowatt hour, there is a viable solution."