When the incentives run out

Ontario ratepayer

By Chris Vander Doelen, The Windsor Star

Not everyone is as delighted as Mayor Eddie Francis by the string of solar and wind energy projects being touted as the economic salvation of the Windsor region.

Some skeptics think the renewable energy boom gathering steam in Ontario is nothing more than a flash in the pan, ignited by government incentives.

Once the government money runs out — and it will, because subsidies are always unsustainable — watch the province’s fledgling “green” industry go poof, the critics say.

The media should be pointing out such pitfalls, one local business guy complained to me this week.   “How about the other side?” he challenged via email after reading my approving Tuesday column about the economic potential of having a cluster of local renewable energy companies set up here.

“The truth … these companies are setting up shop because the government has signed 20 year lucrative contracts (paying) 80 cents per kilowatt hour when the consumer is paying around six cents,” he wrote.

Under Premier Dalton McGuinty’s “green” energy plan, he complains, consumers will pay subsidies of up to 74 cents per kilowatt hour for renewable energy that is still only worth six cents on the market.

“This green energy is not as good as it is being presented.”

On Tuesday I put some of those worries to the two principals of Solar Source Corporation, the Canadian/Indian partnership that intends to be assembling solar panels in Windsor by December.

Solar Source hopes to have 150 employees in place by the end of the year so it can produce crystaline silicone photovoltaic panels in a “clean room” environment, in a new building built for them by Windsor Airport.

Solar Source wants to produce 30 megawatts per year in the first of four planned phases, in the form of 300-watt panels that will measure one metre by two metres each.

Solar Source estimates it will be able to pump out 330 to 350 of these big panels per day in its first year of operation, or 300,000 per year. Additional phases of 30 megawatts of annual production will be added as market conditions warrant.

“There’s big demand,” says Ross Beatty, president of Solar Source. On Jan. 1, 2011, a new Canadian-content rule comes into effect for subsidized solar projects in Ontario, “and we want to be the first company able to produce made-in-Ontario panels.”

There is no doubt their plant will go like gangbusters once open. The Can-Con rule will force developers of solar farms to find local sources for their panels rather than importing finished panels from Korea and Germany.

So what happens when the incentives end? Beatty is unfazed by that question. “I don’t think anything in government is permanent,” he said with a reassuringly cynical grin.

“But we don’t believe (the boom) will end if Ontario turns off the tap. We’re still at the beginning — the industry is in its infancy.”

Prasanth Sakhamuri, managing director of HHV of India, Beatty’s joint venture partner in Solar Source, agreed. “These types of technology need to be supported by government at first. But once it gets rolling …”

Ontario happens to be the first jurisdiction in North America offering a feed-in tariff or subsidy to new renewable energy sources. Other provinces and states are bound to follow suit with their own FITs, further driving demand. But it won’t end there, Solar Source says.

Germany’s solar panel industry continues to be robust despite the subsidies coming to an end in that country, Sakhamuri says. Besides, he said, “we make the best quality panel today in the world.”

That’s likely not a boast. Sakhamuri is the second generation of a family which helped transform their home town of Bangalore, India, into that country’s silicon valley.

In the 1960s, electronic vacuum tube equipment produced by Sakhamuri’s father for the Indian nuclear industry helped propel Bangalore into India’s leading technological city. Today, HHV (for Hind High Vacuum) employs 750 people.

Solar Source will import panel-finishing equipment from HHV India which will be used to apply electrical overlays and final coatings on glass panels also imported to Windsor, which will then be installed in metal frames for final use.

And Windsor, being nearly in the geographical centre of North America, is the perfect place to put a stake in the ground to quickly mark their territory, Beatty says. “The largest market for energy in the world is right here, right below us.”

That sounds to me like a business plan built on exports, not subsidies. Here’s to their great success.

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