Exorbitant rate of return – onslaught of applications

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The provincial government says it can’t afford to pay the current rate to homeowners with small, ground-mounted solar power systems who sell power back to the grid.

The Ontario Power Authority has proposed dropping the rate to 58.8 cents per kilowatt-hour from the current 80.2 cents.

Ontario Energy Minister Brad Duguid said keeping the current rate would cost taxpayers more than $1 billion over the next 20 years.

“There was an exorbitant rate of return on this and it brought on an onslaught of applications because there was huge money to be made,” he said.

“In fairness to Ontarians, we have an obligation to stand up to ratepayers.”

Last fall, the Ontario government introduced a feed-in tariff program so producers could sell solar power back onto the grid.

The Ontario Power Authority said its microFIT Program — which is for homeowners, businesses and farmers feeding 10 kilowatts or less into the power grid — has become far more popular than anticipated.

In a release, the authority said it had received more than 16,000 applications for solar projects — the majority of them for ground-mounted solar systems — since the province’s announcement in October.

It said lowering the rate would ensure the “long-term stability of the program.”

Price drop to hit industry hard

One Ottawa company estimates it will lose $1.5 million in contracts if the price drops.

Peter Glover is with Ottawa Solar Power, one of 40 local companies that install solar energy systems.

Glover said many customers currently waiting for the province to approve their solar applications have cancelled their contracts in anticipation of the rate drop.

“I don’t know why they introduced something they couldn’t follow through on,” Glover said.

“They’ve just knocked their program’s success rate down by 75 per cent, say, and is that a successful program anymore? It’s hard to have faith in what people say.”

Glover said he is already dealing with customers furious about the proposed rate change.

“The range of reaction has been extreme disappointment to complete outrage. They are really, really disappointed,” he said.

“Of all of them, only one of them has contemplated signing on at 58.8 cents. The rest say that there’s no way that they’ll do it. We’re going to lose about $1.5 million in contracts and, in one or two instances, we’re going to have to pull out the equipment we’ve installed there.”

Resident Tim Pychyl, who was considering generating green power on his farm, is rethinking the investment after hearing about the drop in price.

“We thought, ‘Well done, Ontario government. You’re really looking ahead here. We’ll get on board with you,'” he said.

“And now when they change the terms in the process — will you do that to me 10 years from now? Right now the government isn’t giving me the confidence that I want to partner with them.”

Those who have already signed a 20-year contract with the Ontario Power Authority will continue to receive the original rate. In addition, those with rooftop solar projects will continue to be eligible for the higher rate.

The Ontario Power Authority is hosting a webinar to discuss the proposed changes on Thursday. It is also accepting comments and feedback by mail or email until the end of July.

13 thoughts on “Exorbitant rate of return – onslaught of applications

  1. Why worry now Brad. ??…The deficit is still forecasted at $21 Billion and the bill for the FAKE Green Energy Act is well over $20 Billion already….

    Oh Oh..there goes the FAKE Green Jobs that were being advertised…

    It’s getting pretty evident that the Green Energy Act is just a political scheme and it’s being made up as the Government goes along…

    When is the Government going to ever be good at doing something ??? with Taxpayer monies ?

  2. I am shocked I tell you! Shocked! This is unprecedented worldwide!

    It’s appalling!

  3. Did the minister place an unreasonable burden on the English Language?

    [youtube=http://www.youtube.com/watch?v=8keZbZL2ero&feature=related]

    Maybe so…

  4. The dishonourable Brad Duguid declares:

    “In fairness to Ontarians, we have an obligation to stand up to ratepayers.”

  5. It’s an outrage!! All optics for the election. The amount of solar electricity they are talking about is only 20MW and thats going to save us on our bills?? NO WAY

  6. This is just a little different that what they’ve done previously.
    Actually, I guess it is we who have done it, as it is our government.

    When the second 2500MW of FIT contracts were announced, they included only 1 award for offshore wind (Wolfe Shoals), and one large rooftop solar contract (City of Kitchener if I recall correctly). Both struck me as exceptions for legal protection as many applicants had incurred the expense of applying for something that clearly the government was getting resistance on.

    Now we have 5km on offshore, and this rollback and clarification on rooftop.
    I’m almost not contemptuous of Duguid.

    Of course I still don’t see why ratepayers would care if about the on-shore, off-shore distinction …
    I’m not all that worried about the solar/hydro distinction either.

  7. What is rather telling is…..according to a solar contractor, rooftop solar panels are cheaper to install than ground panels because the base is already there. Yet, the Minister thinks it’s the other way around.

    Once again, I don’t think this government has a clue what they’re doing. Not a clue.

  8. MA
    Rooftop panels are cheaper to install but their profits are lower than the more efficient (but expensive)ground mount tracker sytems.
    Also when the government talks about 30% profits, its not the solar panel hosts that are reaping in 30% (they only make a 10% ROI) The 30% applies to the whole solar industry from the manufacturers, to the middlemen, salesman (huge commisions) to the actual homeowner or landowning host.
    They all have their fingers in the pie and the pie has gotten a lot smaller.
    Just wait, the price of these ground mount solar systems will drop all of a sudden with this new pricing.

  9. Sam:

    Good points — I will be watching.

    Maybe it will soon be time to order for the camps. 🙂

  10. Sam, you seem to be up on this.
    Maybe you can answer a question for me a little bit off topic.

    I’ve read in China there are over 30 million households with solar hot water heating.

    Why is it so much more expensive here?

  11. “Right now the government isn’t giving me the confidence that I want to partner with them.”
    Yep, no confidence. Bad business partners. The New Green Economy is bad business.

  12. Scott,
    In China solar water heating means putting your hot water tank on your apartment roof. The tanks are black plastic and preheats the water (due to the black colour of the tank and all of the heat collecting on the flat roof) and then goes to the actual water heater before it comes out the tap.
    Its essentially a very efficient low cost passive system.
    You can see them in many third world or developing countries. Maybe they are not so backward after all??

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