The Ontario Power Authority (OPA) is inviting industry analysts to provide input on its proposed cut to rates paid for ground-mounted solar microFIT projects. This unexpected pricing shift stems from the overwhelming response from households, farms, and small businesses that sent in 16,000 microFIT applications since the program launched last year. Some analysts are concerned that the sudden rate change may impact consumer confidence in the Authority’s larger feed-in-tariff program. Others see the cut as a natural consequence of program growth and are confident in continued industry expansion and job creation.

Solar Jobs and Courses Continue to Be in Demand

The Power Authority stated that the tariff decline is necessary because of the unanticipated popularity of the program, which is mostly funded through rate payer dollars. The shift is not reflective of the entire renewable energy industry in Ontario or of possible future proposals to change its feed-in-tariff (FIT) program.

The proposed cut reflects steps taken by similar FIT programs in Spain and Germany - two countries that, due to overwhelming demand, had to scale back some of their incentives in order to keep their respective programs solvent. Khurram Malik, an Analyst at Jacobs Securities states, “The bigger program is about job creation. There may be tweaks in there … but nothing significant in our opinion.” Demand for green energy jobs, training, and solar courses continues to escalate.

MicroFIT Profit Cuts Minimal or Excessive?

Under the original program guidelines, microFIT projects must generate less than 10 kilowatts from ground-mounted or rooftop solar systems to receive $0.80 Canadian per kilowatt-hour produced. The proposal looks to cut that rate by 27% for any new ground-mounted solar contracts. Malik believes this to be a positive move for the industry as it illustrates the OPA’s commitment to the terms of contracts already awarded. While some believe that such confidence reassures the public of the OPA’s expanding interest in job-related training opportunities and solar installation courses, mounting criticism suggests that the change could backfire.

According to David Gower, Associate Director of Ontario Solar Academy, “Unilateral changes like this make proper budgeting and planning extremely difficult for the solar PV professionals who come through our courses.” He adds, “I understand the rationale behind the proposed change, but a shift like this warrants greater discussion and input from all relevant stakeholders.”

Corporate Commitment to the Feed-in-tariff
Some analysts perceive the rate change as problematic for the Authority’s larger feed-in-tariff program. The uncertainty surrounding the microFIT program resonates with corporate renewable energy producers. Dundee Capital Markets Analyst, Ian Tharp, stated, “The lack of transparency in the decision has several stakeholders casting doubt on the future of the Ontario FIT program.”

However, Malik disagrees that Ontario would make such sudden changes to its more significant feed-in-tariff program. The program has already attracted global green energy manufacturers, including South Korea’s Samsung C&T Corp and Bosch Solar Energy AG. These companies have created many new jobs across Ontario, opening up new training opportunities, and boosting demand for solar energy courses and installation certification. Other large investors are eagerly looking to participate and commit to the program’s 20-year contractual terms. It is possible that many would-be FIT applicants will wait until the OPA has finished making its decision about the microFIT before moving forward with their own solar proposals.