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Ontario's New Solar Industry

Ontario's New Solar Industry                          

February 2010

In the past 12 months the solar industry in Ontario has grown in leaps and bounds. Solar sales companies have sprung up like mushrooms - almost overnight. Solar manufacturing companies from Europe, Asia and the US have set up or are setting up branch offices and/or assembly facilities.

All of this activity has been the result of the provincial Feed-In-Tariff program. Before the FIT program there was another less-lucrative program called the Standard Offer Contract or SOC. That program resulted in a few sales as its buy-back rate for the electricity generated was only about half as much as the best rates available under the FIT program. Basically this proved that without massive subsidies there is no market for PV in Ontario.

Many of these new solar sales companies have no solar experience of any kind. The individuals who start-up these companies attend a couple of courses provided for free by the manufacturers or distributors of a given solar product. They become members of CanSIA (which anyone who has $400 can do). They whip up a web-site using stock photos - usually from solar PV installations in German - and manufacturers' stock information. They'll proclaim that they are helping people save the Earth, and start quoting the supply and installation of PV systems as quickly as they can.

Because these new companies lack any experience installing solar (and most have never installed anything - their previous job as a financial analyst didn't involve climbing ladders), their idea of what it costs to design, supply and install an electric generating system is way out of line with the true costs of staying in business. The competition is fierce because there are so many new, inexperienced companies vying for business from a limited number of wealthy residential clients. (One has to be wealthy to have $30,000 to $50,000 to buy a piece of equipment that can provide an 8% to 10% return on the "investment" - the "investment" doesn't work if you have to borrow the money!!) Inevitably it's going to be a race to the bottom of the quotation barrel. New companies are going to find that they are losing money, that  their costs are much higher than they thought, and they will cut corners, cut staff and cut-out. Many poorly installed PV systems are going to end up being thrown up on roofs in Ontario.

So what happens to all these new solar companies when the massive buy-back subsidies are significantly reduced or they disappear entirely? (October 2011) There is no real market in Ontario for anything other than solar pool heating - and it's a very small, highly competitive, shrinking market. Solar hot water systems, for both residential and commercial applications have long paybacks, that without a significant subsidy cannot be sold.

95% of these companies will disappear within one year - the smart ones will get out faster. Hundreds, if not thousands of PV solar systems will become "solar orphans", as those in the solar industry call systems with no installation company. A large collection of probably poorly installed PV systems will remain, leaving a blight for the remaining solar companies to clean up.

I'm not looking forward to the chaos of the next two years and cleaning up the mess left behind.....