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Writing on the Wall

July 2010

It's July, and it's sunny & very hot. Not the best performance weather for solar electic systems, but great for solar heating systems for pools and hot water!!

A news article in the Saturday paper tells how the OPA has decided that ground-mounted solar electric (PV) systems under 10 Kilowatts will now only qualify for 58.8 cents per Kilowatt hour - down from 80.2 cents/kwhr. Apparently there has been a rush on pole-mounted tracking PV systems that they  say provides too rich a rate of return (ROI) to the installers & owners...

To solar PV companies this should be seen as a shot across the bow - if what you are selling is too popular, they will change the rules. As FIT applications mount and the amount of "alternative" electricity proposed exceeds some unspoken / unacknowledged maximum Gigawatt capacity (probably about 10 Gigawatts - an amount already exceeded), the OPA is likely to start dragging its feet on approving systems before it completely changes or shuts down the program.

The amount of negative public reaction to the FIT program should not be underestimated. In the next Provincial election - October 2011 - the FIT program could be targeted as a "steal from the poor to pay the rich" program. After all if you have $40,000 to $80,000 of cash to buy something as exotic as a solar electric system - you are well-off, and some would say rich. Raising the electrical rates across the province - which hits the poor and lower income earners hardest - to pay foreign companies (the ones building the multi-megawatt solar and wind farms) and those wealthy enough to be able to afford an expensive PV system - may well prove to be a hot potato that gets chucked into the fire. This is especially true when the real numbers about the cost vs. carbon dioxide reduction provided by PV come out. (Hint: PV produces very little in the way of CO2 reduction per dollar spent.) Also, there is the real phenomenon that people with PV systems actually start using more electricity than they did before they had a PV system. So, there may actually be no net electricity consumption reduction coming from residential PV systems - just a major increase in the cost of electricity for everyone else who doesn't have a PV system... That's going to be popular.....

The FIT program is becoming a victim of its own success, rapidly exceeding the alternative electicity capacity that can be actually installed in Ontario. Anticipate further reductions in the rates and longer approval times, leading to a virtual, if not complete, shut down of the program by or on October 2011. Solar businesses, you have been warned (yet again - see February's blog). The writing is on the wall, if you have the vision to read it….