Summary
In September the Ontario (Canada) Government issued a Ministerial Directive in support of an electric grid Feed-In-Tariffs (FIT). Offering the most attractive payments anywhere - a Strategy intended to replace Coal Fired Power Plant by 2014; a move that could prove to have great impact on Solar financing, but the Political Imperative dictates that Manufacturers must meet a Domestic Content quota of 50% going to 60% in 2011 a target that can only be reached if Production takes place in Ontario.
Analysis
On September 24, 2009 the Minister of Energy of the Ontario Government issued a Ministerial Directive in support of a Renewable Energy for electric grid Feed-In-Tariffs (FIT) Program. The announcement placed emphasis on a higher Tariffs than currently is in evidence anywhere - a Strategy born out of the Green Revolution in order to replace Coal Fired Power Plant by 2014; a move that could prove to have a very positive impact on the near term Financing of Solar Systems in Ontario. In order to benefit from the Government of Ontario's Solar bonanza - the Political Imperative dictates a Domestic Content quota (meaning Ontario Content) of 50% going to 60% in 2011 - a target that can only be reached if foreign Manufacturers of Solar Panels and Inverters establish production in Ontario. At a time when Canada is championing Free Trade with US and the EC, it raises much concern with the Manufacturers of Solar equipment particularly Solar PV panels outside of Canada that want to participate, but fear that Ontario will only have a limited period of time for its FIT Program, which makes building an Industry at best very risky (Ontario Labor cost cannot compete with low cost production areas, limiting potential for export - making major investments in establishing Production unwise).
Some feel that the dual objective is driven by a need to replace lost Automotive jobs by jobs in the Renewable Energy field and at the same time retire Coal Fired Power Generation – as with most dual purpose, it appears not to serve either objective well and despite offering the world’s highest Feed-In-Tariff, the Ontario Content Rule may have the seeds of failure built in.
Some feel that the dual objective is driven by a need to replace lost Automotive jobs by jobs in the Renewable Energy field and at the same time retire Coal Fired Power Generation – as with most dual purpose, it appears not to serve either objective well and despite offering the world’s highest Feed-In-Tariff, the Ontario Content Rule may have the seeds of failure built in.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
