The solar industry stands at a crossroads. As we work to create a better future for energy generation in Ontario, we continue to carve out the path for green energy in our province. The Ontario government’s Feed-In-Tariff program is allowing us to build the network that will support our future green energy needs and goals – including the closure of the province’s seven coal-fired power generation plants – but costs within the industry continue to soar due to ongoing legislative uncertainties within the program responsible for the creation of the industry as a whole. A balance must be met.
In a recent industry review, Solar Power Network took a hard look at the overall solar industry, the needed commercial rate decrease to create an enduring program and overall global cost parity, and the ways by which this can all, simultaneously, be met to solidify the industry’s development. In order to create a strong foundation for the industry, Solar Power Network estimates that the current commercial rate must decrease to 60¢/kWh in the immediate future – a 20% reduction.
For this to happen, the FIT program must be allowed to run its full course, as established, before facing scrutiny on a political level in order to fully develop its potential. With this legislative stability and a commitment to the future of green energy in Ontario, four key cost centres will be addressed in an immediate and significant way. These costs include:
Manufacturing – As the industry faces a lack of consistency in orders due to the unpredictable nature of the timing for Ontario Power Authority approvals, which is compounded by the recent announcement of retroactive changes to the criteria for approvals, this makes it difficult for manufacturers to predict the volume of needed raw materials, manpower and ultimately, future revenues. Due to this lack of certainty, manufacturers are unable to lower their cost to the industry. These companies don’t know when the next batch of projects will be approved, and without this consistency, manufacturing prices remain high, even by global standards. Given stability within the program, these rates would quickly drop.
Engineering – With a lack of predictability in upcoming project and streams of revenue, much like with manufacturing, engineering costs for creating solar systems unique to each rooftop space, remain at a high. The lack of stability makes it difficult for these firms to create a streamlined service given the ebb and flow of the ONTARIO POWER AUTHORITY approvals process. With a steady stream of clients and thus, approvals, engineering costs would also decrease.
Financing – The lack of legislative stability within the FIT program effects financing in probably the most profound way of all the cost factors involved. Due to instability alone, major financial institutions consider the solar industry a high-risk investment and without the support of the banks that support the growth of the vast majority of Canadian industry, the solar industry must work with private investors, which comes at a premium. Without a firm and ongoing commitment from the government, these costs will remain high. Once stability within the program is achieved, the major banking players will get involved, resulting in a quick and dramatic decrease in costs, which in turn, results in a decrease overall commercial rates.
Installation – Much like manufacturing and engineering, the cost of installation remains high due to the instability of incoming projects from Ontario Power Authority approval. Given consistent and lasting legislation, the cost of installation will fall as well.
A decrease in commercial rates is within our reach. With the ongoing and continued support of the Ontario government, the potential for the FIT program is astronomical. The government has officially made the decision to close our dangerous coal-fired power plants, and something must replace that energy source.
The time for stability is now. With progressive companies like Solar Power Network working to create a clean, healthy environment for future generations, the infrastructure is all in place. With global cost parity within our reach, how can we deny an energy source as renewable and reliable as the sun.