Stop-start Ontario solar rush will soon restart … maybe

The lack of clarity shrouding the start date of the two-month scramble for new projects – and it is not yet clear if it will be limited to two months for large-scale ground-mounted schemes – is typical of the delays and set-backs which have afflicted the solar industry in the province, according to Antonio Antonopoulos, vice-president, technology, for solar developer CarbonFree Technology.

"The FIT system and the way projects are developed in Ontario differs from how it works in countries like Germany, where projects are built without any long-term, cast iron guarantees on the level of FIT available," Antonopoulos told pv magazine.

"In Canada, before you develop your plant, you apply for a FIT at a set price and that price is agreed for the length of the PPA, for instance for 20 years. Because the previous FIT scheme was so generous, there were lots of applications at a generous level and as the price of building a plant continued to fall because of the falling costs of polysilicon worldwide, developers who had negotiated to develop projects waited as long as possible before actually building."

The previous regime permitted developers a three-year window before projects had to completed, rising to four years on payment of financial penalties. For that reason the majority of the projects in development today are historic ones dating back three years.

Back in 2007-08 the provincial government-owned but independent Ontario Power Authority (OPA) was offering CA$0.42/KWh, prompting a scramble to secure that tariff under 20-year PPAs, with the result that some 260 MW of installed capacity arrived in 2011.

Since then, with the OPA overwhelmed by the flood of applications under a solar gold rush, and the government under pressure from lobbyists angry that the FIT terms were overly generous, things have ground to a halt with, for instance, the OPA not processing a single mid-sized ‘rooftop’ application since December 5, 2010.

Under a new regime, expected to come into force this month or next, there will be a two-month window for microfit (up to 10 KW) and rooftop (10 KW-500 KW) applications, with a 200 MW limit for the latter and a 50 MW limit for the smaller household-scale installations, "the price of electricity in Canada means you won’t start a project of there are no FIT payments to support it," added Antonopoulos.

Further doubt surrounds any limit for the 500 KW+ ground-mounted projects although, as Antonopoulos pointed out, it is certain to be less than the 5.1 GW of projects waiting in line to be developed at the utility-scale end of the market, particularly as Canada has no demand for additional installed power capacity.

There is further doubt over the final level of FIT on offer once the new regime takes off. It is expected to remain relatively generous, although Antonopoulos is predicting it will probably fall again once the development window opens.

On top of that, the biggest handicap to a reliable flow of solar projects still remains in place. Although interested players further down the solar chain have successfully negotiated a reduction in the delay permitted developers to 1.5 years for microfit and rooftop schemes, the three year period still applies to the largest category, as well as extending towards any rooftop developers with multiple projects totaling more than 15 MW.

The changes cannot come quickly enough for Ontario’s module and panel makers with a predictable glut of companies establishing bases in the province to fulfill strict domestic content requirements during the initial solar surge. The eventual stalling of developments saw Sharp halt production and others like Siliken and smaller players close down just as swiftly as they had arrived.

"Once the new rules are in place and the backlog of applications starts to clear, I think the situation will improve," added Mr Antonopoulos, "It’s hard to predict how many projects will be going ahead in 2013 but there could be around 400 MW of ground-mounted projects with most of them historic 10 MW-size developments. I think most of the utility-scale schemes will be built in 2013-14."

A 49 MW-sized chunk of that figure was supplied today with the news that Deutsche Bank is providing $139 million of construction financing for five utility-scale plants being constructed in the province by Chinese developer Canadian Solar. The projects are expected to be built and generating this year and next and will be acquired by TransCanada Corp under an agreement signed in December 2011 with the sale proceeds paying back the German bank.

Mr Antonopoulos was also cautiously optimistic about smaller-scale installations under the new rules, adding, "For the rooftop, mid-size category, again most of the developments will be historic projects that could amount to about 60 MW and we could see full take-up of the 50 MW allowance for microfit but of course it all depends on the level of FIT available."

Everyone involved in solar in Ontario will be hoping the provincial government and the OPA can remove the remaining question marks sooner rather than later.