Ontario Introduces Feed-In Tariff, Other Renewable Energy Initiatives (50,000 new Canadian jobs)

[jpak]

http://www.solarindustrymag.com/e107_plugins/content/content_lt.php?content.4040

The province of Ontario has rolled out a series of new measures designed to attract new investment in renewable energy projects and build a green economy that will promote the creation of 50,000 jobs over the next three years.

According to the government of Ontario, the initiatives include the first comprehensive feed-in-tariff (FIT) program in North America that guarantees specific rates for energy generated from renewable sources. The FIT is designed to encourage the development of renewable energy projects by a range of generators. Prices are intended to cover total project costs and provide a reasonable rate of return over a 20-year contract.

FIT payments can range from C$0.10 per kWh for landfill gas projects larger than 10 MW to C$0.82 kWh for residential solar rooftop projects 10 kW or smaller. The FIT also includes a price adder for Aboriginal and community projects to encourage participation.

Developers will be required to have a certain percentage of their project costs come from Ontario goods and labor at the time they reach commercial operation, the minister's office adds. For micro solar PV (10 kW or smaller), this requirement will start at 40% and increase to 60% on Jan. 1, 2011. For larger solar PV, the requirement will start at 50% and increase to 60% on Jan. 1, 2011.

<more>

[GliderGuider]

1. This seems like good news.

My friend Stoneleigh from The Automatic Earth has been working hard on this, representing biogas power producers. I'll ask her opinion of it when I see her tonight - she wasn't at all supportive of Ontario's previous effort, Standard Offer Contracts.

[excess_3]

2. easy to cheat

sell 'grid' power' as solar,

buy at ten cents,
sell at 82 cents

pocket the difference
everybody wins

[kristopher]

3. Is that like Al Gore is going to get rich by ... what was that again - you never said.

You seem to be astute at finding these huge loopholes in the system. Congratulations.

[GliderGuider]

4. The main flaw Stoneleigh finds with this policy

is that you must sell all your power into the grid, and then take your power consumption from the grid. No battery banks, no opting out and using your PV/wind power directly for yourself. So the policy is predicated on the assumption that the grid will always be available. That may or nay not be a safe assumption depending on where you live.

[kristopher]

5. Perhaps the policy isn't designed around the fears of doomers...

I haven't read the specifics of the plan (but it is available for download here http://www.powerauthority.on.ca/FIT/ ) so I'm taking your words at face value. Feed-in tariff policies are designed to build renewable infrastructure and encourage the development of a manufacturing base to support it by providing a guaranteed revenue stream that is attractive to investors. The purpose of that goal is to transition the energy systems AWAY from fossil fuels.

One additional long term consequence will be to help reduce the cost of solar systems and make them more affordable for homeonwers who want to go off the grid. Perhaps Stoneleigh should consider laying out the money for a private system herself if she wants to ensure her personal access to electricity more quickly.

From the above link:

WHAT IS A FEED-IN TARIFF AND HOW IT WORKS

* “Feed-in Tariff” refers to the specific price paid to renewable energy suppliers for the green energy they produce.
* It guarantees market-viable prices for electricity generated from renewable energy sources and provides a reasonable rate of return for projects of different types and sizes. It includes standardized program rules, prices and contracts. The rates are based on the size of the project and the type of energy used to generate electricity.
* A Feed-in Tariff helps spark new investment in renewable energy generation by offering proponents easier access to financing and the energy grid, and a streamlined approvals process.

[GliderGuider]

6. It also doesn't accomodate the needs of those who wish to prepare for ice storms.

You don't need to be a doomer to want a PV backup system in your house.

[GreenPartyVoter]

8. We went for ten days without power, heat, or running water during the ice storm of '98. I was 8 mos

preggers and came down with a bad case of influenza. Would have been lovely to have had a way to get the power and furnace back on.

[kristopher]

11. Buy a small back up generator. They run about $100/kw.

The end result of this policy is going to provide you with a much more secure energy supply. I think we all need more details on the day to day way the system would be designed before you can say the power it produces wouldn't be locally available in cases like you are talking about.

[kristopher]

9. No, you don't.

But trashing a fantastic policy move towards eliminating fossil fuels for that motive just seems a bit skewed to me. Buy a freaking 2Kw generator for $200.

[GliderGuider]

13. Stoneleigh wasn't trashing the policy by any means

Certainly not compared to the new asshole she ripped in the Standard Offer Contracts. She was just pointing out a restriction she felt was inconvenient and unnecessary. She also has a 3 kW PV system on her farm, so there's a degree of personal involvement as well. If this was the worst flaw she could find in the policy, I'd say it passed with flying colours.

[GreenPartyVoter]

7. I have huge problems with that. I think people should be allowed to have batteries for those

times when the grid goes down.

[kristopher]

10. There is no reason you can't have batteries.

They would just have to be charged from house current that you buy for maybe 10 cents a KW. Meanwhile, you would be selling the solar output for 82 cents kwh.

Trust me, when you understand it you will probably want to do it.

[GliderGuider]

12. If the grid is down, that's good for one charge

Unless you can re-route the PV output from the dead grid to your batteries. This is all brand-new, so I doubt all the nuances have been investigated. Some may even be tested in courtt if they appear too onerous or restrictive.

[excess_3]

14. a 20X subsidy is uncalled for

who else get 20 times the value to society,
for their product

[kristopher]

15. It isn't a 20X subsidy.

Locational marginal pricing, peak demand, and the avoided costs of fuel.

these factors combine to make the averaged wholesale costs of peaking power much higher than averaged retail prices.

The actual economic tradeoff will probably no be so much of a subsidy as a redirecting of funds that would otherwise go to pay natural gas generation that will be displaced as the source peaking power. As the utilities are directed to buy the renewable electricity they will not need the natural gas generated electricity. The price paid probably represents very close to the market price of peak electricity on the hour ahead market.
What the government is doing is stacking the deck in favor of who will sell. This is going to result in some inefficiency and over time the mandated price might cost ratepayers/taxpayers a total of a few percentage points more than business as usual. However that statement doesn't take into account any value that might be forthcoming in the decline of solar prices from improvements in infrastructure and increased manufacturing capacity.

As wrong as it is, I don't even see where you got 20X.

[excess_3]

16. wholesale price of electricity is less than 37 bucks ...

wholesale price of electricity is less than 37 bucks per
megawatt-hour, 3.7 cents per kilowatt-hour
http://www.bloomberg.com/markets/commodities/energyprices.html

I assume Canadian prices to be comparable to those in the US

82c, 3.7c. do the math

[kristopher]

17. I know what you meant. It is wrong.

You totally ignored the keywords I gave you. Why is that, do you not want to know the truth?


I don't have the data sets used to form the price they are offering, but it is as I said, the price almost certainly reflects the real cost of providing peak power under the current system. I just checked some old data (2002) for Ontario and found exactly what I expected - peak power often tops $100MWh with the highest I saw being $399.

There is a reason for this that relates to the way the system is structured to provide electricity. You'll find the fundamentals of that reason here: http://en.wikipedia.org/wiki/Electricity_market#Wholesale_electricity_markets

This is the link for Ontario Independent Electric System Operator
http://www.ieso.ca/imoweb/marketData/marketData.asp

Then go to this link and download the 2002 data set to confirm the numbers.
Hourly Ontario Energy Price (HOEP)

If you want to understand better, look for a graph that shows the daily contributions to the amount of electricity provided by type of contract (Long term, week ahead, day ahead, hourly, half hour, 5 minute) and then figure out what the average prices are for EACH of those market. THEN figure out what will be displaced by the renewable program. Average out all of that data THEN compare it to the price mandated by the program.

20X is so very, very wrong.

[excess_3]

18. a subsidy of 10X, is still uncalled for

avoided cost of fuel, if the cost of NG was a
'normal' (instead of low recession price)
6 bucks per MMbtu,
avoided fuel cost would be about 6 cents per kwh.

......................................
my computer can't open up a 'csv' file, sorry
......................................

I am not against reasonable subsidies,
how about paying 2x of avoided cost?
Solar PV is a mature technology, IMO.
....
consider fuel ethanol, the subsidy is about
0.4X, (forty percent), and a huge industry sprang up.

solar PV does not even show up as a separate
number in EIA data, PV is lumped with 'other'.

(wind is 2 percent of US electricity, BTW)

[kristopher]

19. I explained that you don't have the data to conclude the subsidy.

You are looking at ONE averaged figure that DOES NOT represent the value of the renewable input into the system. Therefore you cannot get a valid conclusion from the data you are using.
I provided you with that example to show you that not only was your initial number grossly wrong, but that your approach was so simplified that it was unworkable.
Remember, these programs are under close scrutiny by people who DO know the numbers. You can be sure that the problem has been closely scrutinized by economists looking it using a variety of assumptions. It is very possible to achieve the objective of attracting capital investment into the sector without huge subsidies. What the investors are looking for is more of a guaranteed revenue stream. That is something a government can provide with rulemaking that redirects business - which is what this is. IT doesn't cost anything to predict what the value of the electricity is going to be and GUARANTEE that a certain technological sector will get the business. That promotes competition in that sector (spurring tech development) and funds it with cheap money by removing uncertainty for lending institutions.

The main *costs* involved is potential loss of value to the owners of existing power plants and some sacrifice in short term "economic efficiency" due to the rules restricting competition to within the sector.

If someone were a right winger that would be the valid point of attack; but frankly due to long term gains in efficiency it isn't a winning one either.

[kristopher]

20. Forget something

If you have Excel or something similar to it, that will probably open the file.