The prospect of the Progressive Conservatives toppling Ontario’s minority Liberal government has several Ottawa solar firms looking at relocating to new markets, just as the industry starts to see higher returns at home.
© Etienne Ranger
Suzanne Cyr is the vice-president of sales and marketing at SolPowered Energy.
By Jacob Serebrin
Tory leader Tim Hudak has vowed to scrap the province’s feed-in tariff program, which pays renewable energy producers generous premiums for their power under 20-year contracts. He’s previously said that existing contracts would be honoured. While no election date is set, voters in the province are expected to go to the polls later this year or in early 2015.
David Cork, the vice-president of sales and marketing at iSolara Solar Power, said his firm would cease operations in Ontario if the FiT program vanished.
“We’d shut our doors,” he said, adding that the firm may move to another province that has, or is considering, an incentive program similar to Ontario’s FiT.
Other companies are looking even farther afield.
Suzanne Cyr, vice-president of sales and marketing at SolPowered Energy Corp., plans to look at opportunities in the Caribbean, which also has a FiT program, starting next fall.
The high prices paid to producers became a popular target for critics such as the Progressive Conservatives and others upset with rising hydro rates. However, supporters of the program say the premiums were needed to kick-start a nascent industry and could eventually be scaled back as the industry became more efficient and found economies of scale.
That appears to be happening.
This year, the provincial government will pay 39.6 cents per kilowatt-hour for small-scale solar rooftop installations. That’s down from 80.2 cents per kilowatt-hour in 2009.
Despite the lower prices, local producers say they’re still realizing similar rates of return. Part of that is due to the increasing level of experience of installers.
“What used to take us five and a half days now take us two and a half,” Mr. Cork said.
Another factor is a decision by the provincial government to drop a 60 per cent domestic content requirement for FiT projects following a World Trade Organization ruling in 2012. That’s helped to lower the prices installation firms pay for solar equipment.
Closer to home, Hydro One is upgrading the capacity of its Hawthorne transformer station. This will enable the provincial transmission system to better accommodate additional generating capacity and allow regulators to approve more projects, especially those on the larger end of the scale.
These factors, combined with a rush to sign new contracts with the province before an election becomes imminent, mean the next 10 months are going to be “very hectic” for the city’s solar industry, Ms. Cyr said.
Sidebar: Investing in solar
While outfitting large industrial rooftops with solar panels can cost millions of dollars, a local organization has found a way for individuals to invest in renewable energy on a much smaller scale.
The Ottawa Renewable Energy Co-operative started in 2010 and currently has 250 members, said Janice Ashworth, the group’s operations manager.
The group partners with local organizations such as schools and housing co-ops to fund rooftop solar installations. Co-op members front the money for the installation and equipment and receive an annual dividend. A portion of the profits are paid to the organization whose roof the installation uses.
The co-op is currently selling its second tranche of shares and hopes to raise $1.25 million, said Ms. Ashworth.
She said shares in the co-op cost $500, with a minimum purchase of five.
Shares are RRSP-eligible, she said, “which opens up another pool of capital that people have been putting aside.”
It’s a stable investment, she said: “There’s a guaranteed buyer, guaranteed rate.” According to Ms. Ashworth, the returns can vary between three and four per cent, depending on the amount of sunlight.
“It’s a relatively predictable business model,” she said.
Ms. Ashworth noted that the co-op draws a mix of investors: While some “people want to encourage renewable energy development locally,” others are interested in the stable returns on investment.
It’s a similar sales pitch to what David Cork, the vice-president of sales and marketing at iSolara Solar Power, uses when he’s trying to sell homeowners on rooftop solar.
He said those installations can generate a rate of return between eight and 12 per cent annually. And while other forms of investment might do that occasionally, “a stock isn’t going to do that every year for 20 years,” said Mr. Cork.