OPA reduces incentive for ground-mounted solar power

At 80 cents the math worked to make the risk associated with the program reasonable. At 58 cents, the incentive is not there and I can promise you, you will lose your shirts if you sign on to this program. I am a science and business teacher, and had applied for 5 microFit set ups, but will not even think about it now.

This is a sad day for the microFIT program

Being a solar installer and being at the grass roots of what is going on here I believe its not the cheap price of a tracker that is the problem. Look at the figures yourself.

Rooftop 40%
PPW return ROI % yearly total after cost
5.76 $10,343.3 6.15 16.26 $206,860.62 $143,252.30
---------------------------------------------------------------------------
Rooftop 60%
PPW return ROI % yearly total after cost
7.45 $11,155.77 7.47 13.39 $223,115.77 $139,808.56
---------------------------------------------------------------------------
Tracker 40%
PPW return ROI % yearly total after cost
8.71 $14,623.75 6.58 15.21 $292,475.00 $196,318.43
---------------------------------------------------------------------------

Tracker 60%
PPW return ROI % yearly total after cost
12 $15,165.02 8.5 11.76 $303,300.41 $174,324.22
--------------------------------------------------------------------------
PPW= price per watt

Do the math; the trackers are actually less return on investment. The difference is that it maximizes the sunlight during the day to make up for its larger cost.
I do believe what is going on is politics.
During the months between the release of the Green Energy Act and the first contract offering the OPA said this would not work without the infusion of 60 billion dollars to upgrade the power lines to allow for the extra generation. The fact is that microFIT reduces the load on the system by producing the power where it is needed, reducing loss in the transportation of the power from the Nuclear, Coal or Hydro facility.
Hydro One was also opposed saying it will not work.
One year latter we have some Hydro companies charging nothing for the service of disconnect and reconnect and meter change. Hydro One is charging $1350.00 for the same service. Niagara Peninsula Energy had a meter in place the same day as the ESA inspection. Hydro One has been telling people that it can take up to 6 months for a meter placement.
I believe our representatives have been once again given poor information by the powers that be in an effort to fulfill their own prophesies.

What will this do to the microFIT program?
During the Cansia conference back in Dec 2009, the one thing that industry asked for was a stable program, one where the rules did not change in mid stream. The reason that this was so important was so that businesses could plan their business strategies with no surprises. This way companies could come to Ontario, open factories and hire skilled labour in order to boost our manufacturing base here in Ontario. In order to make sure that this would happen, the Ontario Government made an Ontario Content Rule of 40% until Jan 1st 2011 and then 60% Ontario content after that. In the months since the first contract offering companies have been slow to come to Ontario for fear that the government may change the rules.
Here we are July 2 2010, Friday at 3:00pm on a holiday weekend the OPA releases the NEWS of the price change.
How is this self fulfilling prophecy?
The OPA contract stipulates that if the meter is not in place by Jan 1 2011 that the system will require 60% content up from the required 40% content for the first year.
Since the beginning of this year the OPA has been dangling its feet in regards to releasing contracts. Being that Ontario Hydro says 6 months to have a meter placed and because the OPA has not been releasing very many conditional contracts, there are a lot of companies getting very nervous since they stocked up on imported parts. What happens when supply gets large and there is no demand? Prices go down. The few contracts the OPA has released have had many companies bidding on the few systems and the company that wins is the one that "just want to get a system in place and will almost give it away to do so. Yes again, prices go down.
As a retailer and installer, one thing we hear from our potential customers is, I won't invest in anything the government has their hand in because "I can't trust them". They will change the rules and I'll lose large. In fact once a contract is in place it is a contract and it cannot be broken so if you are in you are OK, there is nothing to worry about. What it does do is affect consumer confidence.

Conclusion
In fact it doesn't really matter to me whether the price is 80 cents or 58 cents per KWH, it is what it is. Even at 58 cents it is still a good investment. The problem lies in the damage that just the announcement will do and I'm sure has done already. Scaring away potential customers is one thing, the damage done to the companies looking to invest in the Ontario market means a loss of all those jobs that were promised. What companies are going to invest millions of dollars in an atmosphere of government distrust? If they changed the rules once who says they won't change it again. How can you build a business plan on that.

Dan Holtl
President
Go Solar Canada
info@gosolarcanada.ca
www.gosolarcanada.ca
519-500-0574

My wife and I applied for a 10 KW system on March 4. How could it take so long to approve since all we are waiting for is a conditional offer? Now the answer is clear. OPA has been just sitting on applications. More math: How long does it take to approve an application? OPA must check that you are a Hydro customer. That's about it. Let's be kind and allow them a whole hour to do this. 16,000 applicants at one hour each is, let me see, 16,000 hours =2000 person days. Put a few people on it and a couple of months is plenty. We applied in good faith, formed a business, cleared some land, checked on the insurance situation, spoke for a couple of hours with a contractor, talked with the bank... All wasted time because at 58.8 we are walking away. I applauded the microFIT initiative but this latest nonsense and the arbitrary removal of my rights at the G20 mean that my vote will not be for McGuinty in the next election...

This is another example of the government waffling on the MicroFIT program, which only proves to potential investors (both in manufacturing operations and also in projects themselves) that this is a bad place to invest.
Launch a program, stick with it, and do your homework ahead of time rather than wait for the applications to flood in to prove what everyone in this fledgling industry knew from day 1 -- that ground mount MicroFIT's would be the obvious winners and the best use of investment capital.
Not only does the OPA's tariff reduction reduce 20 year power payments by $750-million, but it largely hits the farming community where such payments are so badly required.
It's absurd to think that a quasi-government entity knows full well how consumers can get the best return on their investment dollars, and then purposely knocks this option off the list of potential investments.
Welcome to Ontario -- the land of the inefficient hunt for solar energy.
It's time to tell the OPA that we need a stable program that offers a reasonable return, and a return that takes into account the true costs of going solar and not just the big numbers found on marketing materials.
Ian Karleff
AS Solar, managing director

My husband and I have a signed contract for a 10kw MicroFIT system and our OPA application was put in on March 17th. As with many others, we spent countless hours researching and interviewing contractors and arranging financing. We struggled with insurance issues that resulted in our changing to another company after 33 years and had been waiting for our conditional offer for over 15 weeks. At the time we applied we were told that it would be a little longer than 30 days for our conditional offer to arrive. At the time we arranged for financing we were able to get a very good rate that was guaranteed for 120 days, which takes us to July 28th. For the last few weeks we have been eagerly awaiting our conditional offer and looking forward to getting started with our project as our contractor informed us that one of his other clients had received his conditional offer in early June and his application had been made on March 18th. At that point we expected to hear any day. We now understand why we did not, the OPA obviously had virtually stopped issuing conditional offers some time ago. We recently tried several times to get in touch with them regarding our submission and were responded to with generic form messages. Their 1-800 telephone number is a call centre that has no information and they were not willing to put us in touch with anyone else.

This was to be a huge investment for us in excess of $105,000.00 for what we thought seemed like a great program, a win win situation that would create clean energy while stimulating the Ontario economy. We can understand that the OPA might need to review pricing but to do so after having so many people waiting for so long and not honour the pricing to those who have had an application in for months is just wrong. There is no way that we will go ahead now with this new pricing as it no longer makes financial sense for us. For those such as Brad Duguid, our Minister of Energy and Infrastructure, who stated in a recent article that the rate of return for a ground mounted project is 30% to 40% let us assure you taking everything in to consideration it is not. The reality in our case as it is for many is approx. 14.5%. Here is the math, cost of good quality well installed dual tracking system $105,000.00, 5.7% interest over 20 years approximately $70,000.00, maintenance over 20 years approximately $9,000.00, insurance over 20 years approximately $10,000.00 and a modest extended warrantee package approximately $6000,00 all for a grand total of approximately $200,000.00. The revenue generated from this particular system is approximately $292,500.00 for the 20 year period which translates into the rate of return of approximately 14.5%. At 58.8 cents/kilowatt hour we would be without profit and losing close to $13,000.00.

Knowing that many of the conditional offers that have already been made will never reach fruition is also very frustrating for people like us who already have signed contracts and are ready to go. With the conditional offers allowing for up to one year to complete installation it will be quite some before it is known how many installations will actually take place. In the meantime it seems to us that people who have the space available for ground mounted systems are being penalized where as the roof mounted systems will find themselves on industrial building rooftops in cities across the province. It looks like the small guy loses out again and the businesses win. From what we have heard, one of the grocery chains should be enjoying their MicroFIT installations on over 120 stores at 80.2 cents/kilowatt hour before long.

We would be very interested in knowing of anyone else who might have an application that was made after March 17th and that has received a conditional offer.

The OPA should have made the new pricing effective for any new applications or at very least should consider granting at 80.2 cents/kilowatt hour those applications that can provide proof of a signed contract given the length of time, effort and dollars that it takes to reach that stage. In our case the 30 day comment period will take us beyond our guaranteed financing rate and that will change things for us even if approved at 80.2 cents/kilowatt hour.

Hello, it is with regret I here about the reduced rate paid on a ground mount solar system.
It unfortunately is not economically fesiable to participate now. I will now explain why.
I currently have 100,000 in GIC's. In 1 year bank of Canada rates will rise.(already anounced)
I will be guaranteed to recieve 5 %. If I decide to pull out 10,000/year(the same return I would expect on a ground mount paying the new proposed rate), My 10,000/year withdrawal will last me 15 years. I will only pay income tax on the interest income, and never have to worry about fututre malfunctions, etc. If a person like myself is in a position to buy one outright(with no financing) it will make no sense to a banker to lend on the new proposed pay rates. Please note, Bank of Canada rates are proposed to rise 4 % by the fall of 2012. Thank You. JC

Here is a point I have not seen elsewhere. Suppose that 16,000 people were putting in tracking systems and (at 80.2) each got paid $15,000 per year. This is $240 million. By reducing the payment to 58.8 they reduce this payment to $176 million, an apparent saving of $64 million per year. It seems like a lot to a taxpayer like me but there are two considerations. First, the Ontario budget for 2010 is $92 Billion. So $64 million is 0.07 %. In other words, relative to other expenditures, not a hill of beans. The second point, and this is one that has been made by farmers for decades, is that it ignores the spin-offs. Many people will pay income tax on their payouts. That money goes straight back to the government. Contractors will purchase goods (can you say HST? I knew you could!), hire staff (and pay CPP, EI, WSIB which go you know where). Solar manufacturers in Ontario would pay taxes and hire staff. You get the idea. I had dreamt of Ontario becoming a world leader in solar after the OPA and government had wisely primed the pump. Now they have poisoned the whole Ontario solar business place. As you can estimate from the above, they likely haven't even saved any money, and they have lost the trust of investors. Those who asked, "But can you trust the government?", have their answer, again.

I put in for a microfit project February 4th and have been waiting patiently. To have this happen at this late date is extremely disappointing.
I concur with the theorist above... They must have had a set budget and realized that that they'd blow it if they offered 16 000 people 80cents. So they changed the rules to still be able to offer everyone the chance to participate.

The Gov't benefits because more power/hype is created for the same money.

A 27% drop is ridiculous?

I'm out.

Now is the time to organize and boot Dalton and his crew out in 2011. Where are the large roofs? The cities of course. Dalton is destroying rural Ontario!

Why should anyone have thought, even for an instant, that paying 80 cents to produce something that eventually gets sold at retail for a fraction of that, was, or could ever be, a wise thing to invest money in?

This whole story is a classic example of the greater-fool theory. It's debatable whether the government is the greater fool for offering 80 cents in the first place, or whether it's those people, including farmers, who thought this bubble could, or would, last long enough to recoup their investment.

Anyone who invests in anything completely dependent on legislation for success, rather than sound economics, is a fool by first principles, and now we're finally seeing the evidence of the wisdom of that adage.

I would suggest that nobody bail on this project yet. OPA needs to honour all applications at 80.2 cents/kw up to the announcement on July 2 and they need to do this quickly. That is absolutely the only fair way. I understand OPA planned for 100,000 total applications - if this is so then 16% at the higher rate will not be a factor. Do they want power or not?
OPA is proposing biomass to replace coal at Nanticoke and Lambton GS by 2014 (or shut them down)- their credibility in the farming community just hit zero. Maybe they are relying on biomass from all the urban gardens and greenroofs on new buildings.
My application was filed March 16 and I have not heard didley - my wife reminds constantly me about government promises.

Has anyone considered that the price of the solar installations will come down with this announcement? From what I understand everyone from those who made the solar components to those who were going to be installing them were set to make money hand over fist. Since energy producers were set to make good money, nobody cared.

Also for those who are slamming the 80 cent price as being outrageous (namely the "you were all too greedy" guy) remember that Ontario has to buy power from the U.S. or Quebec during summer months to meet demand. This cost can range from $1.20 to $1.80 per KWh. Seeing that solar pumps out most of it's production on hot summer days there may be some economic sense here.

Solar is far from dead yet.

The reasons Brad Duguid cited for the rate decrease are completely
contrary to fact! Ask any informed Solar Sales Professional like myself.So what is the real reason? Are we just now to wait for a neneg on rooftop system rates as well? When this fledgling industry turns its focus on that as our only means a viable sale. This destroys all credibility this program NEVER had! Last month I lost a sale of 2 trackers worth over $250 000 due to the simple fact they couldn't trust the government. Now I understand You can only trust the government to screw up and reneg on any and all "guaranteed"
promises.I had to laugh at the new rate schedule on the OPA's site
that has refers to "guaranteed" and "proposed" rates.What I know for sure is it's "proposed" that I'm out of my green job,and pretty much "guaranteed" I won't find another one in the Province selling and installing solar trackers.

After listening to both webcasts from OPA, it is clear that the microFIT architects DO NOT want, what they refer to as, ‘the excessive rate of return’ that is achievable from the ground based PV systems. They are quite adamant about this. They are slowly realizing that the claim of ground PV systems being cheaper than roof types is not supportable. Today’s broadcast seemed to dwell less on the installation cost and more on the ‘rate of return’ portion of the argument. Any correspondence to MPP’s must address this. I see no reason why larger rate of returns should be deemed so bad, after all we are selling KWHr units of power, nothing else. Does anyone know of any other government subsidized initiatives that do not impose an inverse relationship between payout vs efficiency of production? The intent here would be to convince the Ontario government that the more KWHr I generate and deliver to the grid (to meet current and future energy needs), then the more one would should get paid. If a precedent can be found to support the idea that the more you make the more you get paid, then this notion of ‘excessive rate of return’ can be dispensed with altogether.

Also to address the issue of installation costs of ground PV systems, another factor that adds to the cost is the fact that I do not have access to a 220 volt grid tie in connection that would normally be available at a residential rooftop. My system is to reside in an open field quite some distance from any dwelling. There is a high tension overhead hydro line that will require the purchase, at my expense, of a step up transformer that will match my 220 volt AC inverter output to the higher voltage hydro line. These transformers aren’t cheap. So yet again here is evidence that contradicts the OPA claim.

Michael Eno

My previous comment was incorrect about claimed cost of roof vs ground mount systems. Sorry for error but I was still agitated over this whole fiasco while writing it up. Can administrators edit this paragraph out and post corrected version below?

After listening to both webcasts from OPA, it is clear that the microFIT architects DO NOT want, what they refer to as, ‘the excessive rate of return’ that is achievable from the ground based PV systems. They are quite adamant about this. They are slowly realizing that the claim of ground PV systems being cheaper than roof types is not supportable. Today’s broadcast seemed to dwell less on the installation cost and more on the ‘rate of return’ portion of the argument. Any correspondence to MPP’s must address this. I see no reason why larger rate of returns should be deemed so bad, after all we are selling KWHr units of power, nothing else. Does anyone know of any other government subsidized initiatives that do not impose an inverse relationship between payout vs efficiency of production? The intent here would be to convince the Ontario government that the more KWHr I generate and deliver to the grid (to meet current and future energy needs), then the more one would should get paid. If a precedent can be found to support the idea that the more you make the more you get paid, then this notion of ‘excessive rate of return’ can be dispensed with altogether.

Also to address the issue of installation costs of ground PV systems, another factor that adds to the cost is the fact that I do not have access to a 220 volt grid tie in connection that would normally be available at a residential rooftop. My system is to reside in an open field quite some distance from any dwelling. There is a high tension overhead hydro line that will require the purchase, at my expense, of a step up transformer that will match my 220 volt AC inverter output to the higher voltage hydro line. These transformers aren’t cheap. So yet again here is evidence that contradicts the OPA claim.

Michael Eno

I hve been a renewable energy dealer for 11 years. Lived offgrid on my farm for 16 years. I had been long awaiting something like the Green Energy Act after being disappointed year after year. I tough we finally nailed it. Well I guess not after the last weeks events.
I invested a fair bit of time and energy researching the best solution for my customers, kept the prices down and the production up to attract a lot of business. I estimated up to 3 million in sales. In one day it all went away. I am not certain of the future either. The announcement and the OK to start came out to late to start before winter so I planned for a spring start. My first project is in the ground now and will be completed shortly and will enjoy the 80.2 cent offering. The rest that were awaiting approvals have pulled out. Pretty much everything is on hold now for a month. When things get going again we have been told approvals will be done in 60 days. After the recent events I would not order a system or take any ones money to do so until a contract is secured. This will take us into September. Then the components will need to be ordered and installed. Currently the OPA has 1600 applicants in the system. There is no way on Gods Green earth that they will be inspected before year end when the content rules require 60% Ontario content. This is compounded by module suppliers and manufacturers requiring projections to secure modules. In this climate are you kidding?!Projections?! A question was came up on the Tuesday webinar and the OPA was asked if the roof top price could be guaranteed. There was silence and the answer was NO.
I really think the problem here is there has been opposition in the media by those who prefer things to go on as the have. Overpriced nukes and deaths and health costs due to burning coal to continue as they have. The program is being run by politicians and bureaucrats who are concerned about their jobs and haven't a clue about running a business. That 80.2 cents was a figure that small businesses like mine, larger ones that were going to relocate and provide materials for the Ontario content and the people who were going to invest in these systems. We all need to know what the numbers are and where they can go before proceeding. That is how business works. Banks won't loan money on uncertainty either. One of the pillars of the Green Energy Act was job creation. With the uncertainty going on no-one in their right mind will go ahead with investing in this initiative and I think other types of investors will take this as a sign that Ontario is not a good place to invest. Just on the announcement and listening to the OPA webinars I estimate we have lost $5 million in lost business and investments and an incalculable amount of job loss.
The main argument now is some of us got too good at doing our jobs and pushed the ROI too high. I have some problems with this train of thought. First, this is a free country and last I heard we are entitled to work smart and hard and get rewarded for it. No government agency has any business in getting in the way of that.
Second, I have always been told not to be wasteful of our resources. In this case it is the sun and the solar modules. Do they really wan me to mount them in an inferior way to collect better rates? Perhaps I can get a buck a KW mounting them facing north.
The most troubling point for me however is the fact that the Ontario Government inked a multibillion dollar deal with Samsung. A large company like that would have a secure idea of what their figures are before signing any deal. It is a disgrace the citizens of Ontario that decided to invest in all aspects of this technology are not afforded the same assurances with some losing their shirts.
Even more disgraceful are those who helped all this happen by lobbying against Ontario citizens who had the foresight and ingenuity to make a buck.

www.microfitaction.com

Recently the OPA has announced a proposed rate change for ground-mounted solar systems, effectively reducing the microFIT contract rate from 80.2c/kWh to 58.8c/kWh, a 27% decrease. They have based this change on the claim that ground-mounted systems are cheaper to install than roof mounted systems and therefore produce an unreasonable rate of return. Based on industry experience and information provided by installers and consumers this claim is clearly incorrect.

Within the same News release the OPA states, “The microFIT Program is designed to encourage home owners, farmers, small businesses and institutions to develop small renewable energy generation projects of 10 kilowatts or less”. Based on the OPA conference call on July 6th it is estimated that 10,000-11,000 of the received 16,000 applications are for ground-mount systems, which means nearly 70% of all applicants will be affected by this proposed rate change. As if a rate change was not bad enough, the applicants who in good faith applied for contracts as far back as January are going to be retroactively affected by the change should it be adopted.

The OPA’s proposed rate change has already sent ripples of uncertainty and disappointment through the industry, with the real damage yet to be done. This rate change will cripple the industry before it has even gotten off the ground. Fewer ground mount systems will be sold, and public trust in the integrity of the program will be lost if we do not act now.

The premise of the FIT and microFIT programs was to create green jobs in the sales, installation and manufacturing sectors. That call was answered, product was designed and fabricators have tooled up, and now with the rate change it looks like it may have all been for naught. The OPA has described this up and down rollercoaster as “the growing pains of a new industry”. For those who have invested their life savings, built businesses and endeavored to develop new products in Ontario this is much more than “growing pains”, these are crippling and quite possibly bankrupting blows.

The ultimate reliability and integrity of the FIT program now hangs in the balance of this final decision by the OPA.

This website and petition has been launched to help unify our voice with those who may be affected by this rate change. The intention is to show the OPA in a clear succinct manner what impact their decision will have, and why it is so important to leave the rates unchanged for all microFIT projects.

Please help us and our industry get back on track by signing our Petition and helping build our case to the OPA.

SIGN THE PETITION

www.microfitaction.com