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Expect Delays: Reviewing Ontario’s “Buy Local” Renewable Energy Program

| Written by John Farrell | No Comments | Updated on May 20, 2013 The content that follows was originally published on the Institute for Local Self-Reliance website at http://ilsr.org/expect-delays-reviewing-ontarios-buy-local-renewable-energy-program/

placeholderLaunched in 2009, Ontario’s “buy local” Feed-In Tariff (FIT) program promised to deliver hundreds of megawatts of new renewable energy and create 50,000 new jobs by the end of 2012. The program has had some notable achievements, and the province has worked hard to remedy some of the remaining roadblocks to success.

The bottom line is that the FIT program and its predecessors (despite facing significant threats) have jumpstarted renewable energy development in Ontario: the province would rank #4 and #11 for solar and wind deployment, respectively, if it were a U.S. state. It has created 31,000 jobs. It has also enabled widespread participation in renewable energy generation: 1 in 7 Ontario farmers is participating, earning a return on their investment.  Finally, it has enabled the province to shut down all of its coal-fired power plants by the end of 2014.

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Ontario FIT program solar wind capacity

Huge Interest

The biggest challenge for the FIT program is the overwhelming demand. Already, signed contracts for nearly 5,000 megawatts of new renewable energy capacity will allow the province to meet most of its 2030 renewable energy target, 12 years early. Actual deployment has kept pace with many U.S. states, but poor preparation has meant that less than 10% of energy under contract (thus far) is actually producing electricity.

Success with Small

The MicroFIT program (mostly 10 kilowatt and smaller solar) has been a huge success. More than half of the 230 megawatts of solar added to the grid under the FIT program has been from the MicroFIT program, serving almost 15,000 individuals and small businesses.

Unexpected Challenges

The Ontario Power Authority has faced several additional challenges that may explain its difficulty in keeping up with demand:

  • The world economy collapsed in late 2008, with a slow recovery.
  • The ruling Liberal Party nearly lost its majority in the fall of 2011, jeopardizing support for the FIT program.
  • The largest provincial utility, Hydro One, limited renewable energy to no more than 7% of peak demand on its distribution feeders and missed deadlines for interconnection, slowing energy deployment.
  • In May 2013, Canada lost an appeal to a World Trade Organization suit challenging the program’s buy local provisions from Japan, the European Union, and the United States.

A Mixed Review on Jobs

ontario FIT program manufacturingThe Energy Ministry says that 31,000 direct and indirect jobs have been created thus far by the Green Energy Act, far more than would be expected with less than 10 percent of the renewable energy deployed and despite the world economic slowdown.

Manufacturing has come to the province to serve the “buy local” provision. About half of surveyed manufacturers intending to locate in Ontario have established a presence locally.

Doubling Down on Local

Ontario energy officials haven’t abandoned the ‘buy local’ policy, but rather have reinforced it with new program rules that prioritize local ownership of FIT projects. The success of the MicroFIT program and community-based projects led to a points scoring system for new FIT projects that rewards greater local support and local ownership. A quarter of the program capacity opened in early 2013 was set aside for locally owned projects. The new rules will hopefully lead to more smaller-scale projects with support from the local community.

Conclusion: Improvements Needed

While renewable energy development has been a modest success and job creation more so, the FIT program needs to improve. The Ontario Power Authority needs to streamline the development process for projects with existing contracts and push utilities to use evidence-based procedures for determining grid capacity. It should consider whether utility-scale, multi-megawatt projects make sense, given the difficulty in getting such projects to market. It should consider requiring local ownership for the remaining program capacity, knowing that it will minimize public opposition and maximize the economic returns. With these changes, the FIT program may still live up to much of its early promise.

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About John Farrell

John Farrell directs the Energy Self-Reliant States and Communities program at the Institute for Local Self-Reliance and he focuses on energy policy developments that best expand the benefits of local ownership and dispersed generation of renewable energy. More

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