Ontario Feed-in Tariff Prices Drop, Germans Still Far Cheaper

Date: 23 Mar 2012 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

Ontario just completed a revision of their landmark feed-in tariff program and rates for renewable electricity generation and prices fell sharply: 30% for solar and 15% for wind power. This continues a trend of falling costs for renewable energy around the world.

As a bit of background, Ontario’s feed-in tariff gives wind and solar producers (and many other technologies) long-term contracts at premium prices to support deployment of new renewable energy. In a unique marriage of environmental and economic goals, the province also provides price bonuses to community-based projects and requires wind and solar projects to source much of their labor and materials within Ontario (for more on this, see our 2011 report).

Modeled after Germany’s landmark program, Ontario is starting to see the price declines as their renewable energy market matures. Here’s a quick look at how the new prices stack up against world-leader Germany, as well as against two of the prominent feed-in tariff programs in the United States, Vermont and Gainesville.

For solar, Ontario pays a rate comparable to other North American jurisdictions, but all of them pay much more than Germany. When converted to U.S. dollars, adjusted for the solar resource, contract length (for Vermont), and for the 30% federal tax credit (U.S. programs), Germany pays just half of what North American feed-in tariff programs do for the same size solar project.

For wind power, Ontario pays less than Vermont (which caps wind projects at just 1.5 megawatts), but still more than Germany’s mature wind market. Unlike its North American counterparts, Germany’s tariff adjusts based on the quality of the wind regime. In the reference scenario (~6 meter per second wind at a height of 50 meters), Germany’s price paid is a full 2 cents per kWh less than American producers. In a high wind scenario (7 meter per second wind), Germany pays even less. Only in a low-wind regime does Germany’s tariff price compare to Ontario.

Ultimately, the test of success for Ontario’s clean energy program is its outcomes and public support. Despite public outcry about high prices paid to renewable energy producers, the prospect for over 43,000 jobs and nearly 5,000 megawatts of clean energy sustained feed-in tariff supporters in the government and the program will continue.

I suspect that these new lower prices will bolster support for Ontario’s renewable energy program.

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John Farrell

John Farrell directs the Energy Democracy initiative at the Institute for Local Self-Reliance and he develops tools that allow communities to take charge of their energy future, and pursue the maximum economic benefits of the transition to 100% renewable power.