A recent article in the Financial Post describes growing confusion over Ontario’s green economy. While many workers in the province upgrade their training to make the switch to careers in solar and other renewable forms of energy production, the media have sent mixed messages regarding the industry’s stability.
The main concerns that I typically read about can be summed up as follows:
Hydro rates are rising, and we are told that this is largely due to the Ontario government’s feed-in tariff (FIT) for green energy and the high rates the program pays to its participants.
A government-initiated tariff is only as stable as the initiating party’s seats in the Legislature - and an Ontario election is less than a year away.
The FIT’s domestic content requirements (DCRs) strangle foreign and violate international trade agreements.
The bulk of concerns regarding Ontario’s FIT, which pays producers of energy from sources like solar, wind, and biomass, center around the program's high prices. At its most generous, the FIT pays rates of up to 80.2 cents/kW-hour for solar power, which is many times higher than the current market price for electricity. These general incentives have opened up new opportunities within the province, including solar energy career training for PV installers. Opponents of the FIT ague that these sky-high prices are primarily responsible for a projected increase in residential energy costs, increases that Ontarians have already begun to notice on their bills in the last couple of months.
High Price for Solar a Small Price for Clean Energy, Careers
However, an interesting study recently prepared by ClearSky Advisors (ClearSky) suggests that the program will only increase the price that the average Ontarian sees on his or her hydro bill by about the cost of one donut per month. That’s right, a donut. This is after the researchers crunched numbers related to the social costs of nuclear and coal-fired energy. The study goes on to say that if the current rate of FIT-application approvals continues for the next five years, the province will enjoy more than 70,000 extra “person years” of employment by 2015.
Of course, the FIT is a political creation, and as such, any party, including the program’s creators, could stop accepting applications at any time, but all currently-approved projects are locked into a twenty-year contract. We can be sure that players in Ontario’s green economy would be quick to litigate any attempts to change that. As Adam Webb, President of Ontario’s Sentinel Solar Corp., puts it, "The Ontario government and the OPA would find themselves in a class-action lawsuit brought by every manufacturer that has spent the money to come to the province and open up a manufacturing facility."
Either way, if the ClearSky study’s findings are sound, politicians who try to rally behind contemptuous attitudes toward the FIT as part of their election platforms may have a tougher sell than they expect. Even the most ardent capitalist is likely open to the idea that a dollar a month, more or less, is a small enough sacrifice for clean air and jobs.
Certification Criteria Fuels International Ire
Now the DCRs, they do add an unwelcome level of complexity to the issue of whether or not the FIT, and the green economy it tries to create, are “worth it.” In order to receive FIT certification, projects must contain a certain percentage of materials and use a minimum amount of labour from within Ontario. For PV projects, this number will top out at 60% as of 2011.
Much like the “Buy American” sloganeering in the US, DCRs make the Ontario PV, wind, and biomass industries difficult for outsiders to penetrate. Solar panels and parts from overseas are often much less expensive than just about anything made in North America, so the criteria provide a competitive edge in the province's rapid transition to a self-sustaining renewable energy industry.
The most glaring downside to the FIT’s DCRs is international opposition. Japan has filed an official complaint with the World Trade Organization (WTO) alleging that the requirements basically amount to subsidies, which violate trade rules. The complaint is backed by members of the European Union and the United States and has fuelled political debate back home. One group, led by Mitsubishi Electric Corp. (Mitsubishi), alleges that the DCRs will actually rob 9,000 jobs from the Ontario economy and cost the province $2 billion in potential investment capital. On the other hand, the ClearSky report found that solar power generation produces twelve to fifteen times the number of jobs per kilowatt-hour as nuclear or coal projects.
Of course, tomorrow could always bring a contradictory report, and the next day another. The truth is that the solar industry, like every other renewable energy industry, is new by historical standards, and as such, it is inherently confused and confusing. Politicking and editorial bluster only make a clear analysis of the situation more elusive. But, if I squint my eyes and peek through the fog, I think I can see a light. The future is bright and we just have to press ahead. The green economy may as well be called “the economy,” because it is just tomorrow’s way of doing business.