Ontario, Canada is in the midst of a solar boom. The province contains the largest operational solar facility in the world–a 97 megawatt behemoth built by First Solar–and has contracts for over 1,400 more megawatts of solar power ready to be built. But it isn’t because Ontario gets lots of sunlight (the city gets 20% less than Los Angeles). No, the solar boom is the direct result of the province’s feed-in tariff program, which offers homeowners and businesses above-market rates for feeding their excess solar power back to the grid. And therein lies the problem.
Ontario’s feed-in tariff program, begun in 2009 to increase green investment in the region, lures solar installations by paying 44.3 cents per kilowatt-hour for power from larger solar projects
and up to 80.2 cents for rooftop systems that produce less than 10 kilowatts–an above-market rate (residents pay 10 cents per kilowatt-hour for power during times of peak solar productivity). There is, in other words, plenty of money to be made on solar installations.
It’s no surprise, then, that Ontario has received 30,000 project applications in the past 18 months, according to MIT Technology Review. But this kind of success doesn’t come without problems. Ontario is having trouble keeping up with demand–in January, 1,000 projects were delayed because of concerns about the grid’s capacity to handle the solar deluge. And if Ontario’s Progressive Conservative Party comes into power (it’s leading in polls), the whole program might be canceled, causing a major headache for developers who have been relying on high feed-in tariffs to make money.
Perhaps the biggest problem is that Ontario’s program discourages innovation in the solar industry by paying out the same rates for older, clunkier installations as it does for new, more efficient ones.
Ontario is far from the first city to use feed-in tariffs–the practice is common throughout Europe. But the province may have made a mistake by offering so much cash for solar power. It’s a lesson that should be taken into account by other cities considering similar programs.