Meanwhile, the public has grown anxious about the program’s impact on future electricity rates, and opposition politicians are eagerly fanning the flames of discontent as an October election looms. The province’s Progressive Conservative Party, which is leading in the polls, has hinted that if it comes into power, it may cancel the feed-in tariff program, creating uncertainty for investors and developers.
“This does give us cause for concern,” says Jason Gray, director of Canadian operations for solar developer SunEdison, which has more than 100 megawatts of projects built or in development. Gray says he understands the need to start reducing prices, but he warns against any reaction that will undermine confidence in the market.
It is expected that in any case, a program review this year will lead to a rate reduction. The question is how deep the cut will be. Regardless, the public perception of the impact of solar on electricity rates may be overblown. Program proponents argue that power from new plants of any kind—not just solar—is more expensive and that projected rate hikes in Ontario relate mostly to the cost of renewing infrastructure after years of underinvestment. They also say that the price of connecting solar to the grid, while high in absolute terms, is relatively low from a system perspective. The impact of solar on overall rates has so far been marginal.
Jatin Nathwani, executive director of the Waterloo Institute for Sustainable Energy, says the biggest problem with the program is that it discourages innovation by guaranteeing healthy profits for those who deploy older, more expensive solar technology. It also fails to adjust rates fast enough to account for rapid declines in the price of technology, meaning electricity consumers end up paying an unnecessary premium. “You will get a lot of solar projects and interest and some associated employment. But will it create a long-term sustainable industry with a bright future? I have my doubts,” says Nathwani.