In mid-August, the Ontario Power Authority (OPA) announced a new feed-in-tariff (FIT) rate for certain projects installed under the microFIT program. The program, launched in October 2009 (see the October 15, 2009 LRSJ*), offered a tariff rate of C$0.802/kWh for any approved installation less than 10 kW.
The new rate, begun on July 2, lowered the tariff by 20% to C$0.642/kWh, specifically for ground-mounted projects. Moreover, commercial entities that lease land or rooftops for PV installations are no longer eligible for the microFIT program at all. Ground-mounted projects have inherently lower installed costs per watt than roof-mounted projects. Therefore, customers, mostly in rural areas, could generate extremely high returns by opting to install small ground-mounted projects.
We had previously said that the OPA would cut solar subsidies under political pressure as early as 2011 (see the April 8, 2010 LRSJ*), and Lux Research clients should expect this announcement to foreshadow further cuts before the end of the year. While this cut corrects flagrant abuse of an overly generous rate, many of the 11,000 pending applicants that submitted proposals after July 2 are already expressing discontent at the changes. Meanwhile, members of the provincial parliament representing rural constituents lobbied for these tariff reductions and will step up their efforts as Ontario’s citizens grow weary of funding extensive solar subsidies. While Ontario may remain a solid solar market at more reasonable FIT rates, the gold rush there could be drawing to a close.
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