New Market Opportunity:  Ontario’s New Feed-In Tariff Program
BOTTOM LINE FACTS:

• Ontario’s Feed-In Tariff (FIT) program for renewable energy generation is a cornerstone of the province’s Green Energy Act. The provincial government launched the program in September 2009, and the Ontario Power Authority (OPA) started accepting applications October 1, 2009. It is North America’s first comprehensive feed-in tariff program for renewable energy.
• A feed-in tariff or FIT is a straightforward way to contract for renewable energy generation. It provides standardized program rules, prices and contracts.
• The program encourages the development of renewable energy projects across Ontario. The program delivers significant benefits to project developers. The prices are designed to cover project costs and provide a reasonable rate of return on the investment over the term of the contract.
• The program is divided into two streams - FIT and MicroFIT. The FIT Program is for renewable energy projects that can generate more than 10 kilowatts (kW) of electricity often related to commercial properties and in-ground facilities.
• MicroFIT is designed to encourage homeowners, businesses and others to generate renewable energy with projects of 10 kilowatts (kW) or less.
• MicroFIT is designed to make it simpler and faster to get small-scale renewable projects installed and producing power.
• The FIT Program is designed to give developers and their lenders the confidence needed to undertake projects - and to enable Ontario to build a reliable and sustainable electricity system
• Prices paid for renewable energy generation under FIT and MicroFIT vary by energy source and take into account the capital investment required to get a project up and running:
• Under the program, participants are paid a fixed-price for the electricity they generate. FIT and MicroFIT contracts are for 20 years, with the exception of waterpower, which has a 40-year FIT contract
• Click here: to view the FIT and MicroFIT Tariff price schedule

BACKGROUND

At the end of 2006, the Ontario Power Authority (OPA, Canada) began its Standard Offer Program (SOP), the first in North America for small renewable projects (10MW or less). This guarantees a fixed price of $0.42 CDN per kWh over a period of twenty years. There was no specific contract allocation prior to the installation. Uncertainty was called as the main reason the program’s success was limited. The fact that it was hard to see a decent return on investment with the relatively low remuneration for power generated, did not contribute to its success. On October 1, 2009, OPA issued a Feed-in Tariff (FIT) program, increasing the fixed price to $0.802 per kW while offering a conditional contract prior to any actual construction of investment in a power generation facility.

The political purpose of incentive policies for solar PV power generation is to facilitate an initial small-scale deployment to begin to grow the industry, even where the cost of PV is significantly above grid parity, to allow the industry to achieve the economies of scale necessary to reach grid parity. The policies are implemented to promote national energy independence, high tech job creation and reduction of CO2 emissions.

By encouraging the development of renewable energy in Ontario, the FIT Program will:

• help Ontario phase out coal-fired electricity generation by 2014 - the largest climate change initiative in Canada
• boost economic activity and the development of renewable energy technologies
• create new green industries and jobs.