Thursday, September 24, 2009

Solar Energy Market to Instantly Boom in Ontario: Province to Become Best Market for Investment

Attention investors interested in solar companies. There will be a business boom in Ontario very soon, possibly starting next week.

The Ontario Green Energy and Economy Act is a provincial act that will be enacted next week by the prvince of Ontario, in Canada. It outlines major incentives for households and business to install solar panels. Among other things, it will establish a pricing scheme where the energy produced by the solar panels can be sold back to the energy grid. The pricing is not yet fixed, but it appears that indications are that it will be fixed at $0.80 per KwH, and it will be guaranteed for 20 years. This is an extremely good rate which will make a major difference for investing.

Read more here.

Among the major objectives of the act are:

- Delivering renewable energy
- Creating jobs
- Setting up the province for growth
- Reduce our pollution and greenhouse gas emissions
- Ontario wants to be a leader in solar eenrgy, manufacturing, installation, and distribution.

With this pricing scheme for selling energy to the grid, the estimate payback for solar panel investments will be in 17 years (as opposed to 25 years before the act). This make for very compelling capital investment. As long as the sun shines, by knowing the average sunshine hours investors will have a very good idea of how much revenue it will generate. The rate is even higher than Germany and Japan, which are the current leaders.

Some critics say the rates are too high. However, it must be taken into consideration that during peak hours in summer months the province needs to import energy from other markets (Quebec, U.S), at even higher rates. In addition, the infrastructure in Ontario has been lacking investment for my years and power generation has suffered a lot, even causing blackouts due to lack of energy. With solar energy, the demand from the aging energy grid in Ontario will be reduced.

Ontario will be an eraly adopter and will likely be seen as leading market in the world. Significant amounts of activity will occur in this space in Ontario.

Customers have been waiting for 12 to 15 months, waiting for the Green Energy Act to be enacted. There will be a an explosion in demand and business once it passes. One year from now this will be a totally different and very robust market, will see a rush of capital.

Ontario also wants to ban farm land from this, this is controversial.

Executive Summary of the Act:

"The Ontario Green Energy Act will make Ontario a global leader in the development of renewable energy, clean distributed energy and conservation - creating thousands of jobs, economic prosperity, energy security, and climate protection. "

Core Components of the Green Energy Act

1. An obligation for the responsible power purchase authority to grant priority and obligatory purchase of green energy projects.

2. A system of Advanced Renewable Energy Tariffs as the primary procurement mechanism for renewable and clean distributed energy to ensure the equal participation of community energy in the sustainable energy sector. The tariffs per kilowatt-hour of generation are based on key components of the German and French models: Tariffs are differentiated on the basis of: technology, resource intensity, project scale and location to ensure projects are economically viable in communities across the province. Prices are set on the basis of cost and a reasonable return on investment. A minimum profitability index of 0.1 for lowest yield and 0.3 for highest yield green energy projects. No cap on project size or program size. No cap on voltage: The tariff includes all behind the meter, all distribution and all transmission connected projects. 100% inflation protection at 2 levels: within the power purchase contracts, within the tariff program

3. An obligation for all utilities to grant priority grid access to green energy projects and an obligation for all utilities to connect green energy projects to the grid (within a reasonable limit to be determined by relative costs and goals related to the successful implementation of the Act).
Utilities are entitled and empowered to recover all related costs. Related costs are to be spread equally across the entire rate base.

4. The explicit and direct participation of First Nations and Métis as developers and owners in energy projects (generation, transmission, conservation) so they benefit directly from the resulting economic development in recognition of the additional and unique barriers they face.

5. The establishment of a Green Energy Debt Finance Program and a Community Power Corporation. The Green Energy Debt Finance Program would be mandated to raise the financial capital required to meet the financial market short falls in the development of eligible and viable projects (individual, community and commercial) to meet the GEA targets. The intent is that over time the market and community will meet all financial requirements for these projects. Vehicles such as Green Bonds could be implemented under this program to raise a portion of the required capital. A Community Power Corporation is necessary to ensure the equal opportunity for participation of the community power sector in recognition of the additional social and economic benefits of these projects to Ontario communities and the people of Ontario as a whole. The mandate of the Corporation would be to build the capacity of local communities to develop eligible and viable projects, provide early stage project funding, and to facilitate the develop of financing mechanisms. This corporation will require an initial investment of $25 million.

6. The adoption of smart grid technologies, including energy storage, in order to transform Ontario's energy system from highly centralized to more distributed.

7. A mandated commitment to a continuous improvement approach to conservation with a minimum 2.5% annual (compounding) reduction in energy resource needs from 2011 until 2027.

8. Electricity pricing that reflects its true cost and provides signals to consumers to manage their energy demand.

9 Priority for vulnerable consumers (including relevant industrial users) to reduce their energy burden through conservation, bill assistance, innovative utility policies and stronger consumer protection.

10. Streamlined regulatory and approvals processes that enable the rapid but prudent development of green energy projects across the province, reducing uncertainty and transaction costs to all involved. This would include a comprehensive one-window approach to consultation with First Nations and Métis that will lead to their meaningful engagement in the energy sector and create certainty for the province.

Other links:

Ontario Bill 150, Green Energy and Green Economy Act, 2009
Bill 150 was tabled at the Legislative Assembly of Ontario on February 23, 2009 and passed into law on May 14, 2009.

Official Liberal Party of Ontario Website for Ontario's Green Energy Act

Stumble Upon Toolbar


Ron Burgundy said...

For people looking to invest in Solar there is also a group out of Toronto who started the Solar Income Fund

bogged down said...

SO this Community Corporation is funded with 25 million dollars in tax-payer money to be used to fund renewable projects in Ontario communities. Sounds like a back door subsidy for wind, solar firms. this on top of the FIT program.

Financial TV

Blog Archive

// adding Google analytics