Ontario Feed-In Tariffs Rapidly Creating Solar Jobs: Provocative Report Says Cost only a "Donut per Month"

Solar PV Creates 12 Times More Jobs Than Nuclear--15 Times More Than Coal

Ontario Solar PV Attracting $8 Billion in Private Investment

Clean Generation Saves Ratepayers 20%

November 23, 2010

By Paul Gipe

Using a measure of cost that all Canadians understand, a provocative new report says the impact of Ontario's feed-in tariffs for solar photovoltaics (PV), which will create 70,000 jobs, is no more than one Tim Hortons donut per month.

Tim Hortons is a popular Canadian coffee-shop chain found in even the smallest village.

The confidential report comes at a time of heated political debate in the provincial capital of Toronto about the cost of the current government's Green Energy and Green Economy Act. Ontario's Feed-in Tariff program is the most visible--and the most controversial--aspect of the policy.

The report by ClearSky Advisors was prepared for private, and so far unnamed, clients. However, a summary has been released to the media.

ClearSky says that by 2015 Ontario's solar PV industry will have created 72,000 person-years of jobs.

Ontario plans to close all its coal-fired power plants by 2014. Generation by renewable sources, including solar PV, will be used to offset the coal-fired generation lost.

Program Cost Minimal

Critics of the program say that feed-in tariffs are the cause of what they claim are increasing electricity costs.

Not so, says ClearSky's summary. Cost of electricity in the province will increase slightly to a maximum of about 1% of a typical household's bill, then decline steadily as the initial contracts work their way through the system.

Solar PV is the most expensive of the new renewable energy technologies. Though costs are rapidly declining, generation from solar PV is still several times more costly than that from wind, hydro, or biogas. Thus, feed-in tariffs for solar PV are a lightning rod for critics of renewable energy.

In a previous report, ClearSky estimated that Ontario will install 3,000 MW of solar PV in the next five years. During the period studied in this report, ClearSky says Ontario will install a total of 6,000 MW of solar PV by 2021. For comparison, California is expected to have a total installed capacity of 800 MW and the US 1,700 MW of solar PV by the end of 2010.

If ClearSky's estimates become reality, Ontario will soon become the largest center of solar PV development in North America by a wide margin, and rival European countries, which are currently the leaders in solar generation.

More Jobs from Solar PV than Coal or Nuclear

The Green Energy Act was in part justified by the job-creation potential in Ontario's industrial sector, which was hard hit by the collapse of North America's auto manufacturers.

Implementation of the province's Feed-in Tariff program by the Ontario Power Authority includes a controversial domestic content provision. In effect, a substantial portion of any solar system installed in Ontario must be manufactured in the province.

ClearSky's summary suggests that this policy may in fact work as intended at creating new jobs. The report says solar PV creates 12 times more jobs than nuclear per kilowatt-hour of electricity generated and 15 times more than coal.

More Jobs per Dollar Invested

ClearSky calculates that while investment in solar PV results in 30% to 40% as much electricity as investment in conventional sources, the investment in solar PV pays dividends in job creation. According to ClearSky's summary, investment in solar PV creates 2.4 to 6.4 times more jobs than a similar investment in conventional sources.

Ontario Solar PV Billion Dollar Market

At the current pace of development and with the limitations of a weak, antiquated grid in mind, ClearSky projects that between 2010 and 2015, Ontario's burgeoning solar industry will attract nearly $8 billion in private capital.

Clean Generation Saves Ratepayers 20%

On October 17, 2010 the Ontario government announced a rebate of 10% on ratepayers' electricity bills to compensate for what it calls the "Clean Energy Benefit" of the Green Energy Act. The rebate will be paid for from tax revenue.

In a posting on their web site, Why Ontario's Clean Energy Benefit Makes Sense - Sort Of, ClearSky argues that the rapid development of clean sources of generation to replace the existing coal-fired plants saves taxpayers money by eliminating coal's social and environmental costs.

The posting has revised interest in a long-forgotten report on the cost of coal-fired generation. The 2005 report, Cost Benefit Analysis: Replacing Ontario's Coal-Fired Electricity Generation, tallied the then social cost of electricity from the province's nuclear-powered and fossil-fired fleet of generators. The report says Ontario's coal-fired power plants cost Ontario nearly $0.13 CAD/kWh in environmental and social impacts.

According to ClearSky, new renewable generation under the Green Energy Act's feed-in tariffs saves ratepayers the equivalent of 20% on their electricity bills. Thus, they reluctantly say, the province's Clean Energy Benefit does appear justified and could be even higher.

While ClearSky's market analysis won't settle the debate on the future of Ontario's electricity system, it clearly shows that the province is headed toward becoming a leader in renewable energy development, and especially in the creation of a solar PV industry.

• ClearSky Executive Summary: Economic Impacts of Solar Energy in Ontario
• Solar industry to create more than 70,000 jobs in Ontario by 2015
• Why Ontario?s Clean Energy Benefit Makes Sense ? Sort Of
• Cost Benefit Analysis: Replacing Ontario's Coal-Fired Electricity Generation by DSS Management Consultants Inc. and RWDI Air Inc., for the Ontario Ministry of Energy, April, 2005, 93 pages.

What's New on Feed-in Tariffs

• Ontario Feed-in Tariffs Rapidly Creating Solar Jobs: Provocative Report Says Cost only a "Donut per Month"--Using a measure of cost that all Canadians understand, a provocative new report says the impact of Ontario's feed-in tariffs for solar photovoltaics (PV), which will create 70,000 jobs, is no more than one Tim Hortons donut per month. . .
• ClearSky Advisors: Solar industry to create more than 70,000 jobs in Ontario by 2015--Despite the higher costs of Solar PV power generation, the net impact to the average Ontario household will be the equivalent of less than 1% of their electricity bills each year?-less than the cost of one Tim Horton?s donut per month. . .
• NREL: Ontario is Getting Low Greenhouse Gas Emissions with a Little Help from their FITs--Ontario will make use of a potentially effective policy- known as feed-in tariffs (FITs)-to encourage the installation of a large amount of renewable energy to make up for the closing of so many coal plants. . .
• TD Bank Financial Group Provides Financing for Ontario Feed-in Tariff Projects--One of Canada's largest banks is now offering dedicated financial services to homeowners and small businesses developing renewable projects under Ontario's Feed-in Tariff program. . .
• ClearSky Advisors: Why Ontario?s Clean Energy Benefit Makes Sense ? Sort Of--Now that coal is being replaced, in part, by renewable energy and electricity conservation programs, ratepayers are being asked to pay more for their electricity but taxpayers will no longer have to shoulder the cost of coal?s economic externalities. Put differently, the new electricity rates more accurately reflect the true cost of the electricity. . .
• The Leader: British FITs Could Power Public Housing--SOLAR panels could be fitted to thousands of council homes in Wrexham at a cost of nearly £30 million. . .
• George Soros: New Drivers of Green Growth--A third initiative concerns renewable-energy development. Well-designed feed-in tariff programs offer investors the transparency, longevity, and certainty that they seek _ and these incentives have backed approximately 75 percent of solar photovoltaic capacity and 45 percent of wind capacity built worldwide through 2008. . .
• Toronto Star: Solar prices expected to decline--?We fully expect the government at the two-year review is going to hold firm and revise the feed-in-tariff prices,? said Gray, vice president Canada for SunEdison. The firm is a division of MEMC Electronic Materials Inc. . .
• Feed-in Tariffs for Renewable Heat, Solar Thermal, Solar Domestic Hot Water (DHW), Efficiency, and Biomass--Below are some sources on feed-in tariffs for renewable heat and solar DHW. . .
• French Community Solar with Feed-in Tariffs--Énergie renouvelable citoyenne 2010 . . .
• Steven Cohen: New York's Green Economic Revival--It can be coupled with a state feed-in tariff policy, guaranteeing that small scale renewable energy generators obtain access to the grid and a fixed, long term price for the power they generate. This will encourage the development of renewable energy. Renewable energy investors need protection from the current boom and bust cycle in fossil fuels. . .
• Vision of Earth: Feed-in tariffs: A fitting policy for renewable energy--Development of renewable energy can actually lead to a reduction in total costs for the consumer. This can happen for instance when the demand for natural gas goes down because less of it is required for peaking power plants. This reduced demand lowers the price, which will lower the cost of heating a home in those areas that use natural gas for heating. The total effect of feed-in tariffs is usually very small, hardly noticeable on a monthly power bill. Some studies, such as this one for instance, show that electricity prices actually end up falling as a result of feed-in tariffs. . .
• Provincial Feed-in Tariffs Spurring Community Power--The Ontario Power Authority (OPA) has signed feed-in tariff contracts for 384 MW of community-owned renewable energy projects in the Canadian province. When completed, Ontario will have the largest installed base of community-owned renewable generation in North America, surpassing community ownership of renewable generation in Minnesota. Nearly one-third of the capacity will be built by Ontario's aboriginal population. . .
• The California Solar Paradox: Why Does DRA Overlook the Cost Control Feature of Feed-in Tariffs?--The proposed solutions for reining in utility costs of solar PV ignore the world's most successful policy for developing massive amounts of renewable energy while strictly controlling costs: Feed-in Tariffs . . .
  

This feed-in tariff news update is partially supported by the Jan & David Blittersdorf Foundation in cooperation with the Institute for Local Self Reliance. The views expressed are those of Paul Gipe and are not necessarily those of the sponsors.

Paul Gipe