The worldwide solar energy outlook is positive, according to the market research firm IHS. They predict a 25% rise in demand for photovoltaic (PV) solar power in 2015 as installations approach 55 gigawatts (GW). How does this worldview translate to the utility-scale solar power outlook in Ontario? It may well be a mixed bag based on trends and government actions.
Momentum seems to be building in the small generator and micro-generator solar market in Ontario through the corresponding feed-in tariff (FIT) and microFIT programs, but newer utility installations are no longer eligible for the FIT program. In 2013, the provincial government halted the FIT program for large-scale solar projects, giving in to critics citing lowered demand growth and rising electricity price pressures caused by the FIT subsidies.
For utility-scale, the FIT program was replaced by a competitive bid system known as the Large Renewable Procurement (LRP) program for projects generally above 500-kilowatt (kW) capacity. The program is administered through the Ontario Power Authority (OPA), which merged at the beginning of 2015 with the Independent Electricity System Operator (IESO).
Under LRP, the government determines how much new power it will buy from all renewable sources including solar, and companies must solicit competitive bids for approval to supply that power. The posting date for the final LRP Contract and Prescribed Forms is now set for March 10, 2015.
For 2015, only 140 MW of solar power was put out for competitive bidding, with 42 applicants meeting qualifications to bid. For comparison, the FIT program has added another 99MW of solar power spread across 330 new contracts from smaller sources.
Another factor is the removal of the “local content” requirements that mandated that a certain percentage of the supplies in any Ontario-based solar project must be provided by local manufacturers. The World Trade Organization ruled that this practice went against international trade laws. While the local content change undoubtedly harmed local suppliers, it arguably helps the utility-scale projects by driving down costs and allowing for more competitive bids.
The greater opportunities for Ontario’s solar companies may lie elsewhere. Suppliers like Canadian Solar have been replacing the potential losses in Canadian business with imports and projects throughout the world, and as the solar power industry matures this level of diversification will become increasingly important to survive.
Meanwhile, utility-scale installations that are in progress are doing reasonably well in the province, such as the Grand Renewable Energy Park (GREP) in southwestern Ontario that will provide 100 MW of solar energy upon its completion. The solar component of GREP is intended to be the largest solar PV project in Canada, barely outproducing the 97 MW Sarnia power plant.
It’s hard to say that Canada’s utility scale solar energy opportunities are keeping pace with other operations around the world, especially in expanding markets such as China, the U.S., and India. The challenges from this point on are an interesting mix of the technical, the economic, and the political. Currently in the LRP solicitations solar ranks a solid second in the renewables behind wind power (300 MW in the 2015 LRP), and while solar power does hold some significant benefits over wind it is by no means assured that solar power will prevail.
Right now, the provincial government holds most of the cards that will determine the ultimate success of industrial scale solar power in Ontario, as well as the ratio between larger and smaller scale production. Let’s see how the government decides to play those cards over the next few years.