Ross McDonald welcomes the Ontario Power Authority launch of the first feed-in tariff of North America.
Feed-in tariffs are not a new concept. They were introduced in Europe many years ago (e.g. Germany 1990, Spain 1994). But they are widely credited as the primary reason for the substantial uptake in clean energy production, and therefore clean technology and equipment manufacture, in selected European geographies. For example then in 1990 Germany had 56MW wind power, 2MW solar power and 190MW biomass power. By 2008 this had grown to 24GW wind power, 5GW solar power and 3GW biomass power.
So what's the big deal? Feed-in tariffs stimulate the development of clean energy power. Key aspects of the OPA FIT policy are noted below.
■ Power type - various renewable power sources - including wind, solar, biomass and biogas
■ Transparency - all PPA terms, including power acquisition cost, are known prior to PPA application.
■ Power capacity - policy has no cap on renewable energy
■ Negotiation - minimal bilateral PPA negotiation as preset standard terms
■ Commitment - 20 year power purchase agreement
■ Timeline - standard terms greatly simplify the PPA approval process, estimated at two to four months
Is there a catch? Yep. The feed-in tariff in Ontario is not just clean power, but creating local jobs. An important mandatory provision is domestic content, which requires developers to purchase a material proportion of products and services from Ontario suppliers.
Will the feed-in tariff improve the attractiveness of Ontario to clean energy developers? Yep, without doubt. It materially lowers developer risk, and enhances returns to make projects more financially viable.
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