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Group declares Ontario’s FIT program protectionist


October 21, 2010
by PLANT STAFF

TORONTO: Some Canadian solar photovoltaic (PV) manufacturers have joined the ranks of renewable energy players and governments outside Canada who are not happy with the domestic content provisions in Ontario’s Feed-In Tariff (FIT) program.

A research study completed for a group of Canadian and international solar photovoltaic manufacturers that includes First Solar, Mitsubishi Electric Sales Canada, Sanyo Canada, Timminco and the unnamed Canadian division of a global electronics corporation that manufactures solar inverters, shows the 60% Ontario content requirement set for 2011 will result in increased costs for solar energy projects of all sizes; 9,000 fewer jobs; and $2 billion less investment in Ontario renewable energy projects.

The FIT program sets out lucrative pay ranges guaranteed over a 20-year span ranging from 13.5 cents per kilowatt hour for wind power to 80.2 cents per kilowatt hour for small, rooftop-mounted solar projects.

But wind projects that generate more than 10 kilowatts must have a made-in-Ontario portion starting at 25%, which will increase to 50% by 2012. Large solar panel projects start at 50% and increase to 60% by 2011.

A spokesman for the group told PLANT the complete results of the independent study will not be released to the public, but a press release suggests solar panels and other solar energy system components will be in short supply next year as experienced best-in-class solar manufacturers leave Ontario or are not able to sell their products into the province’s solar market. The group claims this will lead to solar panel prices increasing by up to 25%.

“This is certainly not fair for Ontario electricity ratepayers who are funding this solar incentive program through higher electricity rates and those same customers are not able to purchase best in class solar technologies at competitive global prices,” the release states.

The companies also predict the likelihood of many projects being cancelled or postponed as investor returns decline below acceptable level due to higher solar project costs in 2011. This, they claim, translates into the potential for 9,000 fewer jobs and $2 billion less invested into Ontario’s solar market by companies with operations in other provinces and foreign manufacturers.

“This will have serious international trade implications for Ontario and Canada as Japan, the European Union and the United States all join forces to fight this protectionist trade measure in Ontario,” said Takashi Sato, president & CEO of Mitsubishi Electric Sales Canada Inc., in Markham, Ont.

Robert Dietrich, CFO of Timminco, a Toronto-based producer of silicon metal, including a solar grade product, has manufacturing operations in Quebec. “When one province like Ontario implements trade restrictions that impact Canadian manufacturers in other provinces, that’s a very narrow view of optimizing Canada’s manufacturing sector and promoting job growth in manufacturing,” he said.

The US and the EU have joined Japan’s fight over Ontario’s green energy plan. Japan has lodged a complaint with the World Trade Organization, claiming the percentage of project costs that must come from Ontario goods and labour violates Canada’s international trade obligations. The issue is also coming up in Canada EU free trade talks.
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