* Province to cut solar rates more than 20 pct, wind 15 pct
* Rate cuts apply only to new projects
* Prices for water, biogas, biomass unchanged
* New projects with aboriginal support given priority
* Commitment to renewable power targets affirmed
By Susan Taylor
TORONTO, March 22 Ontario's renewable energy
sector breathed a sigh of relief on Thursday as the province
announced rate reductions for solar and wind power that were
more modest than some had feared and it repeated its commitment
to renewable power targets.
Following a review of its ambitious clean-energy program,
Canada's most populous province said it will cut the rates it
pays for power from new solar projects by more than 20 percent
and wind rates by about 15 percent, reflecting lower prices for
generating equipment such as solar pane ls and wind turbines.
Ontario's feed-in-tariff plan, aimed to spur job creation
and help replace coal-fired power in the province, has been a
source of anger for ratepayers facing higher electricity bills.
Launched in 2009 with a global recession underway, the
program paid green energy producers generous above-market rates
for power that they could "feed" into the provincial grid. The
current rates will still apply to existing projects.
"The reduction is certainly not insignificant, but I don't
believe it's a knock-out punch," said Bruce Cousins, CEO of
solar power equipment maker Carmanah Technologies. "It is going
to put pressure on (profit) margins throughout."
The program, which contributed to rising electricity bills
in Ontario, became a flashpoint in last year's provincial
election, in which the Liberal Party was re-elected but with
fewer seats in the legislature. The opposition Progressive
Conservatives campaigned on a promise to slash the program.
Analysts and clean energy companies say the rates announced
on Thursday appear adequate to produce profit from renewable
power projects, but the reductions mean developers will need to
work more efficiently.
"These are a lot higher prices than, say, Germany or even
Italy," said Michael Carten, chief Executive of Sustainable
Energy Technologies, which manufactures solar inverters.
"You should see the industry move itself to streamline
installation processes and costs and try to drive some of the
The government said it will cut the rate it pays for power
from new small solar projects to 54.9 Canadian cents a kilowatt
from 80.2 Canadian cents. The rate for large solar installations
will drop to 35 Canadian cents from 44.3 Canadian cents a kwh.
Considering the plunge in equipment prices, Ontario's rate
reduction is not as bad as some anticipated, said National Bank
Financial analyst Rupert Merer.
Prices for solar modules have fallen to as low as C$1 per
watt from close to C$4 per watt since the feed-in-tariff program
was introduced in late 2009, he said.
"It's never good news to see cuts in prices, but maybe the
industry was bracing for something that could have been much
worse," he said.
Wind power project rates will fall to 11.5 Canadian cents
from 13.5 Canadian cents per kwh.
HURDLE FOR NEW PROJECTS
Still, the reduction will make it more difficult for small
projects and new entrants, said Canadian Wind Energy Association
president Robert Hornung.
"We believe that this new price will prove extremely
challenging for many projects and could prevent a number of them
from proceeding," he said.
Prices for water, biogas, biomass and landfill gas will
remain at current prices.
The province said it plans to create a new renewable energy
committee to help shorten the project application process by up
to 25 percent.
To date, the program has resulted in the signing of almost
2,000 contracts that provide about 4,600 megawatts of power,
enough electricity to power 1.2 million homes, the province
More than 200 projects that represent a further 2,900
megawatts of power are currently in the approval process.
"We moved very quickly in the beginning, what we're seeing
now is a slowing down," said Association of Power Producers of
Ontario president David Butters.
"The important thing is that the government is still
committed to continue on with the acquisition of renewables, but
obviously at a slower pace."
The province said it will study whether it needs to increase
its renewable capacity target at the end of 2013, based on power
supply and demand forecasts. It expects to hit its target of
10,700 megawatts of renewable energy generation by 2015.
The government is also recommending that about 10 percent of
remaining clean energy capacity be reserved for projects that
have significant participation from local or aboriginal
communities. The review recommends a new point system that will
give priority to such projects.
The government says the plan has attracted C$27 billion
($27.19 billion) in new investments and created more than 20,000
clean energy jobs, adding that it was on track to create 50,000