Ontario's micro Feed-in-Tariff Program

There is a program in Ontario run by the Ontario Power Authority called microFIT (micro feed-in-tariff) that is designed for homeowners, farmers, small business owners, schools, and religious institutions that allows them to develop a small (10 kW or less capacity) renewable electricity power generation project and get paid for the electricity generated at very favourable rates for the next 20 years.  Technologies include solar photovoltaic (PV) cells, wind, water power, biomass, bio gas, and landfill gas.  Most of the 1,394 licenses approved since December have been for solar projects.  At the end of 2009, Canadian solar installation capacity was about 100 MW. But primarily as a result of the Ontario program Canadian solar capacity is expected to increase to nearly 700 MW Within the next three years according to the Canadian Solar Industries Association.

The rate for electric power from solar PV is 80.2 cents per kWh, much higher than the current rates for electric power in Ontario.  The Ontario Energy Board (OEB) has recently released new electricity commodity prices that will take effect May 1, 2010 under the Regulated Price Plan (RPP).

• Off-peak 5.3 cents per kWh
• Mid-peak 8.0 cents per kWh
• On-peak 9.9 cents per kWh

As an example, a group of farmers called Farmers for Economic Opportunity applied for and got licences from the OPA for small solar installations. These arrays are small, on the order of 10 m² and cost in the range of $60,000-90,000  They are expected to generate an annual return of 15-20% on the initial investment.

Comments

[Richard Musi]

Thanks for this information - I hadn't realised how favourable the FiT in Ontario really is! Here in the UK we launched our FiT version of the policy on the 1st April, and we're waiting on the figures after the first month's activities.

My website (http://www.globalfeedintariffs.com/) looks at FiTs worldwide - let me know if you're interested in a link swap.

Richard.

[Christopher Stewart]

Geoff,
I have received my condtional offer from OPA for a small scale rooftop 10 mw solar aray back in december. I have not been able to find funding to purchase the installation and bring it on-line due mostly to the fact that the banks have only vauge numbers like 15%-20% returns. Do you know of anyone who has received a contract with the OPA that is now receiving cheques? The banks are looking for "proof" that once they cut a cheque that I will be able to service the debt.

Christopher

[M Dochoda]

Why is this considered to be such a good deal? When I crank out the numbers, my math shows that investing that same $60,000 in a mutual fund returning an average of 4% over 20 years will get you the $134,000 the micro-FIT promises at the 58.8 cents per kW; without the hassle, maintenance and insurance cost that you would incur with the micro-FIT contract.
Even at 80.2 cents, a stock market investment returning 5.6% will get you the $182,000 to micro-FIT will give you without the hassle.
The rates of return bandied around try to make you think that you still have an asset at the end of the contract. In reality, after twenty years the panels will be worthless, it will cost you money to remove and dispose of them.