Standard Offer Contracts - the Future for Renewable Generation?
Posted by Stoneleigh on October 18, 2006 - 10:22am in The Oil Drum: Canada
The Washington Post recently hailed Ontario's electricity sector as an innovator, claiming that Ontario "makes clean energy pay". According to the Post, "the growing chorus of cheerleaders for the program say it is an example of the kind of individual, grass-roots effort that many see as the solution to intractable problems ranging from energy shortages to global warming".
"We love the idea," said Keith Stewart, an energy specialist at World Wildlife Fund Canada. "The small stuff adds up. This model should be taken right across North America."
It sounds ideal, but, looking a little deeper, can Ontario's draft program of Standard Offer Contracts (PDF warning) for renewable energy - billed as "the most progressive renewable energy program in 20 years in North America" - live up to the hype? There is no lower limit on the size of project eligible to participate, but can it really encourage the proliferation of backyard generation, or farm and community scale projects, as its "cheerleaders" believe?
The Ontario electricity sector is facing challenging times. According to the IESO, "by 2014 close to 13,000 MW of Ontario's electricity requirements will need to be met with new supply or demand-side resources". This represents a large percentage of the total installed capacity of 31,189 MW as of September 2006. Up to 80% of current generation capacity will reach the end of its design-life within the next fifteen years. As part of its plan for balancing supply and demand Ontario government set targets for renewable generation of 1350MW by 2007 and an additional 1350MW by 2010. Mild weather in 2006, unlike in 2005, has kept prices low this year, fostering even greater complacency than usual. However, the IESO has warned that a season of extreme temperatures could test the system to its limits and could result in rolling blackouts.
Requests for Proposals (RFPs) - Bidding into the Central Station Model
The initial approach sought to encourage the construction of renewable generation through a series of requests for proposals (RFPs). An RFP involves setting the quantity of new generation politically while leaving the price to the market, with the lowest bidders being chosen to build the required capacity. However, the bidding process was criticized for being cumbersome, bureaucratic and costly. Only large commercial projects in resource-rich areas were able to bid - only large, well-funded projects could afford to prepare a bid at all, and only projects in resource-rich regions would be cost-effective enough to justify a low bid that might have a chance of being selected. This process forced renewable generation to conform to the central-station model - large generation remote from demand - to which it is not well suited, rather than encouraging the development of small-scale distributed generation.
The European Alternative - Renewable Energy Tariffs
Critics of the RFP process pointed to the European experience (PDF warning) with renewable tariffs - the resulting huge increase in installed renewable generation capacity and the development of a successful indigenous European renewable energy industry. Under a renewable tariff system, the offer price is set politically and the amount of installed capacity is left to the market (PDF warning). Offer prices vary between technologies, as some renewable energy technologies are viable at a lower price than others. Offer prices may also vary with the energy intensity of the resource to be exploited, with projects in areas of lower energy resource intensity being offered higher prices for the electricity they generate in order to ensure their viability.
The intention in many European countries is to develop their indigenous energy potential as fully as possible in order to reduce dependency on energy imports, which are becoming more expensive and are increasingly derived from exporters that Europe would rather not be so dependent upon. Eliminating dependency is not possible, but renewable energy generation is nevertheless seen as a vital component of energy security, and thus worth developing even if it is currently far more expensive than conventional alternatives. Parts of Europe are taking the long-term view that fossil fuels are likely to be less affordable, if not less available, in the future than they are now, hence investments in renewable energy generation capacity made now are likely to grow in value over time.
Self-Reliance Versus Comparative Advantage
This philosophy of deliberately developing expensive self-reliance, at least to the extent that such a thing is physically possible, is completely at odds with the rationale typically governing North American expenditure on generation capacity, namely comparative advantage. Here, great importance is generally attached to achieving the lowest price in the short-term, the assumption being that the long-term will look sufficiently like the short-term that the decision will be justifiable over the life of the investment. There seems to be little real concern over dependency on imports of fuel or electricity -either between regions or between countries - and a great deal of complacency regarding both the price and the availability of conventional supplies.
Nationally, Canada has significant fossil fuel energy sources of its own as well as reserves of uranium and hydro resources, which would explain, although not excuse, a measure of complacency with regard to energy security. However, the same cannot be said of Ontario at the provincial level, where imports of both fuel and power have been increasingly necessary in recent years in order to keep the lights on. Growing dependency on natural gas for electricity generation is a prime concern, as is the inability of Ontario's available generation capacity to meet demand without the need for expensive imports during extremes of temperature.
Standard Offer Contracts (SOCs)
Ontario was persuaded, following the long heat wave of summer 2005 and resulting price increases, to put in place a legal framework for encouraging the development of renewable generation similar to that of several Europe countries, under the name of Standard Offer Contracts (SOCs). The regulations are due to be finalized shortly.
On March 21st, Premier Dalton McGuinty and Minister of Energy Donna Cansfield announced the long-awaited introduction of Standard Offer Contracts (SOC). SOCs allow operators of wind turbines, solar panels, run-of-river hydro plants and biomass plants to connect to the provincial electricity system. Dr. David Suzuki was also present at the announcement in Cambridge, ON, congratulating the Premier for taking the North American lead in renewable energy. "Ontarians need a reliable power system that doesn't leave a legacy of economic or environmental debt," said Suzuki. "Today's announcement will revolutionize the market for clean, renewable energy in North America and lay the groundwork for a healthier, brighter future."
The assumption, expressed above by the Ontario Sustainable Energy Association (OSEA), is that emulating the structure of the European renewable energy program would result in emulating its success, but there are key differences between the Ontarian and European approaches. In fact in some ways, the SOC program more closely resembles the RFPs which preceded it than the European approach it was intended to resemble.
The upper size limit for project eligibility is 10MW, which may well open doors for projects unable to compete under a RFP. Importantly, however, from the perspective of the way SOCs have been presented in the media, there is no lower limit on the size of projects eligible to participate.
Renewable energy is inherently decentralized, and small-scale investment in renewable technologies needs to be encouraged for its true potential to be realized. Farmers, co-operatives, communities and first-nations groups are ideally placed to install renewable energy systems. However, SOCs are not nearly as a good a deal for very small generators as their proponents have led people to believe.
No Lower Limit?
The OPA initially considered setting a lower limit of 150kW, or even 500kW, for eligibility for a SOC, so as (to paraphrase the OPA's March 2006 report) not to inflict too great an administrative burden on itself or on the utilities in having to deal with many small applicants. This position is not indicative of an organization that is in any way committed to encouraging small-scale distributed generation, despite the green image the Ontario government is keen to cultivate.
It was instead decided to allow project economics to drive a reasonable floor, in other words to allow small potential applicants to discover for themselves - quite likely after having made the renewable energy investment - that the costs associated with a SOC are prohibitive at small scale. These generators, who will probably end up net metering, will not get the return they had been led to believe they would receive by the publicity materials.
The OPA knows projects at residential scale, and perhaps at farm or community scale as well, will not be economically viable under a SOC. The following appears on their website (question 5):
It sounds expensive, especially for very small generators. Can you make money?The OPA does not believe that very small, residential scale projects will make a profit under the Standard Offer Program. Residential scale generators are welcome to participate in the Standard Offer Program.
Homeowners may be motivated by reasons other than making a profit. The Standard Offer Program was designed to reduce the barriers small generators were facing in the competitive bidding processes that were previously available. It is up to each project to satisfy its own decision criteria.
In some cases, particularly the very small projects, another program—called Net Metering—might be a more satisfying way to get involved.
SOCs Versus Net Metering
The article in the Washington Post promulgates a major misconception:
In addition to getting paid for making electricity, homeowners and businesses slash their own electricity draw from the grid, where power sells at an average of about 5.8 cents a kilowatt hour across the province.
This is completely untrue. The author has confused SOCs with net metering, which has been available in Ontario for some time. Under a net metering agreement, small generators can net off the electricity they produce from their consumption and pay only for the difference, if their consumption is greater than their production. If their production is greater in a given month, they may carry credit forward for up to a year, allowing their production and consumption to be netted out over an annual cycle. If their production exceeds consumption over the year, however, the utility will not pay for the surplus.
In contrast, under an SOC production is completely separate from consumption - the two are metered and handled independently. All production is compensated at the rate established in the SOC - 42 cents per kWh for solar photovoltaic generation and 11 cents per kWh for everything else - while consumption is charged for at the prevailing rate set by the province. One cannot both be paid for electricity produced under a SOC and watch one's meter run backwards - it will be one or the other. For most small generators, net metering is likely to be the more attractive option as the costs they would be expected to bear under a SOC are likely to prove to be prohibitive.
Fixed Costs and Fixed Prices Under a SOC
All generators under a SOC are required to have an Ontario Energy Board generator licence, at a cost of $100. They must also have a four quadrant meter with telecommunications capability in order to transmit the hourly data. The cost of the meter is likely to be between $1000-3000 and a dedicated phone line may well be required. In addition, generators must maintain separate utility accounts for generation and load, at additional cost. All connection costs, including a connection impact assessment and any upgrades to the distribution system required as a result of the connection, must also be carried by the generator.
Solar installations will be paid 42 cents per kWh and all other generation technologies will receive 11 cents per kWh, with prices to be fixed for the 20 years of the contract. An inflation adjustment is available for 20% of the price paid to non-solar installations, while solar generators will receive no inflation adjustment at all. The price could therefore vary significantly in real terms over the life of the contract.
A premium of 3.52 cents per kWh is available to non-intermittent generation, only if it can guarantee that power would be supplied to the grid for at least 80% of on-peak hours under normal circumstances. A costly assessment would have to be undertaken by the generator in order to establish this capability. Given that the definition of peak hours is subject to seasonal variation and also to change without notice, this could be difficult to prove and to design for. Wind and solar are automatically excluded from this upgrade, even if twinned with small hydro or energy storage in order to provide dispatchability.
Costs Versus Benefits for Small Generators
Even in today's terms, the price offered for non-solar generation is not particularly generous in comparison with the spot price for electricity, especially during peak seasons. It is approximately double the regulated price paid by electricity consumers, but the regulated price is itself effectively subsidized. During peak demand periods the spot price regularly exceeds 11 cents per kWh - in fact in the summer of 2005 there were entire weeks when the spot price averaged over 15 cents per kWh. Seen in this context, the SOC payments for non-solar generation hardly represent a premium, even without taking into account all the costs to be imposed on small generators. This is perhaps not surprising since the Ontario Power Authority (OPA) set the 11 cents per kWh rate by reference to the rates offered under the previous RPF system, which pertained to large commercial projects.
The payments for solar PV, which might seem generous at first glance, are not attractive for small generators. For instance, a homeowner with a typical 1.5kW system could conservatively expect to generate approximately 1500-1800kWh per year in Ontario (depending on whether or not the angle of the panels is fixed or optimized by season). That is equivalent to about 125-150kWh per month. At 42 cents per kWh, that would be worth $52.50-$63 per month.
To put that in perspective, the cost a dedicated phone line, which would probably be required under a SOC, could reach $40 per month. Added to the $10-30 cost of maintaining a separate utility account as a generator, and the capital cost of the required interval meter costs - $1000-3000 - it is clear that generators at a household scale would be lucky not to make a net monthly loss. It would be unlikely that the generator would even recoup the cost of the meter over the life of the contract, let alone the cost of the system. Needless to say, the numbers look even worse for small generators using any generation techology other than solar PV.
According to the Washington Post article:
Advocates like Deborah Doncaster, executive director of the Ontario Sustainable Energy Association, say they want to get the program started and expect that the power authority will increase the prices later.
However, any changes to SOC prices would not be retroactive and so would only apply to contracts established subsequent to the change. The OPA explicitly said during a teleconference on September 15th, that the price paid to solar installations was not intended to provide a return on investment. In addition they said that any adjustments to the price would reflect only changes in the cost of the technology. They specifically ruled out changing the price in the future in order to provide a better return on investment.
Common Pricing, Variable Costs
The common price of 11 cents per kWh for non-solar generation will result in very different rates of return for various classes of renewable energy projects as the cost structure for different technologies is ignored. The assumption built into this model is that all renewable energy, with the exception of solar PV, is of the same value to the Ontario ratepayer and so should be similarly compensated in order that the cheapest technology in the most resource-rich location would be favoured. It would be considered irrelevant, in terms of value to ratepayers, if this provision were to result in only one form of renewable energy being taken up under the SOC program, or if SOC generators were concentrated only in certain resource-rich areas. This philosophy - the pursuit of comparative advantage - is exactly the same as that underlying the RFP program which preceded it. It is, however, completely at odds with the basis of the European renewable tariff system, the success of which the SOC program was meant to emulate.
Map: windatlas.ca
Some technologies, for instance the biogas digesters currently being considered by many farmers, would not be viable at all under such a pricing regime. The equipment would not last for the 20 years of the contract and the rate offered is too low to allow for equipment replacement. The common pricing system would heavily favour wind projects in areas of high wind energy density at the expense of almost everything else, which is bound to lead to disappointment given the expectations that have been created. Of particular relevance to farmers, who have been keen proponents of a SOC program, is the tax provision that dictates that if farmland is used for the purpose of electricity generation to be sold to the grid, then the taxes for the affected land will shift from farmland rates to industrial rates. It is not clear that farmers are yet aware that they should have grounds for concern.
Incentives and Credits
Renewable energy often benefits from various incentive programs, which may comprise an essential element of their financing. Under the SOC program, any incentive payments which a project may be eligible for will accrue to the OPA and not to the generator. The OPA also retains, "for the benefit of Ontario consumers", the rights to any emissions credits resulting from avoided emissions of greenhouse gases by a SOC project. This provision could jeopardize the viability of renewable energy projects, and could potentially cause external sources of funding to dry up rather than to contribute to the budget of the OPA.
Backup Power?
SOCs encourage those who invest in renewable energy infrastructure to put in a grid-tie and sell all their output through the grid in exchange for payment. However, should the electricity supply system become less reliable than it is now - perhaps due to fuel shortages courtesy of peak natural gas, unfavourable hydrological conditions due to global warming or reliability issues at aging nuclear installations - the owners of those renewable energy systems will still suffer blackouts like the rest of the population. Under outage conditions, a grid-tied system with no capacity for power storage will not function - no power will be paid for and no power will be available to the owner of the system. Energy storage systems can be expensive, but can allow the small generator maximum flexibility as to the use of his output. If he cannot be paid due to an outage, he can use the power himself to run his essential loads.
Value for Ontario Ratepayers?
According to the OPA, the SOC program has been designed "to promote renewable energy generation projects that are of value to the Ontario ratepayer", not "to have Ontario electricity consumers and taxpayers subsidize any and all renewable energy projects regardless of their value to the system". As the cost of participation is entirely disproportionate for small generators, the message sent to these generators is that their participation is not of value to Ontario ratepayers, even in aggregate.
Unfortunately for the Ontario government, there may be a political price to pay for having led homeowners, farmers and small co-operatives to believe that they would be offered a favourable deal under a SOC. For instance, according to the Canadian Solar Industries Association (CANSIA), there has been a 400% increase in sales in the last year since the SOC program was announced, which represents a lot of raised expectations.
In Ontario, the program has already brought a rush of activity. Homeowners in Toronto are climbing onto roofs to add solar panels. A cooperative of small investors is raising money to build five large wind turbines to harness Lake Huron winds. Others are eyeing the locks of a St. Lawrence Seaway canal for small hydro-turbines. Farmers are looking at manure piles and figuring the profits of using organic decomposition to create methane gas that can make electricity. "There's a tremendous interest, at all levels, from well-organized business consortiums to small homeowners," said Tim Taylor, a spokesman for the Ontario Power Authority. "The impact in megawatts is going to come from the larger projects, but there's a tremendous momentum found in small, backyard projects."
The following response, quoted in the Washington Post, from a Toronto homeowner with newly installed solar panels on his roof, is typical:
I think the government has underestimated the amount of response it was going to get," he said. "What other kind of home improvement gives you dollars in return?
He and many others who have invested in renewable energy technologies, or have sunk time and money into attempting to make such an investment, are likely to be very disappointed, if not very angry.
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What we mean by this is sending and rating these links at reddit, digg, del.icio.us, /., fark, stumbleupon, metafilter, and the like. Reddit, Digg, and del.icio.us are available up in the little icons under the title.
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More importantly, Canadians, make sure to hit the Canadian blogs and websites to spread the word about TOD:Canada.
After investigating SOCs I was drawn to another alternative - green electricity cooperatives like Bullfrog Power. You draw your power from the grid as normal, but pay the cooperative instead of the power company. They in turn supply the amount of electricity you use into the grid from certified green sources. It costs the homeowner a premium of about $1/day and there is no need to try and generate your own renewable power under potentially sub-optimal conditions. It doesn't get you off the grid, but it does promote the growth of green electricity.
And welcome to TOD, Canada.
Est-ce que ca va etre bilingue?
It wouldn't hurt to approach some bilingual authors to try to get some posts in French. Could actually draw in a whole new readership profile into TOD.
Feel free to contribute content (contact me at Stoneleigh2006(at)msn(dot)com). The west coast is currently under-represented and we'd love to hear your perspective.
We have to give some thought to how we would organize it, though.
If you do it, do it well, I'd insist.
For instance, if only one in 10 stories is available in French, that isn't ideal, it's discriminatory. So you would need pretty solid and quick translations (you can't have a 10-day delay).
Also, in the Comments threads, things can become pretty messy, if you have long strings of people reacting to each other. You don't want to force them to scroll more than already necessary. There must be a point of "scroll fatigue". I'm sure that already happens over at TOD, there are regular complaints about the scrolling through hundreds of posts.
Still, the threads, we can just see where it goes, and act when we find it gets out of hand. For the stories, we'd have to have a concept beforehand.
One solution would be separate threads, but is that so great?
Another option might be to include buttons for "All languages", "English only" and "French only", if technically feasible.
But I'll admit the separatism issue is ugly in my view.
We're actively thinking about it.
Considering the traditionally progressive viewpoints of Quebecois, I'd expect there to be quite a bit of interest from that particular province in some French language posts.
Wonder if he's got the same message for the people he's about to fire.
What about the Peak Oil and die-off crowd?!
Infinite exhilaration awaits us all!! Everybody loves a comeback story!!
Interested to know how long you been posting on TOD - as Roel or as anyone else.
Here's and exerpt from an email I sent to PG a couple of weeks back related to recruting European contributors:
Anybody know who this guy Roel is - he just appeared on the scene I believe - got involved with fights with several posters including me - but has settled down and he is posting lots of interesting and varied stuff.
So I'm looking forward to your Dutch gas post!
Wellcome to TOD!
CW
Hey CW, yeah the Dutch gas, that's true.
As a kid I lived very close to where that all comes from. And I would still doubt your assessment of a fantastically kept resource. The only government imposed cap I have seen is from 2005. We'll ask our grandkids how well they think it was taken care of. All of which is not to say that other parties couldn't have done worse that the Dutch.
I've been living in Montreal for years, but still have my European passport. And now find myself editing TOD: Canada. Small world, mate.
Plus, I haven't gotten around to showering you with compliments for your LIES piece, simply because I haven't fnished it. And really wanted to, becaus it is that good.
I had to research and write a piece for the MTL weekly I write for, which was pushed forward to nexr week at the last moment. Canada is fast turning into the US, and I like it not one bit. But you in the UK must now just how that feels. Holland is the same.
I'll go finish reading LIES now. Question for you:
Yesterday, I posted, both here and on the mothership, an article stating that Statoil cut their offshore output by 340.000 bpd. No-one reacted, while everyone was all over the same numbers in Alaska a while back. Whassup with that?
roel
PS don't ya dare go believing that I've settled down
i'm going to move on to looking at N Sea gas - so may revisit Groningen at that point - will try to gather some insider facts.
CW
Spin doctors!!!! They managed to turn "reducing demand" into "demand-side resources"! What politicians are they going to fool with that?
By reducing demand, you reduce supply and you reduce the need for "demand-side resources". Reduce demand by insisting on passive solar houses, super-insulated houses (eg strawbale). Insist with local politicians and local builders. Don't settle for builder's "R20000 features", you need much more. Educate yourselves. Search the internet with the keywords I gave in this paragraph.
Heck, Canadian Tire sells nice little wind generation packs.
Unfortunately, the Federal Conservatives haven't helped things at all after dismantling the One-Tonne Challenge program. The possibility of grants and rebates after having upgraded your home really drove people to take the plunge. If that could ahve been combined with this Provincial commitment to actually pay people for the priviledge of using their power... then it could have been a really nice synergy.
Such is life.
I have to default back though to my positive outlook... it's certainly better than anything else happening in Canada.
If you an SOC that values the power you put in the grid at 45 cents as opposed to net-metering which values it 11 cents, there's no argument that's a better price. Now if you have a monopoly utility who adds all sorts of idiocy to make the system seem less viable that's a problem. For example, the ridiculousness of requiring a dedicated phone line or saying it will cost $1000 to $3000 in real time meters, when the technology itself at this point is a few dollars, that's another problem. The cost of information and communication technology is minimal at this point compared to the cost of energy, though certainly there are many who want to make a big profit off IT.
In California, the utilities give 11 cents for net metering, steal, by paying nothing for surplus power generated, and at the same time pay as much as 30 cents for peak electricity from natural gas plants.
Basically there's two things we need to do, subsidize renewables and figure out how to put intelligence into the grid, so that we can better run a distributed generation as opposed to centralized generation system. Net-metering which the utilities fought in the first place, is a first primitive step, but it is grossly insufficient.
The utilities are going to lose and they don't want to, but as a society that's what has to happen. In electricity we have basically a century old system, that has been run the same way for a hundred years. It's an economic system that counts on a cheap over-abundant supply of fossil fuels, a completely unintelligent network, and dumb consumption. All this needs to be changed and it's going to cost money and it's going to be fought tooth and nail by those who have an established interest in the present system, the bigger interest, the greater they'll fight it.
Countries that can boast successful community-owned projects (such as solar parks) typically have a payment rate of over 80 cents (Canadian) rather than 42 cents. This allows individual investors to receive a dividend of between 8 and 10 percent. Solar projects in Ontario will probably break even over the 20 year SOC contract period.
One positive aspect of the SOC is the amount of media coverage it is receiving. Companies can leverage this media attention - the return on investment of a renewable energy project may be low, but the 'free' advertising and goodwill they receive is worth money to them... It's just a different way of looking at the benefits of renewable energy and maybe using a different budget to pay for it.
The Sunpark Challenge is one project that is inviting companies to use some of their marketing budget to build renewable power projects. The SOC will cover all the running costs of the project. In essence, each company would be buying promotional opportunities and advertising, rather than hardware to generate power.
I encourage everyone to visit www.sunpark.ca to see if your company could benefit from becoming involved in this project.
As projects like this are built, we can support the solar industry in Canada, and help bring prices down to a level that everyone can afford... Maybe then the SOC will be more attractive!
I'm particularly concerned about the farming community as they been on board with this from the beginning, but most of their projects are unlikely to be viable. Even those that would be might incur a huge tax penalty (land taxed as industrial rather than agricultural). Personally, I doubt if projects less than about 500kW would be viable.
I live in Southwestern Ontario and installed a 5kW PV grid-intertied system with battery backup this summer. Since I did the installation myself, the project was a long time in planning and was well underway before the SOC was announced.
Like you, I also listened in to the teleconference that the Ontario Power Authority held to answer questions about the SOC program. There seemed to be as many questions regarding micro-scale systems (<10kW) as there were for larger systems. It was obvious that the micro-scale producers were not happy about what they were hearing.
Immediately after the teleconference I contacted the Canadian Solar Industry Association to find out if they had any inside information about relaxed metering requirements for micro-generators. They said that they were very aware of the issue and are actively working with the OPA to find a better metering solution for micro-generators.
In my case I currently use the net metering contract. Since the administration and billing for the SOC will be handled by the electricity distributor (Hydro One for me) and they also look after the net metering program, it is hard to understand why the OPA feel they need more rigorous metering requirements for the SOC program. The net meter I have installed records both what I consume from the grid in addition to what I send out into the grid. Presumably this is an accurate meter, so why not use the production value for the SOC, and correct the SOC payment by the amount of credit I receive from the net metering program? Since there will be no on-demand production and the amount of production will be relatively small, the meter can be read manually every few months as it is currently done now for net metering, and for all residential customers. I know that the production value from the net meter only includes energy generated during the times I produce more than I consume, but I think for many small generators like myself this would be acceptable if I can avoid all the more extensive metering requirements.
My current plan is to wait for a year or so to see if the OPA relaxes the metering requirements for micro-generators.
On the generation side of the bill, they use a complicated crediting process (more complicated than necessary IMO), but they do credit you not only for the energy you deliver to them, but also credit you the delivery, regulatory, and debt retirement charge relative to the energy you deliver to them. The catch is that from this total generation credit, they only apply a credit on each bill equal to the electricity used (@0.058 $/kwh) minus the GST and distribution charge related to that usage. The rest of the generation credit (if there is any) is not lost but rather is carried forward to the next bill. If the accrued credit does not get zeroed out over a year, then you lose this credit. The only thing I don't know yet is if they do this zeroing all at once after each year, or if they use some other method. I guess I'll learn once a year has passed.
Yes, that's what I heard on the teleconference as well. They backtracked relative to what they indicated in their draft program rules. I'm still hoping that there will be enough disgruntled people to bring about a change eventually. That why I'm waiting for a year before deciding to go further.
I suspect that I may end up producing slightly more than I consume, but don't mind providing some energy philanthropy.
I heard of these proposals for time of day pricing, but this would also require a new meter which records usage relative to time of day. It will be interesting to see how/if they try to tie together net metering with time of use/production.
Bienvenue, TOD: Canada!
Great article. I've been wondering what was going on in Ontario. Last summer, there was all that talk about looming shortages, but no real solutions (that I ever saw, anyway).
Is it to supply large amounts of renewable energy from Ontario sources ?
If so, the limit whould be much higher than 10 MW. Small hydro plants that might have been, say, 13 MW will be built as 9.98 MW plants. (Note Innergex hydro plant in BC that was 49.9 MW when a 65 to 70 MW plant would have better for the site). 11 cents for the first 10 MW, 9 cents for 10 to 100 MW, 8 cents for anything above 100 MW would be smarter if "small is better". (Is it ?)
Please note group wants to install five large wind turbines close to Lake Huron. Would not six, eight or twenty be better ? More renewable power, greater efficieny in operations & maintenance. But six WTs > 10 MW, so five it is.
Is it to supply large amounts of renewable energy ?
Is so, contact Manitobe & Quebec. Large new developments are possible from both, hydro + wind via new HV DC lines.
Is it a political ploy to excite a large number of voters and generate trivial amounts of power ?
Not very good at that either.
I am puzzled as to the goal of the SOC. Neither fish or fowl.
Some small clusters of WTs, some small hydro (likely 9.98 MW, wasting renewable power from sites suitable for larger).
Perhaps enough to replace for one smaller nuclear reactor. Perhaps half of one.
Alan
Five years ago I literally could not get a straight answer to this question, even though I had face to face meetings with people working in the Minister's office. It seemed like deliberate obfuscation to me.
Now? Well it's still pretty byzantine to put this together, but if you read this site you might actually figure out how to do it. Whether you can make money or not.
In five years...that's the level of progress.
I have no more hair to tear out.
Just because near 9 million people talk french in Canada (I'm surrounded by mostly french talking people) I want to point to a french program currently going on :
Energetic crises - Myth and Reality in french only. The program is currently running and I will try to make a resume of it.
Here is the people talking :
Hélène Raymond (journalist Radio-Canada),
Thomas Mulcair (Members of the National Assembly, Chomedey),Previously Environnement Minister
Jean-Thomas Bernard (titulaire de la Chaire en économie de l'énergie électrique et professeur à l'Université Laval),
Yvan Dutil (chercheur, ABB Bomem et membre de la Commission énergie de Nature Québec)
Sophie Brochu (vice-présidente exécutive, Gaz Métro).
Jean-Thomas Bernard know the problem but is a cornucopian, want to go the Hirsh way. I sent him a copy of my report, hasn't came back with it recently.
Yvan Dutil, well Is a physicist, he knows math and exponential growth, what a surprise (wink-wink) he almost read the french report I wrote last april. He seems to know PO quite cleary. He has probably read LATOC and The Oil Drum.
Sophie Brochu is talking about the Natural Gas problem and what is needed to be done at first. She's stating that using Electricity to heat homes (what we do mostly in Québec) is something dummy. She's clever that most I talk to.
Well, lets talk about this!
gagnon_pascal (at) cgocable (dot) ca
Yes, a transcipt of the program would be good
We should do aome Québec energy stuff
What have you written about?
And is your report available anywhere?
Easy to find on google (first link).
I do a heck of a job localy and regionaly to get most influent people informed on the problem.
It's hard, really hard, but I do it.
I will try to keep you informed on the things I do.
Crise énergétique
Then you can go to this adress to watch it online in direct WebTV
I hope it will help for those talking only french. This is the first video document in french that talk about this problem.
The transcript will have to wait a bit (I'm very loaded of work, I work 10-12 hours a day)
I live in Toronto, am a regular at the Meetup.com monthly gathering of Peakniks, and have the background of working for the MOE in Ontario for three years and now work for an energy marketing company.
The latter point is bizarre...I can't sound too panic-ridden to people, but honestly if I really want to sell people on the programs (particularly gas) how the hell do I NOT say gas production is in decline on this continent?
Oh wait - I still do that. And people still don't sign up.
I'm not saying my company is the best, but Christ Almighty - aside from a company going under and leaving you holding the ball, how could locking in at a price now NOT save you money by 2011!?!?!?! If anyone could explain this to me I'd appreciate it.
But anyway...I look forward to more articles, the first one was utterly fantastic. The OEB's offer certainly seemed solid until you take it apart...hearing the truth is very useful.
For a follow up, perhaps a study of electricity rates across the country? How Quebec and Newf/Labrador are in good places because of hydroelectric? The challenges faced by each province given different sets of circumstances (HUGE debt in Ontario, indigeneous resources in Alberta, availability of hydroelectric)?
I look forward to your work and would even like to help if I can.
well, your proposal to check rates across the land sounds good
so why don't YOU do it? write to
Stoneleigh2006(at)msn(dot)com
I think you'd have to include with that:
* sources, as in how much coal, how much hydro, etc
note that we have many provinces
* future expectations, both pricewise and sourcewise (growth rates?!)
NB: pollutionwatch.org named Ontario Power the by far biggest CO2 emitter in the country, which leads to another aspect of the question
The report on their site is revealing, but you have to keep in mind they talk only about large emitters, not province wide total numbers
I'm expecting a great deal of volatility in the price of natural gas over the next few years. This would wreak havoc with longer term planning by both companies and individuals. If companies offer fixed rates that turn out to be too low they may well go out of business, unless they in turn have secured their supplies at a fixed rate over the life of the contracts they have offered (in which case someone else further up the supply chain may go out of business). Somehow I doubt if the little guy will end up winning on the deal in the long-term, but there may be short or medium term benefits.
Not withstanding the fact that the OPA's report to the public distorted some of, and omitted most of CANSIA's representations on solar PV and solar thermal energy as potential contributors to Ontario's energy supply mix, (see http://www.cansia.ca/downloads/report2006/C19.pdf for the real deal) I see a number of problems with the whole Standard Offer Contract program.
Simply put, the SOC is being used as green washing for nuclear power and the construction of new gas fired electricity generating stations. This is where most of Ontario's new energy supply will come from in the government plan. Two new nuke plants were announced this summer. Here in Ontario we've got sunny propaganda announcements on the TV every evening from the nuke boosters, telling the public that nuclear power is safe and green. Some members of the OPA board Such as John Beck (Aecon corp) come from the nuclear industry in Canada, and their companies are getting government work. After the release of the OPA report on the future of Ontario's electricity supply, the public was given the opportunity to "comment" in a series of rigid formal plenums that severely limited the public's ability to "comment" by framing a set of false questions and limiting debate times. Needless to say, public comments - almost universally in support of a massive investment in solar and wind - were ignored, while public sentiments were pandered to.
A peaking Canadian natural gas supply does not seem to be a concern to either Ontario's government or most of its green critics. The OPA is dealing with the limited question of what technologies we will use to turn finite fuel into usable energy, not where our future supplies of fuel will come from. It's a Pepsi or Coke kind of debate.
Two days ago the Ontario government announced the construction of 7 new gas fired co-generation plants. These are being cheered in the press by naïve boosters of "energy efficiency" and the environment because they will allegedly wean Ontario off dependency on coal. Nobody is talking about what fuel these plants will be burning in the year 2030, long after we will be eating into Canada's so-called "undiscovered" reserves of natural gas. When I asked one friend what she thought would happen to these plants in the future, she suggested they could be turned into very smart condos.
One of these soon to be white elephants, the Portlands Energy Centre, (PEC) is being built in Riverdale, the Toronto neighbourhood where I live. The government originally told local residents that there would be co-generation and solar panels incorporated into the plant. Because I worked for the only solar energy company in Riverdale at that time, I was encouraged. Work on a big project! Both measures were later dropped. There is a grassroots movement in Riverdale to oppose the plant, which is going ahead anyway. All I've got out of the PEC so far is a yellow "Stop the Plant!" lawn sign that cost me ten bucks.
But from my perspective in Ontario's solar energy industry, the biggest problem I see with the SOC is a near total lack of any rapidly scalable capacity within the renewable sector in Ontario (especially the small scale grassroots solar area) to meet any massive demand for grid tied solar energy systems or solar DHW. These seem to be the great white hope being held up to the gullible public and also to international observers and media who should know better.
Who is going to install all of these solar systems? Actually, I know who. And that's the problem. I can count the solar installers in Toronto on my two hands. Toronto has some 4 million people. This fact alone makes the SOC a mere sop to a gullible public that is ignorant of the basic facts. The few companies that provide grid tied PV in Toronto are all scrambling to keep up with demand, and also trying to figure out what they're going to do next summer when we expect demand to explode. The public imagines that solar installations will just sprout up like so many tulips. Supply will be chasing demand for a long time, yet people here expect PV prices to come down. Think again folks.
Where are the PV panels going to come from? In terms of demand for PV, Ontario does not even register on the global map. The EU and China are sucking up global supply.
If we really want a solar industry in Canada, we need quality solar products made here. There is only a tiny manufacturing base for solar energy products in Canada, and for the highest quality product, both PV and thermal, you need to import from Germany or Japan, where domestic demand is very strong. Somebody is going to have to throw some major cash into a Canadian PV cell plant or three if we want a secure, cost effective supply of solar panels, and that's going to take government support. If the government was serious about solar, they'd have a renewable energy industrial strategy to provide supply to meet the demand they are creating with these big press releases. They might even create a job! However Ontario's Premier would rather cut deals with the big auto makers to keep their plants open and their destructive and wasteful products on the road and the workers employed in jobs with no real future - which shows you just how green and forward thinking he and his government really are.
It's the shallow approach of the policy makers themselves that calms any urge I have to enthusiasm over the prospect of big renewables in Ontario. I recall my last meeting with the former Energy Minister, Donna Cansfield, about 11 months ago. Back then I worked for a solar water heating business, (since then I have started my own solar energy products company, see www.solarcooking.ca ) and I urged her to consider some support for solar thermal.
Donna, (who meant well I'm sure, as she is a very nice person) replied that the "standard offer contract" was coming, and that it was the solution to my problems. Right there, my heart sank. She didn't get it. Solar water heaters were never eligible for the SOC, which is focused exclusively on feeding electricity into the grid, something solar water heaters don't do. I informed her of this at the time, but still there is no new provincial support for solar water heating. If the SOC and renewable energy were such important parts of this Minister's portfolio I wondered to myself, why didn't the Minister have a firmer grasp of the difference between solar PV and solar thermal, and how they related to the SOC? The simple answer is that solar energy has never been very important to the McGuinty government, except as a public relations effort to pacify the public. It's the only conclusion I can draw based on what I've experienced.
PS. The indifference is not just a Liberal affair. The Federal Tory government of Stephen Harper cancelled all federal government support for large scale solar thermal projects (an excellent program called REDI which formerly paid 25% of the project costs back to the purchaser after installation) as soon as it came to power last year. After months of lobbying by CANSIA, an effort in which I participated, the government granted funds to a few suspended projects, provided they be completed by December 31st 2006. Because many of the re-started projects could not be completed by that time, the offer of funding was really moot.
Back to the topic: Great post! Here in Vermont too we have a "net metering" program that isn't what is seems to be, as credit for surplus power is taken by the utility at the end of the year. Moreover, one still has to pay the fixed per-month subscription cost. Some stupid non-solutions have been suggested, such as extending the credit period to two years. If one uses less energy than one produced in the first year, one will probably do that over again the second year, no? Another idea has been "group net metering", which means joining with neighbors to invest in a generating venture together. To me that seems like an artificial bureaucratic obstacle (more paperwork), since there would be no difference at all, neither to the finances of the utility, nor the physical system, between that and true net metering (where one household makes surplus power which is then supplied to the neighbors (and further) via the grid). Since most who have an interest in these sort of ventures first start with personal conservation (or should), and since a 3KW windmill costs little more than a 1KW windmill (and less than the grid intertie device), it makes no sense to deliberately install a system that will generate, on an annual basis, less than the household use. One local installer suggested to me to burn up the credit in December in resistive electric heat. I think that is counterproductive, from a societal perspective. We need that surplus electric power from renewable sources for better uses than heat. (That story about houses with PV systems in Arizona using electric clothes dryers makes one both laugh and cry.)
The only valid reason I have heard for the "zero plus" program (misleadingly called "net metering") is that the utility should not be required to pay retail rate for power it buys. After all, it has to pay for maintaining the power lines. To that I'd say: (1) the fixed monthly fee is supposed to cover that expense, and (2) if that's not enough, then public policy could choose to have the rest of the ratepayers pay that extra little bit to encourage distributed generation, that won't be a problem until such generation is far more common. Moreover, (3) they could set an upper limit, e.g., 2400 KWH per year (about US$22 per month at our rates), for power to be actually bought by the utility from one customer via the net metering program, or (4) they could have a different, non-zero, per-KWH rate for such purchases. What rate? That's a matter of public policy, certainly no less than their average wholesale rate (wouldn't encourage much micro-generation, but better than the current program), but hopefully more than that.
Well, since I am the editor, with Stoneleigh, I can do what I want. That is not the reason for the posts,. though. And I don't bleed, thanks for caring. I am covered in paint, but it's not red.
The double posts were more in a Drumbeat kinda fashion, but we didn't have the Round-Up yet yesterday.
Then again, who am I to explain, I'm always surprised how fast any post on TOD goes off-topic.
What we want and need to do here in the starting phase is generate traffic, simple as that. Hence, positing relevant links serves a purpose. Since I read a lot, I will post what I think deserves attention.
And relevant ranges from local to the same international approach that is present at TODMommy. We can't ignore the global aspect of much that we talk about. Or ignore the mothership and its topics and posters, and stop posting there.
We'll see where it goes, and work hard to give TOD: Canada a raison-d'être.
So come back often, now, you hear?
roel
Countries that have vast endowments of fossil fuel and U are I believe, going to struggle with renewables. Hard enough to get renewables going in countries that have to import a lot of energy - though Germany is a leader in wind.
As I have mentioned before I am a fan of SAGD applied to tar sand production compared with mining - which is crude. So here's the Encana challenge - to produce all steam used in SAGD from renewables by 2010 - then you are making real progress in CO2 reduction. Problem is with Arctic high pressure in winter time - what to Hell do you use to make renewable electricity with ambient tempearture of -30C and permanent dark? (that's Encana's problem)
I was at Niagara falls with my family in Summer 2005 - there was ample solar energy around then - not to mention all that water. Hard to believe you guys have reneable energy problems when the rain fall from half a continet goes over a cliff edge on your door step.
Good luck with TOD Canada!
Cry Wolf
What you took a picture of was the equilavent of, perhaps, a nuclear reactor's worth of renewable energy at peak being spent on tourists. From vague memory, 100,000 cubic feet/sec are "wasted" for tourists. A trickle at night.
Las Vegas neon is nothing in comparision !
Best Hopes,
Alan Drake
The question Boof seems to be dancing around is class. We almost never address it within the solar business, though our lives revolve around upper middle class homeowners who are usually overly educated and well endowed with disposable income. Many have paid their mortgages off. Other, more independent minded types who can't afford our services in one go often end up doing it themselves in stages. To know them is to love them.
I quoted a potential customer today for a kilowatt of solar PV with battery backup approximately $16,000 CDN installed. This is for a granny cottage. Solar PV is not cheap. That's the whole point.
The real barrier to wide adoption of PV is not whether we price energy fed into the grid at 45 cents or 10 bucks a kWh, or what the licensing structure is, or could be. No. The mechanics of the SOC are a Red Herring. (don't get me wrong, we need to deal with the SOC on its own terms, because it's real and it's here)
The real barrier is first cost. That's it. In terms of its structure, the SOC is simply a novel form of investment insurance for the already wealthy, and has numerous precedents in the modern Canadian economy. The whole tiresome preocupation of customers with "payback" illustrates it nicely. Wealthy investors want to know they are going to get a monetized "return" on their investment. Bully for them. The SOC simply guarantees investors who can pony up the first cost of a solar PV system that they will see a return, backed up by the government. Where do I sign?
But wait. I have no money. I rent. I love solar energy, peace, love, good government, and all that stuff. Well, the government, and our industry by extension, says, "See ya! Wouldn't wanna be ya!" to those folks, who happen to be most people. The idea that solar is "power for the little guy" will be but a dream until we conquer the barrier of first cost.
The answer is actually easy. It's easy terms. Financing. Mortgages. I've been trying to get this going for years, and I know bankers who are keen on it. It's the damned government that is standing in the way.
If we want to propagate solar systems like so many flowers, then simply have a system whereby Joe Six Pack goes to the bank, and says "I want $16K to invest in a solar system." "Fine. You're breathing, aren't you?" says our friendly loans officer. "Thanks for reminding me," says Joe. The loan is underwritten at zero % interest, backed by government interest bearing bonds. When has a Canadian government not jumped at a chance to help out our Canadian Chartered Banks? Answer - when doing so would help the little guy.
My scheme would have the same effect as the SOC, an investment guarantee - but it's going to benefit a much wider range of people, and the very small investment risk is borne by the banks and the government. (Isn't this what they float government bonds to cover? Think of the potential derivatives market for 2nd hand solar energy debt!) My "solar mortgage" is also far less costly in terms of administration, (unless the hedge funds get their hands on it) because it's the same type of operation the banks and the government are already running! The solar system would simply become incorporated into the "real property" of the house, like refinancing the house to put in those nice granite counter tops. What's the payback on granite these days anyway?
The private borrower merely has to ensure he or she does not borrow more money than they can afford - a whole separate problem these days, but does it not make more sense than buying a Hummer for zero % down?
The failure of these types of projects to bear fruit in the dry sandy soil of the Ontario government wasteland of missed opportunity was a major reason why I decided to sell solar cookers, which most people can afford, and which feature zero % state sponsored baggage. But if anybody is interested in working on small scale solar PV or thermal energy financing projects, I have the contacts, and I'm a sucker for punishment.
Now I'm gonna say this.
This site is in its infancy. If you don't have anything important to say.
PISS OFF
Let TOD CANADA ascend.