The National Renewable Energy Laboratory (NREL), a branch of the US Department of Energy, has published a study relating feed-in tariffs (FIT) to the accelerating production of renewable energy.
According to the study, FITs are the most effective means of encouraging the development of green (renewable) energy production. Other alternatives include government subsidies or tax breaks, government policy (in the case of state-controlled utility providers), or simply to allow market forces to take control.
In a free market economy, government subsidies or tax breaks are not yet effective ways of encouraging green energy production. Too much depends on the whim of the current government or the outcome of future elections. A case in point, for Canada, was the sudden abandonment of the federal ecoEnergy program in March of this year – a year ahead of schedule. This program allowed homeowners to qualify for a subsidy if they upgraded the energy efficiency of their homes.
Free market forces alone will not provide the green energy Canada will need in the next few years as the effects of peak oil start to make themselves felt. Right now, energy prices are kept artificially low, especially in North America, so the market provides little incentive for business to forge ahead into the future. As energy prices continue to rise, however, green energy, whether from solar, wind, hydro, or biogas will not only become the cheapest energy, but, more important, the only truly sustainable and viable form of energy. But herein lies the problem – high energy prices cause inflation and recessions. The 2008 recession, caused by triple digit oil prices, is only a foretaste of what the world will suffer within the next decade.
Ontario’s FIT and microFIT Programs Offer a Solution
Based on Europe’s FIT programs, the Ontario FIT and microFIT programs actually encourage green energy production throughout the province by everyone from large multinational corporations to individual homeowners. These FIT programs work. In the EU, more than 15,000 MW of solar power and 55,000 MW of wind power have come online between 2000 and the end of 2009, thanks entirely to FIT programs.
At this time, Ontario produces about 8,000 MW of green energy from solar installations alone. Most of this growth is thanks to the provinces FIT and microFIT programs – before these programs were introduced under the province’s Green Energy Act, there was relatively little solar activity.
FIT Plus microFIT Equals Green Jobs
Due to its Ontario content rule, the Green Energy Act forecast the creation of 50,000 new green jobs throughout the province. Until very recently, this forecast was well on its way to becoming reality. Several companies have announced plans to build solar panels. These companies, if everything unfolds as planned, would add up to about 1,000 MWs of solar panel production every year, and about 2,000 new green jobs. More noteworthy, these jobs are only for the production of the panels – far more green jobs could emerge for those with the proper solar training and skills to install and maintain these panels.
Recently, however, the Ontario government quietly announced what is basically a retroactive revision to its microFIT program, substantially reducing the price paid for certain forms of green energy production. The provincial government proposal would have lowered the rate paid for electricity derived from ground-mounted solar installations from the promised 80.2¢/KWh to 58.8¢/KWh – a 27% drop. Once the plan reached the public, however, reaction was massive. Sentinel Solar, a solar installation company that would have been hard hit by the decision, launched a petition, attracting over 1,439 individual signatures.
As a result of petitions such as this, and the adverse public reaction, the province backtracked and agreed finally to reduce the tariff to 64.2¢/KWh, a 20% cut. The government also allowed people who had already submitted their applications by a certain deadline to receive the previously promised rates, if approved.
Petition signers also had the opportunity to participate in a questionnaire. The results of this survey strongly validated the power of FIT and microFIT programs in encouraging green energy production. Equally important, the results demonstrate the green job potential of these programs.
Briefly, the survey results showed conclusively that sudden changes to the FIT and microFIT structures would jeopardize any future green energy production – not just solar installations, but also any installations falling under the microFIT tariffs. Such a decrease would also eliminate many of the green jobs in Ontario’s pipeline.
This petition and the outcry over the McGuinty government’s decision to cut rates, however, prove that the public is becoming more aware of the province’s over-dependence on fossil fuels to meet basic needs. Now that the provincial government realizes it has little choice other than to follow the course it set out with its Green Energy Act, opportunities and growth in the solar energy sector will continue to grow, along with demand for increasing numbers of qualified, skilled workers in both solar and other fields.
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