greening canada by tapping into the “solar gold rush” by tim murphy presented to: solar...
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TRANSCRIPT
Greening Canada by TappingInto the “Solar Gold Rush”
By Tim MurphyPresented to: Solar Gigawatts
Location: Munich, Germany
Date: May 28, 2009
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Overview
– Solar in Canada– Federal incentives– Ontario – Incentives by other provincial and municipal
governments– Roadblocks to solar energy in Canada
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Introduction: Solar in Canada
– Canada’s solar resources• More solar potential than Germany (a world leader in
solar energy deployment)• “PV hotspots” such as Regina, Saskatchewan (Yearly
PV potential of 1,361 kWh/kW)• Cold weather increases PV efficiency
– Resources have been underdeveloped• Criticized by groups such as Green Cross
International and the David Suzuki Foundation
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Federal Incentives
– ecoEnergy programs• Renewable Power program
– $1.48 billion investment to increase renewable energy sources
– Goal: produce 14.3 terrawatt hours– Open to businesses, municipalities, and
institutions• Renewable Heat
– $36 million investment– Encourage industry and commercial businesses
to install solar heating systems
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Federal Incentives (cont’d)
– ecoEnergy programs
• Retrofit program– Grants for making energy efficient upgrades to
properties– Upgrades must be recommended by certified
adviser – Residential: up to $5,000– Commercial: lessor of: (a) $10/GJ of savings;
(b) 25% of cost; or (c) $50,000– Industrial: lessor of (a) $10/GJ of savings;
(b) 25% of cost; or (c) amount to reduce net simple payback to no less than 12 months
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Federal Incentives (cont’d)
– Tax incentives
– Accelerated Capital Cost Allowance (CCA)• 50% deduction on cost of renewable energy generation
equipment (acquired after February 23, 2005)• Certain intangible project start-up expenses qualify (feasibility
studies, engineering and design work)
– Canadian Renewable and Conservation Expense (CRCE)• Deduction for certain expenses related to getting project
started (e.g. access road, clearing land, service connection, engineering) as long as at least 50% of expenses fall within category of qualifying equipment
• Does not include most payments to non-residents, administrative and management expenses, land acquisition, depreciable capital property
• Advantage of CRCE is ability to transfer benefit directly to shareholders through flow through share structure
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Ontario
– Most populous province– Integrated Power System Plan (“IPSP”)
• Ontario Energy Board (“OEB) approval – Supply Mix Directive: June, 2006 directive to the
Ontario Power Authority (“OPA”)– Conservation measures to reduce peak demand
6,300 MW by 2025, including:• Solar heating• Small scale (10 MW or less) customer-based electricity
generation• Generation encouraged by net metering
– Increase renewable energy by 2,700MW by 2010 and 15,700 by 2025
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Ontario (cont’d)
– Renewable Energy Standard Offer Program (“RESOP”)– Launched November 2006– First initiative of its kind in North America– Features:
• Simplified eligibility and contracting• Standard rates paid for grid-delivered energy• Available only to projects under 10 MW
– Rates• Most technologies: base rate of 11.08 cents/kWh (20% indexed to
for inflation) plus reliability premium of 3.52 cents/kWh• Solar PV: 42 cents/kWh
– Project put on hold due to overwhelming response• 290 contracted PV projects, but most may never come online
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Ontario (cont’d)
– Green Energy and Green Economy Act, 2009 (“GEA”)– Introduced February 23, 2009– Will amend 20 other Acts (including energy, real estate, planning
and environmental legislation)– Measures include:
• Feed-in tariff (the “FIT”)• Streamlined project approval process• Right to connect• Province-wide renewable energy standards• “Smart grid”• Financial incentive (e.g. low interest loans for small scale projects)
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Ontario (cont’d)
– FIT– Replaces RESOP• First feed-in tariff of its kind in North America• Expected to launch June 2009• Renewable producers receive set price for energy fed into
grid over a 20-year contract (40 years for water power)• Fears that program will raise electricity prices
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Ontario (cont’d)Fit Rates
Renewable Fuels Capacity Range Original Proposed Price (¢/kWh)
Original Proposed Price (¢/kWh)
Rooftop or Ground Mounted Solar PV
≤ 10 kW 80.2 80.2
Rooftop Solar PV > 10 kW ≤ 250kW 71.3 71.3
Rooftop Solar PV > 250kW ≤ 500 kW 63.5 63.5
Rooftop Solar PV > 500 kW 53.6 53.9
Ground Mounted Solar PV > 10 kW ≤ 10MW 44.3 (automatic degression) 44.3
On-shore Wind Any size 13.5 13.5
Off-shore Wind Any size 19 19
Waterpower ≤ 10 MW 12.9 13.1
Waterpower > 10 MW ≤ 50MW 12.2
Biomass ≤10 MW 12.2 13.8
Biomass > 10 MW 13
Biogas ≤ 500 kW 14.7 16
Biogas > 500 kW ≤ 10 MW 14.7
Biogas > 10 MW 10.4 10.4
Landfill gas ≤10 MW 11.1 11.1
> 10 MW 10.3 10.3
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Ontario (cont’d)
– “Smart grid”
• Provisions in GEA provide for its development• Defined as “advanced information exchange system and
equipment”
• Will allow for greater integration of renewables into
energy supply mix
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Ontario (cont’d)
– Incentives outside of the GEA
– Ontario Solar Thermal Heating Incentive• $14.4 million program to entice industrial, commercial and
institutional sector to install qualifying solar thermal heating equipment
– Net metering• Credits consumers for energy they contribute to the grid; reduces
electricity bills• Available for projects under 500 kW• Similar to programs offered in other provinces, such as Quebec,
Saskatchewan, Manitoba, P.E.I. and Nova Scotia– Tax incentives
• Rebate on provincial sales tax (8%) paid on solar equipment• Similar to rebates in other provinces, such as B.C.
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Provinces and Municipalities
– Alberta– No provincial PV incentives– 20 municipalities in the Alberta Solar Municipal Showcase
• Provides funding for grid-connected PV installed on municipal buildings
• Funded by the municipalities and the Federation of Canadian Municipalities
– British Columbia (B.C.)– Released BC Energy Plan in 2007
• Goal: achieve zero greenhouse gas emissions
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Provinces and Municipalities (cont’d)
– Programs in B.C.– Standing offer program
• B.C. Hydro purchases energy from small projects (0.05 – 10 MW)• Features simplified process• Rate is lower than Ontario’s RESOP
– 100,000 Roofs• Goal: install solar water heaters on 100,000 roofs by 2020• Participants can receive up to 36% of the cost• progress was slow due to lack of installers
– Innovative Clean Energy Fund• $25 million/year levy on sales of conventional energy• Funds provided to renewable energy projects to decrease technical
application costs
– Solar Communities• Seven communities in B.C. selected to be SolarBC Communities• Each receives $20,000 plus marketing, training and policy development
assistance for solar energy projects
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Provinces and Municipalities (cont’d)
– New Brunswick– Embedded Generation tariff program
• Producers are paid 9.445 cents/kWh fed into grid• Available for projects between 100kW to 3,000 kW
– Northwest Territories– Alternative Energy Technologies Program
• Provides funding to develop renewable energy projects; communities (half the cost up to $50,000/year), businesses (1/3 the cost up to $15,000/year) and homeowners (1/3 the cost up to $5,000/year)
– Quebec– Net metering program
– City of Toronto– Municipal government’s Sustainable Energy Funds
• $62 million funds provide interest-free loans for renewable energy projects in the municipal, academic, social services or health sectors
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Roadblocks
– Cost• More financial and tax incentives required to decrease capital and
operational/management costs
– e.g. Ontario’s RESOP and FIT
– Targets• No federal solar targets
• 88 MW target in Ontario too low considering potential
– it is hoped that the GEA and the soon to be updated IPSP will address this problem
– Caps• Decrease potential of incentives (e.g. Ontario’s net metering
program limited to projects under 500 kW)
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Roadblocks (cont’d)
– Connectivity• No grid priority for solar power• Inconsistency in connection costs and procedures• GEA should eliminate some of these problems in Ontario by making
the following amendments to the Electricity Act, 1998:– Priority connection– Mandating time limit for connection assessments– Making the connection assessment process more transparent
– Administrative Deficiencies• Delays during the planning and zoning phase for projects
– Addressed by GEA’s amendments to the Planning Act• Application process can be cumbersome
– Streamlined under GEA• Some programs are difficult to access; discourages involvement for
projects under 1,000 kW • Proposed FIT lottery
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Questions & Answers
Tim Murphy
Partner, McMillan LLP
Tel: 416-865-7908
E-mail: [email protected]