FEED-IN-TARIFF - Announcement

On September 24, 2009, Ontario Premier Dalton McGuinty, Deputy Premier and Minister of Energy and Infrastructure George Smitherman, and Minister of the Environment John Gerretsen announced the official launch of the Renewable Energy Feed-In-Tariff Program. The Ontario Power Authority (OPA) will begin to accept applications on October 1st, 2009 with the first contracts expected to be signed by December 1st.  
One key aspect of the GEA is to leverage the electricity system in Ontario to create jobs, and as such there will be a requirement for any installation to meet “Domestic Content” criteria. The domestic content requires developers have a certain percentage of their costs come from Ontario goods and labour once projects reach their commercial operation.

The requirements include:

The income created from the MicroFIT generator will be taxable whether you are a business or homeowner.   

By participating in the MicroFIT program you are entering into a business relationship with the OPA and will be receiving business income.

We strongly advise all interested parties to consult the Canada Revenue Agency (CRA) and the Ontario Ministry of Economic Development and Trade to understand the rules about reporting business income and business registration.

Please visit http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/menu-eng.html
or call 1-800-959-5525 for information on GST registration and collection

Please visit http://www.ontario.ca/en/services_for_business/index.htm
or call 1-800-959-5525 for information on GST registration



3. How much energy will a PV system produce and how big does it need to be?

The physical size of a typical commercial or residential installation would be about 4 metres by 5 metres.  

An installation of this size unit would have a generating capacity of about 3 kW.

It is expected that a unit of this size will produce about 280 kWh of electricity per month.   

For PV generated electricity the rate paid is 80.2 ¢/kWh.   Based on the estimated output of the panels this would result in a payment of $224.56 per month (for 280 kWh).

(actual results will vary based on installed equipment, solar exposure and maintenance of the equipment)


4. How do I get paid for installing a MicroFIT unit?

You get paid for the electrical energy that your unit produces once you enter into a contract with the OPA.   The rate, known as the Feed In Tariff has been set at a rate to help pay for the equipment and the energy that it produces.

Payments for the energy produced will come directly from your local distribution company (LDC) based on the contract that you signed with the OPA.  

Once you have installed your equipment, received Electrical Safety Authority permit to connect, entered into a MicroFIT contract with the OPA and entered into an agreement with the LDC you will start to be paid for the energy produced.

The LDC will meter the installation and will read the meter on a predefined scheduled.  

A payment will be made to you based on the agreement with the OPA for the energy produced.  

A service fee for the metering and billing services will apply to the account that you hold for the generation.    

The specific account fee on a monthly basis for the initial period will be the same as the service fee charged on load accounts.  This will be reviewed and may change in the future.  


5. What kind of costs am I looking at if I want to install a MicroFIT unit?

A typical residential Solar Photo Voltaic (PV) unit of 3 kW would cost about $30,000 to purchase and install.  

In addition to these costs any approvals and permits required would need to be taken into account.

There will also be a local connection fee for completing the connection to the electrical system  

On an on-going basis there will be a service fee for the metering associated with the generation connection to the electrical system because the service is separate from the electrical service providing electricity to your property.



6. Can I do this myself or do I need to use a special installer?

While you can purchase and install the system on your own it is critical to ensure that the installation meets all of the technical and safety requirements.  

Prior to connecting to the electrical system to sell electrical energy the installation will need to successfully pass the Electrical Safety Authority inspection and provide a copy of the inspection certificate to the Utility.  

You can contact the ESA at 1-877-372-7233 or learn more by visiting their website at: www.esainspection.net

Because of the technology involved we encourage the use of qualified installers.

The ESA has provided the following guide for connecting small inverter based generation:

7. Where can I find out more information about MicroFIT or FIT?

The best source for information is the Ontario Power Authority’s website.  

The OPA is overseeing this program and their site on the FIT and MicroFIT program is the most up to date.  

Contracts and program rules can be obtained at:   www.fit.powerauthority.on.ca


8. Is there a list of qualified equipment suppliers and contractors?

The OPA does not require that suppliers and contractors be registered for the program. The contract for the FIT program is between the facility owner and the OPA directly.
It does make sense however to find a contractor with experience in the technology being deployed.
You can check with the following associations to determine who their members are and the services provided:

Canadian Solar Industries Assoc: www.cansia.ca
Canadian Wind Energy Assoc: www.canwea.ca
Ontario Waterpower Assoc: www.owa.ca
Canadian Bioenergy Assoc: www.canbio.ca



9. How quickly would a system pay for itself?


The payback of a Solar system will vary based on three key inputs.

1. The cost of the installed system
2. The amount of energy in kWh’s the solar system can produce
3. The price paid for the energy produced.

Costs

A smaller Grid Tied Solar PV system (1Kw - 3Kw) installed on a roof top with fixed mounting angles will cost between $8,000 and $12,000 per kW.  This may seem like a significant spread, however there are multiple factors that affect the price such as the quality and efficiency of the panels not to mention the inverter and the roof preparation. Typically one wants to ensure that when installing solar panels on a roof top, the roof is in good repair for it is more costly to make repairs later once the solar panels and hardware mounting brackets are in place.

Energy Production

The amount of solar energy varies based on the geographical location as well as the angle of the installation. Factors such as shade from taller buildings or even trees during periods of the day can significantly reduce the available solar energy as well. In the Collingwood area with a panel that is shade free, one can expect an annual average of approximately 4Kwh’s per day for a 1Kw panel. On some days a 1Kw solar panel will produce significantly more energy (up to 8 kWh’s) and on other days the output could be close to zero (snowing and cloudy all day with very little solar penetration).

In order to gain more output, one could install the system with sun tracking motors and software. Typically this type of installation is better suited to a pole mounted system. The benefit of such a system is a potential increase in output by between 20% and 30%.

Price Paid for Energy Generated

The proposed Feed-In Tariff planned to be launched by the OPA later in 2009 is a 20 year contract at 80.2 cents per kWh for the energy delivered to the distribution system from a solar installation which is <10kW in size.  Other price offerings vary depending on the size of the solar panels.

With the three main components required to calculate a simple payback, we can do an example:

Our sample system will be a 2kW solar panel installation.
For our sample system, we will use an installed cost of $11,000 per kW.
Assuming the annual average of 4kWh’s per day X 365 Days X 2kW Panels, our sample system should produce approximately 2,920 kWh’s each year.

At 80.2 cents per kWh, that represents an annual payment of $2,341.84

$22,000 installed cost divided by $2,341.84 = 9.4 years.

This means that in the remaining 10.6 years, a proponent can earn an additional $24,823.

The example above does not include such things as the cost of borrowing the money to install the system, or the cost of taxes on earned revenue. However one can work with an accountant and find ways to write down the investment to reduce or even eliminate much of the taxes, and borrowing costs right now are significantly low that even if included, the impact may only change the outcome by between 1 and 3 years.