Policy Update: Don’t Burn Your Early Adopters
In a conference call on October 21st, the Ontario Power Authority (OPA) announced that renewable energy systems of less than 500kW capacity that had been connected to the electricity grid before October 1, 2009 (the launch date for Ontario’s new FIT Program), would be allowed to transition into the FIT program.
Early Adopters Rewarded
The announcement will please the many early adopters that jumped on the idea investing in renewable energy when the Province launched the now suspended RESOP program in 2006. The FIT program offers owners of solar systems in particular, a vastly superior feed-in tariff compared with the RESOP, with small system owners receiving more than $ 0.802/kWh for systems less than 10 kW, while RESOP paid $ 0.42/kW independent of system size. Also roof-top systems above 10kW will benefit from higher rates, with $ 0.713/kwH being paid for electricity from systems between 10kW and 250kW and $ 0.635 for systems between 250kW and 500kW.
No Domestic Content Required for Systems Predating October 1st
This transition is enabled by a decision by the OPA to treat systems in operation before October 1st as if they have met the province’s strict domestic content regulations which came into effect on October 1st and will apply to any new projects under the FIT program. The mechanics of the transition have yet to be worked out, but the OPA said that they will publish information on the web-site for the FIT program within a week.
The Importance of Creating Policy Advocates
Politically, this decision by the OPA is clever because the beneficiaries of the grandfathering arrangement are people with a demonstrated strong interest in renewable energy and potentially the Green Energy Act which is behind the new FIT program. Before today’s announcement it looked as if these renewable energy supporters would be left with the much less attractive RESOP rates something that could have created a number of vocal critics of the new FIT program. Instead, this move by the OPA and the Ministry of Energy and Infrastructure to transition early adopters may have turned those critics into advocates, which is something any new program like the FIT program needs if it is to succeed.
With both policies and technologies new and complex to mainstream buyers, it is critical that governments work hard to create advocates for their program, because eventually the program’s success depends on buyers trusting their policies. While Italy’s renewable energy policies have been very lucrative over the last couple years, a lack of trust in the government has hindered the kind of rapid adoption that we saw in Spain. With more and more early adopters coming online in Italy that mainstream skepticism is slowly decreasing and Italy may actually pass Spain in terms of installed volume in 2009 according to some analysts. Like Italy, Ontario needs people on the ground that can talk to the benefits of the program in order to broaden it’s appeal and ensure long-term support.
