Several times each year, we publish forecast scenarios for the Ontario solar PV market. In our expected case scenario published this week, ClearSky Advisors calculates total cumulative solar PV installations to reach 3,467 MW dc by 2019. This exceeds the current Long Term Energy Plan solar PV targets of 3,300 MW dc by 2021 by over 150 MW dc. Since our forecast models calculate based on planned future contract awards, historical project attrition rate, and other quantifiable factors, a disparity of 150 MW dc is more significant than it appears on the surface. Why does the LTEP call for less solar PV than has been announced already?
Option 1: The Ontario Ministry of Energy plans to scale back on announced project awards
In Q2 of 2014, the Ontario government announced 900 MW ac for small FIT/microFIT procurement from 2013-2017 and followed that up with an announcement of 280 MW ac of procurement under the new competitive bidding process for utility-scale projects for 2014 and 2015. There is a possibility that the Ontario government plants to scale back on future contract awards, and this could happen for a variety of reasons ranging from a change in government, to limited taxpayer support. Regardless of the reason, should this option be exercised, the expected case forecast could fall within the LTEP targets.
Option 2: Policy makers anticipate project attrition rates higher than the current trend
Project attrition rates have remained relatively stable for the last few years with the highest attrition in microFIT projects and the lowest attrition in utility-scale projects. It is possible that the government is predicting higher attrition rates as tariff rates drop faster than installation costs. Developers will likely still bid for projects and apply for contracts, but the project economics may be stumbling block leading to higher attrition rates. The move to competitive bid procurement for large-scale projects is likely to increase attrition given the experience of other jurisdictions, so perhaps this is the most likely explanation.
Option 3: Future target increases
The last option – and one that is harder to accept – is that the government will increase its solar PV targets as part of the next revision of the LTEP. It is also possible that policy makers have left room to shift some capacity away from other renewables (such as wind or biomass).
Most likely, policy makers are simply signalling that there is no intention to expand upon the existing programs. On the contrary, there could be segments of the program that are scaled back or delayed to keep the industry growth in line with the LTEP.
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Photo Credit: Flickr Creative Commons Benson Kua