Ontario’s FIT Program: The Impact of REA Delays

Posted by on Thursday, February 3, 2011 · Leave a Comment 

As recently as the fall of 2010, utility-scale solar developers in Ontario were optimistic about their ability to build projects in 2011. Since that time, developers have reported that delays to Ontario’s Renewable Energy Approval process (REA) have caused them to downgrade their expectations for 2011 by hundreds of MW. Developers have cited a lack of clarity regarding requirements and timelines from the Ministry of Environment and the Ministry of Natural Resources as key issues in completing the REA process. The permitting delays will have two major outcomes.

1. The large majority of utility-scale equipment demand will be pushed back into 2012 and 2013

  • Delayed development will alleviate module supply constraints in mid/late 2011
  • Developers who were aggressive with their Commercial Operation Dates may be forced to incur penalties or apply for force majeure

2. Political risk will be increased for all stakeholders on utility-scale projects that do not receive their Notice To Proceed (NTP) before the provincial election in 2011

  • Project proponents cannot receive an NTP until they have completed the REA process
  • There are several ways FIT contracts can be cancelled; of particular significance is the OPA’s ability to terminate contracts up until the NTP is issued
  • There will be a provincial election in the fall
    • i.      John Yakabuski (Conservative MPP and Energy Critic for the official opposition) has stated, “We are not going tear up contracts, but I can tell you we are going to look at each and every one of those contracts to see what options we have”  (http://uk.reuters.com/article/idUKTRE70B6PK20110112)
    • ii.      The Conservatives are currently leading in the polls
    • iii.      Delays to utility-scale FIT development are chronic (from the ECT process, to the  TAT/DAT process, to the REA process); these delays may indicate that even the current administration’s support for the FIT program is waning in the run-up to the election

Given political and supply/demand implications, the timeline for the REA process should be a serious concern for all participants in utility-scale FIT projects in Ontario.

  • Ontario-based equipment manufacturers will need to incorporate reduced utility-scale FIT demand into pricing and production decisions for 2011
  • Developers should do everything in their power to receive NTPs before the provincial election
  • Utility-scale stakeholders should be working hard to communicate the benefits of solar to political decision makers and the public alike; strong public and political support is the best way to protect existing contracts and to create a sustainable PV industry in Ontario.

ClearSky Advisors is in the process of updating our overall market forecast for the Ontario PV market. The forecast will be published in early February and will include detailed information about the commercial rooftop market as well as both utility-scale and microFIT markets. If you are interested in more information about our coverage of the Ontario PV marketplace, please contact:

  • Tim Wohlgemut, 877-333-5821 x501
  • Jon E Worren, 877-333-5821 x502


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