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CKA Super Elite
CKA Super Elite
 Ottawa Senators
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PostPosted: Mon Sep 24, 2012 10:57 pm ... y-fit-day/

Wind and solar now cost $4-billion a year

Pop the champagne, Ontario. September is the third anniversary of one of the most expensive and least useful experiments in top-down central planning in the province’s history. Three years ago, the Ontario Power Authority (OPA) released the original pricing model for the Feed-In Tariff (FIT) and MicroFIT programs after the passing of Bill 150, the Green Energy and Economy Act, in the spring of 2009. Under FIT, the Ontario government set sky-high prices for wind and solar power: wind generation at 13.5¢ per kilowatt hour and solar generation as high as 80.2¢ per kWh.

The original pricing model was revised down slightly earlier in the current year, a move that has done little to stem the flow of applications. As of last month, OPA reports applications for 12,000 megawatts for wind and 8,500 MW for solar, numbers that dwarf the government’s long-term target of 10,700 MW by 2030 for wind and solar combined — a clear indication that FIT and MicroFIT pricing has caused developers to salivate at the returns being offered.

The rush to collect this subsidy continues. This month the city of Toronto announced it would install solar panels on several city-owned buildings to generate 2,600,000 kWh at 48.7¢ a kWh, or about $14-million over the life of the contract. All told, the city says that will reduce greenhouse gas emissions by 480 tonnes a year, or about $2,600 a tonne, well in excess of the current going North American rate of $15 per tonne.

As for the revenue, under Ontario’s magic FIT program, the $14-million will be paid by all Ontario electricity ratepayers. In effect, Ontario electricity consumers will help defer Toronto’s municipal tax increases. Essentially, the city of Toronto’s solar-panel revenue becomes an indirect tax on all Ontarians. In addition, the power that will be produced at 48.7¢ a kWh is power that Toronto currently buys at 7.2¢ per kWh (based on its filing with the Ontario Energy Board). Had the city purchased the $15 carbon credits along with the electricity at the foregoing rates, it would have saved ratepayers $1-million per year.

By most measures, the three-year-old FIT program looks like a success: lots of activity, big dollars flowing, much hype. So does the MicroFIT program (small renewables generating less than 10 kilowatts). According to Better Farming, by 2010 the OPA had 25,245 MicroFIT applications and 19,651 conditional offers. By 2011 the number surpassed 35,000 according to a Hydro One report.

But a problem that surfaced later was that Hydro One, the province’s electricity distribution monopoly, was unable to hook most of those MicroFIT and many of the FIT contracts to the grid. This was solved by directives from the OPA instructing Hydro One to spend hundreds of millions to connect those applying to the grid.

A Hydro One submission to the OEB in May indicated it had spent $1.4-billion to the end of 2011 and plans to spend another $970-million over the next three years on transmission development focused on hooking renewables to the grid.

The rising cost to ratepayers due to the Green Energy Act and the FIT program is evident in Ontario Energy Board reports. According to the OEB’s recently released yearbook of distributors, Ontario Power Generation, the government electricity generation company, provided almost 60% of all the power consumed in Ontario in 2011 at a price of 5.3¢ per kWh. The other 40% came from others — including Bruce Power, TransAlta, NextEra, Enbridge and thousands of small and large solar and wind developments at an average price of 12.5¢ per kWh. With OPG’s role continuing to show year-over-year reductions (84.7 terawatt hours produced in 2011 versus 125.3 TWh in 2002), it’s clear the company’s ability to temper rate increases will diminish in future and Ontarians’ electricity bills will continue to rise.

Negative expert opinions on the objectives of the Green Energy Act are dismissed by the government. Current Energy Minister Chris Bentley and other government agencies issue press releases extolling its virtues. When Loblaws signed up for solar panel FIT programs, former energy minister Brad Duguid portrayed the move as symbolic of a great province-wide effort: “Everybody is participating, from everywhere in Ontario, from farmers, schools and hospitals to large-scale retail and commercial operations.”

Mr. Duguid got that right: everybody is paying. The implications of Ontario paying above-market pricing (71¢ per kWh to IKEA and Loblaws) are significant. To put it in context, the Global Adjustment — the pot where subsidies for wind and solar are temporarily placed before billing ratepayers — for the 12 months ended Aug. 31, 2009, totalled $2.98-billion. For the 12 months ended August 31 this year, the Global Adjustment had grown to $6.2-billion, a jump of over $3.2-billion or 107% in three years.

If one couples that with the drop in revenue for OPG of $554-million in the six months ended June 30, 2012 (clean hydro has been displaced by wind and solar) compared to June 30, 2009, the raw costs in dollars required to support FIT and MicroFIT programs are in excess of $4-billion annually, with only 2,000 MW of wind and 400 MW of solar up and running. The more wind and solar Ontario gets under the FIT program, the bigger the costs become.

The province claims 20,000 jobs have been created, most of which would be in construction. At current costs, that works out to a cost per job of $200,000 annually and growing. The price has been high, and it’s still rising. But will FIT prove to be useful? Will it achieve its objectives, which are allegedly intended to reduce carbon emissions? No evidence exists that any carbon emissions have been reduced as a result of the FIT program, despite the City of Toronto’s claims to be cutting carbon emissions at the absurd cost of $2,600 per tonne.

So happy FIT anniversary, Ontario. But forget the champagne. We’re out of cash.

CKA Uber
CKA Uber
 Montreal Canadiens
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PostPosted: Mon Sep 24, 2012 11:51 pm

solar generation as high as 80.2¢ per kWh.

Sure hope every homeowner in Ontario is putting panels on the roof,

because they are going to be paying for it big time in the future.

CKA Uber
CKA Uber
Posts: 12434
PostPosted: Tue Sep 25, 2012 5:55 am

Someone hasn't read the story of the Three Little Pigs.

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