Solar Energy Update for Ontario

Updated: Jun 19, 2019

There have been some changes to Ontario's solar program and you will want to know if now is the time to install a system; how it will affect your facilities and electricity bill, and how to upgrade your solar system to meet the changes.

In early 2018, the Independent Electricity System Operator (IESO) made a major change in the way that solar system output is managed contractually. Rather than making solar system owners enter into a long-term fixed price contract via the Feed-In-Tariff (FIT) program, a simpler and more flexible program called Net Metering was introduced.

What is the difference between the two programmes? Under the old FIT program, all power produced by a solar system was metered separately and dispatched to the grid. Your bill for the power consumption of your facility was unchanged, and you received compensation for your solar production that was deemed to be taxable income for your business.

The new Net metering program allows you to credit your solar production directly against your power consumption. In essence, the solar system is operating behind your meter. This allows you to off-set up to 100% of your consumption on an annual basis. Your electricity bill is reduced in proportion to the amount of electricity you generate, and the prevailing cost of electricity.

On a month-to-month basis, should you generate more power than you consume, you will be credited with the surplus. This surplus can be applied to future months where demand exceeds production (for example, some months during the winter). However, should your production exceed your consumption over the course of a full year, any surplus credits are forfeited. This means it is very important to determine one’s current and future power usage and to size the solar system to balance accordingly.

Is Net Metering better than the old FIT program?

There have been numerous variations of the FIT program since its start in 2009. Each successive variation offered lesser tariff rates, as the IESO was intent upon reducing its subsidy to the renewable energy sector. Over the same period, costs for solar panels have diminished dramatically, allowing solar contractors to reduce their pricing.

The net result was that solar proponents were able to develop a solar project of a given capacity for much less financial outlay and maintain the same rate of return. In its final form (FIT 5), the tariff rate for industrial-scale solar systems ranged from 18 to 20 cents per kilowatt-hour. This rate was used as the basis for a 20 year fixed price contract, with no provision for escalation.

In contrast, the Net Metering program does allow for escalation. The off set cost of electricity is based on the volume-based components of your electricity bill. These components typically include the electricity commodity supply, the Global Adjustment charge, and the Demand charge. For a typical Net Metering application, the offset of these charges gives a saving of 15 cents per kilowatt-hour. With electricity costs rising well above inflation, it is easy to see that the Net Metering off set rate will overcome the FIT tariff rate in a relative short period of time.

It is important set up the proper steps needed if you are interested in setting up solar. You need to find a company that can offer you a feasibility analysis of your company needs with regards to your power consumption and demand. Make sure that you establish an optimal system size with associated costs and a detailed analysis of the final costs and those going forward.

Do hire qualified installation staff for the construction, especially for roof top systems in our variable and harsh Canadian climate. Ensure you have a professional engineering analysis done of any roof structural integrity and hire qualified electricians as system voltage levels can be 1,000 volts or more and they need to know how to set up your system to the local utility hookup.

You need to select a reputable solar panel manufacturer with a proven track-record and long-term reputation. There is a risk that they may not be in business in the future, leaving you, the system owner unprotected. The same goes for your inverters. Select a well reputed company and make sure they offer a strong warranty with some long-term programs. Make sure you have at least two so that you have a back-up if there is a single failure.

Typically, a large-scale solar project requires 8 months to set up. Six to eight weeks for construction followed by the Electrical Safety Authority (ESA) inspection and the local utility inspection. Under all reasonable conditions, you can expect your solar system to last approximately 25 years (related to climate etc.) and many major systems can be up to 40 years.

Written by: Rob Hawthorne

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