The next few months are make-or-break for Ken Burns's solar-installation business.
He left a career in theatre production to start his small Southern Ontario company, pouring $100,000 of his and his wife's savings into the enterprise – one of many green energy start-ups in Ontario in recent years.
The province has been at the forefront of renewable energy development in Canada, offering solar and wind power producers guarantees of lucrative prices that Ontario's Auditor-General criticized on Monday as too rich and too rushed.
Other governments in Canada and around the world are trying similar incentives to boost the production of green energy. Public-opinion polls have shown consumers are willing to pay more for cleaner electricity, but political changes and logistical problems have snarled many renewable energy programs. And people like Mr. Burns are suffering because of the complications.
The allure of high prices has, in some respects, been a failing of the McGuinty government's green energy plans. Long delays in processing a flood of applications, and uncertainty over power-grid connections have, particularly in the solar sector, made things difficult for many manufacturers and small business owners.
The slowdown has worsened, many in the industry contend, since the Liberals' postelection decision to slash the number of power proposals eligible for today's generous 20-year fixed rates. The retroactive cap is part of a sweeping review of Ontario's feed-in-tariff program that will undoubtedly reduce how much is paid for renewable energy.
But with no certainty on the new prices or how long it will take to fix glitches in the system, Mr. Burns said, few people are willing to commit to having his company install new solar projects until the backlog of applications is dealt with and potential earnings are clearer.
"I'm quite stretched financially," added Mr. Burns, who's looking for other work this winter while he awaits the review's outcome. "For a small business to be able to operate, we need to be able to work and be able to keep people employed."
It's not only the green energy sector that has a lot at stake in the government's probe of its two-year-old feed-in-tariff program. The Liberal government has committed hundreds of millions of public dollars to foster the development of cleaner energy and new jobs.
The province is working with the Ontario Power Authority to carry out the review, which includes a look at prices, manufacturing, new technologies and whether municipalities should have more say on wind and solar projects in their communities. Consultations are under way and input is being accepted until Dec. 14.
The review was expected, but many in the industry assert they were blindsided by the retroactive cap affecting applications in the queue. Energy Minister Chris Bentley said the cap was necessary because the cost of producing green power has dropped and electricity consumers should reap the benefit. The feed-in-tariff program had offered wind developers 13.5 cents a kilowatt hour, and solar-power producers between 44.3 cents and 80.2 cents per kilowatt hour.
"We want to make it sustainable," Mr. Bentley said in a recent interview. "In looking at price, we want to strike the right balance, one where we can continue to grow green energy … but also reflect the number of savings that are generated through the reduction in technology prices for ratepayers."
As a result of the cap, 6,543 large renewable energy proposals representing 12,410 megawatts, and 8,217 small power proposals representing 75 megawatts, will no longer qualify for the current prices if they are approved, according to figures provided by the Ontario Power Authority. In some instances, proposals submitted as far back as last December will be out of luck.
The change doesn't affect wind and solar projects that have secured contracts or conditional offers: 1,966 large projects and about 25,000 small projects amounting to 4,848 megawatts in all.
In Windsor on Tuesday for the opening of wind-turbine parts factory, Premier Dalton McGuinty defended his government's green energy polices, which, Auditor-General Jim McCarter noted this week, will add about $220-million a year to the cost of electricity.
"We have moved forward aggressively. There is no doubt about that whatsoever. We sent up a bright red flare to the rest of the world that we are in the game and playing hard when it comes to renewable energy," Mr. McGuinty told reporters.
The retroactive cap has not had such a big impact on wind producers as solar proponents because fewer applications are awaiting approval, said Justin Rangooni, Ontario policy manger for the Canadian Wind Energy Association. While solar prices are expected to drop once the green energy review is complete, the wind sector is advocating for little change to the amount paid.
"We believe that wind energy as it is right now at 13.5 cents is cost-competitive with any new forms of generation," Mr. Rangooni said.
Any major drop in the price paid for solar will likely affect the Region of Waterloo's renewable energy plans. The region, which includes seven municipalities, borrowed $16-million to install 25 rooftop solar-power systems on its buildings.
It had expected to recoup that investment and make about $160,000 a year for two decades under the feed-in-tariff program. But with seven of its 25 project proposals now subject to new pricing, the region may have to revisit some of its solar plans, said Brian Bechtel, corporate energy specialist for the Region of Waterloo.
"We knew that the rates were going to be adjusted, but we also thought that any applications in the queue would be at the previous rate," Mr. Bechtel said. "We acknowledge that prices of the installation and the panels have definitely gone down. But I don't really think that everybody is considering all the long-term costs of running these systems for a 20-year period of time."
With a report from Karen Howlett