Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }

Ontario’s clean power program is in place, but recent changes are making investors skittish

Brian Gable/Brian Gable/The Globe and Mail

Ontario's feed-in tariff program elegantly kills two birds with one stone. First, it empowers the private sector to develop the clean power projects Ontario needs to meet its promise to close its coal plants. Second, it provides a big boost to green manufacturing with a target of creating 50,000 new jobs. For the FIT program to succeed, investors in projects and in manufacturing facilities need to remain confident that the program is stable and their investments won't be subject to unexpected or arbitrary rule changes.

Fifteen months after it was launched, the program is off to a good start. A total of 2,625 megawatts of FIT contracts have been signed, and many more projects are in the queue waiting for approval. A large number of international equipment makers are setting up facilities in Ontario, and many plan to make Ontario their base for North American operations.

Despite this auspicious start, recent changes to the FIT program are fraying the nerves of investors, developers and manufacturers alike. They have all spent time and money based on the assumption that the program will remain unchanged for the first two years, and many now worry that further program changes may scupper their plans.

Story continues below advertisement

There have been three important changes to date.

First, the Ontario Power Authority said last July it was reducing tariffs paid for power from 10-kilowatt and smaller solar systems. The OPA was swamped with more applications than expected and believed owners of these systems would earn higher-than-expected returns.

Earlier this month, the government began notifying about 1,000 homeowners and farmers who had already been offered FIT contracts that they won't be able to connect their systems to the grid because of capacity constraints. Some applicants had already begun installing their systems, so they're now stuck with significant bills and no idea when they can start to sell their power, if ever.

Finally, the government announced on Feb. 11 that all applications for offshore wind projects will be put on hold indefinitely, pending further research on their health and environmental effects. The developers behind these wind projects had already invested millions of dollars in them and were expecting a green light very soon.

Before the McGuinty government makes any more changes to the FIT program, it would be wise to note the starkly contrasting experience of two European countries.

The poster child for what to do right is Germany. The current Renewable Energy Law was passed in 2000 in the face of strong opposition. One party, the Free Democrats, opposed the law until 2009, when party members finally reversed their stand in light of the program's huge popularity and the jobs created. The Christian Democrats have argued at various times for lower rates but never for its cancellation. Germany's program has attracted billions of euros worth of investment and now enjoys the support of all parties.

The leading example of what not to do is Spain. The current program was established in 2004. In 2007, the government raised the rates significantly, leading to the equivalent of a solar gold rush and jumping Spain to first place internationally in new installations. The government slashed tariffs in 2009 and hit the brakes even harder in 2010 by introducing retroactive limits on how much power would be bought under existing contracts - a change now being challenged in court. The same governing party, the Spanish Socialist Workers' Party, has presided over all of these events. Spain's meddling with its FIT program has scared away investors, likely for years to come.

Story continues below advertisement

Ontario's FIT program is attracting investment, creating jobs and meeting Ontario's energy needs. Billions of dollars have already been committed to manufacturing plants and to projects. But recent events have made investors very skittish. If further changes are to be made, it would be better that they were broadcast well in advance and introduced only gradually. Investor confidence, after all, is easy to lose and very hard to regain.

David Oxtoby is CEO of CarbonFree Technology Inc., a solar power project developer based in Toronto.

Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies