I don’t believe in free lunches. Whenever somebody offers me anything for “free” I immediately ask myself what’s in it for them. If the answer doesn’t bother me, I may go with the offer. microFIT PV is no different, so here is the best explanation I could think of.
This is the last part of a series analyzing what are the incentives for the Government to offer such a generous price for the solar-produced electricity. If you didn’t do it before, you may want to read first part 1, part 2, part 3, part 4 and part 5.
It’s now time to wrap up our series about the government’s own interest in pushing microFIT solar installations. I will quickly summarize the advantages from the Government’s point of view:
- Ontario will benefit from the generation capacity built on roofs. This will not require any capital spending, since it will be done from microFIT applicants’ money.
- Ontario as a whole, and cities in particular, will benefit from partially decentralizing the electricity generation. Producing the energy closer to the place it is used will decrease the transmission losses.
- the grid will also benefit because solar panels will provide maximum power during the day. Fortunately, this coincides with the peak electricity usage.
- the solar panel installations will generate jobs in Ontario. Obviously, the install part cannot be done overseas. For the hardware parts that could be imported, the government imposed origin restrictions. The hope is that manufacturers will open production facilities in the province, thus creating additional jobs.
- the government appears like a Green Knight, ready to jump to save the planet. They need all the goodwill they can get to offset the recent HST slap in the face of Ontarians.
- and let’s not forget the money: they will pocket around 100 millions as their HST cut, just for the microFIT applications submitted until August, 2010. Add some extra cash that will come later, as income and corporate taxes.
- the best part: all of the above will be achieved for free! The applicants will pay for their solar systems. The generated electricity will be mixed with the output from the traditional power plants, and the result will be sold to the consumers at obviously increased rates. All the respect to the guys who devised this ingenious scheme!
Right now, there not much public dissent regarding all these. Green it today’s fad! But I would expect the majority of the population to wise up suddenly and start asking questions when they’ll have to pay the increased electricity rates.
To be fair, it’s government’s job to look into the future and lead us with their vision. To do this, they behave like a reversed Robin Hood, taking from many to give to a few. That’s the way today’s world works and I’m OK with it. The only problem here is that instead of being enlightened, they seem to fly by the seat of their pants.
Now being done with my rant, I can get back to my solar project! Being a pragmatic person, I see no reason to not profit from the government’s offer. As my father used to say, the government is not in the business of giving money away, they’re in the business of getting it from you. So double-enjoy it when you can be at the receiving end! 
SearchingForGreen
[…] If you want to read the rest of my analysis, go on and read part 6. Posted in […]
I think most people that start a solar project will claim their HST back.
Agree, that’s what everybody should do, I can’t see any reason not to!
Vasile
Hi, Pieter!
I think I previously missed your point :-). Even if the people recover the HST for the system, the government will get it from the electricity sales in the next (10?) years.
I’m not saying this is bad. After all, that’s how governments are making money. I’m only showing that there is a financial incentive for them, too. More economic activity = more taxes in general, not only HST. HST was the simplest example.
Regards,
Vasile
I think you are missing the point of this program, which is understandable as all the hype has been about the green energy that it will produce. It is first and foremost a jobs creation program. Germany has had a Feed-In-Tariff for 13 years and today solar accounts for about 1.5% of thier energy production. Any HST collected on the sale of these systems will also be a drop in the bucket.
The real point of this program is to create a new industry with all the jobs and economic activity that it will bring. For example, to meet the Ontario domestic content requirements, an inverter only has to be assembled in Ontario. It would be better if all the components were made here in Ontario, but having it assembled here still means that the inverter manufactuer has to lease factory space, set up an assembly line and hire and train workers.
I am in the solar business and the first tracker that we built was imported from Germany. Now the ones we install are built in Ontario. I know personnally 3 people who have moved here to Ontario to work in solar.
Every time I go into a Marks Work Warehouse and buy another work jacket or go into Home Depot and buy tools I always think to myself what a smart program this is because it has got me out spending money, trying to get other people to spend money, chasing that paltry 80 cents a KW.
I will also note that prices have quickly come down for rooftop microFIT installations, and we would be happy if we could sell systems for 6.5 cent/watt.