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 third 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 and part 2.
In the previous posts we talked about the technical advantages of installing solar panels on the city roofs. Since the microFIT program is administered by the Ontario Government, you may well expect that the story doesn’t end there, and politics is indeed at work :-).
One of the declared purposes of the program is to create new jobs. In order to achieve this, all microFIT installations have to obey to some rules regarding the origin of the components of the system. Each component is assigned a percentage, starting with the silicon used in the solar panels and finishing with the installation labor. Until the end of 2010, the Ontario-made components should amount for 40% of the whole system. This threshold will increase to 60% on the first day of 2011. The thinking is that this requirement will push the solar manufactures to open shops in Ontario and use local labor.
This makes sense, and the government’s attempt to lure manufacturers seems to have worked. Announcements are quite a few, since everybody wants a piece of the action. See here an up-to-date (August, 2010) post detailing the numerous pledges.
My only problem is the rush. Remember, microFIT was announced at the end of 2009, when to my knowledge the only solar panel producer in the province was Solgate. To be approved for microFIT in 2011 (a mere one year later), a system has to have at least a part of the solar panels themselves built in Ontario. That’s because the panels are assigned 45% of the mark, so the rest of the system accounts for 55% – a little bit shorter than the 60% needed for getting approved. Having just a little over 1 year to decide and plan to build a factory seems to me a little tight for any serious manufacturer, unless they were already at the starting line.
The ones who will pick the tab for this decision will be the people having their systems going online after 2010. They will pay higher prices (at least that’s expected) for arguably lower quality panels, coming from newly installed lines and factories. All these people will be denied the chance to try the cheaper Chinese solar panels, if they want so. But more important, they cannot use the best panels, produced outside Ontario by companies with decades of experience in the field like Sharp and Sanyo.
I don’t know about you, but I never liked to be a guinea pig and test if new products are good or not. Especially with something as expensive as solar panels, which are also expected to be alive for at least 20 years in full sun, rain and snow on my roof!
Thanks, Mr. Premier!
P.S. If you want to read the rest of my analysis, go on and read part 4.
Update: Some people (myself included) hoped that the government will wise up and will extend the current 40% Ontario content rule for at least a few months in 2011. Unfortunately, a relatively recent letter from the Ministry of Energy to OPA (June 28, 2010) shows this is not the case: “Ontario’s targets and timelines for the FIT program, including domestic content, are ambitious, but we believe them achievable. We do not believe we need to, nor can we afford to, alter our timelines for creating jobs and investment in Ontario.”