The Minister of Energy announced yesterday that the LRP2 round of renewable projects would be suspended due to an excess of ongoing power generation within the scope of the current energy mix in Ontario - of which nuclear composes 50%. The LRP2 round was slated to be comprised of 250MW of solar generation capability.

As part of the suspension of LRP2, the IESO will also remove the 8% provincial tax which should reduce costs for residential customers (business customers will be unaffected since taxes 

What are the main implications going forward for the solar industry in Ontario?

1) Distributed small scale solar generation will be largely unaffected - which means FIT 5 and FIT 6 should proceed as expected. MicroFIT (10kW and below) should be fine as well, although the current rate of contracts being released is currently very constrained. 

2) Net metering for residential customers and non-profits (condo corporations for example) will be negatively impacted since the tipping point where it makes economic sense might be an additional year out now (since rates will be cut by 8% due to the removal of PST).

3) A confirmation from the Minister that we are in a surplus situation energy-wise and renewable energy is somewhat responsible for pricing increases is not a good message to the public - could it lead to further momentum in killing green energy initiatives in Ontario? Perhaps.

All in all, we see the situation as largely status quo for the time being.

Net Metering currently has lots of room to grow although finding financing options for mid-sized net metering projects are definitely not as available as for FIT-based projects. A federal subsidy to bring down installation costs (as it is in the U.S. with their federal tax credit) could help for sure and combined with a recent drastic reduction in solar equipment prices could bring net metering to the forefront in 2017.

 

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