FIT for Ontario? The future of Feed-in Tariffs

This past December, the Pembina Institute teamed up with MaRS Discovery District to host a thought leader forum on the topic Ontario as a Green Energy Hub. The forum brought together a diverse group of people who are all in the midst of wrestling with renewable energy policy in Ontario.

Ontario attracted praise and attention when it passed the Green Energy and Economy Act in 2009, but the Act has also been a source of controversy. The debate during the last provincial election raised both doubts and opportunities for the future of renewable energy in Ontario.

Globally, the green energy sector is robust. As economies sputtered in the last few years, investment in the renewable energy sector has kept on climbing, sustaining 20-30% growth rates around the world for the past two decades.

In fact, Ontario’s Feed-in Tariff (FIT) is modelled after successful programs in Europe that establish long-term contracts for renewable energy projects.

Ontario has tried to galvanize this growing economic sector by creating a business climate that entrepreneurs and technology innovators can leverage to drive the transition to renewable energy. In fact, Ontario’s Feed-in Tariff (FIT) is modelled after successful programs in Europe that establish long-term contracts for renewable energy projects. At the end of 2011, the FIT program entered its first scheduled review.

In the midst of this review, we asked 30 clean energy leaders to take a step back and imagine medium- to longer-term goals for the province: what would be needed to secure Ontario’s place at the centre of green energy innovation?

Here is some of what we heard:

Successes in Ontario

Ontario’s move to enhance green energy has inspired everyone in the industry, while also requiring a sharp learning curve. Outside the province, the ripple effect started by Ontario’s FIT program likely helped to inspire Nova Scotia’s Community Feed-In Tariff program. As a policy leader, Ontario is facing problems and solving them first.

Ontario is spurring innovation and building capacity among provincial experts in renewable generation, grid infrastructure and management, finance and community development. But innovation in response to a new energy paradigm requires time and ongoing commitment to finding solutions.

The Green Energy Act has started to broaden the base of engagement for a transition to renewable energy in Ontario. Electricity generation was once the responsibility of only a very small group of people. However, within two years of the FIT program, one in seven Ontario farms now has at least one solar panel installed, and community groups, First Nations and individuals are actively working on developing their own clean energy projects across the province.

Challenges ahead

Ontario’s initial success has also created long-term questions. To survive long term, the green energy economy needs sustained investment and development opportunities in the province. The long queue for projects in development and the possible ceiling imposed by the overall provincial targets for renewable energy could result in a boom-then-bust in the renewable energy economy. In addition, bottlenecks need to be overcome in order for clean energy entrepreneurs to deliver on the projects they have begun.

While the opportunity is open for communities, we need to further foster and support the development of community power projects as they can directly engage citizens and lead to an improved acceptance of green energy projects.

Going forward

While Ontario has taken the lead, there remains work to be done. Looking forward, Ontario has the opportunity to build on its successes and work beyond innovation in electricity generation towards other innovative aspects of greening the energy system.

By bringing together different sectors of the clean energy industry that do not often work directly with each other, the forum hosted at MaRS was a successful beginning to a broader conversation.

Ontario has taken a major step in becoming a clean energy leader and the next few years will determine if it can truly become a green energy hub for North America.