Local Content Rules: Good or bad for the regional economy?

Two conflicting views of the impact of domestic content rules on the regional economy:

1. A study by a coalition of mostly foreign PV producers argues that Ontario’s 60% domestic content requirements will reduce job creation and private investment in the Province, as compared with only a Feed-in Tariff and no domestic content rules.  The study was led by Mitsubishi Electric Corp., a global supplier of PV modules and inverters, and supported by U.S.-based First Solar, Japan’s Sanyo Eletric Co., and Toronto-based Timminco, a silicon processor. According to the president of Mitsubishi Electric Sales Canada Inc., the Dom Con requirements are “poison”.

*Does anyone know where I can find an original of the study?

2.  In sharp contrast, on Bloomberg last week – more news that Spain, which never imposed restrictions on where solar panels could come from, is suffering hugely from its overly generous FIT subsidies.  Not only are farmers losing hard-earned savings on lower than agreed upon feed-in rates, but few green jobs were created, let alone sustained – “The spending didn’t achieve the government’s aim of creating green jobs, because Spanish investors imported most of their panels from overseas when domestic manufacturers couldn’t meet short-term demand.”

Also adding urgency to the issue: Japan, backed by the EU and the US, has taken Ontario’s Dom Con rules to the WTO.

So, what’s better – the FIT and Dom Con Combo, or just the FIT?  Obviously it depends who you speak to – as a Globe & Mail article put it, “Behind much of the push for liberalized trade rules are multinational companies that are eager to keep costs down and locate their manufacturing facilities where it makes the most business sense.”

By itself, that’s not a strong enough platform on which to reject or accept DC rules though. Certainly, in most cases, manufacturing in Ontario does add a premium. But as Ontario is finding out – it is attracting a significant amount of investment and creating jobs (for example, see this and this).  The challenge will be keeping the capacity here once the FIT is removed, but by then there should be a strong base of innovative companies in the Province to move things forward, and what matters equally if not more – lots and lots of solar panels feeding clean electricity to the grid.


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