Yesterday the Ontario Power Authority (OPA) announced that it’s granting developers up to one year in extensions to grid connect renewable energy projects that have already received their Notice to Proceed. I see only upsides to this. Environmental assessments, public and aboriginal consultations, and other elements of the approvals process have dragged on in some cases, and the Ontario solar supply chain has not adapted to the local content rules as fast as expected. The extension means that many good projects that are taking longer than the 15 months originally allowed won’t have to go back to the drawing board. The full story from the OPA is here.
I spoke with Nic about the extension this morning, and he made the point that the OPA’s decision really highlights their reflexivity – one of the reasons he has confidence in Ontario’s FIT program. Italy and Spain have ended up with huge headaches because of FIT programs that had to march full steam ahead into unintended and unwanted consequences. These countries made a set of fairly inflexible rules at the beginning, and a few years later found themselves mired in trouble. There was a small uproar over the ground-mounted microFIT rate cut this past July, but that decision, along with this latest one, demonstrate an ability on the part of the government to react in near real-time to prevent problems down the road.
The frequent rewriting of the rules may seem frustrating, but consider this recent Greentech Media article, “How Do You Say Colossal Solar Mistake in Italian (that would be “errore solare colossale).” More than 50,000 applications have been submitted to Italy’s FIT program (as opposed to Ontario’s 4,400 to date), putting the Italian government on the hook for an approximately $60 billion dollar incentive burden – according to Vishal Shah of Barclays Capital – a figure “higher than the German/Spanish subsidy burden.”
Granted the issues at stake in Ontario and in Italy are different – Ontario is compensating for the delays in project start times due to the learning curve that both regulatory bodies and industry are going through; Italy more so needs to put a break on the pace that applications are being submitted. As well as to make sure the applications they’re getting are legitimate. The point is, as Eric Wesoff, the author of the article, notes, “that planning and regulatory diligence can make or break a renewable energy policy. Germany seems to have done it right, while Spain and perhaps now Italy are examples of how to get it wrong.”
We may wish that the Ontario government had designed a perfect FIT program up front, but the reality is that the program seems to be working as intended, and the government seems to be on point in allowing a degree of flexibility in seeing the program forward.