Keeping Up With The Joneses

“Generally speaking, when you speak of solar energy in Canada, it is really referring to solar energy in Ontario,” says Kevin Allan, vice president of sales and marketing for Grasshopper Solar, Ontario’s largest residential solar company.”

Keeping up with the Joneses          BluEarth’s Little Creek Solar farm. Source: BluEarth

Canada

A lack of national-level policies

The unique constitutional fabric of Canada dictates that each jurisdiction has its own set of regulatory guidelines and processes. This poses a barrier for a streamlined approach to energy policy – despite it being a predicament that neighbouring America has clearly found surmountable, according to Dan Woynillowicz, policy director at Clean Energy Canada, a clean energy and climate policy think tank.

BluEarth’s Little Creek Solar farm. Source: BluEarth

“Similar to the US, the bulk of jurisdiction and decision-making around electricity policy in Canada occurs at the provincial level and not the federal level,” Woynillowicz says. “A significant difference between Canada and the US is that in the US there has still been a lot of federal engagement to try to encourage development of solar energy; we really have not seen that in Canada.”

For the last 10 years, Canada has had a Conservative federal government that mostly wound down some of the existing programmes supporting renewable energy, which contrasts with the prominent support given to solar in the US, such as the US Department of Energy’s SunShot Initiative.

“[The US] has had more on the innovation and early deployment side of things,” adds Woynillowicz. “They’ve also had the solar investment tax credit (ITC) as well, which has played a significant role in encouraging solar in the US.”

New policy drivers for renewables

The new government under prime minister Justin Trudeau has made promises to shake off Canada’s reputation as a laggard on climate change, with designs for it to emerge an ‘energy superpower’ by fixing the country’s reputation as a carbon bully in international climate negotiations.

“The federal government has actually identified increasing the use of renewable electricity as a key piece of what needs to happen within the energy system to achieve the greenhouse gas reductions that they committed to in Paris,” says Woynillowicz.

These promises have as of yet to translate into legislation, but the government has embarked on a cooperative process with the provinces to develop a Climate Plan for Canada, which provides for fuel-switching and emissions regulations on coal-fired generators.

“In addition to making the tax treatment more favourable as with oil and gas, we’d like to see tax treatment become more competitive like that in the US,” says Bateman.

Examples of renewable energy policy have only been seen in dribs and drabs, highlighting the piecemeal policy framework of the country. For now, the future of clean energy rests on the cumulative effect of some of the other pieces, rather than any single overarching policy.

Ontario

“Generally speaking, when you speak of solar energy in Canada, it is really referring to solar energy in Ontario,” says Kevin Allan, vice president of sales and marketing for Grasshopper Solar, Ontario’s largest residential solar company.

Today, the province has enhanced the competitiveness of solar by phasing out coal in its entirety – which is one of the most significant environmental actions in North America as a whole. It has installed well over 2,000MW of solar to date. Under its Long Term Energy Plan, Ontario expects clean energy to comprise half of all installed capacity by 2025.

Some industry analysts reconcile the pivotal turning point for Canada’s solar industry with the launch of Ontario’s Green Energy Act (GEA) in 2009. Just a year prior, there was 5MW of solar installed nationally, and in 2009 that increased tenfold and from that point forward there were several hundred megawatts installed every year. The GEA gave rise to Ontario’s feed-in tariff (FiT) programmes which really drove the first real wave of solar in the country.

The province has since switched from this approach to a competitive procurement process under the Large Renewable Procurement (LRP) programme. Under Phase I in March this year, 16 contracts totalling 455MW of renewable energy capacity were offered. Of those, seven were solar(139.85MW) at a weighted average price of US$156.67/MWh.

The next round of contracts will be bid for in summer 2016. A total of 930MW is on offer, with250MW specifically allocated to solar.

Alberta

Meanwhile, the province of Alberta has recently unveiled a series of policies that could eventually see it emulate Ontario’s lead on solar. Last November the provincial government set a target to phase out coal by 2030 and effectively triple its share of electricity generated by renewables over the same period.

So far Alberta has only installed a lowly 9MW or so of PV, and the new policies so far contain no specific carve-out for solar. But CanSEIA believes under the province’s climate leadership programme, in which its ambitions are framed, solar could meet up to 15% of its power needs by 2030, resulting in up to 4,300MW of new capacity being installed in that time.

Already some large projects are beginning to come forward in the Alberta. In Vulcan County, EDF EN Canada is planning a 100MW project, which is set to be operational autumn 2018. Sucor, BluEarth Renewables and GTE Power are other names that are also proposing large solar farms. Between them, including the Vulcan farm, there are a total of eight separate projects that could produce up to 352MW of energy.

Saskatchewan & British Columbia

Southern Saskatchewan and southern Alberta have some of the best solar resource in Canada – approximately 1,500kWh/kWp installed, according to Bateman.

The province has committed to generating 50% of its power through renewables by 2030. That is approximately double what the province has – creating a huge opportunity for wind and solar and other renewables over the coming years.

It has also committed to initiating the procurement of 60MW of utility-scale solar starting this year. The impending outcome of these procurements will serve as a benchmark to determine what scale and pace the province moves forward with solar after that point.

British Columbia, on the other hand, is one of the provinces with a lot of hydro power, so whilst significant annual growth is expected, it will start from a very small base. “It’s an up-and-coming province for sure, but Saskatchewan and Alberta are going to be breaking the 100MW mark in the next few years, whereas British Columbia will be a slow burner,” says Bateman.

Obstacles for Canadian solar industry growth

A lack of overarching policy stimuli can be pinpointed as the main reason why solar has not taken off in Canada in the way it potentially could, alongside competition in a highly saturated energy market rich in hydro and amortised coal.

On the manufacturing side, Canada arguably lacks a lot of innovation support relative to the US or some European nations like Germany. Some industry experts go as far to say that the Canadian financial sector is nowhere near advanced enough in its understanding of electricity markets and how to manage and mitigate some of the opportunities and risks associated with them.

But with the pricing recently seen in Ontario’s competitive tender, Bateman believes others may sit up and take notice of what is possible with solar.

“I think that 2015 will be viewed as a turning point for the solar industry in Canada – with the price discovery from the LRP,” says Bateman. “Policy makers, regulatory and utilities will really begin to take a more serious look at solar than they have done in the past. I think that, combined with some of the new policies at the federal level, will really bring solar into the mainstream.”

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