Toronto: Jan Carr, a prominent Ontario energy expert and the first head of the Ontario Power Authority, has proposed a major restructuring of renewable energy procurement in the province. Competitive forms of procurement should be the norm for larger power projects, and the FIT program should be redesigned and limited to small scale projects, he recommends.
In a paper published by the Council for Clean and Reliable Electricity Carr says, “It would be unfortunate if customer concerns about electricity prices resulted in FIT’s cancellation, but the current program is economically unsustainable. This is due largely to its excessive subsidies and lack of incentives for electricity generators to be innovative or improve cost-effectiveness. As well, FIT’s cumbersome structure requires detailed management, which results in the Ontario Power Authority (OPA), its administrator, being seen as a roadblock.”
“It is argued here that the current FIT program should be modified to become a Distributed Generation Tariff (DGT) better equipped to contribute to the province’s electricity supply. DGT would take over where FIT has failed by facilitating economical investment in a broad range of small-scale renewable, integrated and waste energy projects. Switching to a DGT should be considered seriously as part of the impending FIT review …. Adopting a DGT would ensure that the baby – small-scale generation projects that reduce our environmental footprint – remains, while the dirty bathwater – the subsidies and prescriptions that encumber FIT – is thrown out.”
While acknowledging that a standard offer program is helpful in encouraging smaller and innovative power projects, Carr says “any standardized tariff arrangement also has the potential to unnecessarily increase costs for consumers.” He explains that “In essence, the new DGT would be technology-neutral, apply only to small-scale projects and not have a limited contract term. Rather than being the main vehicle for supporting investment in generation, as FIT is, the DGT would underwrite investment that fills only a small, but nonetheless valuable, part of Ontario’s future electricity needs.”
Carr’s comments were the initial submission in an open “commentary initiative” on energy policy sponsored by the Council for Clean and Reliable Electricity (CCRE). For further information or to obtain copies of the papers, readers may visit the CCRE website: www.thinkingpower.ca.