Ontario's MicroFIT/FIT/CFIT Feed-in Tariff incentive programs

Since 2009, the province of Ontario, Canada, has had an incentive program that pays homeowners, schools, companies, and other organizations for solar power that they generate. This power is fed to the electrical grid. The program is divided into two: microFIT and FIT. The microFIT is for homeowners, companies, schools, cooperatives and other organizations who own the system and produce 10kW or less. The FIT is also for owners of the systems but produce more than 10kW. FIT stands for Feed-in Tariff. Each program has different rules. The contract period is 20 years.

Different amounts are paid depending on the system size and type:

In Ontario, Canada the average consumer can pay around $0.20 per kWh for electricity (total bill amount/kWh used) so this is a substantial incentive.

10kW microFIT system installed on a home. Photo courtesy of Ottawa Solar Power

Arnprior solar farm using the older $0.42/kWh Ontario SOP program.

A typical microFIT system diagram

A typical microFIT system looks like this.

The costs for a microFIT system

The high cost of solar panels still plays a big part in the decision as to whether or not to go with this approach. The following is a quick back of the envelope calculation to illustrate this. As the table shows, a 2.3kW PV system costs around $17,000 (rounded up to the nearest $1000).

Assuming an average of 4 hours of sunlight per day, it would generate 4 x 2.3kW per day, which is 9.2kW. 9.2kW per day x 365 days in a year gives 3,358kW per year of generated power. At $0.549 per kW x 3,358kW, that's $1,844 per year of income. Given the initial cost of $17,000 divided by $1,844 per year, it would take just over 9 years to cover the initial costs and start making a profit for the remaining 11 years of the 20 year contract. The panels typically have a 25 year warranty and the inverter a 10 year warranty. The only part likely to be replaced during the contract is the inverter since there are some electronic components in it that can wear out.

Annual costs will vary. For example, there may be a small account charge with the local distribution company (power company). Also, the system will add to the value of the property, possibly increasing the property taxes. There is also the consideration of getting insurance. The income from this program is taxable income.

However, if grants or subsidies are available then they can reduce the initial cost, giving an earlier payback. Another approach is to have a leasing company purchase the solar panels and other hardware and then lease it to you, causing you to begin making money much sooner, though since you wouldn't own the hardware, you will always have the cost of paying the leasing company.

Domestic content requirements for microFIT

One interesting feature of the Ontario program is the required domestic content. The installation must have 60% domestic content. The 60% formula basically means all the mounting structure, the hardware, the wiring, the solar panels and the inverter must be made in Ontario, and the labour must be from Ontario.

The purpose of the domestic content requirements is to help grow the green industry in Ontario. Inverter companies like SMA Solar Technology AG, and solar panel manufacturers such as Canadian Solar and Opsun Panels are working on opening plants in Ontario.

News

Government

March 22, 2012 - The results of the Two-Year FIT Review have been announced. The main highlights are:

• The payment amounts have been significantly lowered, reflecting the lowering prices for solar panels over the years. The new amounts are in the table at the top of this page. As an example, a roof mounted microFIT (<=10kW) used to pay $0.802 per kWh but will now pay $0.549 per kWh. But as you can see from the above back of the envelope calculation, you can still get a payback of under 10 years for the 20 year contract.
• It's been recommended not to go ahead with the CFIT (Commercial FIT) program. This program has long been under consideration for allowing companies to "rent" people's rooftops or property for installing systems on.
• Much has been recommended for encouraging greater community and Aboriginal participation.

July 7, 2011 - The Ontario provincial government released a Progress Report that included the progress regarding clean energy and infrastructure. Highlights on the electricity side are:

• More than 2,000 megawatts of new electricity supply from sustainable, renewable sources have been brought online - enough to power nearly 900,000 homes,
• 13,000 clean energy jobs have been created.
• Reduced coal usage for 2011 by 90% from 2003 and are on track to eliminate all coal altogether by 2014.
• Went from 10 wind turbines in 2003 to 900 in 2011 and now have the capacity to power more than 350,000 homes.
• Have more than 200 megawatts for solar capacity online, enough to power more than 30,000 homes.
• Signed or offered contracts for more than 21,000 small, medium and large clean energy projects and about $13 million in private sector investment, including investment in manufacturing.

Industry growth

The following is a collection of announcements of plants either planned or in production as a direct result of this Feed-in Tariff program.

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