APR 28

If you subsidize it, they will come. Ontario recently decided that every kilowatt of solar power generated in its borders could be sold for than 42 cents per kilowatt (more than seven times the going rate for electric power). They expected folks to want to build solar plants...about 88 megawatts worth. But now there are over 40 projects, with a total capacity of 400 megawatts under contract to be built in Ontario. And while the government is proclaiming it a huge success, one has to wonder if this is the best way to spend the money.

Four hundred megawatts is a lot of power, as much as a small coal-fired power plant, and Ontario will certainly be better off for the capacity. But the question remains, does simply handing solar companies seven times the going rate for power create a true opportunity for change?

As it is obviously economically viable for solar companies to build these plants, is there any end in sight? Theoretically, solar-generating capacity will continue to grow until the government can no longer afford the subsidy. I maintain that taxing carbon, or capping its emission, would provide a more stable solution. This way, the market find the cheapest way to decrease emissions on its own, without relying on the government to pay so dearly for every renewable kilowatt generated.

Via CleanBreak

Comments (10)

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Oil Companies
written by Enrique, April 28, 2008

If we are subsidzing the oil companies who are making record profits every year, Why not subsidiy a nascent industry like solar energy.

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Walking the line?
written by MichelleBennett, April 28, 2008

I agree that this subsidy is probably not economically sustainable (in the sense that Ontario can afford to keep it up forever), but I think it's certainly a step in the right direction. By building more of these solar plants, local and regional officials will see first hand that solar is reliable, clean, and profitable in the long run. Perhaps it will help persuade them to make more comprehensive policy.

But, as you point out, it's not the only solution. A wider variety of policy is necessary if we really want to fight climate change. However, I'm of the camp that likes to give kudos where they're due and encourage more change as necessary. Criticising Ontario for passing beneficial subsidies isn't terribly productive - but praising them and using at an example for more comprehensive policy might help to tip them in the right direction towards carbon legislation.

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written by jerry austin, April 28, 2008

Carbon credits aside, let's clarify a few points made here. One, there is no contractual obligation for these 400 megawatts to be built, they are only applications to build. Two, 400 megawatts is a drop in the bucket, about 1 1/2% of Ontario's current average daily peak demand. Three, the going rate in Ontario for electric power is actually about 11 cents when all charges are considered, so the fixed purchase price of 42 cents per kwh over a 20 year term is not the road to a pot of gold.

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written by jake3988, April 28, 2008

Well, the best and easiest thing to do is subsidize the solar until it gets off its feet.

But like the first commenter said... America has been subsidizing oil companies for years. Democrats partially rolled it back, but didn't remove it.

The best thing would be to tax carbon and use that to subsidize the alternative energies.

But then again, we're (U.S.A) subsidizing corn-based (bad) ethanol but we placed a huge tariff on Brazilian sugar-cane ethanol. So even subsidizing can be horrible.

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Good for Ontario
written by Raymond, April 28, 2008

This will be a good short term method of forcing Business to go green.

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written by Bob Wallace, April 28, 2008

Solar and wind are likely to need subsidies for a while longer while they grow manufacturing and improve installation efficiencies.

It's an economy of scale thing....

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written by Ken, April 28, 2008

Energy should not be subsidized. This only indirectly passes on the cost to the customer, through the filter of the government. A better way would be to simply put a cost on pollution, so that the market will discover the most cost-effective ways of creating clean power.

I would hate to be a resident of Ontario. They'll still be paying 42 cents per kWh even after solar energy has become dramatically cheaper. This is only encouraging inefficiency and waste.

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written by Bob Wallace, April 28, 2008

Solar and wind are likely to need subsidies for a while longer while they grow manufacturing and improve installation efficiencies.

It's an economy of scale thing....

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USING BIODEGRADABLE TABLE WARE
written by TOM BRINKMAN, April 29, 2008

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written by TOM BRINKMAN, April 29, 2008

THIS NOT SPAM

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