As election day nears here in Ontario, we have had many CED Co-op members ask us what potential impact the results could have on our co-op and our solar power projects.
While we are not thrilled at the prospects of the coming election results, we are confident in our contracts being honoured. There are over 26,000 active microFIT contracts and over 4,000 active FIT contracts. We believe that there is some safety in numbers. Many of these contracts are held by school boards, hospitals, and other governmental organizations that are backed by provincial coffers. Many FIT contracts are also financed by both domestic and international banks, who will not roll over and simply take losses.
If any measure of these contracts were cancelled, we believe that there would immediately be a class action lawsuit. History would say that our governments do not get out of contracts easily or cheaply.
In addition to this, cancelling contracts could threaten the provincial credit rating. This could cost the province more than it could potentially save by cancelling contracts.
Finally, for any meaningful dollars to be saved in the context of the Provincial Budget and IESO Electricity Expense numbers, the target would likely have to be the 150 or so contracts that range from 5,000KW to 300,000kW of generating capacity, rather than targeting our smaller projects, the largest of which is 500kW.
All of the electricity produced by all solar FIT projects 500kW or less makes up about 1% of provincial electricity needs. Many of these later FIT contracts were issued at about $0.18/kWh. This is still a premium, but not much above where we are headed to spend for nuclear power within the lifespan of these FIT contracts. Even if cancelled without any cost to the province, avoiding this small premium for a mere 1% of provincial electricity will not make a big enough impact to be deemed the “saviour” of electricity costs.
In terms of mitigation, there isn’t much we can do ahead of any actions being taken. In the meantime, we continue to ensure that we are operating within the rules of our contracts.
As always, we encourage everyone to make your voice heard in support of a renewable energy future. Review the party platforms, and ask tough questions of the candidates in your riding. Whoever is elected on June 7th, continue to be an advocate for solar power.
If you have any questions, please get in touch. We would love to hear from you.