This is really hard to write, because back on June 4th I blogged about how the industry should empathize with the OPA's situation having thousands of applications to process, and how we should be appreciative of the opportunity they offered us.

Over the last few days, I have really done an about face, because I now understand that the delays were not due to application volume, they were due to the OPA planning to screw the applicants of the microFIT program. I was blindly supporting the OPA based on a trust that they were really interested in the Green energy program that they were promoting succeed. Today I understand that this is not the case.

So to all those that saw through the veil of crap that the OPA was feeding us, I say that I am sorry for having believed the propaganda. You were right to call the OPA on this, and I was fooled.

Shame on me.

Today another manufacturer told me of $55 million in sales lost to the OPA change in microFIT ground mounted pricing. This is just a sign of news I expect to hear more about from within the industry as time goes on.

Unfortunately I don't believe that the OPA understands the severity nor the full implications of their proposed rate change. If this goes through, the OPA and the Ministry of Energy and Infrastructure will loose all credibility within the solar industry.

Many people in the industry assumed that rates would change when the planned 2 year review took place, but for the OPA to decide to change the rate, because people are expected to (in their estimation) earn too much from ground mount installations says, we'll lower your rates, whenever we want, without consideration for your plans.

I am not sure how FIT sized projects can assure their investors that they they will earn a reasonable return, when the OPA could change their rate at anytime. I also don't know how microFIT project developers could make plans to proceed, when the rate may change again tomorrow.

Every project takes time and money to develop, and now no one can proceed on a project because there is no assurance that any rate will be available before they get their contract offer. We cannot make plans, discuss income projections with banks and financiers, because everything we plan could change tomorrow. No longer is the fact that we have applied any assurance that we can make plans, we will need to wait and see what the rate will be when we finally see the OPA offer.

And what if the OPA would say, go ahead, make your plans, everything is good to go. Who will believe them after a rate change? The fact that they did not even say that all the applications in the system would qualify at the rate they applied at, no they said that only those they had approved would get that rate. This is further unsettling news. The fact that, our applications have been we held up for 3-4 months, is just our tough luck, all we can expect is today's rate, or tomorrow's rate or whatever rate we decide to offer when we finally get around to processing your application.

Oh, and another thing. When the OPA states that we will process your application in 30 days, that's just crap too, because we will really process your application whenever we want, so that it suits their plans. And don't forget, that the rate you apply at, really has no relevance on what rate you will get. We just make them up so that we can lure you, and international manufacturers into our province. The OPA obviously has no consideration for anyone's plans, just their own.

I have tried to teach my children as they grow up, to understand what an important thing trust is. We begin relationships trusting one another, but when one person breaks the trust, it takes a very long time before the other party begins to trust again. While the OPA stated that they could change the program at anytime, no one could have guessed that they would lower a rate because we would be making too much money, doing what they said. To me, this is a trust broken, and I am sure that many others that were making plans on developing microFIT projects based on trust in the continuance of the program during the first 2 years, feel betrayed as well.

I urge you to share these feelings with your MP. I don't think that the government should feel that their betraying our trust is something we will let happen without an issue.

Faster than the solar industry is built in Ontario, it begins to fall apart.

Today we lost over a million dollars in business because yesterday, the OPA proposed a rate reduction for ground mounted microFIT projects. This was no small drop, this was not an expected drop during their 2 year program review, this was over 26% out of the blue!

The claim is that in keeping with the spirit of the program, they needed to reduce the rate for the program to be sustainable. Translated this means that because you and I have worked hard over the last 9 months to bring the cost of solar down so that we can make a decent return on the second largest investment most will make during their lifetime (besides buying a house) that we would be earning too much. Because of our efforts, the OPA is reducing our potential income by 26% percent!

The ripple effects throughout the Ontario solar industry are expected to be huge. How can a manufacturer consider investing in setting up a manufacturing facility in Ontario, when they cannot even rely on the government to continue a program on the time-line they have laid out? How can a manufacturer plan to be in any long term business, that will really benefit Ontario, when the OPA along with the support of Ministry of Energy and Infrastructure have chosen to change the program in its infancy.

They will not. There will be no long term benefit to the people of Ontario. What will happen is that a few mobile manufacturing facilities will setup in the province to suck out as much business as they can, then when the program has been totally devastated by the OPA and the Ministry of Energy and Infrastructure, they will leave. 

What we will have done is paid foreign companies for the products that we buy, and we will pay foreign companies for the green energy that they supply us for the next 20 years. Colin Anderson of the OPA and Brad Duguid the minister in charge of Energy and Infrastructure should rethink their proposal. Tell them what you think!

Hopefully it's not too late to salvage the industry, but I have my reservations.

Today the OPA announced a new rate of 58.8¢/kW for ground mounted microFIT installations citing the success of the program (lots of applications), with the majority of them being ground mounted as the reason. They go on to say that for the program to be sustainable, the new rate for lesser costing ground mount projects be reduced, but that it will still offer future project owners to recover cost and earn a reasonable return over the long term. In addition they cite that the program was designed on the principal of a reasonable rate of return.

They go on to say that the Ministry of Energy and Infrastructure supports this decision because it ensures that the microFIT Program is meeting its program goals and is providing proper value to generators and ratepayers. The OPA believes it is in the best long-term, sustainable interests of the program, generators and ratepayers that a proposed new price category be created now so the program can realize the value it was intended to deliver.

What crap!

First of all, the program is not a success, unless the purpose of the program was to collect a few applications. Maybe as the OPA chose not to impose any fee to apply, their purpose was only to collect applications, if so then the program has been a moderate success. I would not say that in a province with over 12 million people living in it, having only 16,000 applications would constitute a success. To put it in perspective, this is akin to the city of Cobourg applying for microFIT applications, not Toronto, Ottawa, Hamilton, Windsor, Thuinder Bay, etc.

The next question is, how many of these applications have been connected to the grid? This to me would be the true indication of success of a program. How many thousands of microFIT producers are connected up right now? I have spoken to many people in the industry and we expect that only about 30% or less of the applicants will actually connect to the grid. This would bring the number of microFIT projects down to about 4,800 given the number of applications. So although a city the size of Cobourg may have applied, less than 1 in 3 is expected to follow through. This is because the cost of solar PV is so high. So is this the success of the program that the OPA is claiming, that less than 1 in 3 people in a city the size of Cobourg connect to the grid, out of the whole province of Ontario?

And what about the cost factor cited as the reason for a lower rate for ground installation? I am not sure about other installation companies, but it costs more for a ground mount system here than a rooftop system. Our rooftop system is the least expensive system we sell, so how does the OPA come up with this information? If a generator (this is what you are referred to by the OPA if you sell power to them) builds their own racking out of say wood (that will last 20 years, ha) and screws on their own panels, and connects up their own wiring, it would cost less than a rooftop system. If this is how they determine that it costs less, than I wonder why they should penalize the hard working people of Ontario that try and do it themselves, to be able to afford a system, by lowering the rate. This lower rate translates into about $60,000 less over the 20 year contract on a 10kW ground mounted system. I would like to know how someone building a system themselves could save $60,000.

And why should the rate for a microFIT on the ground be any different than microFIT on a roof? An individual is already limited to a microFIT sized project, so why should they restrict the rate as well? Didn't they plan for this when they determined the system size and rate?

I have been receiving a number of comments from customers, prospects and manufacturers as a result of this announcement. Customers are wondering why they are being penalized for planing a ground mounted system, while manufacturers are saying that in addition to the problems caused by the OPA's inability to process applications on the time-line they stated, this lower rate will kill ground mount microFIT projects.

When I started this business, I thought that this provided Ontarians a good opportunity to participate in producing Green Energy for the province. While microFIT projects do not produce more than what 1 – 1.5 typical households consume, the fact that we could participate and earn a very conservative business income made this an appealing investment. Backed by a Government contract for 20 years, assured participants that they could recover their investment. Now they are changing the rules, even before the program reaches their own stated 2 year review.

Is the OPA trying to sabotage green energy production in Ontario? Most residential rooftops cannot accommodate a 10 kW system, which means that only ground mounted systems could produce this. Does this mean that they really don't want to produce green energy, or do they just not want to have individuals produce this? The government has been very quick to announce large scale PV and renewable energy projects, with foreign companies. This is not great, because what they are doing is selling off the opportunity for Ontarians to benefit, in exchange for green volume from foreigners. I don' t think that this spells success for Ontario.

I expect that this will also limit PV solar manufacturing moving into Ontario. With a 60% domestic content requirement coming into effect in January 2011, I was looking forward to seeing new industry open in Ontario. The fact that a majority of applications will now never be completed, should cause manufacturers to take a hard look at opening factories here. I know that if I were a manufacturer and I saw that the government thought that 16,000 applications were too many, I wouldn't open up here. There isn't enough business today, nor enough coming tomorrow to warrant it. I urge you to contact your local MP about this decision. It affects not only today's generators, but Ontario's future Green economy as well. If the majority of microFIT applications are for ground mounted systems, and the OPA killed ground mounted microFIT projects by lowering the rate, what then will continue this Green economy? If we aren't placing orders, we aren't buying parts, and we aren't making parts, so we aren't employing people to build them or install them.

Ask your MP to request that the OPA keep their rate structure for the first 2 years, then assess the number of microFIT connections, before they determine the impact that the current rate structure has. At least they can let the industry get started, before they kill it.

Weights & Measures Canada has determined that (I am going by my understanding of an article I read) a parallel connection is the only accurate way to monitor your power production for the purpose of billing/charging the OPA for what you produce. As they are the body that governs this, the OPA has changed their connection requirements, for the time being.

This means that you must connect with a parallel connection to your LDC (local distribution company) who in most cases are Hydro One. The price I have heard is around $1,400 for the connection, so in most cases, you will need to budget this into your setup costs. Kingston Hydro has a lower fee, and other smaller LDCs may as well, but planning for $1,400+ to connect and about $7 per month for your account fee should cover things.

There has been a lot of talk about companies approaching businesses and rural land owners about leasing their rooftops or farm/vacant land to install solar grid-tied PV systems on . They propose to pay you for using currently unused space, and through the lease, turn the unused space into revenue generating space.

There are a few of things to consider before signing on the line:

1. Why would you lease the space to someone else? You can purchase a system for $5 – 7 per watt, which will earn about $1 per watt per year. This means you should be able to recover the cost of the equipment in 5 - 7 years. The OPA contracts run for 20 years, leaving you with 13 – 15 years of 100% profit. Banks are moving towards 10 year financing packages and with equity in your home/farm/building, the rates are very attractive.

2. If the company is proposing to install on your rooftop, will they provide an engineer stamped assessment of whether you roof/building can support the additional load. There are currently no building code requirements, or building permits that address solar PV installations, so how do you know that your roof can support the system proposed? While microFIT sized installations are not a big issue, FIT sized installations could pose risks.

3. Who insures the equipment, and damage that it may cause. If it is riding on your building insurance, it would add to the question, why lease as opposed to own?

4. If you are leasing farm/agricultural land for the installation of PV Solar, the land will probably be rezoned industrial, which will result in additional taxes. Who will pay for this?

5. What happens if you sell the building or land or farm? If the new owners do not want the solar lease, will it affect your ability to sell?

There does not seem to be a lot of benefits to the lessor, except some small return for no effort.

Before you sign, make sure you review the lease with a lawyer, and ask them about how you can get out of it should you need to.

Are these companies really providing a service or just taking advantage of people that don't know enough?

One issue facing many homeowners, is structuring your system financing.

Before you sign on the dotted line to buy your system, consider these points:

1. What is the total cost of your system, installed? Make sure you include any permits, inspection fees and connection fees into your total.
2. Are you going to finance all, some or none of your total costs? Before you can know the amount you will be financing, you will need to decide if how much of the costs you will finance.
3. What financing options do you have? Many banks will only finance the systems for 5, 7 or 10 years. The length of the loan, along with the amount financed will determine whether you system will: earn enough to pay the loan, be short (in which case you will have to add some money to cover the loan payments) or make more than the loan cost.
4. Is the best option to pay cash, or reduce the loan costs by using some of your savings to buy the system? Your solar system income is business income. Interest expense can reduce this income amount and help reduce the amount of income tax paid on it.

Some things to consider when buying a system:

• The more you pay for a system, the longer it will take to pay off, so the less income you will earn over the course of the contract. If you pay the system off in 5 years, you can earn income for the next 15, but if it takes 7 - 10 years, almost half of your earning power is gone.
• If you can pay off a system in just 5 years (but it uses all of the income the system makes to do this) you get 15 years of full income. If you spread the cost over 7 or 10 years however, you can be earning an income from day 1. This will earn you less over the term of the contract, so you will need to decide what is most important for you, a steady income for 20 years, of a larger income for 10 - 15 years.

Deciding how best to structure your financing and how it affects your income is important. As an accountant, professional investment counselor or a tax consultant to determine what is best for you.

The City of Kingston's building department's policy on rooftop PV solar systems, is a building permit is only required if the individual solar panel size being installed is larger than 5 square meters. This is good news and bad news.

The good news is there is less red tape to process before your system can be installed and operating.

The bad news is, the onus to decide if what your salesperson/installer is using is your responsibility. If you didn't read my blog yesterday about what to consider in rooftop mounts, you probably should.

As I have said before, use your best judgment. Read everything you can on the subject and don't be swayed by salespeople telling you to buy what everyone else is getting. This is a new industry, and many people that blindly trust the "experts" will be sorry down the road.