Every year since 2006, the Canadian solar industry has convened at Solar Canada, the conference and trade show hosted by the Canadian Solar Industries Association, the organization that represents and develops markets for the solar energy industry throughout the nation.
Although Solar Canada is now one of the largest events for the solar energy industry in Canada, it came from humble beginnings, with fewer than 100 participants in attendance in its first year. The event was held in December in order to coincide with the downtime for the small integration companies that dominated the industry. To say that the optimism at the time for this niche technology to drop in cost tenfold, disrupt the electricity sector, and become a widespread and mainstream energy option was met with some doubt would be an understatement.
Fast-forward to 2016: That optimism from a decade ago has become a business that attracts more than C$1 billion of investment and supports 10,000 jobs annually in Canada. Canada has become one of the leading markets for solar PV globally and represented one of the top 10 countries in 2014 and 2015, with an average of 675 MW installed in those years. Our national cumulative installed capacity will soon surpass 3 GW. Solar Canada now welcomes thousands of attendees and hundreds of exhibitors from around the world – a testament to how the Canadian market and industry have matured.
In recent years, most discussions about the Canadian solar market focused on the province of Ontario, whose installed capacity has represented more than 99% of the market activity in the country’s provinces and territories. However, those market dynamics are shifting, and this year, there are three key questions on the minds of solar industry stakeholders.
What will Canada’s new federal government do to shape the solar industry’s future?
Canada’s federal government has largely been absent on climate change and renewable energy for the past decade. Our new prime minister, Justin Trudeau, has garnered global attention for his progressive social and environmental views and his popularity among young people. Now having just passed one year in office, Trudeau and his administration have provided signs that new policies and programs will position Canada for the low-carbon future.
The first early signal that his government will be making amends for the past decade of inaction was the ratification of the Paris Agreement, a global pact that commits Canada and other nations to work toward limiting the earth’s global temperature rise to “well below” 2°C above pre-industrial levels. The second signal, the introduction of a minimum national carbon price across Canada starting at C$10 per tonne in 2018 and rising to C$50 per tonne by 2022, will begin to level the playing field between energy that emits greenhouse gases and energy that does not. The third, a newly announced commitment to power all federal government operations and buildings with 100% renewable electricity by 2025, shows that the federal government is willing to lead by example.
At the time of this writing, deliberations are taking place on other major issues, including the future of coal-fired generation in the provinces where the previous federal government’s emissions regulations would have seen coal plants operating into the 2030s and 2040s, as well as the role of a new Canada Infrastructure Bank being created to, in part, support green infrastructure expenditure and leverage private-sector investment. Also at press time, the federal government is considering programs or tax policies to incentivize the deployment of renewable energy in advance of COP22 in Marrakech, Morocco, in mid-November and a First Ministers’ Meeting in early December.
Although we don’t necessarily know how the federal government will deliver on its climate policy goals today, we no longer have to question if it will. We also believe federal-level policies and programs will enable Canada’s solar markets to develop more rapidly and more uniformly at the provincial and territorial levels.
What market share of Alberta’s and Saskatchewan’s renewable targets will solar capture?
Two provinces in Western Canada best known for their oil and gas resources and their cheap electricity generated from coal have announced their intent to pursue their renewable resources. Both prairie provinces have an abundance of flat land, a solar resource better than anywhere else in the country, and new targets to demonstrate their intent to decarbonize and diversify their electricity supply mixes.
Alberta will meet 30% of the province’s annual electricity needs with renewable resources by 2030. This equates to a tripling of supply from renewables from today and is in support of the province’s phase-out of all coal-fired generation by 2030. (Coal currently provides about two-thirds of the province’s annual electricity needs.)
The province will support 5 GW of utility-scale renewables through the Renewable Electricity Program (REP), with the first round of competitive procurement to take place in 2017. Successful bidders will have their projects contracted via an “indexed-REC” (which functions like a “contract for differences” to firm up revenues from the merchant market, while minimizing the level of incentive required) with a 20-year term. Although the first round of procurement to contract 400 MW of renewables will be “technology-neutral,” carve-outs or set-asides are in consideration for future rounds.
However, near-term utility-scale procurement will also take place in the province outside of the REP. The Government of Alberta, whose operations are already powered 100% by renewables, will procure 135,000 MWh per year of solar electricity generation to meet more than 50% of its electricity needs for the 1,500 buildings and properties the government owns and operates.
Located to the east of Alberta, Saskatchewan also has committed to clean energy, with a target to have 50% of the province’s electricity capacity come from renewables by 2030 – representing a doubling of its renewable generation capacity. Saskatchewan’s competitive procurement processes are expected to deliver a minimum of 60 MW of utility-scale generation. Developers will have the option to propose a site or make a bid to construct, own, and operate on a site identified and secured by the province’s crown corporation utility, SaskPower. Partnering on projects with the First Nations Power Authority and partnering with communities are also options that are under development for future rounds of procurement. A review of the province’s policy and regulatory frameworks for distributed generation is also under way.
Although these commitments create the potential for significant growth in solar electricity generation over the next 14 years, it will be the policy and procurement details that define how rapidly this opportunity manifests.
What future will Ontario’s Long Term Energy Plan hold for solar?
Ontario has been the leading solar market in Canada for many years. More than 99% of the country’s almost 3 GW of solar is located in the province due to the Green Energy and Economy Act (GEEA), which sought to counter the potentially devastating implications of the global financial crisis of 2008. The GEEA gave rise to the province’s feed-in tariff (FIT) programs, which for a number of years made the province one of the hottest solar markets in the world. In fact, if Ontario were a U.S. state, the province would have been ranked third for the amount of solar capacity added in the years 2013 to 2015.
At press time, the province has procurements for distributed generation, including solar, under way through the microFIT (50 MW) and FIT (150 MW-200 MW) programs. However, Ontario appears to be beginning to apply the brakes on utility-scale renewables following the recent postponement of a 250 MW solar procurement under the Large Renewable Procurement program due to adequate supply and a new agreement for hydropower with neighboring Quebec.
As a centrally planned electricity market, Ontario has a supply-and-demand planning process that is a critical indicator of the market opportunities in the near to medium terms with regard to government procurement. The process to renew the province’s Long Term Energy Plan – which forecasts future demand, the success of conservation and demand-side management efforts, and then assesses political, economic and technical factors to establish the actions required to achieve the most desirable future supply mix – has begun. The current discussions surrounding the cost-effectiveness of solar vis a vis other options such as storage technology and nuclear refurbishments, the demand outlook due to electrification to combat climate change, and other considerations will be formative for solar in the province.
The Ontario distributed solar market is primed for growth, however, through a revised net-metering regulation and the possibility of transitional incentives funded from the province’s cap-and-trade regime. These regulatory developments would allow more electricity customers to self-generate a portion of their electricity to offset electricity costs without depending on central procurements.
The Canadian solar market is entering a new phase as Ontario considers whether to increase, maintain, or decrease the scale and pace of solar deployment in the coming years. Nonetheless, new policies and programs at the federal level and in Western Canada are expected to more than compensate for any near-term bumps in the road.
Solar industry stakeholders have more questions than answers right now about how to best position their businesses for future success in Canada. However, we are confident that the answers will point to a rate of market growth in Canada that will continue to advance at an equal or greater rate than that which has been experienced since our first Solar Canada event in 2006.
We hope that those who are the most optimistic today about solar’s increasing cost-competitiveness and market growth in the face of some doubters become the new benchmark that drives investment and creates jobs for the benefit of Canada and Canadians for years to come. More than anything, we hope you consider being a part of Canada’s solar future.
Lisa Hatina is the business development and member relations manager at the Canadian Solar Industries Association. The organization is hosting the Solar Canada 2016 conference Dec. 5-6 in Toronto, Ontario.