Feed-in Tariffs

In its campaign for a Green Energy Act, OSEA pushed hard for a system of feed-in tariffs. These premium prices for renewable energy are credited with spurring the rapid deployment of renewable energy in Europe. Characterized as the best mechanism for combating climate change, feed-in tariffs act as financial incentives for everyone to produce electricity from green energies such as solar, wind, biogas and run-of-the-river hydro power plants that is fed into the provincial electricity grid.

These long-term payments made to generators of renewable energy, be they households, commercial companies, community groups, energy co-operatives or utilities, are differentiated by scale and technology so, for example, one price is paid for solar PVs on a rooftop and another price is paid for ground mounted solar while different prices are paid for wind power generated on shore and wind power produced off shore.  Based on what it actually costs to produce energy from each technology, the tariffs ensure that producers will make a reasonable profit and, thus, are an incentive to get into the business of producing clean, green power.

The recently passed Green Energy Act gives the government the authority to direct the Ontario Power Authority to establish a feed-in tariff program, which it did.  In October 2009, both the Microfit Program for power projects less than 10 kilowatts and the FIT Program for larger projects were launched. Ontario’s feed-in tariffs are the most comprehensive in North America and among the most generous in the world. As a result, they have attracted much interest from developers and manufacturers both at home and overseas.

However, while the tariffs are proving effective in attracting outside investment, they have also been designed to encourage local participation by including a bonus or “adder” for communities, First Nations and Métis groups that produce green electricity. This top-up is meant to defray addition costs incurred by community power groups and to put them on a level playing field with commercial developers.

The benefits of feed-in tariffs are widely recognized. As well as spurring the development of renewables and encouraging distributed generation, they help secure the supply of domestic energy; accelerate the transition to a low carbon energy system, create new jobs and industries; guarantee investment security; and drive innovations in technology;

By encouraging the development of renewable energy in Ontario, the FIT Program will help Ontario phase out coal-fired electricity generation by 2014 - the largest climate change initiative in North America.