Ontario’s Solar PV Tariff Price Setting

By Paul Gipe

April 15, 2007

by Paul Gipe

Using the principle established by first, the Aachen model, and subsequently that used in Germany’s EEG (the Renewable Energy Sources Act), the Ontario Sustainable Energy Asscoiation held a pricing workshop with stakeholders in December, 2004.

OSEA estimated that a tariff of $0.83 CAD/kWh was necessary for minimal profitability under Canadian conditions in 2004. Subsequently, the Canadian Solar Industries Association suggested that such a tariff would indeed spur industrial growth, but that the Canadian market was too immature for the rapid growth anticipated. CanSIA instead proposed a tariff one-half that of OSEA’s calculations as “place holder” for solar PV in the Standard Offer Program, and thus Ontario’s $0.42 CAD/kWh solar tariff was born.

CanSIA hoped that Ontario’s solar tariff would lure “early adopters” to install solar PV and in doing so would enable provincial companies to gear up for greater growth when a subsequent tariff reflecting the true cost of generation was introduced.