Blind alley

Dead-End-Good-Ways-To-Make-Money1In my last post (which also happened to be a speech I gave for last week’s launch of Project Neutral in Guelph) I pointed out that the city is hemorrhaging money to pay for energy. By 2031 the annual bill will reach half a billion dollars. Guelph is not alone – every city has to pay for the energy it uses. Since no North American city has achieved energy self-sufficiency, most of that cash leaves town.

Guelph is a growing city. The Province of Ontario’s Places to Grow Act of 2006 committed the city to a 50% population increase over the ensuing 25 years. That means adding nearly 60,000 more citizens, and 20,000 more dwellings to accommodate them. Growth in population has traditionally been tied directly to growth in energy consumption, so as long as the two go in lockstep, we would expect Guelph’s energy consumption to grow by 50% from 2006 to 2031.

Guelph’s Community Energy Initiative commits to breaking the link between population and energy. It states the goal that all growth in energy needs for the residential sector will be met by efficiency. In other words, if a new house is built, the energy it uses will come not by generating and importing more energy, but by all the existing housing using less.

Energy efficiency programs, in which utilities work with government to encourage homeowners to use less, are nothing new. One of the most recent such programs was the EcoEnergy for Homes program. It achieved less than 10% penetration. Unfortunately, that’s not enough for the program to be considered a success.

Why was EcoEnergy for Homes a blind alley? First, the economics were problematic. Second, it was maddeningly complicated. I went through the process on two successive homes, so I got to know the details pretty well.

Economics first. The return on investment for an energy retrofit is reasonably good, but not fantastic. The fact that the risk is near zero, and so should be rated alongside, say, Canada Savings Bonds, didn’t register with me at the time. If it had, I would have realized that it was a fabulous deal – normally you only get moderate returns with moderate risk, but this was a moderate return with very low risk. Sweet. If I’d only seen it.

Rather than return on investment, some people look through the payback lens. An investment with a return of 10% pays for itself in ten years. With the incentive cash considered, my payback was eight years or so. That made me hesitate – was I certain that I’d stay in my house long enough to get my money back? (As it turned out, I didn’t stay in either house long enough.) The payback looked worse if I took interest costs into account. More on that in a moment.

So much for economics; now on to the complexity problem. The initial step was to learn about the program. The marketing for EcoEnergy was pretty good, but I expect they threw buckets of advertising cash at it to achieve that level of awareness among prospects. There was no personal touch, no way to ask questions other than a FAQ file.

The next step was to get financing. No bank offers a home energy loan program, so the only way to finance the project (if you don’t have a stack of cash gathering dust somewhere, and who does) is with a home equity line of credit. If you’re pushing the limits of your creditworthiness, you’ll never convince your banker that you will be able to pay for the loan out of the savings on your energy bills, so you may never get out of the gate. Fortunately, I had credit to spare so I got the money I needed.

Next, I needed an auditor. Most people hear “auditor” and run for cover, so seeking one out seemed like masochism. I eventually learned that energy auditors are nice folk, but I’d never done business with one before. Plumbers, yes, electricians certainly, but energy auditors never once. Fortunately I was given a list of approved suppliers, which helped the process along, but it was still terra incognita.

Now on to contractors. Many people have done home renovations and so have a favorite. I’d gotten badly burned on a re-roofing job, so even if dude hadn’t gone bankrupt and skipped town, I wouldn’t have sent another contract his way if my life depended on it. Figuring out the good guys from the bad, the experienced from the fly-by-nighters, and the everything-under-one-roof shops from the subcontract-all-you-can guys…well, it’s a nightmare.

Next is suppliers. My contractor had specific brands of furnace, air conditioners, and water heaters that he liked, so I was stuck with those. I could have tried another brand, I suppose, but I would have gotten a line like, “Well, I can install that one if you want, but I don’t really know it that well/I’ve had trouble with them in the past/their new product line just isn’t as good as it used to be”. The cynic in me figured that low volume of purchases meant no bulk discount which meant tighter margins for the contractor. Anyway, how many furnaces does the average person buy in a lifetime? How do you know the good from the bad?

Finally was the incentive process. The auditor took care of it, which was nice, but it took forever for my cheque to finally arrive. There were no guarantees that I would get the money I expected. It was all very nerve-wracking.

What’s really needed in a home energy retrofit program is simple, low-cost financing that is matched to the investment itself, and a turnkey process that requires minimal effort on the part of the homeowner.

It just so happens that Guelph is planning to deliver exactly that. To find out more, tune in next week.

[By the way, if you landed on this page because you were looking up the 2011 movie directed by the unfortunately named Antonio Trashorras, you landed in the wrong place. And you need to get a life.]

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The Big Tent

If energy is the lifeblood of the economy, Guelph – like most communities – is haemorrhaging.

As of 2010, Guelph was spending $500 million per year on energy – electricity and natural gas for buildings and industry, as well as gasoline and diesel fuel for transportation. Where does that money go? A small amount stays in town, to pay for local gas stations, wires and poles, natural gas pipes, and so on. However, that sum is really just rounding error on the total bill. Almost all of the money leaves the city and never comes back. If we take electricity out of the picture, most of what’s left also leaves the province, since local sources of oil and gas are minimal. If the money leaves town, it doesn’t help anyone in town. Energy is a huge drain on the local economy.

If we do nothing, by the time 2031 rolls around, inflation and population growth will have at least doubled the annual spend. A billion dollars will be bleeding out of town every year.

It doesn’t have to be that way. All we need to do is make more, and waste less. We know we can do this, because others have. We can do it without sacrificing comfort and utility. Here in the City of Guelph we have a plan to get there, and we call it our Community Energy Initiative. It has two main parts: Local energy generation, and energy efficiency.

First, we rely almost completely on energy imports. Whether it is electricity coming from Bruce Nuclear or Niagara Falls, natural gas coming from shale deposits in Montana, or oil coming from Fort McMurray bitumen, virtually all the energy we use comes from elsewhere. To pay for it, money leaves our pockets and then leaves town.

However, new technologies mean that we can provide more for ourselves. Combined heat and power technology allows us to use the same fuel – natural gas to start, but eventually locally sourced biomass and biogas – to produce both warmth and electricity. (I like to call this getting a second squeal from the same pig.) Solar energy can also be used to produce both heat and electricity. District energy allows us to take waste heat from industry and supply it to homes, businesses, and other organizations so they don’t have to produce it themselves by burning natural gas.

We already have a combined heat and power plant supplying the West End Community Centre, and two more plants were approved back in April – one at Polycon in the northwest industrial park, the other in the Hanlon Creek Business Park. We have solar thermal panels above the back patio of the Wooly and on top of the River Run Centre and Fire HQ, and, solar photovoltaic panels on top of the Lawn Bowling Club and next to the Speedvale Water Tower. We also have a district energy network growing around the CHP plant in the south end that I already mentioned, and around the Sleeman Centre, which will soon provide heat to the next phase of the Tricar high-rise condo complex at the corner of Wellington and Mcdonnell. This is to say nothing of the DE system that’s been heating the University of Guelph for more than a hundred years. By 2041, half of Guelph’s heating needs will be supplied by district energy.

Second is the matter of energy efficiency. We use far more energy than we need to. If you look at a typical Canadian building through a pair of infrared goggles, it is a kaleidoscope of reds, oranges, and yellows representing embarrassingly large amounts of radiated, wasted energy. A European building will boast a few shades of cool blue. Leading European cities are nearly twice as energy efficient as Guelph is.

Europe hasn’t achieved this through some kind of sorcery, and it’s not as if Europeans are inherently more thrift minded or environmentally friendly. It all comes down to this simple motivating fact: Energy is very expensive in Europe. People, businesses, and other organizations have responded rationally to high energy costs. They have adopted policies, technologies, and behaviours to help them do as much, or more, with less. If we do what they have done, we can achieve what they have achieved.

I’m a fan of Earth Hour and I do my best to participate each year. However, contrary to the message that Earth Hour sends, conservation does not mean freezing in the dark. It just means figuring out ways to reduce how much we waste.

In the near future the City of Guelph will be launching a program called GEERS – Guelph Energy Efficiency Retrofit Services – to help overhaul our existing buildings and stop them from bleeding precious energy.

Earlier I mentioned that Europeans used a combination of policies, technologies, and behaviours to achieve leadership in the energy sector. Policies like the Community Energy Initiative and GEERS, technologies like district energy, and behaviours like participation in Project Neutral will help Guelph to get there too. I encourage everyone to learn more about Project Neutral and how it can help all of us to use less energy, save more of our hard-earned cash, and leave behind a smaller footprint.

It’s an understatement to say that there was an unexpectedly large turnout for the People’s Climate Mobilization on September 21st of this year. Some of you may have been on the steps of the old Guelph City Hall for the local version of that event. This demonstrated that many people care deeply about climate change. However, “many” is not the same as “all”. For many other people, climate doesn’t matter – or it doesn’t matter as much as jobs, wages, interest rates…in other words, the economy.

Climate is the small tent – rightly or wrongly, not everyone cares about it. The economy is the big tent – everyone gets money somehow, spends money somehow, and has to find a way to somehow make the two numbers match. To make meaningful progress on the climate issue, the conversation must move beyond the environment, and encompass the economy.

Energy is where the environment meets the economy. As a city, we can work together so that by 2031, we will be wasting far less energy, and producing far more of our own, and maybe, just maybe, keeping half a billion dollars right here in Guelph.

That’s a future we can all get excited about.

Postscript: The annual numbers for energy spend (present day and anticipated in 2031) were originally understated by 50%. This has now been corrected.

Bottom rung

170px-Charles_Darwin_by_Julia_Margaret_Cameron_2It is not the strongest or the most intelligent who will survive but those who can best manage change. ― Charles Darwin

As I mentioned in my last post, I traveled to Germany in February and experienced first hand some of the ways that Energiewende – “energy transformation”, the national policy to eliminate fossil fuels and nuclear from the country’s energy mix – has manifested itself. One of the most striking was the way it has sparked innovation. Necessity is the mother of invention, after all. Dramatically rising energy costs have forced German industry, institutions, and governments at all levels to innovate, and in so doing, to adapt.

Energy efficiency is one of these adaptations. Germany is home to a building design standard called Passivhaus (which, as you might expect, translates as “passive house”). This standard uses aggressive insulation, thermally efficient windows, weather stripping, energy-efficient appliances, and heat recovery ventilation to bring the net energy consumption of a house close to zero. In the North Rhine-Westphalia city of Bottrop, I saw my second passivhaus. It was a low-income housing project.

That was a surprise. Here in Canada, I’ve come to associate highly efficient housing with wealth. Perhaps it’s terminology like “LEED gold” or “LEED platinum” that evokes riches by referring to precious metals. Perhaps it’s the reputation that an efficient building is an expensive building.

Perhaps it was the experience of my first passivhaus, the office of a respected and successful architectural firm in Guelph. It is a lovely two-storey Victorian home whose exterior is indistinguishable from neighbouring houses. There is one exception, being the complete absence of icicles – a dead giveaway that little or no heat is escaping into the attic space to melt the accumulated snow on the roof. (This winter in particular, there is plenty of accumulated snow.) Once inside, if you are particularly observant or, as in my case, have it pointed out to you by the owner, you notice that the walls are about a foot thick. I was awed to hear that the light fixtures and human occupants give off enough heat to keep the place comfortably warm. The furnace almost never runs.

Back to Bottrop, where the passivhaus I encountered was intended not for the wealthy, but for the poor.

The wisdom of making social housing hyper-efficient is inescapable. As energy prices rise in excess of the overall rate of inflation, the ones that feel it most keenly are the ones on the bottom rung of the income ladder. Recipients of social assistance, as well as those not dependent on the state but earning an income not far above the poverty line, are hit hard. They are faced with the impossible choice of either keeping their house warm, or feeding hungry mouths.

If the state provides housing that comes with a large and growing burden of energy bills, it will inevitably have to raise the amount of social assistance it delivers. If, on the other hand, the building can be kept at a livable temperature at little or no expense, the somewhat larger initial investment in the building pays for itself.

If, as in the case of the Bottrop building, there is actually an income stream from rooftop solar panels, the logic of energy inflation is turned on its head. The occupants actually benefit from rising prices for energy, since they are using little or none themselves and have an excess to sell to the grid (and, by extension, their neighbours). Higher energy costs actually mean that less social assistance is needed.

Passivhaus is an intriguing technological innovation. Similarly rooftop solar panels for electricity production. However, these are not nearly as fascinating as the social innovation of applying both technologies in the context of affordable housing.

Social Darwinism is a concept that has earned much derision and disdain from those with a social conscience. The idea that those unable to provide for themselves should be abandoned to their fate, thereby strengthening the human species, has been thoroughly discredited. However, the German experience has shown that the environmental stress of rising energy costs can lead to an innovation that helps the most disadvantaged and disenfranchised. Social Darwinism is being reborn, but in a way that promises to offer the “weak” not a cold shoulder, but a warm home and some welcome extra income.

I’ll give the last word to Charles Darwin again:

If the misery of the poor be caused not by the laws of nature, but by our institutions, great is our sin.

Energiewende

I spent this week at the penultimate meeting of the Transatlantic Urban Climate Dialogue (TUCD) in Germany, over and over hearing the term energiewende. Some of our hosts translated this as “energy change”, demonstrating characteristic German modesty. If I bought a Tesla Roadster, installed a solar array on the roof of my home to power it, ever after laughing at the price per litre posted at the local petrol station, and then referred to my accomplishment as changing a tire, it would be a similar understatement. Energiewende is no mere change. It is a revolution.

Visible signs of energiewende abound. Solar panels are a common sight on roofs of homes, factories, and institutions – the Free University of Berlin has several hundred kilowatts-worth of photovoltaics atop many buildings erected or annexed during the Cold War era when the city was hemmed in on all sides by the repressive and utterly democracy-free German Democratic Republic. As our train glided across the countryside at 200 kilometres per hour (120 mph) on the way from Berlin to Essen in the Ruhr valley region, we frequently squinted through the rain dotted windows to see farms of wind turbines rising above the landscape, sleek blades silently rotating with elegance and simplicity. From a hilltop in the Ruhr Valley city of Bottrop, a region once synonymous with coal mining, steel production, and air pollution, the silhouettes of massive power plants are visible on the horizon, their gargantuan stacks belching steam and carbon dioxide no longer, mute relics of a largely bygone carbon economy.

Energiewende makes itself felt in other, more subtle ways. Bathroom faucets often have no manual taps, but sensors that only dispense water when you present your hands – no absent-minded soul will ever leave the water running as they exit. Step off the hotel elevator onto your floor, and the hallway almost instantly lights up, activated by motion sensors that ensure all is dark when no one is there to benefit from the light. Step into your hotel room, and you will find all electricity extinguished – until you slip your access card into a slot on the wall by the door. On entering a Canadian hotel room, by contrast, you would find the lights blazing, as they would have been since the cleaner finished up many hours before. (This card slot has an added practical benefit of making sure I never misplace my room key.)

More subtle is the revolutionary way the room is heated. The hotel has no furnace. Hot water is piped into the building from a plant some distance away, a plant which takes waste heat from industry and puts it to work once more. (More on the idea of District Energy, or DE, in my previous post.) Alternatively, in places not yet served by the District Energy network, buildings are served by micro-CHP (Combined Heat and Power) units. As the name suggests, these devices provide both warmth and electricity. DE and CHP are both largely invisible, their components hidden away in basements or buried under pavement.

Finally, and least conspicuous of all, are the elements of the building envelope – energy-efficient windows, insulation, weatherstripping, and air exchange systems – which together help to make European buildings half as energy intensive as their North American counterparts. Our hosts in the city of Bottrop spoke of a number of housing projects which are “net positive”, meaning that the buildings produce more energy than they use. Some such projects are targeted at members of society on the lowest rung of the economic ladder – low-income earners and beneficiaries of social assistance. These people stand to be hardest hit by rising energy prices, and so stand to benefit the most from a dwelling that receives cheques rather than bills from the local utility.

When I think about my home in Ontario, I realize that the province has really missed the boat with its Green Energy Act. So much of the focus is on green energy generation – wind, solar, and biogas. There is an energy conservation component, but it is the poor cousin. The Feed-In Tariff (FIT) program has more than its fair share of flaws, but it stands head and shoulders above the SaveOnEnergy program.

Coal and oil are becoming ever more scarce and hence ever more expensive, and our environment cannot support their continued use. We need to replace all of our dirty energy generation systems with clean ones, make no mistake. This will be a hard hill to climb. But it will be far easier if the hill is shorter. At the same time as a revolution in green energy generation, North America needs a revolution in energy efficiency. District energy systems, combined heat and power, and building envelope improvements are all critical to shrinking the hill.

Our German TUCD hosts often spoke of everything they have yet to accomplish. They haven’t solved every problem – far from it. But they have made incredible progress. They have developed the technologies, the businesses, the public programs, and the social structures to make it happen. Through TUCD, they have been showing us how – we simply needed to ask.

In Germany, I’ve seen the hill. I’ve seen the way the German people are shrinking the hill at the same time as they are climbing it. And I am completely confident that North Americans can follow their lead.

We need our own energiewende. Our German friends are showing us the way.

Git ‘er done

Git-er-doneThat’s how a popular bumper sticker reads. To heck with correct spelling or grammar. Just do the job, no matter what it takes. Usually it’s on the back of a 4×4, and a muddy one. With a gun rack.

It’s a reflection of the North American psyche, and dates back to frontier times. You’ve got to get the job done, and you’ve got to rely on yourself. Your neighbour can take care of himself. If he asks for help that’s fine, but the starting out position is I can do it and I will do it and I will ask for help from nobody unless I am utterly desperate.

When the job that needs doing is heating a building, this mindset still prevails. Tell me what the best value for money is, and I’ll go for it. High efficiency natural gas furnace? Perfect. Git ‘er done. Electric baseboard heaters? Fine. Git ‘er done. Wood stove? That’ll do. Git ‘er done.

This snap decision has implications for the next two decades or more, because that’s how long many of these technologies will last. Natural gas is cheap now, but where will the price be in fifteen years? A building owner is choosing to be handcuffed to a particular fuel for a very long time.

The funny thing is, homeowners don’t actually want a furnace, a heat pump, a wood stove, nor is do they want natural gas, electricity, or firewood. What they want is heat.

What if they could just buy heat? What if they could opt to have a heat pipe coming into the house – much like that existing pipe supplying water, or natural gas, or that wire supplying electricity, or that cable supplying internet service? They wouldn’t need to fret about how the heat was generated. No more worries about the price of natural gas or whatever fuel source is in vogue. That’s someone else’s problem.

Oh, and while they’re at it, they can get rid of her big hot water tank. Why bother? Just use the heat coming out of that heat pipe to warm up the water, and Bob’s your uncle.

Sounds like a great idea, but obviously it’s fanciful. Who’s going to build a utility to supply heat?

Chances are that a European reading this is feeling awfully puzzled. What’s this guy talking about? We have a heat utility, and we have for decades. All across the continent, communities have built heat utilities. This type of business is built on a technology is called District Energy (DE).

Oh, DE exists in North America, too, but most people don’t know about it. Universities have been doing it for the longest time. My alma mater, the University of Toronto, has subterranean steam tunnels running all over campus – a fact that the engineering prank squad has long used as a convenient way to access buildings by means less obvious than the front door. You won’t find a conventional furnace anywhere on campus. One big plant supplies the entire university with heating and cooling, and those tunnels get the heat or the cold wherever it needs to go.

The Europeans have done it. Universities have done it. Why haven’t North American communities done it?

One big reason is that can-do attitude, which goes hand-in-hand with a going-it-alone attitude. Whenever a North American is trying to crack a problem, the first question they ask is not, “How can I team up with some other people to solve this?”

DE is all about teamwork. If my furnace runs less than half the time, and ditto for my neighbor, why don’t we just share one furnace? Half the capital cost, half the maintenance. Take that up a notch or two, and what do you get? An entire town or city sharing a furnace. That’s DE.

This kind of teamwork is foreign to most North Americans. Oh, there are long-standing traditions of mutual support in times of crisis, and of banding together for barn raisings, but the prevailing attitude is self-reliance unless there is no other option.

We can’t afford this attitude any more. A DE system is more than just a way to save capital costs by sharing our heating equipment. It is also more efficient than having a furnace in every building. Put another way, failing to implement DE is wasteful. In an age of dramatically rising energy costs and extensive harmful effects of greenhouse gas emissions, we cannot afford the waste that is inevitable where DE is absent.

There’s more. For heavy industry, heat is often a waste product, and it costs them a lot of money to get rid of it. By connecting a DE system to such enterprises, that heat can be spirited away for a nominal cost and supplied to residences, institutions, and commercial buildings. One man’s trash becomes another man’s treasure.

Finally, DE offers a platform for changing the way a community obtains heat. To start, the central heat source is likely a natural gas furnace or boiler. But through economies of scale, DE provides the opportunity to diversify away from a single fuel source – something that is difficult or impossible for someone going it alone. Large-scale geo-exchange systems can use electricity to supply heat, reducing dependence on the price of natural gas. Renewable biofuels like wood pellets can be used for fuel. Anaerobic digesters can convert agricultural waste into renewable biogas. Finally, solar thermal can be deployed on a scale that is far more economical than is possible for an individual building, exploiting a heat source that is free. Coupled with thermal storage technologies, a community can use DE to move toward heating that is 100% renewable.

It’s cheaper. It’s more efficient. It paves the way to a post-fossil-fuel future. DE is an idea whose time has come.

Git ‘er done.

An ounce of prevention

After Y2K
After Y2K

A little over 14 years ago, a global apocalypse was imminent. As the clock ticked over to midnight on January 1, 2000, the computer systems of the world were going to drop off a virtual cliff. Huge sums of money were invested to rewrite or replace flawed code, leading to a renaissance for programmers of forgotten computer languages. Practitioners of Disaster Recovery (DR) and Business Continuity Planning saw unprecedented demand for their services. Uber-pessimists predicted a complete breakdown in civil society; a grim new future reminiscent of the Mad Max movies. Urban survivalists stocked up on food, supplies, weapons, and ammunition. Everybody who was anybody made sure they had a backup generator to provide electricity after everything went dark.

The new millennium dawned. I recall one report of an elevator in a building somewhere in the Far East that got stuck between floors as a result of the “Y2K Bug” as it was called, but that was about it. Like every Armageddon prognosticated before and since, the world gave a cynical little grunt, lied to itself that it would never listen to Chicken Little again, and kept right on trucking.

Was the whole thing an excellent example of humanity uniting to defeat a common foe, or falling victim to the very worst kind of snake oil salesmen? Either way, the world became just a little more prepared to deal with disaster. When an ice storm knocked out power to my community just before Christmas this year, I walked around the block and heard portable generators thrumming away at about a quarter of the homes. Most, I expect, were bought in the run-up to Y2K.

A decade and a half on, DR is a buzzword again but with a different meaning. As society becomes more affluent, what was a luxury becomes a necessity: Air conditioning, for example. During the dog days of summer, the sun rises with the “Dog Star” Sirius (or did when the phrase originated), the mercury rises along with it, people beat the heat by cranking the AC, the grid groans under the burden, and electricity utilities warn of rolling blackouts. Utilities offer cash to ratepayers that are willing and able to dial back their power usage during these periods, under programs that are collectively called Demand Response.

DR can be very lucrative. For the simple act of making the electricity meter spin a little slower during a so-called DR event (of which there may be two or three in an entire year), businesses and institutions can secure significant sums. The trouble is, not every ratepayer can take advantage.

I’m responsible for the energy budget of the City of Guelph, in Ontario, Canada. My biggest line items are water, wastewater, streetlights, and buildings such as City Hall, fire stations, and recreation centres. Water offers little opportunity to cut back. You can tell people to turn off the lawn sprinkler during a heat wave, but if you suggest that they drink or shower less, the public health folks will rightly tell you that you’ve lost your sense of priorities (and maybe your mind). Wastewater is also a non-starter – try telling people to avoid flushing the toilet when it’s already stinking hot and see how that goes over. Street lighting consumes plenty of power, but as the sun is setting and electricity demand is dropping anyway. Most city buildings double as “cooling centres”, providing shelter from the heat for those most vulnerable, so cutting back the AC ain’t gonna fly.

What’s left?

If we can’t avoid using the power, we could ease the pressure on the grid by getting at least some of the power from somewhere else. We have a couple of dozen backup generators scattered across the city, why not use those? The whole point of having them is to provide power in the event of a blackout. Doesn’t it make perfect sense to use them to prevent one?

The way Ontario environmental legislation is currently drafted, regardless of whether this is a good idea, it’s verboten. A generator can only be run legally if it has a Certificate of Approval, and that certificate spells out acceptable and unacceptable uses. Backup generators are held to a less stringent standard of emissions than a general use power generator. If a unit has a CofA for backup generation, it can only be run either during an outage, or for occasional testing and maintenance. Running it during a DR event is not an acceptable use. The law specifically states that if you run the unit for testing and maintenance, you can only run it for testing and maintenance, nothing else.  In other words, if you happen to do this testing during a DR event, you’re on the wrong side of provincial law.

The law already anticipates a certain level of emissions from backup generators – it allows a backup generator to be run for maintenance and testing purposes for up to 60 hours per year. All the DR events in a given year would add up to considerably less than that. If generator operators synchronized their test runs with DR events, it would result in no increase in emissions.

The provincial government, through the Ministry of Energy and the Ontario Power Authority, is wrestling with the problem of managing peak electricity demand. At the same time the government, through the Ministry of the Environment, aims to keep air pollution to an acceptable level. There is an opportunity to solve one problem without exacerbating the other, by letting us test our backup generators when that testing will also help ease the strain on our electricity grid.

Why not go for it?

Whither MicroFIT?

Annual Procurement Cap graph
Time, gentlemen, please.

The Ontario MicroFIT program is a keg about to run dry. Nobody knows if there’s another keg in the cellar. The Ontario Power Authority isn’t saying. There are encouraging signs, but past experience has taught us to be pessimistic.

We’ve been here once before. In October of 2011, following a provincial election, the program was shut down for a review of policies, procedures, and pricing. There was no advance warning that the stoppage was pending. There were few signs of how long the program would be closed, and what few there were turned out to be grossly understated. The industry was taken completely off guard, and was shoved into an extremely damaging nine-month deep freeze.

Things are different this time around – to a point. At least now there is some advance warning that something lies ahead, thanks to a feature of MicroFIT 2.0 called the Annual Procurement Target. The OPA indicated that the target for 2012 would be 50 MW. However, they haven’t really defined what that means. The industry has been forced to infer the meaning from the OPA’s behaviour.

When an aspiring MicroFIT participant applies for a contract, the OPA checks the application against the target. If the capacity of the proposed project falls within the target (and assuming the rest of the application is in order), the OPA gives conditional approval. Then the applicant must apply to their local utility for a connection.

No application has yet been rejected because it exceeded the target. Every MicroFIT project is roughly the same size – 10 kW – so once a project exceeds the cap, so will every project that comes after. The target is a trigger to turn off the taps until…something.

Back in late December, there was some speculation about the meaning of the word “Annual”. Did it refer to a target for calendar 2012? Some (me included) supposed that if the 50MW tranche was completely contracted out before New Year’s Day, the program would be shut down until the start of 2013, at which time another annual target would be set. Over 15MW remained when the calendars flipped, so we’ll never know what would have happened.

The OPA issued an update on December 21st,, but it shed little light. It implied that applications submitted before the end of the year would “remain active”, whatever that means. It suggested that anything submitted after that date would be subject so some as-yet unspecified pricing. It promised that more details regarding 2013 pricing would be released in 2013.

When 2013 started, The OPA kept on working through the remaining 15 MW, putting to rest any speculation that a new annual target would be set. That, at least, was comforting – it was evident that the program was not going to be shut down, at least not for a little while. However, there was no explicit statement that the existing pricing would remain in effect. This left the industry flying blind, not knowing if the projects they were pursuing would be subject to the existing price, or one yet to be revealed. This did not make for comfortable customer relationships. “Here, buy this system. It will earn you money. We have no idea how much. Hello? Hello?”

The OPA waited until January 29th to clarify things. At that time they announced that until the 50MW was exhausted, the existing pricing would remain in effect. That, finally, brought some clarity. However, it was also clear that at the established rate of contract issuance, only a few weeks remained before the procurement target (they stopped using the term “annual” at this time) would be reached and… something would happen. A price decrease? Probably. A complete shutdown? Maybe. There was a bit more transparency than back on October of 2011, but still far too much fog.

One thing that was clear: The amount of capacity allocated each biweekly period was between two and three megawatts, which meant that as of the end of January there were between two and three months left before the procurement target would be reached. On April Fools’ Day or May Day or somewhere in between, the keg would be empty.

When the barkeep announces last call, what to patrons do? They stampede for the bar to grab their last pint. Or two. This is what happened. The period from February 18th to March 4th saw a big uptick – only once in October did the biweekly report show a steeper drop in remaining capacity. The target was drawing nearer even faster than expected.

Then something odd happened. Over the following biweekly, the unallocated capacity actually increased. This is puzzling at first, until you realize that any approved project has 180 days to get installed and connected. The rush of applications that came after the program reopened in July – many of which replaced ones that died on the vine when the October 2011 program review was announced – were bumping into that six month limit, and clearly plenty had missed their deadline. It is to the OPA’s credit that they re-released this capacity into the pool to be reallocated, instead of treating it as spent.

Now the influx of new approvals and the amount of offsetting expirations should be approaching equilibrium, so we can expect the remaining capacity to continue to drop by about two megawatts per biweekly period. That means that as of this writing, the best guess is that the procurement target will be hit around May Two-Four.

The OPA still hasn’t said what it plans to do when the keg is empty. However, last month it launched a consultation process to various stakeholders – industry associations, representatives of electricity consumers, and community groups. The review was focused on one thing – price.

This is actually encouraging. Remember that the last time the OPA did a review, they shut the entire program down for the better part of a year. This time it looks like they don’t plan to shoo everyone out of the bar and bolt to door; rather, they’re chatting with folks while the taps are still running.

Yes, it does look like another price drop is likely. That’s okay. The industry can take it. Solar module prices have continued to drop since the July re-launch. That said, some of that price drop is structural – efficiencies gained by economies of scale as the industry has grown – but some is also cyclical, as overproduction has produced a glut of panels on the market. Once that excess inventory is drawn down, panel prices will stabilize and maybe even increase. If the OPA lowers the rate too much, they risk making the program unattractive. That will not be in anyone’s best interests.

But it’s much better than shutting things down.

So here’s to the OPA rolling out the next keg – and may it be tasty, frothy, sensibly priced, and bring us all courage to keep pressing on toward a greener, cleaner tomorrow.