The Bear, the Volt, and the Saint Bernard

The bears have it figured out.

Their diet consists of berries, shoots, grasses, honey, squirrels, salmon, and the odd unfortunate hiker. Though these foods are plentiful in the warmer months, they become scarce to non-existent in winter. But bears don’t starve when the snow falls. In late summer and fall they gorge themselves, storing up reserves of fat, and then settle down in a convenient den to sleep away the lean wintertime.

Like bear food, renewable energy sources such as wind and solar are not available all the time. Sometimes the wind does not blow. Sometimes the sun does not shine. Like bears, we can adjust our electricity consumption to match when it is available, but only up to a point. We need to power our hospitals, public transit, roadway lighting, and innumerable other non-negotiables.

For now, this isn’t a problem. Wind and solar are merely the garnish on the edge of our collective energy plate. The mainstays of our energy diet are hydroelectric dams, nuclear reactors, and thermal plants which produce electricity by burning fossil fuels.

However, this is a passing state of affairs. Most significant sources of hydropower have already been tapped. Nuclear is prone to massive construction cost overruns and rare but catastrophic accidents, and carries a near-perpetual liability of radioactive waste storage. Fossil fuels – coal, oil and natural gas – grow more expensive and scarce, and will inevitably price themselves out of the market. More troubling is the local acid rain and global climate change that they cause.

Sooner or later, all of our energy will have to be renewable. If we are to avoid massive collapse of world ecosystems under the weight of runaway global warming, it had best be sooner rather than later. But before that can happen, we will have to smooth over the difference between the pattern of generation and the pattern of consumption. That means finding methods to store energy on a huge scale.

What are we going to do, build a massive rechargeable battery?

No. But we are going to build a whole bunch of little ones.

Some of these rechargeable batteries won’t be so little. Pumped storage, like the 400MW facility proposed in Marmora, Ontario, uses cheap off-peak electricity (picture wind turbines spinning madly on blustery nights) to pump water into an elevated reservoir. Then, when rates are high, the water is allowed to flow back down into a lower reservoir, turning turbines and generating – well, re-generating – electricity.

The other rechargeable batteries are actually the solution to two problems. Nearly every mode of transportation – be it the plane, the train, or the automobile – relies on combustion of fossil fuels. But like fossil fuels, the internal combustion engine’s days are numbered. The transition to post-gasoline transportation began in 1997, with the advent of Toyota’s hybrid gas-electric Prius, and continues today with the plug-in hybrid Chevy Volt and its brethren.

Eventually internal combustion engines will go the way of the electric typewriter, electric cars will reign supreme, and a sizeable rechargeable battery will be parked in every driveway. These will charge up at night, when both electricity demand and electricity rates are low. When the sun rides high, and electricity rates do likewise, and the car is just sitting in a parking lot anyway, some of that stored energy will be fed back into the grid. And the owner will get credit for it.

That brings us to the third column holding up the temple of the new energy economy.

The price we pay for electricity is like a fixed-rate mortgage. We know exactly how much our payment will be each month. It’s predictable. It’s easy to understand. And, in the long run, it’s also a lot more costly than a variable-rate mortgage.

Our electricity prices are fixed through government regulation. The electricity utility has to deal with a spot price that moves all over the place in response to the laws of supply and demand. However, we as consumers never see that. We are insulated from the harsh reality of fluctuating electricity costs. We are protected. And, just like with a fixed-rate mortgage, that protection comes at a cost.

Early in the previous decade, various jurisdictions flirted with the idea of removing this protection. Let the price that consumers pay reflect the cost to the utility, and people will make sensible economic decisions about such things as when to run their air conditioner, dishwasher, and clothes dryer. Ultimately that should drive costs down, right?

The problem was that it was a case of too much, too soon. Consumers were not used to adjusting their electricity usage to reflect the spot price, and they were not given time to adapt. Their appliances did not offer automation to make this adaptation any easier. And the mechanism to supply price information to customers was also flawed.

Our electricity grid is like a Saint Bernard – big, dumb, and not agile in the slightest. It can cope with a small number of high-output generating stations, but not with a huge number of tiny ones. It is ill-equipped to power a panoply of high-tech devices that react badly to random voltage fluctuations – fluctuations that were inconsequential at the time that the grid was designed and built, when people were only plugging in such comparatively insensitive devices as electric lights and toasters. It can figure out how much electricity each customer uses, but not – at least until recently – when that electricity was consumed. And it cannot cope with the meter running backwards, which is what will happen when rooftop solar panels and electric car batteries are feeding power back into a needy grid.

The technology now exists to match up supply and demand in real-time. It allows for appliances to become smarter about when they start up and shut down, avoiding peak usage periods. It allows for electricity to be generated everywhere, instead of solely in massive centralized plants. It allows metering of electricity being fed in as well as being drawn out. And it allows one part of the grid to isolate itself from another during a fault, preventing massive cascading system failures like the Northeast blackout of 2003. These technologies are referred to collectively as the smart microgrid.

Renewable energy, electric vehicles, and the smart microgrid are the three key technologies that will deliver us from the dead-end energy world of today into the living, breathing, and clean energy world of tomorrow. But technology is only part of the solution. Next week I’ll discuss the people and political side.

What if Durban doesn’t matter?

The end is near...or not

If you’re like me, you care about the future of the planet and believe we need to do everything we can to protect it. If you’re even more like me, you were both dismayed and ashamed by what our leaders failed to do in Durban last month – failed to recognize that our unrestrained carbon emissions from the burning of fossil fuels have put the planet on an express train to catastrophe, failed to recognize that fairness and short-term economic growth do not matter in the face of disaster, and failed to pull out all the stops to reach a new agreement on greenhouse gas emissions. And, if you very much like me, and happen to be Canadian, you’re disgusted by the fact that our leaders added insult to injury by choosing that decisive moment to withdraw from the Kyoto Protocol.

While the Durban debacle was taking place, I was attending the CanSIA Solar Canada conference. The commuter train ride between Toronto and my home in Guelph gave me plenty of time to ponder. I was in a state of disbelief, shock, and shame. How could I tell my kids about this? What would they say?

I know what it is to look back at the previous generation with bitter resentment. The leaders they chose concluded that economic growth would continue forever, so why not borrow against that growth to make things better today? The result was an unsustainable collection of services that eventually had to be trimmed or cancelled, and a crushing burden of debt which my generation – and likely the generations to follow – will now have to repay.

I can bitch and complain that my parents borrowed in my name and without my permission. But if I do, I’m a complete hypocrite. My generation has topped the one that came before. A First Nations adage says, “We do not inherit the earth from our parents; we borrow it from our children.” With the Durban disappointment, we have failed our children beyond all imagination. We have bequeathed them a planet which will turn on them in a myriad of ways, be it increasingly capricious and violent weather, famine and starvation due to lower crop yields, some rivers running dry while others flood furiously, more violent civil and international conflicts over food and water and land, and ecosystems collapsing under the weight of runaway climate change.

Or have we?

Perhaps all is not gloom and doom. Perhaps hope still remains. Perhaps Durban doesn’t matter.

Our national leaders have adopted an ostrich mentality, but federal governments are not the only thing that matters in this world. I am an individual, and I can make change on behalf of myself and my family. My purchasing decisions can affect change in the corporations that supply me with goods and services. I vote and pay taxes in my city and my province; those two levels of government can take up the torch – or the solar-charged LED flashlight – where our federal government has thrown it down with such short-sighted cowardice.

Despite being otherwise allergic to anything green, Canada’s ruling Conservative Party renewed a program called EcoEnergy. This provides rebates to homeowners for improvements that enhance home energy efficiency. I’ve taken advantage of this program in my last two homes, reducing the cost of a new furnace, an on-demand water heater, insulation, windows, and exterior doors. These upgrades reduced the amount of energy my homes required for heating and cooling, and in turn reduced my electricity and natural gas bills.

Even without the government subsidies, these improvements make good economic sense. Anyone that owns a building has a built-in incentive to be green, and many property owners are taking advantage. This runs counter to the prevailing wisdom that people are only interested in being green when the economy is booming – when money is tight, it makes sense to save wherever possible.

Businesses have an additional green incentive that has nothing to do with global diplomacy. In businesses where competition is stiff and differentiation difficult, it can be advantageous to cater to the green-minded. This applies in the battle for talent just as it does in the battle for customers. Google, for example, has taken its informal motto – “Don’t be evil” – to a different level with its significant investments in renewable energy. These enhance its brand, giving Google a leg up over other Silicon Valley companies seeking to attract the best and the brightest.

Municipalities also have a role to play in fighting climate change. The City of Guelph was well-represented at Solar Canada – Mayor Karen Farbridge gave a plenary session address describing the city’s Community Energy Initiative, and CEI General Manager Rob Kerr served as a panelist in a breakout discussion. The CEI includes innovative ideas such as constructing two solar parks within the city limits, developing district energy and combined heat and power, as well as a grassroots program offering energy efficiency retrofits to homeowners at no charge. The objective is to consume less energy and emit less carbon in 25 years than the city does today, while growing its population by 40%.

Then there are states and provinces. Many US states have introduced a Renewable Portfolio Standard, which mandates that a certain percentage of energy produced in the state must be from renewable sources by a specified target date. In Canada, the provinces of Ontario and Nova Scotia have introduced Feed-In Tariff programs, to purchase electricity from renewable sources at a premium rate. This is encouraging investment in wind, solar, tidal, and biomass energy, all of which are helping to reduce our dependence on carbon-laden fossil fuels.

It would have been inspiring if the nations represented at Durban had come to a new agreement to limit carbon emissions, and we must all play our part to convince our elected representatives that they have made a huge mistake. However, it is possible that Durban is not the end of the world. Between individuals, corporations, municipalities, and states/provinces, many exciting things are happening to stave off climate change.

And, if the people lead, eventually the leaders will follow.

The Law of Conservation of Bad Ideas

Which way to the clean room?

Back in the mid-nineties, British Petroleum (of recent Deepwater Horizon fame) bought a company called Solarex. BP’s rationale went something like this: “We’re an energy company, and Solarex is in the energy business, so it’s a good strategic fit.” Solarex was bought, and was re-christened BP Solar.

It was a bad idea.

BP may call itself an energy company, but everyone knows that it’s really an oil company. According to the firm’s 2010 Summary Review, BP’s oil business brought in just over US$36 billion. All other lines of business, BP Solar included, yielded a loss of $21 million. So, it’s fair to say that one one-thousandth of BP is non-oil.

The oil business consists of looking for oil (exploration), getting it out of the ground (production), cleaning it up (refining), and selling it (marketing). Successful oil companies get out and explore where nobody else is. They then nail down production rights, squeezing the best possible deal from the country sitting on top of the oil reservoir (and often these are dictatorships that use the revenues to repress their own people or fund wars with their neighbours). BP and its kind then process the oil in big, smelly, dirty refineries, always in a balancing act with their competitors. You don’t make any money without a refinery, but if everyone builds new ones at the same time, the result is overcapacity, and prices drop through the floor. Then, they market the finished products – gasoline, motor oil and the like, and petrochemicals – which are all in such demand that they practically sell themselves.

Contrast that with the solar panel business. It’s much more like the semiconductor industry than the oil sector. It depends on a steady supply of silicon.  There’s a big emphasis on research and development to improve the product and the production process. The cells are manufactured in a clean room environment. Except for the off-grid market, sales are dependent on governments implementing some form of subsidy for renewable energy, like Germany’s FIT program or the Renewable Portfolio Standard in many US states.

The decision-making around refinery capacity bears a passing resemblance to that in solar panel production, but that’s the sum total of the “synergy” between these two businesses. This is why industry commentators did not have very many good things to say about the BP/Solarex deal.

Fast forward a decade and a half to the present day. The latest BP annual report boasts that solar sales in fiscal 2010 were up 60% over the previous year. It describes an interesting new technology to help solar cells perform at high temperatures – this is an important development, since PV cell efficiency drops as the temperature rises. The report also mentions an anti-reflective glass coating which further increases cell efficiency. Exciting stuff.

Yesterday it all came to a screeching halt. Despite all the rosy news last March, the fortunes of BP Solar have suffered so much that the parent pulled the plug. The 40-year history of Solarex has come to an end.

How did Icarus fall back to earth so quickly?

As I wrote six weeks ago, the solar industry is struggling with cyclical overcapacity. This has driven solar cell prices down sharply, and many manufacturers are struggling. Some are selling below cost just to bring in some revenue and keep from closing their doors. However, the key word is “cyclical”. Many industries suffer from the same dynamic – capacity comes online in large chunks, and if too many players move to build or expand plants at the same time, it causes a glut. Nobody can make money, and the competitors with the weakest capitalization end up on the auction block or the chopping block.

Capital is perpetually scarce in the solar industry, so that’s a fair explanation for why some players have gone belly-up. BP, however, has capital coming out the wazoo – or it did, until the Deepwater Horizon spill, which may end up costing as much as US$30 billion. BP Solar is just rounding error by comparison, but it’s clear that the unit would have faced a severe capital crunch for the foreseeable future.

Oh, one more thing.  The people buying solar cells are often motivated by the desire to bring about a better world. Sure, it may be just a ploy to build green credibility around the corporate brand, but the outcome is the same. If you buy solar panels from the company responsible for what Wikipedia calls “the largest accidental marine oil spill in the history of the petroleum industry”, you can’t expect to earn many brownie points with customers and other stakeholders. It would be like buying first aid kits from Lockheed Martin (which topped the defence industry charts by selling US$33 billion-worth of death-dealing weapons in 2009).

We might ask why BP really got into the business in the first place. Perhaps BP strategists saw the writing on the wall even then, reading up on the concept of peak oil, and recognized that the oil majors’ days are numbered. Perhaps their motivation was more sinister – to buy up the renewable energy industry, and smother it so that it would never become viable competition. Perhaps the logic was as simplistic as “Me energy. Solarex energy. Me buy Solarex. Ug ug.”

If it was the first reason, BP failed. It has made exactly zero progress on an exit strategy to ensure the company can still continue after all the oil runs out.

If it was the second reason, BP failed. The solar photovoltaic (PV) industry – while not thriving – remains a force to be reckoned with, even if you only look at its impressive record of growth coupled with cost reduction. The disappearance of this one competitor will not leave a ripple, and will make the remaining players a tiny bit stronger.

If it was the third reason, BP failed. There are no meaningful synergies between oil and PV. Wildcatters are wildcatters, and silicon wafers are silicon wafers, and never the twain shall meet. If BP or any of its competitors have excess cash, they would do far better to distribute it back to shareholders in dividends or share buy-backs than by investing in an utterly alien line of business. The market is far better at allocating capital. BP and its sisters should stick to their knitting.

Which leads me to my epilogue. Just as BP Solar’s death knell rang out, TransCanada Corporation announced a C$470 million deal with Canadian Solar to buy nine utility-scale solar projects with a combined generation capacity of 86 megawatts. While Canadian Solar deserves kudos for landing this deal, I have my doubts about the buyer.

If you’ve been following the saga of the Keystone XL natural gas pipeline, and you hear the name TransCanada, you probably think they’re all about pipelines. If so, you’re mostly right. However, about one-third of TransCanada’s earnings before interest and taxes arose from its “energy” business.

Before you think that this is another BP fiasco in the making, we’re actually talking about electricity generation here. That’s more closely aligned with solar than BP could ever claim. However, this energy business is mostly “brown” energy – fossil fuel-fired thermal generation plants, nuclear (they own a big chunk of Bruce Power), and large-scale hydroelectric (the sort with a reputation for significant negative environmental impact). Their truly green energy business amounts to two wind farms with a combined capacity of 720 MW – less than 7% of the total. This week’s deal is TransCanada’s first foray into solar.

Compared to operating a combined-cycle natural gas plant, a nuclear reactor, or a hydro dam, keeping a solar farm running is pretty simple stuff. There are no issues with fuel supply, they aren’t a target for terrorists, and their environmental impact is near zero. So although TransCanada’s core business really hasn’t taught them anything helpful, there’s only so much that can go wrong.

Here’s hoping TransCanada will have a better experience than BP did.

21st century public consultation: A “How Not To” guide

In 2009, the Government of Ontario passed the Green Energy and Green Economy Act (GEGEA). Now, two years in, the Ontario Power Authority (OPA) is taking a moment to reach out to the public, collect their comments, and decide what should be included in a mid-course correction for the Feed-In Tariff (FIT) program.

The GEGEA was intended to stimulate growth in renewable energy, conserve energy at the household level, create jobs, and help mitigate climate change. The future of the FIT program, and indeed the GEGEA, hangs in the balance. Some critical issues threaten the ability of the Act to achieve its goals. The review will surface and clarify these issues.

Ontario is the only province to have taken such an aggressive approach to green energy. Other jurisdictions in Canada and beyond look to Ontario as a bellwether for their own plans. If Ontario gets it right, the result may well be a new green standard that other provinces will strive to meet. If, however, the province gets it wrong, it could set the dream of a green and carbon-neutral future back many years. A lot is riding on this review.

It is encouraging that the OPA has chosen a public consultation process as a tool to help with their decision-making. The GEGEA has elicited a range of reactions among the people of Ontario, ranging from the evangelistic fervour that many acquire once they have solar panels on their rooftops, to the bitter NIMBY zeal that has surfaced in some locations where wind farms are proposed or already in production. Given just how many people actually care about this review – a rarity in this era of voter apathy – it is all the more important that the process draws out all relevant and representative views, and also quantifies these views to avoid the squeaky wheel syndrome.

According to the Ministry of Energy website, the review will consist of an online survey, emailed submissions, and consultations with the renewable energy sector. Does this meet the objective of providing a channel to receive any and all feedback? Definitely. Could the ministry be doing more? Absolutely.

In the past month I’ve participated in – or at least been aware of – three gatherings of stakeholders in the renewable energy sector, initiated by three different organizations. The first organization is the Ontario Sustainable Energy Association (OSEA), the second the Ontario Solar Network (OSN), and the third the Canadian Solar Industries Association (CanSIA).

OSEA’s webinar was a follow-up from its November Community Energy 2011 conference, where some initial feedback was gathered from a selected group of attendees. OSEA members include people who have already completed renewable energy projects, or hope to, or help either of the first two camps in some fashion (be it by providing financing, cooperative ownership structures, insurance, or even just moral support). Feedback collected at the conference was synthesized into a slide show and presented by the OSEA Executive Director, Kris Stevens, and well-respected industry commentator and consultant Marion Fraser. If anyone from the Ministry was present for the webinar, they did not reveal themselves. While Chris Bentley, the Minister of Energy, spoke at the conference, as far as I know he did not involve himself in any dialogue or consultations.

The OSN event was a town hall-style meeting on the University of Toronto campus, which began with presentations from members of the OSN’s FIT Review Coalition and concluded with questions from the assembled constituents. Most attendees were installers – small business owners that actually build solar energy systems of various sizes. The feedback from attendees was plentiful, broad-ranging, and animated. The Ministry was not represented at the session at all.

CanSIA represents the Canadian solar industry, including both PV and thermal. However, it is dominated by the very largest players – solar panel manufacturers like Canadian Solar and Q.Cells, developers like SkyPower and SunEdison, and an assortment of well-heeled firms providing financing, insurance, and legal counsel. During its annual Solar Canada conference last week, CanSIA hosted a closed-doors meeting between the Deputy Minister of Energy and a very small, select group – mostly CanSIA board members, if I understand correctly. As at the OSEA conference, Minister Bentley gave a speech, but as far as I know he did not engage with the conference attendees in any way.

Three facts are consistent across each of these events. First, each was a spectacular gathering of people with a deep knowledge of the renewable energy sector, the GEGEA, and the FIT program. Second, because of this, each event presented a tremendous opportunity for the Ministry to consult with a highly knowledgeable group of FIT program stakeholders.  Third, the Ministry did not make any meaningful effort to capitalize on any of these opportunities.

Instead, each of these groups is expected to make its submission to the FIT review in the same way as anyone else – write it up and email it in.

This is the 21st century. Technology has advanced. So has understanding on the most effective ways to consult the public. Why does the FIT review look essentially identical to something that could have taken place a hundred years ago?

What could have been done to improve the whole undertaking?

First, the Ministry should have seized the opportunities presented by Community Power 2011, the OSN FIT Review town hall meeting, and Solar Canada 2011 to wring out every possible drop of insight from the very richest sources available. Second, the Ministry should have convened a much more visible public consultation process, involving a series of town hall meetings like the OSN one. This would allow a broad spectrum of the public to make submissions, but what’s more, one person could build on the ideas of another. It would hence build much more valuable insights than would be possible when each person must submit their ideas in isolation. Third, the Ministry should have taken the process online, providing an open forum where everyone could see what everyone else was saying, and where brainstorming, synergy, and mutual inspiration can take the discussion to another, higher level entirely.

It’s 2011. We know better. And we can do better.

Moving target

In October, Ontario’s Green Energy and Green Economy Act dodged a bullet.

The opposition Conservative party claimed that the Feed-In Tariff (FIT) program, the Act’s most visible component, was sending electricity bills sky-high. On the face of it, the idea makes sense. Since the Ontario FIT rate for small-scale rooftop solar is 80.2 cents per kilowatt-hour, and the peak retail rate is 10.8 cents, doesn’t that mean our bills will be, like, nearly eight times what they are now?

Not even close. The Ontario Long-Term Energy Plan has targeted a measly 1.5% of all power in the province to be supplied by solar photovoltaic (PV) by 2030. If that goal were reached entirely at the 80.2 cent small-scale rooftop PV rate (not, say, large-scale ground mount, which commands half that), it would mean the FIT program would cause prices to rise by less than 10% over the entire 20-year life of the program. That equates to an annual increase of less than half a percentage point, or about 50 cents a month for the average Ontario household. In fact, the increase will be much less, as small-scale rooftop PV makes up only a small portion of the generation capacity currently in the program pipeline.

PV won’t make a noticeable impact on hydro bills. The reason is not that PV is cheap – it isn’t, at least not yet. It’s because the province has set a target for PV that is so low it’s laughable. Seriously, if all the PV industry can expect to accomplish is to reach 1.5% of total generation capacity over a twenty-year period, what’s the point?

1.5% is way, way too low.

Let’s look at some statistics on PV. According to the International Energy Agency, the global authority on energy matters, we can expect to see a reduction of 18% in total installed cost for PV systems each year. At that rate, PV will reach parity with today’s off-peak retail price of 6.2¢/kWh in 2022 – just a little over ten years. Retail rates, of course, will continue to rise rather than remaining constant, so retail grid parity will actually come sooner than that.

At this week’s Solar Canada 2011 conference presented by the Canadian Solar Industries Association (CanSIA), Skypower CEO Kerry Adler opined that 1GW of new contracts per year would be necessary to maintain a sustainable solar PV industry in Ontario. The LTEP target is less than 5GW of total installed capacity by 2030, or less than 250MW installed per year – not even a quarter of Mr. Adler’s projection. Although other industry commentators differed with Mr. Adler, it is clear that industry capacity is far larger than is required to deliver the LTEP goal. Either the industry has to rationalize, or the LTEP goal has to be revised upward.

Another discrepancy will have to be addressed. The response to the FIT program has been much greater than anticipated. However, the program did not include any mechanism to control the volume of applications, and the unexpectedly large number is putting the program under serious budgetary pressure. The OPA is now considering a cap on the number of megawatts-worth of PV contracts that are signed.

Such a measure would be extremely damaging to the nascent PV industry. Business thrives on predictability, on regular production volumes, and on a consistent rate of growth. If the industry is permitted to produce up to an arbitrary cap and no more, what is to be done? Are staff to be laid off, supplier contracts to be suspended, and production lines shut down until the next equally arbitrary reopening of the contracting window? That is no way to run a railroad.

There is another mechanism, a much more natural one than placing a ceiling on installed capacity. It is price.

It is a basic assumption in FIT programs that rates will be reduced rates over time – price digression, as it is called. In some countries, this price reduction is automatic. Hence, nobody that has followed FIT programs at all should be surprised that the Ontario FIT rates will be reduced. However, there are serious flaws in the way that the Ontario Power Authority has conducted the review.

The OPA has telegraphed that the rates will drop, but they have not indicated by how much. That much is not a problem. However, when the OPA announced the review, they also mandated that all applications received thereafter – and, worse, any that were in-process but had not yet reached the contract stage – will be subject to the new, unknown pricing. This means that businesses that negotiated deals and submitted applications assuming a certain price now have no idea if they will lose their shirts on those deals.

The OPA’s approach is understandable. If they’d left the door open, and allowed applications to continue under the old pricing, they would have had a stampede on their hands – everyone would have been falling all over one another to get their applications in under the old, higher rates. Instead of taking the hit themselves, the OPA let the industry take the hit instead. And the industry is hurting.

An automatic digression schedule would have avoided this conundrum. In the future, the OPA should specify a recognized industry metric to use as the basis for price digression. It should publish this metric on a regular basis. And, it should reduce FIT rates according to that metric on as regular and frequent a schedule as is practical. This will ensure that the industry remains competitive, and that FIT rate reductions don’t send it into a tailspin every couple of years. It will also avoid the need for the OPA to set an arbitrary cap on installed capacity.

However, this scenario will result in an organic pattern of growth that will not respect the target in the LTEP.

The Plan was based on what was thought possible at the time it was written. It already appears that the target for PV is too timid. The goals for other renewables may prove likewise. It is important that the Ontario Ministry of Energy not shackle itself to the targets contained in the LTEP. It must retain the flexibility to revise the figures for renewable energy upward if the industry demonstrates that it is capable. It must find ways to buy time, to postpone the huge, irreversible, and open-ended commitment of taxpayer cash required to refurbish Ontario’s aging nuclear plants.

Nobody knows just what renewable energy can do. As the picture becomes clearer, the Ministry must do everything it can to keep its options open.

The buck stops…where?

485px-William_Shatner_James_Kirk_Star_Trek_1967The original Star Trek television series offers an interesting take on leadership. In episode after episode, Captain Kirk is taken out of commission by some incident or other. The crew struggles valiantly to avert disaster, but to no avail – inexorably, without the security of having Kirk in command, the crisis deepens until all hope seems lost. Then, just in the nick of time, the captain is cured/freed/retrieved, then he strides onto the bridge with his customary bravado, pulls some cosmic rabbit out of a subspace hat, and saves the day.

Ontario’s renewable energy sector is desperately in need of a Captain Kirk.

Three stumbling blocks will persist as long as the leadership vacuum continues. The first is the huge discrepancy between the number of MicroFIT applications and the ability of OPA and Hydro One to process them. The second is the huge variation in fees, procedures, and rules across Ontario municipalities. The third is the faint-hearted goals that Ontario’s Long-Term Energy Plan has set for solar and other forms of renewable energy.

According to the OPA’s FIT program summary released last week, over a thousand new MicroFIT applications were received during the two-week reporting period. During the same period, only 75% of that number (786 applications) reached an end state – rejected, withdrawn, denied, or – dare I say it – connected and in production. One-third more projects are going in than are coming out. That means a growing backlog.

When you look inside the process, things get even worse. The Distribution System Code mandated that LDCs (Local Distribution Companies – Hydro One and its local counterparts like Toronto Hydro) take no longer than 15 days to respond to completed applications, either by refusing the request or extending an Offer to Connect. Once all the approvals were in, LDCs would have at most five days to connect the project.

If the LDCs keep up at the rate their going, it will take seven months to get through the pile of projects awaiting approval, and seventeen months to clear the backlog of projects that are approved and are just waiting to be hooked up. In other words, if nothing changes, a person submitting a MicroFIT application today can expect to wait at least two years before supplying their first watt to the grid. The Green Energy Act envisioned a period of twenty days (or 65 days if the project was not using an existing grid connection). The discrepancy is astounding.

Hydro One addressed this issue by asking that their regulator exempt them from the timeline stipulations, and instead permit them to work on a “best efforts” basis.

One of the main objectives of the GEA was to stimulate investment and create jobs in Ontario. When installers have to wait as long as two years between the time that they make a sale and the time that they install the system (and collect their revenue), it is difficult to imagine how they can stay in business. The inability of Hydro One and the other LDCs to stick to reasonable timeframes for approvals and connections is driving a stake right through the heart of this nascent industry, and making it impossible for the GEA to achieve one of its key objectives.

Whoever is in charge of the GEA – whether it’s the Ministry of Energy, the OPA, or the OEB – needs to solve this problem. On the one hand, they need to hold LDCs’ feet to the fire and demand accountability for timelines. On the other, they need to devise some way of throttling the number of applications, or at least giving applicants a reasonable estimate on how long the process will take.

One interesting characteristic of the solar energy system installation business is its regionality – or lack thereof. I’ve spoken to quite a few installers, and although they would prefer to stick to one area, the vagaries of OPA/LDC approvals have forced them to travel all over the province in search of sales. This means that most installers work in multiple municipalities, and have direct experience with just how dramatic are the variations in treatment between different cities and towns. In some, there is a specific fee just for pouring the concrete pad which forms the foundation of a ground-mount solar tracking array. In others, there are other arbitrary and inconsistent fees. This imposes huge costs and administrative hassle on installers.

Whoever is in charge of the GEA needs to start banging some heads together. There is no reason for so much variation between municipalities. With a little bit of effort, these inconsistencies could be eliminated and the approval process could be harmonized. This would remove a completely unnecessary barrier to efficiency in the industry.

Finally, there is the big-picture issue of objectives. The Ontario Long-Term Energy Plan envisions that solar PV will supply a paltry 1.5% of the province’s energy mix by 2030. This is a pittance. A study by the Queen’s University Applied Sustainability Research Group indicates that solar farms on marginal land in 14 counties south-eastern Ontario alone could supply 90 GW of peak power, or roughly 80% of the projected energy demand in 2030. The cost of solar energy is dropping dramatically each year, and by some estimates is expected to be comparable to that of fossil fuels and nuclear well within the timelines of the LTEP.

Why is the Ministry of Energy setting its sights so low? Currently, installations are being done on a first-come-first-served basis without regard for the relative societal value inherent in each project. With genuine leadership and a coherent plan, solar installations could be stimulated in the highest-value locations – urban rooftops. Then, as the industry grows and prices drop, installations could be extended to lower-value locations such as the marginal land in the Queen’s study.

Who is really in charge? Isn’t it time that somebody take command, shake things up, and demonstrate that there is so much more that could be done to make the GEA live up to its potential?

Captain Kirk to the bridge.

Perspective adjustment

In previous posts, I’ve talked about the problem with the Ontario Green Energy Act (GEA): Around 40,000 FIT or MicroFIT applications have been submitted, but less than 5,000 contracts have been actually executed. In any FIT or MicroFIT project, three key players must give approval – the local municipality, Hydro One, and the Ontario Power Authority (OPA). The application-execution disconnect has arisen because the priorities of these three players are not aligned with those of the GEA. However, with just a slightly wider perspective, their priorities are much better aligned than they appear at first glance.

First, let’s take a look at municipalities. In some parts of Ontario, the building permit is a rubber stamp. In others, applicants encounter a huge headwind during the permitting process. The National Building Code of Canada, as the name suggests, is national. Ditto the Canadian Electrical Code. These governing rules don’t vary from one town to the next. Each municipality has its own bylaws, but none of these are likely to account for much of a difference in permitting. So what it comes down to is the permitting office, and the inspectors.

If these parties are conservative (or, dare I say it, lazy), they will be sceptical of new ideas, new practices, and new technologies. They will scrutinize applications for solar panel installations in a way they wouldn’t dream of for, say, a homeowner building a new deck on the back of her house. They will drag their feet. They will resist.

Where a fly-by-night installer is involved, one that has never contracted in the municipality before, and one whose work may be of suspect quality, this approach is prudent. It is the responsibility of the municipal bureaucrat to protect the homeowner, present and future, from the depredations of such swindlers. However, where the installer is reputable, experienced, and has a demonstrated track record in the area, this nitpicking approach is not warranted. By making a judicious distinction between new and established installers, and focusing scrutiny on the newbies, the municipality can actually provide a higher level of care and ensure closer compliance to code than if they treat everyone the same. So it is in the best interests of the municipality to fast-track the low risk cases.

Now, let’s discuss Hydro One. Their mandate is “the safe, reliable and cost-effective transmission and distribution of electricity to Ontario electricity users”. The key word is “reliable”. Currently, all indications are that Hydro One does not welcome the migration from centralized to distributed power, and views it as detracting from, rather than adding to, reliability.

If the folks at Hydro One believe that centralized power is inherently more reliable, they’re forgetting their training in failure mode analysis. Reliability comes from redundancy. Conversely, the single point of failure is the anathema of reliability. In our legacy centralized system, we have a very small number of generation facilities. Each of these is then connected to the grid via a small number of transmission and distribution lines. The chain is only as strong as its weakest link, and where there are single points of failure, a seemingly innocuous event can have catastrophic consequences. For example, the northeast blackout of 2003 was caused by a tree being too close to transmission lines somewhere in Ohio. The failure affected 55 million people across nine states and provinces.

In distributed generation, the electricity is produced and consumed at the same location. If there is also on-site energy storage (for example, in the form of the battery in an electric car), any excess electricity can stored for later use. Drawing power from the grid becomes the exception rather than the rule. If there’s a failure, it affects one site rather than millions.

If you multiply that many times over, the purpose of the grid gets turned on its head. Instead of being the primary power source (and one so failure-prone that many customers are forced to buy diesel backup generators to ensure they don’t get left in the dark), the local generation system is the primary, and the grid is the backup. Customers are generally self-sufficient, and even sell a bit of their excess to help out neighbours when there’s a temporary problem.

In other words, a distributed power system is far more fault-tolerant and reliable than a centralized one ever could be. If Hydro One faces this reality head-on, they will recognize that to fulfill their mandate, they must take immediate steps to ensure they are geared to embrace as many FIT contracts as possible, as quickly as possible.

Finally, there is the OPA. According to their website, their mission is to “ensure that electricity needs are met for the benefit of Ontario both now and in the future.” In other words, their job is to make sure there is enough electricity supply to meet demand. And one source of electricity supply is core to the OPA mindset: nuclear.

This is not fiscally prudent. Nuclear has the technical capacity to meet Ontario’s energy needs, no mistake. But the financial aspects of the technology are hugely off-putting. The down-payment, which you and I are obliged to pay, is huge. It is also virtually guaranteed to rise (by up to 250%, given past experience). All this before the plant produces its first watt of power. Once the plant is in production, there’s the risk of accident, and the huge attendant cost of damages and cleanup (the bill for Fukushima is expected to top $130 billion). And finally, there’s the long hangover after the party is over, where nuclear waste has to be stored and protected for generations to come. This cost profile has scared off most potential private sector investors and insurers, meaning that the work will have to be funded from, and ensured by, the taxpayers.

Contrast this with renewable energy. You and I don’t pay a cent until the system starts generating power. The costs of any repairs and maintenance are well-established, and in any case it’s the supplier that pays, not you and me. The systems (at least in the case of solar) are guaranteed to supply power reliably for decades. And we’re not beholden to one corporate giant that can threaten to shut off the juice if we don’t ante up – instead, there would be a vast number of individual suppliers, any one of which could disappear without leaving a ripple.

US oil billionaire J. Paul Getty once said, “I’d rather have one percent of the efforts of 100 people than 100 percent of my own efforts.” If the OPA hedges its bets and vigorously builds out a robust, small-scale renewable energy infrastructure, underwritten not by the taxpayers of Ontario, but by the suppliers themselves, the result will be a much more reliable, long-term energy supply with lower cost and lower risk.

In renewable energy, Ontario municipalities, Hydro One, and OPA all have the means to fulfill their mandates. They just need to adjust their perspective.

P.S. BrighterTomorrow was a day late this week, as I was working mightily to clear out my house before the closing date. That’s all done now, so we’ll be back on schedule henceforth! Thank you for your patience.

Grey skies, grim faces

Canadian electrons, or Danish?

This week I went to Community Power 2011, a conference presented by the Ontario Sustainable Energy Association (OSEA).

It felt like any of the bazillion conferences I’ve attended. Nametags dangle from lanyards adorned with sponsor logos. Keynote speeches – even from the mouthpieces of much-reviled organizations – are greeted with polite applause. Audience members queue up to speak their questions into faulty, intermittent microphones. People shuffle past slick trade show booths as they nibble bland and repetitive buffet lunches. Smiling schmoozers sip cocktails at the social hour and awards ceremony.

The attendees were an eclectic mix of equipment manufacturers, university professors, labour unionists, First Nations band council members, lawyers, engineering consultants, construction contractors, financiers, farmers, and bureaucrats. Their common purpose is to take our current paradigm of energy production and use – archaic, inefficient, environmentally destructive, and the exclusive preserve of massive corporations – into a new era where communities harvest and use their own energy efficiently, cleanly, and without bequeathing future generations a crippling debt and ruined planet.

This aspect lent the conference a feeling of purpose, of mission, of manifest destiny that I hadn’t experienced in any other. Everyone I spoke to shared a sense that the future of the world is in our hands, the solution to the world’s most pressing problem is within our reach, and we need to get on with the job.

However, the gathering had another novel aspect. Lurking just below the surface, creeping into podium speeches, popping up each time I struck up a conversation, was a pervasive sense of gloom. Developers are watching their contracts sit in limbo, so they are trimming their staff and wondering how long they have until they run out of capital. Manufacturers are shutting down production lines and hoping to sell off accumulated inventory. Potential customers have waited so long for their MicroFIT applications to be processed, they despair of their dream projects ever seeing the light of day.

Ontario’s Green Energy Act had promised to usher in a brave new world. This ain’t it.

The reason is clear, but the cause is not. Everyone knows that the FIT and MicroFIT programs – which allow individuals and organizations to produce and sell green power in the province – are horrendously backlogged. One speaker gave the figure of 43,000 applications submitted, but only 5,000 contracts actually executed. Somewhere in Hydro One, or the Ontario Power Authority, or both, a bureaucratic bottleneck is strangling an entire industry.

An industry in deep trouble is never a pleasant thing. But this isn’t just any industry. The future of our economy, our race, and our planet is at stake. If we get this wrong, we have ruined everything. So along with gloom was intense frustration. We are not just citizens of Rome, we are the firefighters, forced to watch the majesty of our city disappearing in flames while Emperor Nero plays his fiddle.

Who is our Nero? Is it Hydro One? Is it the Ontario Power Authority (OPA)? Is it some other player? Theories abound, some reminiscent of the daft conspiracies spouted by Internet trolls, others depressingly credible.

I spoke to one person who blamed the line workers of Hydro One. Many are approaching retirement, and will have to relearn their trade if they are to work effectively in a world of distributed rather than centralized power. They are the very people doing the connection assessments and then making the hook-ups afterwards. So, my conversation partner theorizes, they are dragging their heels for all their worth. The only solution is to clean house in a radical way, ditching the worst offenders and putting the fear of God in the remainder.

Another fellow conference-goer accused Hydro One engineers of over-the-top conservatism. Like all from this profession (I am one, so I know whereof I speak), they take the limiting parameters – voltage, current, resistance, etc. – from exhaustive laboratory failure testing, then add an arbitrary safety factor large enough to make them comfortable, then they use that as a rule for field practice. Trouble is, the Hydro One safety factor is much larger than that used elsewhere, particularly in places that have already deployed distributed power generation successfully on a large scale. Canadian electrons behave the same as Danish ones, so the discrepancy is hard to justify. This is especially galling to developers when it means the difference between Hydro One approving or rejecting their project.

Then there is the Customer Service Epic Fail camp. They point out that Hydro One has a certain mindset when it comes to all the little people out there at the end of the wires – they are ratepayers, they receive their electricity and pay their bills, period. Suppliers are another player in the Hydro One world, but they have always been large and few. FIT and MicroFIT have produced legions of small suppliers (actual and aspiring). The Hydro One people deployed to deal with this new beast are ill-equipped and too few in number. As a result, nobody can find out where their application is in the process, and odd things are happening – one applicant had a neighbour apply after they did, found out that the neighbour got connected, and then was told that there was now no room on the grid segment for any more projects. It’s enough to make a person throw a…to make a person go berserk.

My view is that while each of these theories has merit, there are two other big-picture explanations. First, although the GEA set targets for how much solar and other renewables would be in the province’s energy mix by certain milestone dates, it did not include a triage mechanism to expedite the highest-value projects (namely city rooftop installations – see this previous post). It also included no mechanism to regulate the flow of applications. The response from the public has been far larger than the program authors imagined, and both Hydro One and OPA were woefully unprepared. Now, instead of starting with the most beneficial projects and working down the pile, all projects are treated the same – and at the same glacial pace. As a result, the program will not yield all the benefits to the public that it could.

Second, and most importantly, the key players have not been given the right incentives and the right mandate. Hydro One is focused on grid reliability; anything that might interfere with that is the enemy. OPA is focused on long-term large-scale supply, so – in spite of huge public opposition arising from stranded debt and the Fukushima disaster – nuclear is their most attractive option. Dealing with a myriad of tiny suppliers is as delightful a prospect as being stripped naked, smeared with honey, and staked down on top of a fire ant colony. And local municipalities are concerned with safety, so that generally means approving the same way of doing the same things, and looking with deep suspicion on anything new or innovative, like, for example, solar panels or wind turbines.

Nobody has the mandate to ensure the GEA does the most public good, as measured by the most watts of usable green energy brought online to replace brown energy. Nobody has the mandate to rethink safety factors devised before most Ontarians were born. Nobody has the mandate to treat FIT and MicroFIT applicants like human beings.

Until these incentives and mandates are put in place, and backed up by an institution and/or legal framework with real teeth, the GEA will not live up to its promise.

And there will be more glum faces at Community Power 2012.

This too will pass

Earlier this week, the Globe and Mail described the tribulations facing several players in the solar photovoltaic (PV) industry (Solar power boom hits a wall, November 6, 2011). Cited in the article were the insolvency of Arise Technologies Corporation’s German subsidiary, the bankruptcy of US solar panel manufacturer Solyndra LLC, and the difficulties that Automation Tooling Systems Inc. has faced with its Photowatt division.

The article solicited nearly 200 reader comments. Most of these either decried the practice of feed-in tariff (FIT) programs as corporate welfare for the solar industry, or scoffed at the possibility that solar energy could be economic. When the issue of the Solyndra bankruptcy is discussed in the US, the banter goes in a similar direction, but worse so given that the policies of the Obama administration assigned half a billion dollars in loan guarantees to the company.

What do these tales of corporate woe really tell us?

One fallacy is that the solar industry as a whole is in deep trouble. The Canadian heartland of the industry is Ontario, thanks to the provisions of that province’s Green Energy and Economy Act (GEA). The opposition Conservative party took aim at the GEA in the lead-up to last month’s provincial election, casting a pall of uncertainty over the future of the program. When the ruling Liberal party secured only a minority government, it did little to allay industry concerns. Another blow was the regulator’s decision to grant Hydro One a reprieve from the GEA-mandated time limits for processing of FIT and MicroFIT applications; the Hydro One backlog has reduced the flow of new solar installations to a trickle. Finally, the in-progress FIT program review will likely reduce the rates OPA pays for electricity; this will render marginal projects uneconomic. How many remains to be seen.

This triple whammy – political uncertainty, the connection backlog, and the imminent reduction in rates paid to solar energy producers – has taken its toll on the industry in Ontario. Beyond the province, the picture is not all sweetness and light either. Worldwide, too many manufacturers have rushed to build capacity for PV cell and panel fabrication, and now there is a glut on the market. Prices for solar cells have fallen precipitously over the past year. Again, players that are on the edge of profitability are being pushed out of business.

If you’re an investor, this should give you pause. It is hard to tell which players will emerge intact from the current production glut. That is the key message of the article, but most readers appear to have missed it. The fact that a few players are struggling does not mean that the entire industry is doomed.

In the 1980s, electronics makers of every stripe rushed into the personal computer market. Stores were flooded with mutually incompatible machines from Texas Instruments, Coleco, Commodore, Radio Shack, and many others. Few could have predicted that in the end, only two platforms would survive: Mac and Wintel. The Coleco Adam and its ilk were relegated to the rubbish heap of history, many companies were bought or went bankrupt, and it was a nightmarish time for investors – but the industry as a whole not only survived, but boomed.

Another fallacy is that solar energy is not economic. It is true, in fact – in the same way that it’s true that my daughters aren’t earning any money. They’re still in high school, so it’s absurd to expect them to be earning their keep. But in a few years (I fervently hope) they will be on their own, thriving, and no longer dependent on me to support them.

Feed-In Tariff programs which stimulate investment in solar energy are the same way. The rate is high to start, all kinds of people decide to install solar panels to take advantage of the investment opportunity, and many competitors enter the market to meet that demand. The industry moves up the learning curve, and costs are driven down. Then the authorities can reduce the FIT accordingly. Some companies will be unable to stay profitable at the reduced rate, and they will struggle or fail. Others will find ways to improve efficiency and remain competitive. All the while the price per watt will continue to fall. Before long, solar will eclipse other entrenched sources of energy, and the FIT will be eliminated altogether. That trajectory is already built into FIT programs in Ontario, Germany, and Spain.

In some parts of the world, the sun has already taken its inevitable place as king of energy sources. Where the price of electricity is high, or the solar resource is abundant, or there is no existing grid infrastructure to supply artificially cheap fossil fuel or nuclear power, solar is already the best choice. No FIT required.

A final fallacy is that it is somehow wrong and corrupt to redistribute taxpayer dollars to one favoured industry. If that industry were harming the public, that logic would be sound – and, in fact, public harm is precisely the reality for the Alberta oil sands. Favourable tax treatment, lax enforcement of laws governing pollution of groundwater and rivers, and most of all the fact that the price of fossil fuels does not reflect societal harm they inflict (more frequent and damaging extreme weather conditions, coastal inundations, crop failure, and desertification), all amount to subsidies to this industry.

All Canadians (indeed, all people the world over) are currently subsidizing companies like Syncrude while they earn record profits and contribute directly to public harm. Ontarians are also subsidizing companies like Arise and Photowatt which struggle to turn a profit while they are busy building a clean, sustainable future for us all.

The solar industry is facing struggles. Solar energy is more expensive than non-renewable alternatives. Through FIT programs, solar energy companies are being subsidized.

For now.

Why don’t you stick that solar panel where it’ll do the most good?

In George Orwell’s Animal Farm, some domestic animals overthrow their masters and take control the farm for themselves. Their porcine leaders announce the farm’s new motto: “All animals are equal”.  However, the pigs gradually assume special status, revising the motto to read: “All animals are equal but some animals are more equal than others”.

In my October 5th post entitled Power to the People, I spoke of solar power bringing about a new era of democratized electricity production. In a democracy, each vote carries the same weight (in theory, at least). However, when power generation is distributed rather than centralized, it cannot be this way. Much as it may irk rural dwellers, the urbanite matters more.

If a farmer sticks a ground-mount solar array in the corner of her field, the electricity it produces will go in part to offset the power that the farmer herself uses. The rest must make its way through the wires to the next consumer, with the inevitable transmission and distribution (T&D) losses. However, if a city dweller puts solar panels on the roof of their home, the resulting electricity will suffer almost no T&D losses before it gets consumed.

The authors of the Ontario MicroFIT program wanted to create a higher incentive for people in the city than in the country. They used the rooftop array as a proxy for urban producers, and ground-mount as a proxy for rural. That’s why, when you look at the rates offered to small-scale electricity producers, the rate is higher for rooftop solar compared to ground-mount solar.

That approximation is a bad one, for five reasons.

First, a person living in the country has a roof, too. That roof is less likely to be obstructed by other buildings, and hence is an optimal location for solar panels. Unless the power then has to travel over hill and over dale to get to market. So the MicroFIT program designers unwittingly created a big incentive for country folk to put solar panels on their rooftops.

Second, people who live in the country – farmers, especially – are very resourceful when it comes to squeezing every possible penny of value from what they’ve got. They have land. They want to get the most of it. So even though the rate for ground-mount solar is lower, putting a solar array in an unproductive corner is a no-brainer. Especially if a developer is willing to take care of all the heavy lifting to design, build, and finance the project.

Third, consider real estate turnover statistics. Rural properties often stay in the same family for generations. By comparison, houses in the city change hands far more frequently. A solar array is a big investment, and not one you’re likely to make if you expect to sell your house again in a few years.

Fourth, the urbanite’s key resource is not land, but money – and there are many competing investment opportunities. I calculated that the congregation of Guelph’s Dublin Street United Church should expect about a 13% return on the money they invested in their rooftop solar array. That’s not too shabby. But finance-savvy people know that improving energy efficiency has a really good return as well, especially since the otherwise eco-brainless federal Conservatives extended the EcoEnergy benefit. You can also get a very good payback on other measures with no environmental flavour, like debt reduction.

There is one more consideration. Rural folks have a pioneering, “git ‘er done” mindset that has little interest in, or respect for, bureaucratic policies and procedures. They are less likely to follow the established steps to the letter. And, if things go off the rails, they aren’t going to take it lying down (as exemplified by the uproar that happened earlier this year when Hydro One notified thousands of MicroFIT applicants that they would not be connected).

All of these factors have conspired to deliver far more rural MicroFIT applicants than the program authors anticipated, and to make those applicants a much bigger headache to those administering the program.

How did this happen? The Ontario MicroFIT program was based on a similar program in Germany. There’s a clue.

Although Ontario has a lower percentage of the population living in rural areas (15% compared to Germany’s 26%), those rural people are a lot more spread out – the population density in Germany is more than fifteen times higher than Ontario (229 people/km2 in Germany compared to 13.8 in Ontario).  So, a kilowatt of electricity from a Canadian rural producer has to travel much further to get to market than its German equivalent. The problem presented by rural producers is an order of magnitude larger in Canada than Germany.

It’s time for a rethink.

First, the rooftop/ground-mount terminology in MicroFIT program rules and documentation must be abandoned. It encourages the wrong kind of solar installation. The program should say what it means, and offer preferential rates to urban applicants only.

Second, there must be more active encouragement of urban installations. Groups like Our Power, which helps urban neighbours to collaborate on evaluating installers and obtaining financing, should receive incentives such as fast-track project approvals and priority grid connection.

Third, the construction permitting process should be revised to encourage urban real estate developers to include solar energy production as part of new builds.

These measures will help concentrate solar power development where it will do the most good – in the cities. And MicroFIT applicants from urban areas will find their rightful place. A place where they are more equal than others.