Northern domestic action

Randy Tallon is a man of action. Black fleece, bald, a big grin on his face, attentive blue eyes, a quick gait, a strong handshake; and he has a message as well as a mission: “Sault Ste. Marie is the alternative energy capital of North America.” Modesty is spelled differently. But on the way from the airport to the center of the 75,000 resident capital of the province in the southeast of Ontario, it becomes clear that the International Relations Director of the local Economic Development Corporation has more to offer than just words. The 126 wind turbines of the 189-megawatt (MW) Prince Wind Farm tower over the wooded hills. Five hydroelectric stations around the city annually produce approximately 203 megawatts of clean energy. Two local companies work on the biodiesel and methane gas reprocessing. The steel plant Esser Steel Algoma produces 50 percent of its energy itself with the help of a cogeneration power plant. With regard to photovoltaics, the old trapper city, founded by the French in the 17th century and located along the St. Mary’s River that connects Lake Huron and Lake Superior, has quite a bit to be proud of. On the left and right side of an access road to a local school and immediately adjacent to a power line, thousands of modules from the first two construction phases of a solar park projected to reach 60 megawatts, are flashing in the late fall sunshine.
Economic developer Randy Tallon, Robert Reid, head of local energy service provider N-Sci Technologies, and Richard H. Weiss with the plant’s operator Starwood from the state of Connecticut proudly pose in front of the fenced-in solar field. “So far, everything has gone according to schedule,” emphasizes Starwood Director Weiss. “Local support and acceptance is excellent.” The EPC contractor of this large project is Q-Cells International. According to Weiss, the project was chiefly financed by the U.S. branch of LB Nordbank. It was contracted last year under the provincial government Renewable Energy Standard Offer Program (RESOP) already before the Ontario Feed-in Tariff (FIT) program under the Green Energy Act started on October 1, 2009 (see pv magazine

The feed-in tariff of the FIT program for solar parks with a performance of up to ten kilowatts (kW) is a little higher with 44.3 Canadian cents/kWh. One of the requirements for payment is now, however, that the energy producer, who applies to the Ontario Power Authority (OPA) for the FIT contract, ensures that their energy project meets the Ontario Domestic Content (DC) requirements. This regulation applies to all types of plants, but is staggered. Operators of ground-mounted and rooftop installations over ten kilowatts have to prove a domestic content percentage of 50 percent by the end of this year. Starting on January 1, 2011, they have to show a percentage of 60 percent. Operators of plants up to ten kilowatts have to show a DC percentage of 40 percent by the end of this year, and starting next year, 60 percent. This means for all plant operators who want to receive a feed-in compensation that at least 40 to 60 percent of the overall project value has to have been created in Ontario.
In this context, the OPA for thin film and crystalline silicon solar projects has submitted a key with “predetermined qualifying percentages associated with each designated activity,” which is the basis for the DC calculation. If, for example, silicon that is “refined in Ontario” is used for crystalline silicon PV projects (over ten kW), are projected with 11 qualifying percentages, then cells that are “created in Ontario” are also accounted for with eleven qualifying percentages. If modules are used whose electrical connections are “formed and material encapsulated in Ontario”, 15 percentage points can be allocated, and inverters “assembled, wired, and tested in Ontario” bring eight qualifying percentage points. In regard to construction costs and onsite labor, labor “performed substantially by residents of Ontario” accounts for 18 percentage points. This way, the operator has a choice as to which components and services for the plant were made in Ontario and which were not. “What is important here is only that the total percentage of domestic content is reached,” emphasizes Leo Tasca, Manager of the Renewable Energy Unit at the Ministry of Energy and Infrastructure in Toronto.
But are there actually enough providers in the still young PV market in Ontario? Currently, an operator of a plant that produces more than 10 kilowatts with crystalline modules can also reach the required 50 percent domestic content percentage, if the planning and installation contracts go to residents, and if the inverters, mounting systems, and wiring and electrical hardware is “made in Ontario.” There are already quite a few local suppliers for these components, among them dozens of international companies, who began business within the last 12 months in Ontario as Conergy, Deger Energy, Power One, Schletter, SMA, Sunlink, Schneider Electric, Flextronics-Enphase Energy, Atlas Tube or Melitron. But starting on January 1, 2011, either the modules, cells, wafers, or silicon have to come from Ontario in order to fulfill the 60 percent DC requirement, and these are components that are currently hardly manufactured in this province. “We are very confident that this is going to change soon,” responded Tasca, who referenced an updated list of all photovoltaic equipment manufacturers in Ontario, which includes more than a dozen module manufacturers that are scheduled to be producing in Ontario by July of next year at the latest.
One of them, Heleine Canada, a subsidiary of the Spanish Helios Europe, has its head office in the new industrial area of Sault Ste. Marie. “I have not had a weekend off in weeks,” said President Martin Pochtaruk and winked at his forklift operator, who was just delivering a pallet with machine parts. The cell lines in the hall are already operational, the laminators have been installed, the first produced modules are already stacked, but “we are waiting for the flashers to be installed before we can deliver products,” said Pochtaruk. According to information provided by him, the machines are mostly from Spain, and Heleine Canada procures most of the cells from Sunways, Bosch Solar, Arise Technologies in Bischofswerda and Suniva. The current production capacity is designed for 50 megawatts, but is scheduled to be increased to 80 megawatts by spring. “We are currently the largest module manufacturer in Ontario,” Pochtaruk proudly explains. The 10 million Canadian dollar plant was mainly financed through private investment.

“We are early movers and hope to achieve a competitive advantage this way, especially once the more stringent requirements of the Domestic Content of the FIT program become effective on January 1,” Pochtaruk emphasizes. One of their challenges, however, is the lack of local suppliers. Many products such as glass, back sheets or junction boxes still have to be purchased in Europe. “We are, however, working on convincing suppliers such as Coverme to move here,” Pochtaruk adds. He does not believe that there will be module bottlenecks, due to the fact that other larger manufacturers such as Canadian Solar would also soon be offering modules “made in Ontario.” He also does not think that all projects that were applied for at the OPA will be implemented in the coming months “because they first need to find financing.” In terms of bankability, business developer Randy Tallon believes that there is a lot of pent-up demand. “Awareness needs to be increased, because many banks do not really know what to do with photovoltaics,” he says. According to official information, the OPA has so far entered into 905 agreements under the FIT program for larger PV projects (more than 10 kilowatts) with a total capacity of 732 megawatt (567 MW ground-mounted, 165 MW rooftop). Officially, seven FIT projects (including wind and biogas) have started production; a total of 28 projects have been approved and financed, representing only a fraction of the applied-for plants. “I think that no more than 30 megawatts of PV is going to be installed in Ontario during the coming year,” Pochtaruk estimates (see pv magazine 10/2010).
It is clear that such a young program needs some lead time and that a region such as Ontario cannot create a solar infrastructure in just a few months. Therefore, the number of submitted solar projects and the number of companies that are willing to move here or that have already moved here is considerable and the first success history of the FIT program and its domestic content provision, the President of Heleine Canada emphasizes. There are, however, also critical voices. The Managing Director of Krinner Canada, Meinolf Schulte, for example, has his doubts whether the high subsidies can be maintained beyond the next provincial elections in the coming year, and whether the premium price products manufactured in Ontario are globally competitive.
So far, the provincial government has not established any development goals or a cap for the subsidy or a degression of the compensation prices. It has, however, stipulated that the OPA has to review the program every two years. It is financed, as in Germany, through electricity rates. “We want to create new jobs, diversify our economy, and decommission our coal power plants starting in 2014, and this is why we do not want to set any limitations when it comes to solar subsidies,” explains the manager from the Ministry of Energy and Infrastructure, Leo Tasca. “So far, our program is a success and we are getting positive feedback from all sides,” he emphasizes. The Ministry is currently working on an energy plan with development goals for renewable energies and the development of FIT programs in other countries is being monitored carefully.
It will be very interesting to see how PV is going to develop in Ontario and whether other Canadian provinces will join the movement and pass similar FIT programs.