It's only "natural" that generous premiums the Ontario government pays for wind and solar power will be reduced after a review of the province's feed-in-tariff program, Energy Minister Chris Bentley said Monday.
The Liberal government decided in 2009 to offer lucrative rates for renewable energy projects to help it develop a new, green economy, but it also put an automatic two-year review in place.
Other countries took similar action after getting their green energy projects off the ground, and then lowered their feed-in-tariff rates, said Bentley.
"When you look around the world, when they've done their reviews the FIT rates have come down," he said.
"That's part of a natural progression, and I know [we'll] be looking at rate reductions here."
Britain's government announced Monday that it would cut subsidies for solar power by half — from 43 pence per kilowatt hour to 21 — and said the big reduction shouldn't come as a surprise to the industry because of falling costs and their big rate of return.
Ontario pays up to 80 cents per kilowatt hour for power from small solar projects, and 13.5 cents per kilowatt hour for wind power. Electricity consumers pay between five and 10 cents per kilowatt hour.
The province's emerging solar sector also knew the premium rates they were getting would drop after the first two years, said Bentley.
"We had the start-up phase for the FIT applications, now we want to take a look and see how we can improve it," he said.
"One of the things we want out of the review is to be able to build this clean, green economy. We want it at the right price so it's sustainable over the long term."
The New Democrats said they were interested in the outcome of the feed-in-tariff review announced by Bentley, but attacked the Liberals for shutting government-owned Ontario Power Generation out of the green energy program.
"I've made no secret about my disappointment with the fact that they've gone completely private and that private power deals are ones that are far more expensive," said NDP Leader Andrea Horwath.
"I think there's some major mistakes that have been made by the government when it comes to renewable power and the pricing may be one of them, but certainly the sourcing is a big one where I come from."
During the fall provincial election, Progressive Conservative Leader Tim Hudak called the subsidies for wind and solar power "unsustainable," and vowed to scrap the Liberals' green energy program.
As in other countries, the premiums led to far more interest in Ontario's feed-in-tariff program than expected — the province has contracted for 4,500 megawatts of renewable energy.
Report due early next year
That has led to complaints from some producers that it's taking too long to get everyone feeding to the power grid.
"This has been an enormously successful program," said Bentley.
"We're working as hard as we can, wherever it makes economic sense, to bring these projects on line."
The review of the feed-in-tariff program, led by deputy Energy Minister Fareed Amin and the Ontario Power Authority, will report back early next year after hearing from the public and industry players.
It will also look at the electricity prices paid by consumers, which are already scheduled to jump 46 per cent over five years as the province rebuilds its aging power system.
"Rates and price are both things I'm very interested in taking a look at," said Bentley.
"I want to take a look at that and make sure that we not only have a reliable system but our ratepayers are taken account of as well."
The government says over 30 businesses have announced they are setting up or expanding plants in Ontario to manufacture parts for solar and wind power projects.