I haven’t been writing here for a while now – my system, generally speaking, has not been giving me any issues to write about. It’s shaping up to be a boring, predictable, steady income stream. (Yes even Toronto Hydro checks have been coming in more consistently). Without snow-related adventures this winter, the only thing I was musing about is effect of not having enough cold days when voltage spikes and maxes out all 16 panels on my roof. On that subject, I did notice slightly lower production this winter, and not too many days when my array is approaching its maximum output.
But let me get to the point of this post… It’s out there in the news all over the place now. The new microFIT rate for residential solar projects is 54.9 cents per kWh, which is 31.5% lower than the previous 80.2 cents.
It was all over news yesterday, though without any details. I got several emails about it from OPA. I even clicked on the links and looked through the website, trying to get to the point – what is the new rate? But to get the actual number, 54.9 cents, you need to go through 2.1 MB PDF, and scroll to appendix 4 on page 27… The number was buried well below all the “we are number one province in the universe” advertising in the report.
Don’t know about the rest of you folks, but as someone who already put my money where my mouth was (already have my microFIT installed and paid for), I can say with certainty that microFIT would-be a non-starter if I had to get my contract now, at the current rate.
I appreciate the point that report is trying to establish, in pointing out that local production capacity is now in place, and that things are getting cheaper, that with so many producers solar panel prices must be on a permanent downward slope.
I appreciate that point but to offer value to investors like myself you need to look at the cost installed, which would include all the new fees and roadblocks that have been created by municipalities and grid operators trying to cash in.
You also need to factor in the fact that some smaller installers (and even an odd bigger one here and there) have been shaken out of the market, so labor pricing has not necessarily gone down.
Add inflation on the whole thing, including reduced rate – so consider net present value (NPV) of this reduced payment stream when evaluating your project financials.
Bottom line:
- As a taxpayer subsidizing these rate payments, I can’t say I care about this reduction. All the contracts already outstanding (number and magnitude of which made this province “number one in the universe”) have the higher price locked in for the next 18-19 years. This reduction is purely nominal, which will affect only new projects, volume of which remains to be seen. It is pure political play, and since we are talking politics, I care much more about $1B wasted at ORNGE, another $1B wasted with eHealth, and countless other billions wasted by inept politicians elsewhere that we will never find out about. So as a taxpayer I want them to talk more about that, and less about saving pennies where it makes no material difference.
- As a would-be microFIT investor (should I move to a different property, etc), I am more inclined to look for equity market returns than bother locking in my cash in microFIT, with payback periods stretching even further out. Had I been a property developer or a trades person who is able to DIY the whole thing – maybe that still makes a lot of sense. But as far as I and my next property is concerned, I think this microFIT ship has sailed. The next opportunity in solar seems to be the point in time when solar costs will approach grid parity (which is probably not too far out, with LDCs trying to jack up rates to pay for their crumbling infrastructure upgrades.)
What are your thoughts on this? Are you currently considering a microFIT setup? Have you been discouraged by the rate change? Feel free to share.
