Buy Local Provisions of Feed-in Tariff Policy Good Value
February 4, 2011
By Paul Gipe
The Institute for Local Self-Reliance (ISLR), a progressive Midwestern think tank, says that Ontario is getting more jobs for its renewable energy investments than comparable Midwestern states.
Minnesota based ILSR examined the cost of Ontario's Feed-in Tariff program and its controversial "buy local" provisions and compared it to similar federal and state programs in the US.
ILSR concludes that Ontario is getting more bang--jobs--for its buck than US programs.
Ontario has clout in North America, says the report, Maximizing Jobs From Clean Energy: Ontario's 'Buy Local' Policy, because of its size and economic influence.
If Ontario were a state, it would rank second behind Alaska in size, fifth in population following Florida, and 6th in economic activity behind Pennsylvania.
Ontario is also the industrial heart of Canada.
To qualify for a feed-in tariff contract, developers of solar energy in Ontario must source 60% of their project's value from within the province.
This domestic content or "buy local" rule has spurred a fast-growing renewable energy industry in the province, says John Farrell, the report's author. More than 20 new manufacturing plants are scheduled to open in the next two years as a result of the policy, says Farrell.
"The buy local provision in Ontario creates a simple, comprehensive economic development strategy for renewable energy that is in stark contrast with the complexity of clean energy programs and incentives used in the United States," explains Farrell.
ILSR's report estimates that Ontario's cost per new job created is one-fourth that of jobs in five new manufacturing plants recently built in Ohio and Michigan using state and US federal subsidies.
Farrell also dismisses concerns that Ontario's "buy local" policy will be overturned by a trade challenge from the US noting that there are many trade disputes between the US and Canada and the US and Europe that remain unresolved after years of negotiations.
As the name suggests, ILSR is an independent think tank that promotes local economic development.
Minnesota has the highest concentration of locally-owned wind turbines in the US, though Ontario's Feed-in Tariff program may surpass it within the next few years as 384 MW of locally-owned and aboriginal-owned projects come on line.
Farrell, an authority on feed-in tariffs as well as US renewable energy resources, notes that the price for wind energy in Ontario is comparable to that in the Midwest. The actual price paid in the Midwest, explains Farrell, is less ($0.11 per kWh) than in Ontario ($0.135 per kWh) because there is nearly $0.04 per kWh of various federal subsidies in the US.
A critic of US federal tax credits, Farrell points out in the report that feed-in tariffs are a more equitable way of developing solar energy in particular. For example, he says, most families do not have sufficient tax liability to fully exploit the federal tax subsidies for a small rooftop solar system. In contrast, anyone in Ontario with a suitable roof can install a solar system.
