In October, 2009, Ryan McCalley traded in the cool fog of San Francisco for the warm glow of Ontario’s burgeoning solar industry. His plan was to build a residential solar company, taking advantage of a financing incentive the provincial government was rolling out that fall.
That incentive was the feed-in-tariff (FIT) program, introduced as part of the Liberal Party’s Green Energy and Green Economy Act, to subsidize electricity generated by renewable sources of power and heralded as the most progressive scheme of its kind, earning accolades the world over.
Since the program came into existence, dozens of companies, most of them small and mid-sized, have sprung up to take advantage, including Mr. McCalley’s Pure Energies Inc.
By early this year, the Toronto-based company had lined up more than $200-million in foreign investment, hired more than 50 workers and signed up 3,000 curious homeowners.
There was just one problem.
The support that the government promised never came. He is still awaiting needed permits and, like many others in the same boat, Mr. McCalley hasn’t been able to really get his business off the ground.
And he fears he may be in worse trouble if Progressive Conservative leader Tim Hudak is elected premier in the Oct. 6 election and follows through with his threats to kill the FIT program.
Last Tuesday’s announcement by Energy Minister Brad Duguid to make it more difficult for existing contracts to be cancelled has done little to assuage his fears.
“It does nothing for us, and very little for the industry, to be frank,” Mr. McCalley says.
“I feel like I’ve been played,” he adds. “We had everything set up, except for the policy that attracted us here.”
Pure Energies has had to lay off half of its work force, and Mr. McCalley has had to scale down his ambitions to servicing a handful of homes in southern Ontario. The $200-million? It has vanished.
“They have made it the most challenging market to operate under. I don’t know how to describe it without using the four-letter word,” Mr. McCalley says.
The FIT program has created 20,000 jobs, many temporary construction positions, with promises of another 30,000 by 2012.
While the program was designed to attract businesses of all sizes, many small-scale companies jumped at the opportunity. They were the first to gain from the renewable energy scheme. Now, they might be the first to lose.
Mr. “Hudak’s threat has already shaken investor confidence,” says Adam Scott, green energy manager at Environmental Defence, a non-profit environmental advocacy group, who predicts that 80 per cent of the solar industry will collapse should the Hudak scenario unfold.
This prediction has rattled the industry, despite both parties’ promises that they will honour existing contracts.
“Nobody knows exactly what honoured contracts mean. Is it only contracts approved prior to a certain date? Or FIT submissions in the queue that are not yet approved by the OPA? Or ones given conditional but not final approval?” asks Erez Hacohen, chief executive officer of Solar Stream Green Energy Group, a Toronto-based full-service alternative energy provider.
He says the Liberals’ most recent announcement has done nothing to quell existing anxieties.
His company has 78 employees throughout the province, with projects in Barrie, Mississauga, and Windsor. He has a $380-million investment hinging on the result of the October election. Should FIT continue, he is looking to hire an additional 50 workers - “we’re talking about skilled labour” - by the end of this year.
Should FIT fall through, “we might have to let go of some people. It really depends.”
David Oxtoby, chief executive officer of CarbonFree Technology Inc., a Toronto-based solar power project developer, is also keeping a close eye on the coming election. He says that pulling the plug on such a nascent industry might have deleterious results.
“Uncertainty is the enemy of solar because transactions take time,” he said, citing the 12 to 36 months it takes to commission, manufacture, assemble, and mount a solar project.
Mr. Oxtoby’s firm currently has about 10 employees, with solar projects from Windsor to Ottawa.
“We hope to do more,” he says. “But it really depends on the election.”
Others consider this a minor bump on the road.
Chris Asimakis, president of Toronto-based Potentia Solar Inc., a solar energy company with 15 employees, thinks the current fear will blow over soon.
“It’s only a fear because it’s being talked about.,” he says.
Mr. Asimakis plans on investing “at least half a billion” dollars and creating many more jobs over the next four to five years, regardless of the election outcome, he says.
“Is the program going to change? Yes. Will there be a successor program? We believe yes. Renewable energy in Ontario is here to stay,” he says.
Mr. Oxtoby agrees.
“The one thing we are optimistic about is that, over the longer term, there will be higher reliance on renewable energy. This is inevitable,” he says.
But Mr. McCalley isn’t so confident. For now, he is sticking to his trans-continental commute, with his wife having elected to stay behind in San Francisco.
“I need to be sure that this is where I want to hang my hat.,” he says. “At the moment, moving up my family to stay for 10 to 15 years is not looking too attractive.”
Origin
Source: Globe&Mail
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