Green power proponents say a new provincial regulation which encourages the production of small-scale renewable electricity is a step in the right direction, but much more needs to be done to reduce the province’s overwhelming dependence on electricity generated from coal.

 

The province’s new micro-generation regulation, which was introduced last February and went fully into effect on January 1, 2009, makes it easier for homes, farms and businesses to feed excess electricity generated from green sources such as solar, wind or small-scale hydro into the province’s electricity grid and get paid for the energy they produce. 

 

Under the regulation, small-scale producers—defined as any system with a capacity of less than one megawatt—who are generating renewable or alternative electricity to meet their own on-site needs can apply to supply any excess electricity they generate to the grid. 

 

Once approved, the distributor installs a meter, and under a system called “net billing” tracks how much electricity is being sent to the grid and how much is being consumed. The micro-generator is paid the same market rate for the electricity they provide to the grid as they are charged for the energy they consume, and is sent either a bill for the difference or a credit which can be applied to a future billing period.

 

Tim Weis, the director of renewable energy and efficiency policy with the Pembina Institute, says the regulation is a welcome, but limited, improvement.

 

“My standard approach to net billing is that it’s a positive baby step in the right direction but it’s not really going to change the game until there’s much more serious commitments in place,” Weis explains. “Most of the small-scale technology is still much more expensive than anything you can get from the grid, so even if you’re allowed—essentially what this legislation does is allow you to get on the grid—it doesn’t really change the economics.”

 

Gordon Howell, a solar power system specialist with Howell-Mayhew Engineering, who has a 2.3 kilowatt solar photovoltaic system on his own house which feeds into the grid, says he welcomes the regulation, which will greatly streamline the process and eliminate fees that in the past have discouraged small producers like him from supplying the grid with electricity generated from renewable sources.

 

“Up to this point I have [had] to pay $268 per year to join the electricity market so that I could get paid for my excess electricity to the grid,” he explains. “I export $160 [of energy] and they pay me in the order $100 for that $160 worth of electricity. So in other words, I spend $268 to belong to the electricity market and they pay me $100 a year.

 

“With the new micro-generation regulations I won’t have to join the electricity market at all,” he continues, adding that other fees, such as meter-reading costs, have also been eliminated under the new regulation. “I will actually sell my electricity to the energy retailer and the price that I will get paid for my energy will be the same as the price that I pay them for their energy.”

 

Howell stresses that it’s not exactly a dollar-for-dollar deal because micro-generators are only paid the retail rate for energy, which doesn’t include the fixed or time-based charges that appear on a household’s electricity bill. That means that based on last year’s prices he’s getting paid about 9.5 cents per kilowatt hour, but paying about 11 cents for what he consumes when all the costs are factored in.

 

While the regulation does make things easier for innovators like him, Howell concedes that it’s not going to have a major impact on the provincial electricity mix.

 

“Yes, it will change it, but realistically it’s not going to change it a huge amount,” he says.

 

The bigger problem, Howell argues, is that traditional means of power generation such as coal are still not being priced to accurately reflect the impact they have on human health and the environment, meaning green options like solar are still much more expensive in comparison.

 

“A solar power system, if you use your own money which means a zero interest rate, if you amortize it over 25 years the cost of the electricity at this point is still in the order of 30 cents a kilowatt hour, so 9.5 cents to 30 cents just doesn’t cut it.”

 

Howell argues that if the full cost accounting of burning fossil fuels was in place, the electricity market would be a much more even playing field.

 

“If the market knows best, then I think we need to do studies to show the damage to the environment caused by fossil fuels and then to make those fossil fuel generators pay for the damage they cause to the environment, and that includes our health-care system. So the price of natural gas and electricity will need to at least double, possibly even triple in order to pay for the damage it’s causing to the environment,” he says. “With that doubling or tripling, then I think solar becomes cost effective on its own.”

 

While that’s unlikely to happen anytime soon, Howell says there are other programs which the government could put in place alongside encouraging micro-generation to significantly change the electricity mix in the province.

 

One option is what’s called a “renewable portfolio standard,” which has been popular in the US, where a government mandates that a certain percentage of the energy a producer generates must come from renewable sources, creating a market for green energy. 

 

Another approach that has been tried is a “system buy-down charge,” where governments directly or indirectly pay for a certain portion of the installation of green technology, such as a solar-power system, to make them more cost-effective.

 

The strategy that has been getting the most attention in Europe, and one which Howell says is likely the best option if it is implemented properly, is a system of “feed-in tariffs” (FiT). With a FiT, governments pay a premium price—often significantly higher than market rates—for energy produced by renewable or alternative sources, providing a guaranteed higher rate of return.

 

The Pembina Institute’s Tim Weis says FiTs have had remarkable success where they have been tried.

 

“The countries that have done it have seen huge, rapid development of technologies—you see growth rates of about 30 per cent a year,” Weis says. “And the countries that have really gone ahead with it hard are Germany, Spain and Denmark, and all three of those countries have also developed really strong manufacturing bases because there’s been so much steady demand for renewable energy that they’ve all become leaders in exporting the technology as well. So it’s kind of a win-win situation where you have not only really increased amounts of renewables on the grid, cleaning up your grid, but also developing a new industry.”

 

Weis says that unlike incentives for micro-generation, FiTs are typically set up to encourage both large and small producers to go green.

 

“With the [new micro-generation] system you’re going to get so few people that actually do it—it’ll be some, for sure, but it’s not going to be a huge impact. And because it’s net billing it means that most of the load is going to be consumed on-site, with very little going on to the grid,” he says. “Whereas with a feed-in tariff it’s opened up, whether it’s biogas or biomass or small hydro or wind, you can get these larger systems on the grid and then you’re talking more utility-scale stuff. So you’re talking about not only different scales of technology, but different scales of pick-up.”

 

The extra amount offered for alternative energy is spread out across all users, which does mean in increase in utility bills, but Weis says that in Germany, which is now the world leader in wind and solar, it has meant in increase of less than two euros to the typical household’s monthly bill.

 

A form of feed-in-tariff was introduced in Ontario in 2006, but despite initial success the system ran into some problems with implementation, and the Ontario government is currently adjusting the program, with plans to relaunch it in the spring.

 

Howell argues that the Ontario experience shows it’s important to be careful when implementing a FiT, but adds that the new regulation in Alberta could facilitate the introduction of a FiT since the net-billing system would make it easy for the government to implement a higher credit for green power and allow utilities to easily spread the higher cost over the entire electricity market.