Op-ed on B.C.'s Feed-in Tariff, by Alex Wood, SP's Senior Director, Policy and Markets.
While Ontario and other provinces struggle to reduce their reliance on coal plants that undermine human health, ecosystems and the climate, West Coasters enjoy ready access to exceptionally low carbon power -- the legacy of a series of prudent and decades-old hydroelectric investments. And while B.C.'s green power is abundant today, and getting greener all the time, it makes good sense to plan for the future.
That's why early in the new year, the provincial government is expected to introduce a new renewable energy policy known as a feed-in tariff. The policy is essentially a guarantee that BC Hydro will purchase electricity from qualifying renewable generation facilities at a fixed rate, for a generous period of time. The policy sharply reduces financial risks for small producers, and allows startup clean energy companies to borrow capital at a lower rate, which can reduce a given project's overall costs and increase its long-term viability. Ontario introduced a feed-in tariff just over a year ago, and the program is already a success. The new solar and wind farms now feeding the region's grid helped Ontario Hydro to shut down four coal-fired energy units recently. Meanwhile, the policy has lured big companies such as Samsung and Siemens to set up manufacturing plants, potentially creating thousands of green-collar jobs.
Since British Columbia's grid is significantly cleaner than Ontario's, its feed-in tariff will be structured somewhat differently. For one thing, it won't include wind or solar -- except in the cases of off-grid first nations communities now powered by expensive and polluting diesel fuel. Instead, it is designed to nurture still-experimental renewable technologies such as geothermal, ocean energy and bioenergy, such as wood waste.
The feed-in tariff is not a new invention. Indeed, it has proven the backbone of successful renewable energy programs around the world. As B.C. follows Ontario's lead and moves to implement a feed-in tariff of its own, it would do well to consider the lessons learned in other jurisdictions where experience with the tool is measured in decades. A recent Sustainable Prosperity report prepared for the one-year anniversary of Ontario's feed-in tariff examines lessons learned from similar programs long established in Germany, Denmark and Spain. Many of those lessons have direct relevance to the options now on the table in B.C.
First, we recommend that the feed-in tariff offered on new contracts account for the declining costs of technology development. In other words, as developers refine and improve ocean, geothermal or biomass technologies, the costs of those technologies will come down. The feed-in tariff rates on new contracts should follow suit, and adjust downward each year by a predetermined amount. This so-called degression will help control overall program costs and avoid a growing real subsidy to companies.
Second, B.C. should consider offering producers a different price for electricity generated at different times of the day or week, or in different seasons. For example, as a winter-peaking utility, much of BC Hydro's demand occurs in the colder months.
B.C.'s policy should reward renewable technologies better able to deliver power at peak demand hours and seasons. The proposed feed-in tariff already provides greater opportunity for this compared to Ontario, because the targeted technologies, such as biomass and geothermal, can provide firm power at all times of the day and year.
Third, the interaction effects between British Columbia's carbon tax and a feed-in tariff need to be carefully assessed, understood and addressed.
Finally, there is the conflation taking place in Ontario where critics are wrongly blaming the province's feed-in tariff for rising electricity prices. Based on recent experiences with the carbon tax and the harmonized sales tax, the provincial government will have learned valuable lessons on the importance of public education and engagement.
As the world begins the hard work of transitioning to a low-carbon economy, B.C. can keep its edge as a clean-energy leader. But to do so, it needs to invest in and encourage emerging renewable technologies. And while Sustainable Prosperity says that putting a price on carbon -- as the B.C. carbon tax does -- is the most effective and efficient tool for moving to a low-carbon economy, a feed-in tariff is a proven policy when it comes to the development of renewable energy.
Just as a series of strategic decisions and investments made decades ago allowed the province to enjoy an abundance of clean energy today, a feed-in tariff -- a policy with a long and proven track record around the world -- can unlock multiple benefits for future generations of British Columbians.
Alex Wood is the senior director, policy and markets, of Sustainable Prosperity, a national research and policy network based at the University of Ottawa that is working to build a stronger, greener economy through market-based strategies.