Earlier this week, the Canadian province of Ontario announced that it had chosen the companies to build $8 billion worth of renewable energy projects under the province’s strengthened feed-in tariff program. The new renewable supply totals about 2,500 megawatts, and Canadian solar panel maker Canadian Solar, Inc. (CSIQ) won about 28% of the program total, 176 megawatts.

To meet its contract requirements, Canadian Solar plans to build a new manufacturing plant in Ontario by the first quarter of 2011 that will employ 500 people. Prior to this, the company manufactured all its panels in China.

Under the feed-in tariff law, companies that build plants using renewable energy will be guaranteed a profit for 20 years. The contract price for electricity varies based on the size of the project, from a high of $0.802 for roof-top installations that are 10 kW or smaller, to $0.443 for ground-mounted solar photovoltaic projects that are bigger than 10 kW but smaller than 10 megawatts.

In January, Ontario signed a contract with South Korea’s Samsung for an additional $6.6 billion in wind and solar generation plants.

Residential consumers are going to be hit with a price increase averaging CDN$300/year as a result of the new feed-in tariff, and that amount will rise by another CDN$65/year by the end of 2011, when the projects are up and running. The province’s goal is to eliminate coal-fired electricity generation by 2014, and it is investing a total of $20 billion to meet that goal. The push for renewable energy is also expected to create 20,000 manufacturing jobs in Ontario.

The renewable generation is expected to raise the cost of electricity to $0.1454/kWh in 2011, compared with an average US residential cost in 2011 of $0.1174. The province will also institute a time-of-use billing scheme that will charge customers about 53% more per kWh during peak periods.

The Liberal government of Ontario is making good on electoral promises to clean up Ontario’s power generation industry. So far, consumers seem willing to accept the price rises. But that’s all theory because their bills won’t change until late 2011.

In Germany, where a feed-in tariff has been in place for four years, the government is reducing the premium paid to solar generators by about 17%. Solar PV electricity costs German consumers from 32-43 eurocents/kWh, compared with just 5 eurocents/kWh from conventionally-sourced electricity. That cost German consumers 8.95 billion euros in 2008. The government decided that the feed-in rate for solar PV was over-subsidizing the industry, especially since the cost of solar panels dropped by a third in 2009.

Ontario’s feed-in rates are nearly equal to Germany’s for the large, open-field solar PV installations. And it’s fairly certain that a central issue in the next election will be the feed-in tariff, and that the oppostion will savage the Liberal government over the high price of renewable electricity.

For now, though, solar makers like Canadian Solar are getting a boost from Ontario’s goal to eliminate coal-fired generation and replace it with renewable generation. But will consumers/voters be so supportive once the higher rates take effect next year?

Tell us what you think here.

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