Has the time finally come for Solar and Storage in Ontario?

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2 Roadmap 2020: Powering Canada s Future with Solar Electricity 2

3 National trade association representing the solar energy industry throughout Canada Since 1992, worked to develop markets and create opportunities for our Members Solar energy technology adds value to the world in many ways, Thus the solar industry is making the world a better place Trade associations exist to represent the interests of their Members CanSIA exists to maximize the benefit of the solar industry to Canada Solar as mainstream energy source, Integral part of Canada's diversified electricity-mix Ensure solar industry will be sustainable with no direct subsidies 3

4 Bob Waddell, Centrosolar Utilia Amaral, SunEdison Bonnie Hiltz, GDF Suex Canada Jon Kieran, EDF EN Canada John Rilett, ENMAX Ivano Labricciosa Thomas Timmons, Gowlings Nigel Etherington, Planet & Company Robert Leah, Recurrent Energy Greg Scallen, SunEdison 4

5 Develop a supportive and stable policy and regulatory environment that recognizes the total value of solar electricity, including externalities. Simplify and streamline permitting and processes for grid interconnection and metering of solar electricity systems. Reduce soft costs to levels consistent with global best practices. Educate the Canadian population on the true benefits and costs of solar electricity, and empower them to take action to support and adopt solar. Develop new and enhance existing relationships with technologies, applications and stakeholders to create synergies that enable greater solar electricity use in Canada. 5

6 *This survey of Ontarians about solar energy, technology and policies was fielded: between May 1 and May 8th, 2015, with 837 adult Ontarians. Using a randomly-recruited, non-opt-in online panel, the margin of error would be +/- 3.39%, 19/20. 6

7 Decreasing Capital Costs and Cost of Capital combined with low technology deployment risk are driving global market: The sun could be the world s largest source of electricity by 2050, ahead of fossil fuels, wind, hydro and nuclear - International Energy Agency (IEA), October 2014 Source: IEA PVPS Trends Report 7

8 Modules responsible for more than half of the total decline. Utility-Scale Solar Equipment Costs 5.00 Estimated $ USD per W DC BOS Inverter Module Source: NREL & CanSIA Analysis 8

9 Global New Investment in Renewable Energy by Sector $bn USD Other Renewables Wind Solar Source: Bloomberg New Energy Finance. 9

10 Significant declines in capital costs combined with historically low costs of capital enable: The most competitive utility-scale solar projects to deliver electricity for $0.08/kWh USD without financial support Now common to see power-purchase agreements for solar of $0.05/kWh to $0.06/kWh and recent reports of pricing below $0.04/kWh pricing are now emerging Ontario s Large Renewable Procurement program is the first ever competitive procurement of utility-scale solar in Canada: Price discovery may be game-changer for solar in Canada. 10

11 Pricing reaching new lows, drivers include manufacturing scale (e.g. giga-factories). Reliability, flexibility, reduced complexity and network congestion. Conservation, demand-side management and load-shifting. Integration of renewables and losses of generation sources (nuclear, coal). Ugly old technology being replaced with beautiful consumer products. Poster-children like Elon Musk of Tesla will boost cachet. 11

12 Solar-plus-battery grid parity is fast approaching. Load Defection and Grid Defection would be disruptive to traditional utility business models. As this disruption is so close, and well within the 30-year economic life of typical utility assets, how should long term decision-making adapt to this disruption? Source: Rocky Mountain Institute 12

13 Applications are received and processed on an ongoing basis. Draft documents under consultation until May 14. Application window proposed for July 13. Bid-Down points introduced to favour projects with most efficient cost structures Proposal submission deadline is September 1. LRP II RFQ expected in Q Phase 1 procured ~34 MW from five companies offering ancillary services. IESO will take lessons from these new projects into Phase 2 for a further ~16 MW. 13

14 Consultation expected to begin in Q CanSIA s Ontario DG PV Task Force working to define best practices for program design and existing program exit-strategy. It is expected that LRP I and II will be over-subscribed presenting an opportunity for further contracting in subsequent years of non-contracted projects with competitive pricing. The Long Term Energy Plan and introduction of Capacity markets will further inform the direction this takes. Auction Revenues, Allowances, RECs and Offsets are all mechanisms which are used to incent the deployment of solar technologies in other jurisdictions. CanSIA are currently participating in the consultations on program design which is in its early days. 14

15 Supply-mix planning has defined Ontario solar market since 2008, Long Term Energy Plan consultation process expected to take place in 2015/2016 and viewed as critical. Graph: Cumulative Solar Installed Capacity in Ontario & Policy Drivers 6, was driven by SupplyMix Planning (i.e. 10,700 MW). 5,000 Cumulative Installed Capacity (MW) driven by existing microfit, FIT and LRP new commitments needed (e.g. LTEP) 4,000 3,000 2,000 1,

16 Today s energy consumers ( prosumers ) seek more value than has been possible traditionally. Empowered by technology they want to interface with grid, produce their own electricity and soon store it too. Continued cost declines will increase rate of prosumers adopting solar: Rate at which capital costs can continue to decline is slowing. Soft Costs present major opportunity to maintain rate of cost decline (Construction industry accounting term for expense not considered direct construction cost and typically considered to be non-hardware ). Deployment of storage will experience unnecessary processes, costs and barriers. Many of the decision-makers will be common for solar and storage i.e. municipal officials, LDCs, electrical inspectors etc. 16

17 The microfit and FIT programs are expected sun-set before 2020, by that time solar embedded generation will have transitioned toward self consumption. Unclear yet what those programs will look like and how they will be administered. Valuing time-of-use, ancillary services and emissions reductions will be key. Include revenue de-coupling rate-design to counter impact of load defection on LDCs. 17

18 In 2004, Ontario s supply outlook was not sufficient to meet North American reliability standards. Province now in strong supply position and benefitting from decade of investments: Narrative that has been driving definition of Ontario s electricity needs has broadened in scope from reliability to need for greater flexibility and resilience: Solar is ideal technology to meet these needs due to unique siting, operational, and ownership characteristics compared to conventional centralized resources. However, to maximize solar s contributions to reliability, flexibility and resilience its role needs to be bolstered with further visibility, forecasting accuracy and dispatchability. Deployment of dispatchable solar will drive storage sales. 18

19 Accelerated deployment of solar in Ontario has been successful: Costs driven-down dramatically, wealth of lessons learned, now bankable. Alleviation of Inherent risks to placing new technologies on the grid. Soft Costs: Identification and elimination of unnecessary processes, costs and barriers are essential for financial competitiveness. Regulatory Modernization: Valuing time-of-use, ancillary services and emissions reductions essential for both. Dispatch: Storage provides solution for solar, solar deployment to drive storage sales. 19

20 John Gorman, CanSIA President & CEO LinkedIn: ca.linkedin.com/in/johnarthurgorman YouTube: Search gorman solar TedX to watch TedTalk. FROM PROCUREMENT TO ADOPTION 20

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