Economic Impacts of the Solar PV

EconomicImpactsoftheSolarPV

SectorinOntario2008‐2018

July,2011

PreparedbyClearSkyAdvisorsInc.

©ClearSkyAdvisorsInc.2011

1

TheEconomicImpactsoftheSolarPhotovoltaicSectorinOntario2008‐2018,©2011ClearSkyAdvisorsInc.

DisclaimerThematerialsClearSkyAdvisors Inc. (ClearSkyAdvisors)provideswill reflectClearSkyAdvisors’ judgment

based upon the information available to ClearSky Advisors. ClearSky Advisors disclaims any other

representations or warranties, express or implied, including without limitation any implied warranties of

merchantability, fitness for a particular purpose or non‐infringement. This report is based on sources

believedtobereliable,butnoindependentverificationhasbeenmadenoris itsaccuracyorcompleteness

guaranteed.ClearSkyAdvisors isanindependentresearchfirmthatdoesandseekstodobusinesswithall

stakeholders within the industries covered in ClearSky Advisors research. Investors and decision‐makers

shouldconsiderClearSkyAdvisorsresearchasonlyasinglefactorinmakingtheirkeydecisions.

2


TableofContents

ExecutiveSummary........................................................................................................................3

1.Introduction ...............................................................................................................................7

2.Investment ................................................................................................................................9

3.JobCreation .............................................................................................................................15

4.ElectricityCustomerImpacts....................................................................................................21

5.CostPremiumvs.JobCreation.................................................................................................25

Glossary........................................................................................................................................26

Appendices...................................................................................................................................28

TableofFigures ............................................................................................................................36

Bibliography .................................................................................................................................37

3


ExecutiveSummary

ElectricitysupplyinOntariowillundergosignificantchangesoverthenext20years.Thesechangeswillbe

driven by the need to replace and/or refurbish existing electricity generating facilities aswell as by rising

electricitydemand.

• By2030,almost70%ofrequiredelectricitygenerationwillneedtocomefromneworrefurbished

electricitygeneratingfacilities

• Despiteconservationefforts,demandforelectricityisexpectedtoincreaseby15%from2010‐2030

Toprepareforthesechanges,theprovincehasdevelopedaLong‐TermEnergyPlan(LTEP)fortheperiodof

2010‐2030.By2030,theLTEPcallsforthevastmajorityofelectricitygenerationinOntariotocomefrom

nuclear power (46%), hydro‐electricity (20%), wind (10%), and natural gas (7%), and for conservation

measures to reduce demand by 14%. The solar photovoltaic (PV) industry is set to add to that mix an

expected1.5%oftotalgenerationby2030.

TomeettargetslaidoutintheLTEP,ClearSkyAdvisorsexpectsthatapproximately3,000MWdcofsolarPV

will be installed and operational in Ontario by 2018. This report examines a number of the economic

outcomesthatwouldarisefromthatlevelofmarketactivity.

Specifically, the reportprovidesanalysisof: (1)privatesector investment, (2) jobcreation,and (3)cost to

Ontarioelectricitycustomers.

EconomicImpactsofSolarPVinOntario

In2011 2008‐2018

PrivateSectorInvestment $2billion $12.9billion

JobCreation1 8,200 74,000

MarginalMonthlyCostofSolarPVtoAverageOntarioElectricityCustomer $1.42 $4.91(in2018)

MarginalCostofSolarPVasaPercentofAverageMonthlyElectricityBill 1.1% 3.0%

KeyFindings

Ontario’sSolarPVIndustryToday

OntarioiscurrentlyaleadingjurisdictionforsolarPVinNorthAmerica.

• In2010,OntariorankedsecondforsolarPVinstallationsamongstUSstatesandCanadianprovinces

andterritories(167MWdc)

• TheprovinceisexpectedtoremainthesecondlargestsolarPVmarketinNorthAmericain2011

• Bytheendof2011therewillbemorethantwodozensolarPVmoduleandinvertermanufacturers

intheprovince

1 Jobs aremeasured in Person‐Years of Employment (PYE). One PYE equals 40 hours of employment a week for aperiodof52weeks.

4


PrivateSectorInvestment

Ontario’s Feed‐in Tariff (FIT) program and Renewable Energy Standard Offer Program (RESOP) have

attractedsignificantprivatesectorinvestmentinsolarPVfacilitiesbyguaranteeingafixedpaymentforeach

kWhofelectricitythesefacilitiesproduce.

• By2018,Ontario’ssolarPVmarketisexpectedtodrive$12.9billionoftotalprivateinvestment

• Between$4.1‐$7.9billionoftotalprivateinvestmentwillbespentinOntario

JobCreation

Incomparisonto largecentralizedelectricitygenerationfacilities,a largerportionofeverydollarspenton

solarPVgoestowardslabour.Primarily,thesolarPVindustrycreatesjobsinoperationsandmaintenance,

constructionlabour,warehousinganddistribution,andmanufacturing.

Ontario’ssolarPVindustryissettodrivesignificantjobcreationintheprovince.

• In 2011, the province’s solar PV industry will provide the equivalent of 8,200 full‐time jobs2 in

Ontario

• In2012,thatnumberwillgrowtoover11,400full‐timejobs

• By2018,Ontario’ssolarPVindustryisexpectedtohavecreatedover74,000jobs

• SolarPVwillresultinanaverageofapproximately25jobsinOntarioperinstalledMW3

2 Jobs aremeasured in Person‐Years of Employment (PYE). One PYE equals 40 hours of employment aweek for aperiodof52weeks.3ThisnumberincludesalldirectandindirectjobsthatwillresultfromtheOntarioPVmarketbetween2008‐2018

0

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20,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

$Millions

Ontario'sPVMarket:TotalInvestment(2008‐2018)

HighCase

ExpectedCase

LowCase

5


• Perunitofelectricitygeneration,solarPVcreates11timesmorejobsthannaturalgasorcoal

• Perdollarspentonelectricitygeneration,solarPVcreates4.8‐5.3timesmorejobsthannaturalgas

orcoal

CosttoElectricityCustomers

Overthecomingyears,electricitycustomersinOntariowillfaceincreasedcostsforanumberofreasons.A

smallpercentageofthesecostincreaseswillbeduetosolarPV.

• It is expected that, from 2011‐2018, solar PV will add 70 cents per year to the average Ontario

electricitycustomer’saveragemonthlybill,comparedwithlikelyalternatives

• By2018,thecostofaddingsolarPVtotheelectricitysupplywillamountto$4.91permonthforthe

averageOntarioelectricitycustomer,or3%oftheirmonthlyelectricitybill

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60

Coal

NaturalGas

Nuclear

Biomass

SmallHydro

Wind

SolarPV

JobsCreated

JobCreaBonperGWhProduced

6


$‐

$50

$100

$150

$200

2011 2012 2013 2014 2015 2016 2017 2018

AverageCostpe

rMon

th

ExpectedAverageMonthlyHouseholdElectricityBill:SolarPVvs.NaturalGas

OtherElectricityBillCosts CostofSolarPVGeneraUon CostofNaturalGastoReplaceSolarPVGeneraUon

Methodology

PrimarydataforthisresearchwascollectedthroughinterviewsandsurveyswithawiderangeofsolarPV

industrystakeholders. In total,ClearSkyAdvisorsconductedover150 in‐depth interviewsandcompleted

nearly100surveys.Overall,weinterviewed:

• largeandsmallprojectdevelopers,representing87%oftheMWvolumeofexecutedFITcontracts• modulemanufacturersthatrepresent89%ofexpectedmoduleproductioncapacityinOntario• invertermanufacturersthatrepresent85%ofexpectedinverterproductioncapacityinOntario

Extensivesecondaryresearchwasalsoundertakentosupportourfindings.

Forecastsforinvestment,jobcreationandelectricitycustomerimpactweregeneratedthroughaClearSky

Advisors model that incorporates established and recognized 3rd party tools (e.g. Jobs and Economic

Development ImpactModel‐ PV1.10.03) with in‐housemodelling.Wherever possible, inputs were taken

fromofficialandtrusted3rdpartysourcessuchas:OPA,MinistryofEnergy,peerreviewedjournals,etc.

Note:Formoreinformationonourapproach,pleaseseeAppendixA

7


1.Introduction

Background

Thetechnologiesandapplicationsusedtogenerateourelectricityhavearangeofimpacts.Theyaffectour

economy,ourhealth,ourenvironment, andour local innovation. Forexample, investment in coal creates

cheap electricity but has expensive health and environmental impacts.On the other hand, investment in

solarPVcreatespremiumpricedelectricitybutalsosupportsahighleveloflocalspending,jobcreation,and

innovation.Adifferentbalancebetweencostsandbenefitsexistsforeachtypeofpowergeneration.

Thequestionofwhatvaluecanbeexpectedfromvariousinvestmentsinelectricityinfrastructureshouldbe

ofparticularinteresttoOntarians.Inordertomeetelectricitydemandin2030,Ontariowillneedtobuildor

refurbish70%4of itselectricitysupplymix.Assuch,Ontariansandtheirgovernmenthavebigdecisionsto

makeaboutwhatkindofgenerationtheywishtosupportintheprovince.

ThisreporthasbeencommissionedbytheCanadianSolarIndustriesAssociation(CanSIA)toanalysesome

of theeconomicoutcomesof increasing theproportionof solarphotovoltaic (PV)generation inOntario’s

electricitysupplymix.Specifically,fortheperiodof2011‐2018,CanSIAaskedustoquantify:

(1) totalinvestmentandlocalspending

(2) jobcreationinOntario

(3) electricitycustomerimpacts.

TheLong‐TermEnergyPlan

OntarioreleasedaproposalforanupdatedLong‐TermEnergyPlan(LTEP) inthefallof2010. InFebruary,

2011theMinistryofEnergyissuedaSupplyMixDirectivebasedontheplanwhichtooktheLTEPonestep

closer to implementation. These documents chart a path forOntario’s future electricity supplymix (from

2010‐2030)5.

TheLTEPandSupplyMixDirectivehavebothsetatargetof10,700MWofrenewablegeneration,excluding

hydroelectric,by2018.Similarly,theLTEPhascalledfor1.5%oftotalgenerationinOntariotocomefrom

solarPVby2030.ClearSkyAdvisorsexpectsthatmeetingbothofthesetargetswill requireapproximately

3,000MWdcofsolarPVtobeinstalledinOntarioby2018.

Scenarios

Theanalysisinthisreporthasbeenconductedusingthreemarketscenariosfortheperiodof2011‐2018.A

highleveldescriptionofourmarketforecastmaybefoundinAppendixB.

4 Ontario Power Authority. (2011). Integrated Power System Plan (IPSP) Planning and Consultation Overview. OPA;OntarioMinistryofEnergy. (2010).Ontario'sLong‐TermEnergyPlan:BuildingourCleanEnergyFuture.GovernmentofOntario5ForacostanalysisoftheLTEPandtheroleofsolarPVrolewithintheLTEPpleaseseeAppendixC“CostoftheLong‐TermEnergyPlan”

8


• Ourhighcasescenarioanticipates3,800MWdcofinstalledsolarPVby2018

o ThiscouldoccurifsolarPVweretomakeupalargerthanexpectedshareofthe10,700MW

of renewables targeted in the LTEP or if Ontario’s overall target for renewableswere to

increasecomparedtothecurrentLTEP

• Ourexpectedcasescenarioanticipates3,000MWdcofsolarinstalledby2018

o ThiswouldoccurbasedontheLTEP’stargetsforgenerationfromsolarPV(i.e.10,700MW

ofrenewablesby2018and1.5%oftotalelectricitygenerationby2030)

• Ourlowcasescenarioanticipates2,000MWdcofsolarinstalledby2018

o Thiscouldoccur if solarPVwere tomakeupasmaller thanexpectedshareof the10,700

MWofrenewablestargetedintheLTEPorifOntario’soveralltargetforrenewableswereto

decreasecomparedtothecurrentLTEP

Note:Themodellingofthesescenariosincludesmanyvariables.Thestatementsabovedemonstrateonlyahigh

levelconceptualizationofeachscenario.FormoredetailsseeAppendixA.

Throughout this report,where only one set of outcomes is presented (i.e. for job creation and electricity

customer impacts) the findingsarebasedonourexpectedcase scenariowhich, in turn, isbasedonLTEP

targets.

Forthesakeofclarity:

• unless explicitly attributed to another scenario, all of the results in this report are based on

3,000MWdcofinstalledandoperatingsolarPVinOntarioby2018.

ElectricityCosts

AnotherkeyassumptionrunningthroughthisreportisthatthecostofgenerationfromsolarPVshouldbe

comparedtothecostofgenerationfromnewnaturalgas.Thisassumptioniscentraltoouranalysisofthe

costimpactsofsolarPVonelectricitycustomersinOntario.

WhyarewecomparingsolarPVtonaturalgas?

Solar PV is essentially a form of peaking power. In other words, it supplies electricity when demand is

highest (i.e.duringthedaywhenthesun isshining).Traditionally inOntarioeithercoalornaturalgasare

usedtomeetpeakelectricitydemand.Thisreportconsidersthecostsofbothoftheseformsofelectricity

generation;however, sinceOntariohaselected tophaseout coal‐firedgeneration,weconsiderednatural

gastheprimaryalternativetosolarPV.

Whyareweusingthecostofnewelectricitygenerationasthebasisforcomparison?

By2030,almost70%ofrequiredelectricitygenerationwillneedtocomefromneworrefurbishedelectricity

generatingfacilities.SolarPVwillbeapartofthenewgenerationrequiredtoserveelectricitydemandinthe

province.Assuch,thecostofsolarPVismostaccuratelycomparedwiththecostofothernewgeneration.

9


2.Investment

Largely,investmentinOntario’ssolarPVmarketisdrivenbytwoprovincialgovernmentprograms.Thefirst

is theRenewableEnergyStandardOfferProgram (RESOP),which isno longerofferingnewcontracts for

solarPVgeneration.ThesecondisOntario’sFeed‐inTariff(FIT)program,whichreplacedRESOPinoffering

contractsforsolarPVgeneration.

BoththeRESOPandFITprogramsprovidefixedtariffratestoindependentpowerproducersforrenewable

energygeneration.Independentpowerproducersmayincludebothindividualsandprivatecompanieswho

havereceivedcontractsthroughtheFITand/orRESOPprogramandwillreceiveasetpaymentforeveryunit

ofelectricitythattheirsolarPVfacilitygenerates.Inshort,itisprivateinvestorswhoinvestinOntario’ssolar

PVmarketandelectricitycustomerswhopayfortheelectricitythatsolarPVgenerates.

ThisreportdealswithinvestmentintoOntario’ssolarPVmarketintwoways.

• First, it presents cumulative total investment and cumulative spending inOntario. Figures 1‐3 tie

totalprojectinvestmenttotheyearinwhichtheprojectisconnected.Bypresentingthedatainthis

way,itiseasytovisualisetheimpactofvariousmarketscenarios.

• Second, itpresents totalannual investmentandannual spending inOntario.Figures4‐5 separate

investmentintotwophasesanddemonstratehowannualinvestmentswillchangeovertime.

ConstructionCostsandO&MCosts

Investment inOntario’s solarPVmarket canbebroken into the following categories: (1) the construction

phaseand(2)theOperationsandMaintenance(O&M)phase.

Theconstructionphaseincludestheone‐timecostswhicharerequiredtobuildanoperationalsolarfacility.

Costsduringtheconstructionphaseinclude:

• equipmentsuchassolarPVmodules,inverters,andmounting

• labourforinstallation

• permittingandengineering

• businessoverhead.

The O&M phase includes the ongoing costs which are required to maintain the performance of a solar

facility.CostsduringtheO&Mphaseinclude:

• performancemonitoring

• labour(forcleaning,replacingbrokenorworn‐outsystemcomponents,etc.)

• thereplacementofequipmentwhichisnotcoveredbywarrantees.

10


2.1TotalInvestment

Total investment includes all costs associatedwith the constructionandoperationof solarPV facilities in

Ontario.TotalinvestmentintoOntario’ssolarPVmarketwillbedeterminedbythreefactors:(1)thevolume

ofsolarPVinstalled,(2)thecostofthoseinstallations,and(3)ongoingO&Mcosts.

Figure1‐Ontario'sSolarPVMarket:TotalInvestment

• By2018,Ontario’ssolarPVmarketisexpectedtodrive$12.9billionoftotalinvestment

• ByreducinginstalledsolarPVfromapproximately3GW(expectedcasescenario)toapproximately

2GW(lowcasescenario),totalinvestmentwouldbereducedby$3.8billion

2.2SpendinginOntario

SpendinginOntariowillbedeterminedbytwofactors:(1)theamountoftotalinvestmentinOntario’ssolar

PVmarket,and(2)theproportionoftotalinvestmentthatisspentlocally(e.g.onOntario‐madeequipment,

locallabour,localengineeringservices,etc.).Theproportionoflocalspendingwillbeprimarilyinfluencedby

the type of project (e.g. residential, commercial rooftop etc.) and the level ofmanufacturing and service

provisionthatoccursinOntario.

Note:Ontario’sFITprogramrequiresthatacertainpercentageofsolarprojectcostscomefromOntariogoods

and labouror “DomesticContent”.SolarPVFITprojects inOntarioare required tohaveeither40%,50%,or

60% Domestic Content. Solar PV RESOP projects, on the other hand, do not have Domestic Content

requirements.

0

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4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

$Millions

Ontario'sPVMarket:TotalInvestment

HighCase

ExpectedCase

LowCase

11


Figure2‐Ontario'sSolarPVMarket:SpendinginOntario

• By2018,Ontario’ssolarPVmarketwilldrivebetween$4.1–$7.9billionofspendingintheprovince

• ByreducinginstalledsolarPVfromapproximately3GW(expectedcasescenario)toapproximately

2GW(lowcasescenario),spendinginOntariowouldbereducedby$1.8billion

Figure3‐SpendinginOntarioasaPortionofTotalInvestment

• By2018,spendinginOntariowillaccountfor46%6oftotalprivateinvestmentinOntario’ssolarPV

market

• ThepercentageoftotalprivateinvestmentwhichisspentinOntariowillincreaseovertime

o Inpart,thisisduetoDomesticContentrequirements

6ThisnumberistheweightedaverageoftheamountoflocalspendingthatwilloccuracrossallsolarPVinstallationsinthe province. It includes all RESOP program (which has no Domestic Content requirements), FIT program (whichmandates40%,50%,or60%DomesticContent),andothersolarPVinstallationsintheprovince.

0

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

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Ontario'sPVMarket:SpendinginOntario

HighCase

ExpectedCase

LowCase

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

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SpendinginOntarioasaPorBonofTotalInvestment

TotalInvestment(ExpectedCase)

SpendinginOntario(ExpectedCase)

12


2.3TotalInvestmentOverTime

Until now,we have presented investment inOntario’s solar PVmarket by linking it to the year inwhich

projects are connected. That is not the way that investment in the sector actually occurs. In reality, in

Ontario,investmentbeginslongbeforeaprojectisconnectedandcontinuesthroughouttheproject’slife.

Moreover,theinvestmentrequiredperunitofinstalledcapacitywilldecreaseovertime.Theexperienceand

expertisegainedduringearlyprojectsisexpectedtoleadtolowercoststhrough:

• astreamlinedapprovalandpermittingprocess

• efficienciesthroughoutthedevelopmentprocess

• reducedequipmentcosts.

Figure 4 separates investment in the construction phase (one‐time costs) from investment in the O&M

phase(ongoingcosts)anddemonstrateshowthatinvestmentwilloccuronanannualbasis.

Figure4‐TotalInvestmentOverTime

• Totalinvestmentwillpeakin2012‐2013atapproximately$2.4billion

• Investmentinconstructionofnewprojectswilldecreasefromthattimeon

• After2018,andlastinguntilatleast2030(duetothedurationofsolarPVcontracts),investmentin

O&M,which extends the life of projects,will remain quite constant at approximately $53million

annually

Note:TheinvestmentfiguresabovearebasedsolelyonOntariosolarPVinstallationsbetween2008‐2018.They

do not include additional investment due to the export of Ontario manufactured solar PV equipment or to

OntariosolarPVprojectsbeyond2018.Assuch,totalinvestmentislikelytobehigherthanwhatisshownhere.

0

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1,000

1,500

2,000

2,500

3,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

$Millions

TotalInvestmentOverTime

O&MPhase

ConstrucUonPhase

13


2.4SpendinginOntarioOverTime

Figure5demonstratestheamountoftotalinvestmentinOntario’ssolarPVmarketthatwillbespentinthe

provinceonanannualbasis.

Figure5‐SpendinginOntarioOverTime

• SpendinginOntariowillpeakin2013atapproximately$1.1billion

• Spendingonconstructionofnewprojectswilldecreasefromthatpointon

• After2018,and lastinguntilat least2030(duetothedurationofsolarPVcontracts),spendingon

O&MinOntariowillremainquiteconstantat$33millionannually

2.5SpendinginOntariowithOngoingManufacturingExports

AlloftheinvestmentandspendingnumbersabovearetieddirectlytosolarPVinstallationsinOntario(i.e.

the Ontario solar PVmarket) from 2008‐2018. If Ontario‐basedmanufacturing, project development, or

services are used outside of the province (as is already occurring and is likely to increase), spending in

Ontariowillexceedthefigurespresentedabove.

Forexample,ongoingsolarPVmanufacturinginOntariocouldhaveasubstantialimpactonlocalspending.

Figure6demonstrates the impacton local spending ifOntario‐basedmodulemanufacturerswereable to

sustainthepeaklevelofsalesrequiredtomeetOntariodemand(i.e.$ofmodulesales in2013)from2013

onwards(i.e.from2013–2030).

0

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400

600

800

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

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SpendinginOntarioOverTime

O&MPhase

ConstrucUonPhase

14


Figure6–SolarPVIndustrySpendinginOntario(WithandWithoutModuleExports)

• Giventhelevelofmanufacturingexportsdescribedabove,localspendingwouldincreasefrom$5.8

billiontoover$14billion

• By2019,localspendingwouldstabilizeatabout$550millionannually

• IfotherOntario‐basedmanufacturing(i.e. invertersandracking)andservices(i.e.engineering)for

the PV industrywere also to continue servingmarkets outsideOntario, ongoing spending in the

provincewouldbeevenhigher

0

200

400

600

800

1,000

1,200

200820102012201420162018202020222024202620282030

$Millions

SolarPVIndustrySpendinginOntario(WithandWithoutModuleExports)

OntarioMarketOnly

OntarioMarketandExports

15


3.JobCreation

Solar PV is a strong driver of job creation. Over the life of a solar PV contract in Ontario, local jobs are

createdprimarilyintheoperationsandmaintenance,constructionlabour,warehousinganddistribution,and

manufacturingsectors.

OfallOntario’selectricitygeneratingoptions,solarPVcreatesthemostemploymentopportunitiesperunit

ofelectricityproducedanddoessoat the lowestcostper job.This fact,asdemonstratedbythenumbers

below, helps to explain why the province of Ontario and other governments from around the world are

includingsolarPVaspartoftheirelectricitysupplymix.

Note:Alljobscitedinthisreportrepresentoneperson‐yearofemployment.Asthenamesuggests,person‐

yearsofemployment(PYE)representoneyear’sworthofemploymentforoneindividual(i.e.40hoursperweek

for52weeks).

3.1SolarPVJobCreationvs.JobCreationfromOtherFormsofPowerGeneration

By installing 3,000MWdcof solar PV inOntario, theprovincewill createmany timesmore employment

than would be created by installing an equivalent amount of generating capacity from other forms of

electricitygeneration.

Figure7‐JobCreationperGWhProduced

• Solar PV in Ontario7 createsmore jobs per unit of electricity produced than traditional forms of

electricitygeneration inOntario;14timesmorethancoal,14timesmorethannaturalgas,and11

timesmorethannuclear

• In general, renewable and green sources of electricity generation create more jobs per unit of

electricityproducedthannuclearandfossilfuelalternatives

7SolarPVinOntarioisexplicitlydiscussedbecauseofthedurationoflocalFITandRESOPcontractsandtheamountofsolarradiationintheprovinceimpactjobcreationperunitofenergyproduced

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60

Coal

NaturalGas

Nuclear

Biomass

SmallHydro

Wind

SolarPV

Jobs

JobCreaBonperGWhProduced

16


Inadditiontocreatingmorejobsthanotherformsofelectricitygeneration,solarPValsocreatesthosejobs

atalowercosttoOntarians.Figure8presentsthecosttoOntarioelectricitycustomersforeachjobcreated

byvariouselectricitygenerationtechnologies.

Figure8‐CostperJobCreatedbyTechnology

• ForeverydollarOntariansspendontheirelectricitybills,morejobscanbecreatedthroughsolarPV

generationthanthroughotherformsofelectricitygeneration

• Excludingexternalities,naturalgasjobscost4.2timesasmuchassolarjobswhilecoaljobsare1.2

timesascostly

• Whenexternalitiesare included,naturalgas jobsare4.8timesthecostofsolar jobsandcoal jobs

are5.3timesmoreexpensive

Note:An externality is a cost that is a result of a financial transactionbut that is notmonetizedwithin that

transaction.Forexample,intheelectricitysector,electricityfromcoal‐firedgenerationisveryinexpensivebutit

hasexpensivehealthandenvironmental impacts.Whenwepay for coal‐firedgenerationwepayonly for the

electricitythatwereceive,notforthenegativehealthandenvironmentalimpactsitcauses.Thecostsofthose

impactsarecalledexternalitiesandtheyarebornebypartiesexternaltothetransaction.

$‐ $500,000 $1,000,000 $1,500,000

SolarPV

Wind

SmallHydro

Biomass

Nuclear

NaturalGas

Coal

CostperJob

CostperJobbyGeneraBonTechnology

CostofExternaliUes

17


3.2SolarPVJobCreationinOntariobyInstallationYear

Figure 9 demonstrates job creation linked to the year in which solar PV projects are connected to the

electricitysystem.Inotherwords,althoughnotall jobsassociatedwithasolarPVfacilityoccurintheyear

thefacilityisconnected,thegraphdisplaystheminthatmanner.Itisausefulwaytoseethedirectimpactof

annualinstallationvolumesonjobcreation.

Figure9‐SolarPVSectorEmploymentinOntario

• Insum,installedsolarPVcapacityinOntariofrom2008‐2018isexpectedtocreate74,217jobsinthe

province

• SolarPVwillcreateanaverageofapproximately25jobsinOntarioperMWinstalled

Note:ThejobcreationfiguresherearebasedsolelyonOntariosolarPVinstallationsbetween2008‐2018.They

do not include additional job creation due to the export of Ontario manufactured solar PV equipment or to

OntariosolarPVprojectsafter2018.Totaljobcreationislikelytobehigherthanwhatisshownhere.

3,012

7,601

10,864 10,9058,452

4,8533,629

1,760

1,311

3,333

4,097 4,150

3,375

1,978

1,532

73449

1,103

4,323

10,934

14,961 15,055

11,827

6,830

5,161

2,4941,481

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Jobs

Year

SolarPVSectorEmploymentinOntariobyInstallaBonYear

O&M ConstructionPhase

18


3.3SolarPVJobCreationbyJobYear

Figure10demonstratesjobcreationbytheyearinwhichemploymentisexpectedtooccur.Thesenumbers

maybeusedasaproxyforthenumberoffull‐timeemployeesinthesolarPVindustryinOntarioinanygiven

year.

Figure10‐SolarPVSectorEmploymentinOntariobyJobYear

• In2011,theprovince’ssolarPVindustrywillprovidetheequivalentof8,188full‐timejobsinOntario

• In2012,thatnumberwillgrowtoover11,400full‐timejobs

• After 2018, approximately 1,100 ongoing, full‐time jobs will be needed for the operation and

maintenanceof3,000MWdcofsolarPVinOntario

3.4SolarPVJobCreationinOntariowithOngoingManufacturingExports

ThejobcreationnumbersabovearetieddirectlytosolarPVinstallationsinOntario(i.e.theOntariosolarPV

market)from2008‐2018.IfOntario‐basedmanufacturing,projectdevelopment,orservicesareusedoutside

oftheprovince,jobcreationinOntariowillexceedthefigurespresentedabove.

For example, ongoing solar PV manufacturing in Ontario could have a substantial impact on local job

creation.Figure11demonstrates the impacton jobcreation ifOntario‐basedmodulemanufacturerswere

abletosustainthepeaklevelofsalesrequiredtomeetOntariodemand(i.e.$ofmodulesalesin2013)from

2013onwards(i.e.from2013–2030).

0

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Jobs

Year

SolarPVSectorEmploymentinOntariobyJobYear

ConstrucUonPhase O&M

19


Figure11‐SolarPVSectorJobCreationinOntario(WithandWithoutExports)

• Giventhelevelofmanufacturingexportsabove,totalemploymentinOntariowouldincreasefrom

approximately74,000jobstoover100,000jobs

• After 2018, local employment in the solar PV industrywould stabilize in the range of 3,400 jobs

annually

3.5Directvs.IndirectJobs

Jobcreation isnormallyclassified intothreecategories:direct jobs(included), indirect jobs(included),and

inducedjobs(notincluded).

• Direct jobs are jobs that are created to immediately serve the actual supply chain; for example,thesejobsincludesolarmodulemanufacturingandprojectconstruction

• Indirectjobsarejobsthathavebeencreatedtofacilitatethedevelopmentandmaintenanceofthesupply chain; for example these jobs include renovations onmanufacturing facilities andbuildingthemachinesusedtoassemblesolarmodules

• Inducedjobsarejobsthatarecreatedelsewhereintheeconomyasaresultofspendingfrombothdirectandindirectworkersandfirms

Although induced jobs are real, they are difficult to quantify accurately. We have chosen to take aconservativeapproachtojobforecastingandhaveincludedonlydirectandindirectjobsinthisreport.

‐

2,000

4,000

6,000

8,000

10,000

12,000

Jobs

PVIndustryJobCreaBoninOntario(WithandWithoutExports)

OntarioMarketOnly

OntarioMarketandExports

20


Figure12‐DirectandIndirectJobCreationinOntario'sSolarPVSector

Ontario’ssolarPVsectorwillcreateapproximately:

• 49,000directjobsbetween2008‐2018• 25,000indirectjobsbetween2008‐2018.

3.6SolarPVEmploymentbyTypeofJob

Figure13‐OntarioSolarPVEmploymentbyTypeofJob

• Overtheassumed20‐yearlifeofsolarfacilitiesinOntario,ongoingO&Mjobswillaccountfornearly

30%ofalljobcreation

• Manufacturingwillaccountforaminimumof14%ofemployment;thisgrowsto42%ifweassume

exportsallowforcontinuedmanufacturing

• Constructionlabourwillaccountfor24%ofexpectedemployment

directjobs66%

indirectjobs34%

DirectandIndirectJobCreaBoninOntario'sSolarPVSector

ProjectDevelopment10%

ConstrucUonLabour24%

Wholesale&DistribuUon

19%

Manufacturing14%

O&M29%

Other4%

OntarioSolarPVEmploymentbyTypeofJob

21


4.ElectricityCustomerImpacts

By2030,70%ofOntario’selectricitydemandwillneedtobemetbyneworrefurbishedsourcesofelectricity

generation.Ourfuturesupplymixwillbearrivedatthroughdifficultdecisionswith important implications

(i.e.costofelectricity, jobcreation,health impacts, innovationetc.).Ontarioelectricitycustomerswillpay

forournewelectricitysupplymostlythroughtheirelectricitybills,butalsothroughtheirtaxesandthrough

damages to theirenvironment.As such, it is important tohavea fact‐baseddiscussionabout the relative

costsandbenefitsofvariousformsofelectricitygeneration;toconsiderwhatelectricitysupplymixwillgive

electricitycustomersintheprovincethebestvaluefortheirmoney.

ToaccuratelygaugethecostofinstallingsolarPVintheprovince,itismostusefultoconsiderthemarginal

costofthatelectricitygeneration.

Note:ThemarginalcostofsolarPVisthecostforgeneratingelectricityfromsolarPVthatisoverandabovethe

costofgeneratingtheequivalentamountofelectricityfromanotherformofelectricitygeneration.

ThismeasureismostusefulbecauseOntariowillneednewgenerationfacilitiesregardlessofwhethersolar

PV is installedornot. Inotherwords, ifsolarPV isnot installed inOntariosomeother formofgeneration

mustbeinstalledinitsplace.Itisagainstthecostofthatothergenerationthatthecostofsolarshouldbe

compared.

4.1ComparingtheCostsofElectricity

TounderstandexactlywhatthemarginalcostisforsolarPVinOntario,wemusthaveaclearpictureofthe

pricesforbothsolarPVanditsalternatives.Toproperlycomparecosts,thefollowingfourquestionsmustbe

answered.

1. WhatisthecostofsolarPVinOntario?

Weprojectthattheeightyear(2011‐2018)weightedaveragecostofallsolarinOntariowillbe46.7

cents/kWh.

2. ShouldthecostofsolarPVbecomparedagainstcurrentelectricitypricesinOntario?

Comparing the cost of solar to the cost of existing electricity generation facilities sets up a false

choiceforOntarians.Itsuggeststhatwehavetheoptionofnotinvestinginanynewgenerationand

can simply keep our existing facilities without further investments. In reality, many of Ontario’s

electricity generating facilities are nearing the end of their lives.Approximately 70%ofOntario’s

electricitygenerationwillneedtobebuiltorrefurbishedby2030.

Assuch,thecostofsolarPVshouldbecomparedwiththecostofelectricityfromneworrefurbished

electricityproducingassets.ThecurrentlowcostofelectricityproducedinOntarioisnotarelevant

benchmarkforthecostoffuturegeneration.

22


3. AgainstwhichtypesofelectricitygenerationshouldthecostofsolarPVbecompared?

While the costs and benefits of all sources of electricity generation should be considered for

Ontario’sfutureelectricitysupplymix,solarPVisessentiallya formofpeakingpowergeneration.

Assuch,thecostsandbenefitsofsolarPVcanbebestunderstoodwhencomparedwithotherforms

ofpeakingpowergeneration.Alternative sourcesofpeakingpower includenaturalgas, coal, and

biomass.

Here,wecomparesolarPVwiththeprovince’straditionalformsofpeakingpower:naturalgasand

coal.

4. IscostperunitofgenerationasufficientmeasureforthecostofelectricitytoOntarians?

In short, theanswer isno.Ontariohasdecided tophase‐out coal firedgenerationbecauseof the

additional health and environmental costs that it imposes on Ontarians. Hundreds of premature

deathsandoverathousandemergencyroomvisitshavebeenattributedtocoal‐firedgenerationon

anannualbasis8.Althoughthesecostsarenotincludedinelectricitybills,theyareveryrealandare

ultimatelybornebyOntariotaxpayers.

Figure 14 shows the cost per unit of generation for solarPV, natural gas, and coal including conservative

assumptionsforhealthandenvironmentalexternalities.

Figure14‐AverageCost/kWhforPeakingPowerinOntario(IncludingExternalities)

• Includingexternalities,themarginalcostofsolarPVrelativetocoalis30cents/kWh

• Includingexternalities,themarginalcostofsolarPVrelativetonaturalgasis31.7cents/kWh

• SolarPViscurrentlyamoreexpensiveformofelectricitygenerationthanarecoalornaturalgas

8DSSManagementConsultantsInc.(2005).CostBenefitAnalysis:ReplacingOntario'sCoalFiredElectricityGeneration.Toronto:OntarioMinistryofEnergy.

0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45 0.5

NaturalGas

Coal

SolarPV

$/kWh

AverageCost/kWhforPeakingPowerinOntario(IncludingExternaliBes)

$/kWhGeneraUon

$/kWhExternaliUes

23


It ismostaccuratetoincludethecostofexternalitieswhencomparingsolarPVwithfossilfuelgeneration.

However,quantifyingexternalitiescanbechallengingandincludingtheminanyanalysisopensfindingsup

to additional scrutiny. As such, the following analysis compares solar PV to natural gas and coal‐fired

generationbothincludingconservativeestimationsofexternalities(section4.2)andexcludingexternalities

altogether(section4.3).

4.2ImpactonOntarioElectricityCustomersIncludingExternalities

InordertoputthemarginalcostofsolarPVinperspective,itisusefultothinkofitsimpactontheaverage

Ontarioelectricitycustomer.Figure15comparesthecostofsolarPVwiththecostsofnaturalgasincluding

externalitiesandcoalincludingexternalities.

Figure15‐ExpectedAverageMonthlyHouseholdElectricityBill:SolarPVvs.Alternatives

• In 2018, for the average Ontario electricity customer, the marginal cost of solar PV relative to

naturalgaswillbe$4.58/month

o In2018,thiswillequal2.8%oftheaverageresidentialelectricitybillinOntario

• Usingthesamemeasure,themarginalcostofsolarPVrelativetocoalwillbe$4.34or2.7%ofthe

averageresidentialelectricitybillinOntario

• Onaverage,bychoosingtogenerateelectricityfromsolarPVratherthannaturalgas,theaverage

Ontarioelectricitycustomer’smonthlybillwillincreaseby$0.65annuallybetween2011‐2018

‐

50

100

150

200

2011 2012 2013 2014 2015 2016 2017 2018

AverageCostp

erM

onth

ExpectedAverageMonthlyHouseholdElectricityBill:SolarPVvs.AlternaBves

OtherElectricityBillCosts CostofSolarPVGeneraUon

CostofNaturalGas(withExternaliUes)toReplaceSolarPVGeneraUon CostofCoal(withExternaliUes)toReplaceSolarPVGeneraUon

24


4.3ImpactonOntarioElectricityCustomersExcludingExternalities

TogaugetheimpactofsolarPVonOntario’seconomy,itismostaccuratetoincludeexternalitiesinthecost

of fossil fuels. However, this concept is somewhat complex. To provide clarity on the direct electricity

customerimpactofincludingsolarPVinourelectricitysupplymix,wehavecomparedthecostofsolarPV

withthecostsofnaturalgasexcludingexternalitiesandcoalexcludingexternalities.

When we exclude the external costs of fossil fuels, coal is clearly the least expensive option. However,

Ontarianshavealreadydismissedcoalaspartofoursupplymixbasedonitsheavyimpactonhealthandthe

environment.

Figure16‐ExpectedAverageMonthlyHouseholdElectricityBill:SolarPVvs.Alternatives(ExcludingExternalities)

• In 2018, for the average Ontario electricity customer, the marginal cost of solar PV relative to

naturalgaswillbe$4.91/month

o In2018,thiswillequal3.0%oftheaverageresidentialelectricitybillinOntario

• Usingthesamemeasure,themarginalcostofsolarPVrelativetocoalwillbe$6.47or4.0%ofthe

averageresidentialelectricitybillinOntario

• Onaverage,bychoosingtoinstallsolarPVratherthannaturalgas,theaverageOntarioelectricity

customer’smonthlybillwillincreaseby$0.70annuallybetween2011‐2018

‐

50

100

150

200

2011 2012 2013 2014 2015 2016 2017 2018

AverageCostP

erM

onth

ExpectedAverageMonthlyHouseholdElectricityBill:SolarPVvs.AlternaBves(ExcludingExternaliBes)

OtherElectricityBillCosts CostofSolarPVGeneraUon

CostofNaturalGas(withoutExternaliUes)toReplaceSolarPVGeneraUon CostofCoal(withoutExternaliUes)toReplaceSolarPVGeneraUon

25


5.CostPremiumvs.JobCreation

ThereisapricetobepaidforchoosingsolarPVoverotherformsofpeakingpower.Thecostofgeneration

fromsolarPV,between2011‐2018,willbegreaterthanthecostof itsalternatives.Ontheotherhand,per

dollarinvested,solarPVcreatesmanytimesmorejobsthannaturalgasorcoal.

Figure 17 displays the electricity generation and job creation returns from a $1 million investment by

electricitycustomersineithersolarPV,naturalgas,orcoal9.

Figure17–ElectricityGenerationandJobCreationper$1,000,000CosttoElectricityCustomers

• SolarPVwillgeneratebetween32%‐34%theelectricitygeneratedbynaturalgasorcoal

• SolarPVwillcreatebetween4.8–5.3timesasmanyjobsasnaturalgasorcoal

9Fossilfuelexternalitiesareincludedinthesecosts.

‐

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

NaturalGas Coal SolarPV

JobCreaBon

JobCreaBon/$1,000,000CosttoOntarioElectricityCustomers

‐

1

2

3

4

5

6

7

NaturalGas Coal SolarPV

GWh

ElectricityGeneraBon/$1,000,000CosttoOntarioElectricityCustomers

26


Glossary

AverageOntarioElectricityCustomer

Demandforelectricityintheprovincecanbeseparatedintothreesegments:industrialdemand,commercialdemand, and residential demand. In this report, where the average Ontario electricity customer isreferenced, we are referencing residential customers only. Based on figures presented in the LTEP theaverageresidentialelectricitycustomerinOntarioconsumes800kWhofelectricityonamonthlybasis10.

DirectJobs

Direct jobsare jobsthatarecreatedto immediatelyservetheactualsupplychain;forexample,these jobsincludemodulemanufacturingandprojectconstruction.

DomesticContent

Ontario’sFeed‐inTariffprogramhasset levelsofdomesticcontent(forwindandsolarprojects)thatmust

beadheredtoinordertoqualifyfortheprogram.Essentially,DomesticContentreferstogoodsandservices

thatarenecessaryforthe installationofanelectricitygeneratingfacilityandthatare localtoOntario.For

solarPV,levelsofDomesticContentareeither40%,50%,or60%.

Externalities

An externality is a cost that is a result of a given transaction but that is not monetized within that

transaction.Forexample, intheelectricitysector,electricityfromcoal‐firedgenerationisvery inexpensive

butithasexpensivehealthandenvironmentalimpacts.Whenwepayforcoal‐firedgenerationwepayonly

fortheelectricitythatwereceive,notforthenegativehealthandenvironmentalimpactsitcauses.Thecosts

ofthoseimpactsarecalledexternalitiesandtheyarebornebypartiesexternaltothetransaction.

Feed‐inTariff(FIT)Program

The program features stable prices under long‐term contracts for electricity generated from renewable

sources.TheFITprogram includesstandardized rulesandcontracts foranyone interested indevelopinga

qualifyingrenewableenergyproject.Pricesaredesignedtocoverprojectcostsandallowfora reasonable

returnon investmentover the contract term.Ontario’s FITprogramcontinues to accept applications and

awardcontracts.

IndirectJobs

Indirect jobsare jobsthathavebeencreatedtofacilitatethedevelopmentandmaintenanceofthesupplychain; for example these jobs include renovations onmanufacturing facilities and building themachinesusedtoassemblesolarmodules.

InducedJobs

Inducedjobsarejobsthatarecreatedelsewhereintheeconomyasaresultofspendingfrombothdirectandindirectworkersandfirms.

10OntarioMinistryofEnergy.(2010).Ontario'sLong‐TermEnergyPlan:BuildingourCleanEnergyFuture.GovernmentofOntario.

27


Long‐TermEnergyPlan(LTEP)

TheLong‐TermEnergyPlan(LTEP) isagovernmentdocumentwhichchartsthepathforOntario’senergy

future.ThedocumentwaspublishedbyOntario’sMinistryofEnergyinthefallof2010.

TheLTEPseta targetof10,700MWof renewablegeneration,excludinghydroelectric,by2018.Similarly,

theLTEPhascalledfor1.5%oftotalgenerationinOntariotocomefromsolarPVby2030.

Person‐YearsofEmployment(PYE)

Person‐YearsofEmploymentareacommoneconomictermusedtomeasurejobcreation.OnePYEisequal

tooneyearoffulltimework(e.g.40hoursofworkperweekforaperiodof52weeks).

RenewableEnergyStandardOfferProgram(RESOP)

Ontario’sRESOPprogramwasamethodforprocuringrenewableenergyfeaturingfixedpaymentratesfor

various types of renewable generation. The program is no longer accepting applications or awarding

contracts.

SolarPhotovoltaic(PV)

SolarPVisaformofelectricitygenerationthatconvertssolarradiationintodirectcurrentelectricity.

28


Appendices

AppendixA‐Methodology

DataCollection

Primarydata for this researchwascollectedthrough interviewsandsurveyswithawiderangeof industry

stakeholders. Information was gathered between December, 2010 and June, 2011. In total, ClearSky

Advisorsconductedover150in‐depthinterviewsandcompletednearly100surveys.Overall,weinterviewed:

• largeandsmallprojectdevelopers,representing87%oftheMWvolumeofexecutedFITcontracts;• modulemanufacturersthatrepresent89%ofexpectedmoduleproductioncapacityinOntario;and• invertermanufacturersthatrepresentover85%ofexpectedinverterproductioncapacityinOntario,

Extensivesecondaryresearchwasalsoundertakentosupportourfindings.Thisresearchwasusedtoinform

interviews,cross‐checkinterviewfindings,compareOntariowithothermarkets,andgenerallytodevelopa

deeperunderstandingoftheeconomicsofOntario’ssolarPVsector.Notableexamplesofsecondarysources

include:

• publications by the Ontario Power Authority (OPA) including Ontario’s Long‐Term Energy Plan(LTEP),IntegratedPowerSystemPlan(IPSP)andquarterlyupdates

• peer‐reviewedstudiesfromacademicsourcesandpublications• statementsandplansbytheMinistryofEnergy,IESO,andOPG.

OurApproach

InordertoanalysetheeconomicimpactsofsolarPVinOntario,aframeworkforprojectingthefutureofthe

market is required.ClearSkyAdvisors regularlypublishesmarket forecasts for theOntarioPVmarketand

continuously acquires data from a broad and comprehensive group of stakeholders inOntario’s solar PV

sector.ToanswerthequestionsCanSIAaskedofus,itwasnecessarytoextendourmarketforecastto2018.

Todevelopourmarketforecast,sevenmarketsegmentsandthreemarketscenarioswereanalysed.

In addition toourmarket forecast, eachquestionwhichCanSIAasked required a uniquemethodology.A

highlevelsummaryofourapproachtoansweringeachquestionisincludedbelow.

• To forecast total investment, installation volumes were compared with installation costs and

ongoingcostsovertime.Thiswasdoneforeachmarketsegmentineachscenario.Installationcosts

wereforecastbasedonhistorictrends,marketdynamics,interviewdata,andin‐houseanalysis.

• Spending in Ontario was calculated by assigning a local spending multiplier to each market

segment. This multiplier was arrived at by assigning local spending percentages to 10 different

project cost components (i.e. modules, inverters, installation, etc.). Amounts for local spending

were largely established through interviews and in‐house analysis that we compared to industry

practicesoutsideofOntario.Inaddition,inputsfromaClearSkyAdvisor’ssurvey(completedbyover

40installersanddevelopersactiveintheOntarioPVmarket)wereused.

• ForecastsforjobcreationweregeneratedthroughaClearSkyAdvisorsmodelthatincorporatesan

established and recognized 3rd party tool (Jobs and Economic Development Impact Model‐

29


PV1.10.01)within‐housemodeling.InputsforthemodelweretakenfromClearSkyAdvisors’market

modelingaswell as trusted 3rdparty sources (e.g.. economicmultipliers specific toOntariowere

obtainedfromStatisticsCanada).Thesenumberswerethencross‐referencedagainstprimarydata

acquiredthroughinterviewsandoursurveytoverifyaccuracy.

• Levels of job creation by various generating technologies were taken from recent University of

California,Berkeleyresearch11thatsynthesizesdatafrom15jobstudies.ClearSkyAdvisorsadapted

this research to reflectOntario‐specific conditions. For example,ClearSkyAdvisors adapted solar

jobcreationtoreflectsolarinsolationandthedurationofsolarPVgenerationcontractsinOntario.

• Thecostofjobcreationwascalculatedbycomparingjobcreationperunitofelectricitywiththecost

perunitofelectricity.

• Electricity customer impacts were calculated using trusted 3rd party sources combined with our

analyticalmodel.Ourgeneration forecast is largely taken fromOntario’s Long‐TermEnergyPlan

(LTEP).Withtheexceptionofsolar(forwhichpricedatahasbeentakenfromin‐houseforecasting),

price information is taken from trusted sources such as: the Ontario Power Authority, Ontario’s

MinistryofEnergy,andMoody’sinvestmentservice.Costdataforfossilfuelsincludeenvironmental

and health externalities where they have been quantified by either peer reviewed publication or

governmentdata.

11Wei,M.,Patadia,S.,&Kammen,D.M.(2010).PuttingRenewablesandEnergyEfficiencytoWork:HowManyJobsCantheCleanEnergyIndustryCreateintheUS?EnergyPolicy38,919‐931.

30


AppendixB–MarketForecast

Manyofthekeyfindingspresentedinthisreport(i.e.investment,jobcreation,electricitycustomerimpacts)

arehighlysensitivetotheamountofsolarPVthat istobe installed inOntariofrom2011‐2018.ClearSky

Advisorsregularlypublishesin‐depthmarketforecastsfortheOntariosolarPVindustry.Whilethedetailed

results of our market forecast are outside the scope of this report, we have included a brief, high level

summary of our most recent market research in order to provide the reader with a framework for

understandinghowsolarPVimpactsOntario’seconomy.

HistoricInstallations

OntarioisayoungsolarPVmarketthathasexperiencedsignificantgrowthoverthepastthreeyears.

• In2008,2MWdcwereinstalledintheprovince



MarketForecast2011‐2018

Lookingahead,thereareawiderangeofpossibleoutcomesforOntario’ssolarmarket.From2011–2018,

the rate of solar installation in Ontario will be impacted by a variety of factors. These include: political

support, the cost of installing solar PV, future tariff rates for solar PV, transmission availability, the

permittingprocess,andmanyotherissues.

In order to capture the uncertainty that exists in themarket, we have forecast high case, low case, and

expectedcasescenarios.While themodellingof thesescenarios includesmanyvariables,eachscenario is

drivenbyahighlevelconceptualizationofhowthemarketwilldevelop.

HighCaseScenario

Inthehighcasescenario,Ontariowillinstallapproximately3,800MWdcofsolarPVby2018.

ThehighcasescenarioisbasedonsolarPVbecomingamoresignificantpartoftheprovince’selectricitymix

thaniscurrentlytargetedintheLong‐TermEnergyPlan(LTEP).

• This could occur if solar PVwere tomake up a larger than expected share of the 10,700MWof

renewables targeted in the LTEP or if Ontario’s overall target for renewables were to increase

comparedtothecurrentLTEP

o TheLTEPistobeupdatedeverythreeyearsandtheroleforrenewablesmaybeincreased

basedonmarketconditions

• Ourhighcasescenarioassumesalowerthanexpectedattritionrateamongstexistingcontracts

ExpectedCaseScenario

Intheexpectedcasescenario,Ontariowillinstallapproximately3,000MWdcofsolarPVby2018.

TheexpectedcasescenarioisbasedonmeetingtheLTEP’stargetsforgenerationfromsolarPV(i.e.10,700

MWofrenewablesby2018and1.5%oftotalelectricitygenerationby2030)

31


• ThiswillrequireareducedlevelofcontractoffersforsolarPVgenerationcomparedtothecurrent

rate

• OurexpectedcasescenarioassumesacontinuanceoftheFITprogram

• Italsoassumesamoderateattritionrateamongstexistingcontracts

LowCaseScenario

Inthelowcasescenario,Ontariowillinstallapproximately2,000MWdcofsolarPVby2018.

ThelowcasescenarioisbasedonsolarPVbecomingalesssignificantpartoftheprovince’selectricitymix

thaniscurrentlytargetedintheLong‐TermEnergyPlan(LTEP).

• This couldoccur if solarPVwere tomakeupa smaller thanexpected shareof the 10,700MWof

renewables targeted in the LTEP or if Ontario’s overall target for renewables were to decrease

comparedtothecurrentLTEP

• Ourlowcasescenarioassumesasteeperthanexpectedreductiontotherateofcontractoffersfor

solarPVgeneration

• Italsoassumesahigherthanexpectedattritionrateamongstexistingcontracts

32


AppendixC‐CostoftheLong‐TermEnergyPlan

Ontario’s Long‐Term Energy Plan charts a course for our electricity supply mix through 2030. The plan

requiressubstantialinvestmentinnewandrefurbishedsourcesofelectricitygeneration.

ProposedchangestoOntario’ssupplymixinclude:

• therefurbishmentofaginggenerationassets(i.e.10,000MWofnucleargenerationcapacity)

• theconstructionof2,000MWofnewnucleargenerationcapacity

• theinstallationof10,700MWofrenewableenergygeneration

• theclosingofallcoal‐firedpowerplantsintheprovince

• anincreasedrelianceonbothhydroelectricpowerandnaturalgasforelectricity.

AllofthesechangeswillhaveimpactsonthecostofelectricityintheOntario.

Figure18‐AverageOntarioElectricityCustomer:LTEPNewandRefurbishedGenerationasaPortionofTotalMonthlyBill

• By2018,LTEPtargetsfornewandrefurbishedgenerationwillcosttheaverageOntarioelectricity

customer$41.90permonthor26%oftheirmonthlyelectricitybill

• By2030,LTEPtargetsfornewandrefurbishedgenerationwillcosttheaverageOntarioelectricity

customer$60.65permonthor39%oftheirmonthlyelectricitybill

CostofSolarPVWithintheLong‐TermEnergyPlan

Clearly,meetingLTEPtargetsforelectricitygenerationby2030willrequiresubstantialinvestment.Largely,

thecostsofnewandrefurbishedgenerationwillbepassedontoOntarioelectricitycustomers.SolarPVwill

accountforarelativelysmallportionofthosecosts.

020406080100120140160180200

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

$/Mon

th

AverageOntarioRatepayer:LTEPNewandRefurbishedGeneraBonasaPorBonofTotalMonthlyBill

AverageMonthlyBill

LTEPPorUonofMonthlyBill

33


Figure19‐AverageOntarioElectricityCustomer:SolarPVasaPortionofMonthlyLTEPCost

• Between 2011‐2030, the average monthly cost of the LTEP to the average Ontario electricity

customerisexpectedtobe$45.05

• Overthatsameperiod,thetotalaveragemonthlycostofsolarPVtotheaverageOntarioelectricity

customerisexpectedtobe$4.87

• FortheaverageOntarioelectricitycustomer,solarPVisexpectedtoaccountfor10.8%ofthecost

oftheLTEP

0

10

20

30

40

50

60

70

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

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2026

2027

2028

2029

2030

$/Mon

th

AverageOntarioRatepayer:SolarPVasaPorBonofMonthlyLTEPCost

LTEPPorUonofMonthlyBill

SolarPorUonofLTEP

34


AppendixD–Assumptions

Assumption Value

Long‐term target for generation from solar PV in

Ontario

2.97TWhby2030

(Or1.5%ofOntario’selectricitysupply12)

Weighted average capacity factor inOntario (relative

toMWdc)

11.5%

Moduleperformancedegradation 1%annually

Expectedinstalledcapacityby2018 Approximately3,000MWdc

WeightedaveragesolarFITtariffratedecrease 7%annually

Averageannualinflationrate 2%13

AveragecostofsolarPVgeneration2011‐2018 46.7cents/kWh

Averagecostofnewnaturalgasgeneration(excluding

externalities)

13cents/kWh2010‐203014

Externalitiesassociatedwithnaturalgas 2cents/kWh15

Averagecostofcoal‐firedgeneration 3.7cents/kWh16

Externalitiesassociatedwithcoal 12.7cents/kWh17

Local spending on construction phase of solar PV

projectsinOntario

36%‐48% of total investment depending on

type of project (e.g. residential or commercial

rooftop)andlevelofDomesticContent

12OntarioMinistryofEnergy.(2010).Ontario'sLong‐TermEnergyPlan:BuildingourCleanEnergyFuture.GovernmentofOntario.13BankofCanadatarget14 Ontario Power Authority. (2007). Methodology and Assumptions for the Cost to Consumer Model.http://www.powerauthority.on.ca/ipsp/Storage/53/4886_G‐2‐1_Att_1_corrected_071019.pdf.; and Ontario PowerAuthority. (2008). Integrated Power System Plan for the Period 2008‐2027.http://www.powerauthority.on.ca/integrated‐power‐system‐plan/g‐plan‐outcomes.15 DSS Management Consultants Inc. (2005). Cost Benefit Analysis: Replacing Ontario's Coal Fired Electricity Generation.Toronto:OntarioMinistryofEnergy.16ibid17ibid

35


Local spendingonO&Mphaseof solarPVprojects in

Ontario

(Includinglabourandequipment)

69%‐76% of total investment depending on

typeofinvestment

AveragetotalsolarPVinstallationcostdecrease2011‐

2018

6.4%

O&Mspending <1%ofcapitalcostsannually

(For all market segments: residential,

commercialrooftop,etc.)

ConversionfromMWactoMWdc 115%

Increase to theaverageOntarioelectricitycustomer’s

averagemonthlybill2011‐2030

$28

Neworrefurbishedgenerationby2030

(Relativeto2011)

70%19

Average monthly consumption of electricity by the

averageOntarioelectricitycustomer

800kWh20

19 Ontario Power Authority. (2011). Integrated Power System Plan (IPSP) Planning and Consultation Overview. OPA.;OntarioMinistryofEnergy. (2010).Ontario'sLong‐TermEnergyPlan:BuildingourCleanEnergyFuture.GovernmentofOntario.20OntarioMinistryofEnergy.(2010).Ontario'sLong‐TermEnergyPlan:BuildingourCleanEnergyFuture.GovernmentofOntario.

36


TableofFigures

Figure1‐Ontario'sSolarPVMarket:TotalInvestment................................................................................ 10

Figure2‐Ontario'sSolarPVMarket:SpendinginOntario............................................................................11

Figure3‐SpendinginOntarioasPortionofTotalInvestment ......................................................................11

Figure4‐TotalInvestmentOverTime ........................................................................................................ 12

Figure5‐SpendinginOntarioOverTime.....................................................................................................13

Figure6–SolarPVIndustrySpendinginOntario(WithandWithoutModuleExports) ................................ 14

Figure7‐JobCreationperGWhProduced................................................................................................... 15

Figure8‐CostperJobCreatedbyTechnology ............................................................................................ 16

Figure9‐SolarPVSectorEmploymentinOntario .......................................................................................17

Figure10‐SolarPVSectorEmploymentinOntariobyJobYear.................................................................. 18

Figure11‐SolarPVSectorJobCreationinOntario(WithandWithoutExports) .......................................... 19

Figure12‐DirectandIndirectJobCreationinOntario'sSolarPVSector ..................................................... 20

Figure13‐OntarioSolarPVEmploymentbyTypeofJob ............................................................................ 20

Figure14‐AverageCost/kWhforPeakingPowerinOntario(IncludingExternalities) .................................. 22

Figure15‐ExpectedAverageMonthlyHouseholdElectricityBill:SolarPVvs.Alternatives ......................... 23

Figure 16 ‐ Expected Average Monthly Household Electricity Bill: Solar PV vs. Alternatives (Excluding

Externalities) ....................................................................................................................................... 24

Figure17–ElectricityGenerationandJobCreationper$1,000,000CosttoElectricityRatepayers .............. 25

Figure 20 ‐AverageOntario ElectricityCustomer: LTEPNewandRefurbishedGeneration as a Portion of

TotalMonthlyBill ................................................................................................................................ 32

Figure21‐AverageOntarioElectricityCustomer:SolarPVasaPortionofMonthlyLTEPCost ....................33

37


Bibliography

DSSManagement Consultants Inc. (2005).Cost Benefit Analysis: Replacing Ontario's Coal Fired Electricity

Generation.Toronto:OntarioMinistryofEnergy.

Ontario Ministry of Energy. (2010). Ontario's Long‐Term Energy Plan: Building our Clean Energy Future.

GovernmentofOntario.

OntarioPowerAuthority.(2011). IntegratedPowerSystemPlan(IPSP)PlanningandConsultationOverview.

OPA.

Ontario Power Authority. (2008). Integrated Power System Plan for the Period 2008‐2027.

http://www.powerauthority.on.ca/integrated‐power‐system‐plan/g‐plan‐outcomes.

Ontario Power Authority. (2007). Methodology and Assumptions for the Cost to Consumer Model.

http://www.powerauthority.on.ca/ipsp/Storage/53/4886_G‐2‐1_Att_1_corrected_071019.pdf.

Wei,M., Patadia, S., & Kammen,D.M. (2010). Putting Renewables and Energy Efficiency toWork: How

ManyJobsCantheCleanEnergyIndustryCreateintheUS?EnergyPolicy38,919‐931.

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Economic Impacts of the Solar PV

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