Outline • OPA approach to FIT pricing • Stakeholder feedback to date • What we have heard • OPA financial assumptions • OPA typical project assumptions • MicroFIT application responses to date • Next steps
OPA Approach to FIT Pricing • Need to find right balance between promotion of renewable energy and impact on rate-payers • Use standard assumptions for a typical project • Recognize that price will not work for everyone • Use current market information and market foresight to set prices to remain stable for 1-2 years • Price of inverters, modules, installation as volumes ramp • For solar PV in particular, stimulate a new industry and anticipate price/cost reductions • Long-term goal is price parity with conventional sources • Introduce a price that will create opportunity, while recognizing that not all projects will/should be viable
Stakeholder Feedback • Regarding the Proposed New Price: • ‘We recognize the need for a new price but it is too low’ • 'Fixed ground mount systems are more expensive than roof-top‘ • ‘Ground mounts with trackers don't generate as much as you say (higher operating & maintenance costs, insurance, shade, etc.)’ • 'Your price assumptions are not in line with my experience, show us more numbers‘
Stakeholder Feedback (cont’d) • Regarding the Process: • ‘Need greater transparency for how changes are made and a greater level of certainty for businesses/people looking to invest’ • ‘The retroactive application of a proposed new price is detrimental to my project/business’ • ‘The program needs a longer term vision for solar targets’ • ‘Consider charging security for microFIT applications‘
Stakeholder Feedback (cont’d) • Regarding Domestic Content: • ‘Will there be relief for people who will not be able to complete a project by Dec 31 2010 because of the time it required for inspections and connection?’ • ‘Prices will go up for materials on Jan 1 due to higher domestic content regulations and the new proposed price will be too low'
OPA Typical Project Cost Assumptions Typical project assumptions based on a 10 kilowatt solar ground-mounted, dual-axis, tracker-based project
OPA Typical Project Cost Assumptions Payments on borrowed amount are repaid to the bank at 7 percent interest. Assuming annuity payments (i.e., constant) over a 20-year period Return on the equity investment is paid monthly at 11 percent to the contract holder, the supplier. Assuming annuity payments (i.e., constant) over a 20-year period
OPA Typical Cost Assumptions • Please note that the return on equity calculation is much more complicated than described above, because it includes factors such as inflation, compounding interest, taxes and O&M costs. However, the example above is for illustrative purposes to explain the basic approach taken by the OPA. Again, these financial assumptions are used for all FIT and microFIT program technologies.
MicroFIT Applications Responses to Date The following is the status of micro-FIT ground-mounted applications to date
Next Steps • Consultation period closes August 3rd, 2010 • OPA will review comments, feedback and assumptions • OPA to determine any adjustments and make final announcement in early August • As a reminder, if an applicant decides to continue with their project, please resubmit at the earliest possible date