Envisaging feed-in tariffs for solar photovoltaic electricity: European lessons for Canada

Abstract

While it is widely agreed that support schemes need to be put in place to promote the use of renewable electricity, there is less consensus as to what are the best kinds of strategies to use. What is attracting increasing attention in Canada is a system of renewable portfolio standards. In this, all power suppliers are under an obligation to ensure that a certain percentage of the electricity they generate is from renewable resources. They can either generate that electricity themselves or purchase ‘green certificates’ from those who have used renewables to generate electricity. Recent experience from Europe, however, suggests that a whole-hearted commitment to this single strategy could be premature and potentially damaging for the development of all kinds of renewable electricity in Canada, solar photovoltaics included. On the other side of the Atlantic Ocean, the use of so-called ‘feed-in tariffs’ (that is, an obligation for utilities to purchase, at a set price, the electricity generated by any renewable energy resource) is widely credited with accelerating the development of renewable electricity in many countries. The purpose of this article is to reflect upon this European experience with feed-in tariffs, to stimulate discussions regarding what promise they might hold for the development of solar photovoltaic electricity in Canada. The article is divided into three main sections. In the first section, policies to promote renewable electricity, presently in place in different parts of Canada, are reviewed. Attention is then focused, more specifically, in the second section of this article, upon ‘feed-in tariffs’. After defining and describing this alternative system, experiences in the countries of the European Union are reviewed. The main strengths and weaknesses of feed-in tariffs—in the European experience—are also examined. The focus then moves back to Canada in the third section of the article. In this, a system of feed-in tariffs is proposed for the province of Ontario in order to provide just one example of the kind of support that could be forthcoming.