Optimal incentive design to facilitate solar PV investments in Ontario

Abstract

Solar photovoltaic (PV) generation has become an economically feasible and clean energy supply option for large scale grid connected operations. From a power generation planning perspective, it is required to design a feasible incentive that will lure investors to participate in the solar PV generation market. In this context, the province of Ontario, Canada, has come up with a Feed-in-Tariff (FIT) program to encourage investment in large scale solar PV projects. In this paper, an optimization model is presented to determine an optimal incentive rate that will facilitate investments in grid-connected solar PV projects. The model determines a range of feasible FIT values that will provide investors with a guaranteed internal rate of return (IRR). It also identifies the most preferred zones in the province for new PV installations, from a system planning perspective.