On Sept. 17, 2015, Ontario’s Independent Electricity System Operator (the “IESO”) released the FIT/microFIT price schedule which will be applicable to FIT 4.0 applications and to any FIT or microFIT contracts awarded after Jan. 1, 2016. Reflecting global trends, the energy prices for rooftop and non-rooftop Solar projects in all project tranche sizes decreased between 23.4% and 29.5%. According to the IESO, the interest in solar PV has greatly exceeded the IESO’s target levels of solar energy generation and lowered prices are an attempt to balance supply and demand.
We note that the prices for all other renewable energy (on-shore wind, waterpower, renewable biomass, on-farm biogas, biogas and landfill gas) sources remain unchanged.
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The IESO has indicated that 2016 solar PV pricing still reflects Ontario’s historically higher costs of solar as compared to other countries and also accounts for exchange rate fluctuations between Canada, U.S. and Asia. A 9% targeted return on equity for solar projects was used as a price determinant in this instance.
The IESO is now required to annually review the prices it offers to generators under the FIT and microFIT programs.