Energy & Power
Ontario plays down Japan and EU’s smackdown c/o WTO ruling
By Anthony Capkun
December 11, 2013 – Ontario is introducing legislation to eliminate domestic content requirements for the construction of future renewable energy projects; an inevitable move, considering Japan and the European Union were not happy with those requirements several years ago, and took their complaints to the World Trade Organization.
The dispute, as explained by WTO, concerned the domestic content requirements by which certain generators of electricity utilizing solar photovoltaic and windpower technology must comply in the design and construction of electricity generation facilities so as to qualify for guaranteed prices offered under Ontario’s Feed-In Tariff (FIT) and microFIT programs, as well as all individual FIT and microFIT Contracts implementing these requirements since the program’s inception in 2009.
One member of the WTO ruling panel believes Ontario’s lucrative FIT and microFIT measures were, in fact, government subsidies (a WTO no-no), “because the pricing offered to relatively high cost and less efficient FIT and microFIT generators under the FIT and microFIT contracts enabled them to enter the wholesale electricity market when they would otherwise not have been able…”.
“The requirements had been put in place as a temporary measure to help spur the growth of Ontario manufacturers and service firms in the renewable energy industry,” says Ontario. “Strong growth in the sector means the measure is no longer required.”
If passed, the amendment to Ontario’s Electricity Act would remove the need for the Minister of Energy to require domestic content requirements be met under the province’s Feed-in Tariff (FIT) Program. Eliminating these requirements began earlier this year, says the province, and legislation is required to complete the process. The changes would help ensure Ontario is in line with decisions made by the World Trade Organization.
Reduced domestic content requirements, coupled with a reduction in technology prices, would continue to be reflected in lower FIT prices, adds the province. “These lower prices would result in lower rates for consumers.”