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November 18, 2002

I Need Photovoltaics By 2006

This past week Ontario's energy market was pretty much turned on its ear by Ontario Premier Ernie Eves. For the cave dwellers that don't know what occurred, Mr. Eves pretty much put a screeching halt to Ontario's electricity deregulation. After months of electricity consumers whining and bitching about the obscene increases they've been seeing on their hydro bill, Ernie stepped in and with a heavy hand froze Ontario's electricity rate at 4.3 cents per kilowatt-hour.

What's more, it's frozen at that rate until 2006. Even better, the new rate is retroactive to May 2002. As an added bonus to consumers, rebate cheques ranging from $40 up to $100 are in the mail, or will be soon. I guess he was really concerned about businesses going out of business due to the sudden spike in electricity cost as well, as it is now law that nobody's power will be cut off between now and March 2003, even if their bill remains unpaid. Wow. If only my mortgage holder was so generous.

As a consumer watching this unfold on the 6 o'clock news one evening, I was elated. Free money, and the guarantee that our electricity bill won't break us next summer when we have to start up the air conditioning again. Eves even reassured everybody that despite sending out rebate cheques, all of this meddling in the energy market will be revenue neutral. Uh, sure - I don't see how that'll happen, but I'm not an economist or an energy policy expert either. Then the news channel I was watching started interviewing everybody else, and aside from a few consumers, nobody had anything good to say.

First, nobody buys Ernie's call that this is going to be revenue neutral. In fact, later that week The Globe and Mail interviewed an analyst that had determined that this will actually cost taxpayers more than if the electricity price increases were just left alone. On top of that, now that the price has been frozen for just a little over 3 years, everybody is wondering who in their right mind will want to build more capacity for electricity generation in Ontario. A valid point. Suddenly the nice big cheque I'm being sent doesn't look so nice.

In the aforementioned Globe and Mail article I read, it mentioned that Ontario Power Generation (OPG) has a fund set aside specifically for consumers. Having skimmed the article I don't recall the exact purpose of the fund, but the gist I got was that it is there to draw from when rebate cheques are to be sent out; sort of a consumer protection fund. What absolutely floored me was the size of the fund: well over a billion dollars. Holy over billing, Batman! I have to seriously wonder how much we could cut off of our electricity bills if this fund did not require feeding out of our pockets. Better yet, what if we were proactive about the entire situation and used that billion dollars to purchase and open new generating facilities, owned in part by the consumer? What a fab idea.

That is just a side issue. The point here is that electricity deregulation caused the price to spike, and now Ernie Eves has stepped in and put the world on hold for three years. With all the dire predictions coming out of every corner except Eves', I have to wonder a) what the hell Ernie was thinking and who (if anyone) he consulted on this, and b) what nightmare are consumers going to be treated to come 2006 when this stop gap measure expires. With point a) being pretty much moot at this point, I'm worrying about point b), and have come to one conclusion: I need to acquire a lot of photovoltaics by 2006.

Photovoltaics, otherwise known as PV or simply solar cells, are a great idea. Buy an array, put it up on your roof, and get free energy from the sun. Their reality, however, isn't as rosy. At this point in the electricity game, the payback for a PV array is on the order of 100 years. Yes, you read that right. It would take more than your lifetime for an array of PV to pay for itself. I'm no beancounter, but it's pretty obvious that 100 years is a terrible return on investment. What that assumes, however, is that electricity prices remain pretty much the same. If Ontario is indeed in desperate need of more capacity that is not going to be built in the next 10 or 20 years, it's a good bet that single digit cents-per-kWh electricity rates will be going the way of the dodo in fairly short order once Eves' meddling is done with.

A co-worker of mine summed up deregulation quite well. It is his opinion that deregulation works, but only one way: deregulation allows the price of whatever is being deregulated to self-adjust to its true market value, regardless of what the price may have been before. In other words, Ontario has been enjoying cheap electricity when the market value of that energy has been much higher. After deregulation the price jumped to where it should be, and people freaked. If this holds true, unless some drastic de-deregulation occurs before 2006, I expect my hydro rate to skyrocket.

And that's where the photovoltaics come in. Let's do some quick math. Current return on investment (ROI) is about 100 years, based on current hydro rates (now 4.3 cents per kWh). Anecdotal evidence shows that electricity bills doubled or even tripled for some, which would bring that ROI down to between 50 and 33 years. Mix in three years of legislated price freeze, no extra generating capacity being built, and the continued insatiable need for people to be ventilated and air conditioned during the heat and smog advisory days of mid-to-late summer, and maybe we'll see an unthinkable quadrupling of electrical energy costs. Suddenly that never-in-my-lifetime PV array will pay for itself in 25 years. That's still a long time, but it's the same timeframe as a typical mortgage. So, is that it? Down to 25 years? No - you forgot about Kyoto.

Unless private industry and/or the government start investing heavily into geothermal, solar, wave, and wind power, the lion's share of power is going to be still generated by gas, coal, and nuclear sources. Nuclear is probably going to slip by Kyoto as the perfect solution because it doesn't emit any greenhouse gases. Sadly, that's overlooking the long-term deadly by-products it does produce. Even so, nobody's going to jump in and just decide to build another nuclear generating facility in Ontario. If it's not in the works already, I wouldn't expect it for another 10, maybe 15 or 20 years. So where oh where can Ontario pitch in and do their part for Kyoto? I'd love to see more wind farms, but as Canadians we' re really good at waiting a good long time to make sure something works. Wave power would work - if Ontario were on an ocean. Geothermal? I honestly haven't a clue if there's any suitable location in Ontario. Even if there is, I don't see anybody jumping on the bandwagon. And then there's solar power.

Solar power is available right now. The technology is here, robust, and available in consumer-friendly packages that can be installed by just about any electrician or contractor. The price is still high, but that could be solved by increased demand - the more that gets built, the cheaper it becomes. If you add in the likely Kyoto-backed future government rebates to homeowners that install household power generating capacity, and you just might see PV arrays that can pay for themselves in just over a decade.

Am I going to run out and get as much as I can? I'd love to, but there are other issues. First and foremost is the orientation of my house. I think my roof is oriented the exact wrong way to effectively use a PV array of any sort. I could still install it and hope for the best, but every hour that my array isn't being used due to improper orientation adds more time onto its payback period. Being faced with a hyrdo bill that could be quadrupled, maybe it's still not a bad idea. However, there still may be by-laws about roof-based installations, and I would also have to contend with neighbours that may not like looking at a bunch of big black panels mounted on my roof. (They may change their tune if I show them how much it's saving me.)

Suffice to say I'm scared about what 2006 holds for my monthly hydro bill. Hopefully by then I'll have a houseful of compact fluorescent lights and a new, more efficient cooling system that will allow my air conditioner to run less for equal comfort. Unfortunately, I'll probably be only one of many millions that will be trying to force Ernie Eves to run in a hamster wheel attached to a generator. It's too bad we can't harness the power of really bad ideas.


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