Ontario will soon offer Canada's first subsidy to
homeowners or businesses that install solar electric
power.

The incentive — 42 cents for every kilowatt-hour of
electricity produced — is to be announced Tuesday by
Premier Dalton McGuinty, industry sources say.

To produce solar power, an average house would need a
system that costs $20,000 to $30,000.

All the electricity generated would be sold to the
local utility company and go into the overall power
grid. It would be worth $1,000 to $1,500 a year. But,
homeowners would continue to buy their power from the
utility at whatever the current rate was. The price
now is under 6 cents a kilowatt-hour, but is expected
to rise in May.

With the energy savings, the system could be paid off
in 20 to 25 years. That's when the main payoff begins,
since the equipment is expected to last 40 to 60
years, Rob McMonagle, executive director of the
Canadian Solar Industries Association, said yesterday.

Although among the most generous in North America, the
program won't cover the entire cost of installing
equipment that converts the sun's energy into
electricity.

But it should be enough to kick-start an industry that
now badly lags behind Japan and parts of Europe,
industry officials say.

"It opens a tremendous opportunity," McMonagle said.

The solar subsidy will be part of a new incentive plan
known as Standard Offer Contracts.

Under the contracts, those who generate electricity
from solar and other renewable sources will be paid
for all the power they produce.

The other sources — mainly wind, but also wood waste,
manure or other biological sources — will earn 11
cents a kilowatt hour.

The contracts will run 20 years and apply to projects
with a generating capacity of up to 10 megawatts, or
enough to supply about 3,300 average homes.

There will be no cap on the total amount of money
available to pay for this power.

Ontario's solar subsidy will be unique in Canada. Only
Prince Edward Island now has a wind-power incentive,
said Robert Hornung, president of the Canadian Wind
Energy Association. "Others are looking to see what
Ontario will do."

At present, solar capacity across Canada is a mere
megawatt
"The (solar) program is designed to start building
capacity in the industry so it can handle a huge
increase in demand," McMonagle said. The aim is that
Ontario companies will construct and install the
systems.

The contracts are expected to lead to the installation
of about 15,000 solar systems, with a total capacity
of 40 megawatts, McMonagle said. After that, growth
should speed up until, by 2025, solar capacity hits
1,200 megawatts.

The Ontario Power Authority, the government agency
responsible for ensuring an adequate long-term power
supply, forecast in a recent report that solar
capacity would be only 40 megawatts by 2025.

It projects that, by then, the province will need a
total capacity of more than 30,000 megawatts, and
recommends $40 billion worth of new nuclear generating
stations to meet the demand. Critics argue that that
estimate could be cut dramatically if the province
pushed harder on conservation measures.

At present, in Canada, solar capacity is a mere
megawatt. In contrast, Germany — with much higher
electricity rates and subsidies — installs 40
megawatts of capacity every six weeks.

In 20 years, solar will be the cheapest source of
power for most homeowners, McMonagle said.

Solar projects are suited for individual homes and
buildings, he said.

In places like Japan and Germany, where solar is
widespread, the installations increase the resale
value of houses, he said.

A more cautious outlook comes from Howard Gomes, sales
director of Solar Roofing Systems Inc., in Aurora,
which builds and installs solar generators that are
integrated into roofing material, instead of in
separate panels.

Home solar installations will likely last about 35
years, and the provincial system will be at best a
break-even proposition unless the payment for power is
tied to inflation, Gomes said. The new contracts are
"a great first step ... a great move on the part of
the province," but it's not enough to get solar into
the mass market.

"The federal government needs to get involved," he
said, so Ontario's incentives match those in the
United States, where Washington offers a 30 per cent
tax credit.

The 11-cent payment for wind power will "get a number
of projects constructed," but it's not possible to
predict exactly how many, Hornung said. "We expect
(next week's) announcement will instigate interest and
proposals."

The contracts will support wind projects built by
municipalities, community groups or businesses, rather
than homeowners, he added. They will complement the
big wind farms — with up to 100 megawatts of capacity
— being erected under a different provincial policy.

The maximum size of 10 megawatts is roughly the same
as 12 wind turbines like the one at Exhibition Place,
on Toronto's west-end waterfront.

By the end of summer, Ontario will have about 320
megawatts of wind capacity, mainly in big projects.