December 15, 2018

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Here comes the sun

Faced with potentially double-digit increases in hydro rates, solar power installations are booming in Manitoba

Hey there, time traveller!
This article was published 10/2/2017 (673 days ago), so information in it may no longer be current.

When Sacha Harder and her husband bought the picturesque Tallpine Lodges in West Hawk Lake, they planned on being there for many years.

They’re excited about the couples-only, all-season resort and are tuned into strategies that will keep the property competitive for the long term.

“Hydro is our biggest expense,” she said. “We’ve been thinking about that since we bought the resort 3½ years ago. This is something we had to look into. We did, and now it is making a lot of sense.”

They decided to invest about $500,000 in a 200-kilowatt solar photovoltaic (PV) system that will provide all the power needed to run their 15 cabins. It could take as much as 10 years to pay for itself.

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Hey there, time traveller!
This article was published 10/2/2017 (673 days ago), so information in it may no longer be current.

When Sacha Harder and her husband bought the picturesque Tallpine Lodges in West Hawk Lake, they planned on being there for many years.

They’re excited about the couples-only, all-season resort and are tuned into strategies that will keep the property competitive for the long term.

"Hydro is our biggest expense," she said. "We’ve been thinking about that since we bought the resort 3½ years ago. This is something we had to look into. We did, and now it is making a lot of sense."

They decided to invest about $500,000 in a 200-kilowatt solar photovoltaic (PV) system that will provide all the power needed to run their 15 cabins. It could take as much as 10 years to pay for itself.

"Our Hydro bill is large, and it’s increasing every year," she said. "The price of going solar is decreasing, If we can make it (power for the resort) ourselves and it makes financial sense, why not? This is a long-term investment for us."

Harder’s decision came about a week after Manitoba Hydro board chairman Sandy Riley warned Manitobans could face rate hikes as high as 20 per cent in the next five years. It’s one of several actions the board believes the Crown-owned utility might need to take to deal with its massive debt load that is expected to grow to $25 billion from its current level of $13 billion within the next three to four years.

A week ago, the Crown corporation announced it would reduce its workforce by 900 positions by offering employees a voluntary departure plan starting this spring.

"We’re looking to the future," Harder said. "Yes, it’s expensive now, but in nine, 10, 15 years when Hydro rates have tripled, or whatever happens to them we will be laughing because we’ll be able to keep our rates competitive, and people will still be able to comfortably come here."

The Harders are going to apply to Hydro’s solar energy program, which provides a rebate of $1,000 per kilowatt of solar generation — up to $200,000. That program was launched last April and at the time, provided the tiniest spark of incentive for the solar power industry in Manitoba, which was virtually non-existent because of Manitoba’s low electricity rates combined with the fairly high cost of solar installations.

Technological advances and efficiencies have lowered the cost of solar power over the years and the Manitoba rebate can cut as much as one-third off the capital expense. Now, along with the threat of potentially significant rate spikes in Manitoba, a mini-boom might be underway.

"My phone has not stopped buzzing since last Friday," said Justin Phillips, co-owner of Sycamore Energy.

Phillips and his partner, Alex Stuart, have been running off their feet since April, trying to keep up with demand since the rebate program was announced. Farmers are proving to be their biggest source of potential business.

Sycamore has been in the alternative energy business for years, but much of its work has been done in places such as Jamaica where energy costs are expensive. With the introduction of Manitoba Hydro’s rebate program, Sycamore has re-branded its local operations at Solar Manitoba.

"We did about $500,000 in business here in 2016, and I’ve already booked about $1.2 million since Jan. 1," Phillips said.

Alex Stuart, left, and Justin Phillips, co-founders of Sycamore Energy, pose with a solar panel system.</p>

BORIS MINKEVICH / WINNIPEG FREE PRESS

Alex Stuart, left, and Justin Phillips, co-founders of Sycamore Energy, pose with a solar panel system.

Including the carryover from 2016 that has not yet been billed, his Winnipeg company has signed contracts for about one megawatt of generation in 2016, and expects to install from 10 to 20 MW in 2017. (As a term of reference, Manitoba’s most recently completed generating station, Wuskwatim, generates 200 megawatts of power.) Solar Manitoba is responsible for about 20 jobs, and Phillips thinks he’ll be able to triple that this year.

"It’s been crazy," Phillips said. "We did five seminars a day in front of about 60 farmers each at the Manitoba Ag Days in Brandon last month, and I bet we pulled in about two megawatts of business just out of that conference."

As enthusiastic as Phillips and Harder might be, the reality is this is still Manitoba, the home of the second-lowest electricity rates in North America (next to Quebec) at about eight cents per kilowatt/hour, cheaper for the big industrial users. Electricity rates are more than twice that in Ontario, at about 18 cents per kilowatt/hour.

In that context, solar likely will remain a niche strategy in Manitoba. Even though the PV systems have about a 25-year life span (some say more than 30 years), the return on investment can take about 10 years.

While proponents applaud Manitoba Hydro leadership for taking the initiative the corporate culture at Hydro believes, with good reason, the lengthy payback will keep solar on the fringe for some time.

Even still, Hydro officials are surprised at the enthusiastic response to the incentive program. Since the rebate was announced in late April 2016, there have been 127 applications and 29 solar installations have been built.

To put that into context, Ben Weir, the director of policy and regulatory affairs at the Toronto-based Canadian Solar Industries Association, said there’s about that many applications every week in Ontario. He said he has not been tracking what’s going on in Manitoba partially because, "Our membership from Manitoba is incredibly small."

Ontario’s incentive program, which comes to an end Dec. 31, has been more intense over the years, offering premium prices on 20-year guaranteed contracts to sell energy generated by solar PV systems back into the grid. Alberta has a new program to replace coal generation that is causing a massive increase in interest there.

"To a certain extent people’s desire to do solar, if it is not environmentally motivated, if it is just economically motivated, will never make sense unless electricity rates are at a certain level," Weir said. "The argument between what rates are and whether or not it makes sense to go solar happens in every jurisdiction. With rates that low (in Manitoba), you need some sort of incentive."

But dire warnings from Manitoba Hydro’s board about a looming debt crisis means there are some who believe the days of low rates could be coming to an end.

Tim Yusishen, president of Winnipeg-based Solar Solutions, has been in the business for more than 25 years. He has mostly been exporting his suite of alternative energy solutions. He’s less enthusiastic than Phillips about the increased demand in Manitoba and is not impressed with the lengthy approval process and amount of paperwork required for the Solar energy program applications.

He remains convinced about the long-term economic viability of solar power consumed where it is produced. He’s equally convinced Manitoba Hydro’s unusually low rates and profligate spending on dams is a recipe for disaster.

"Honestly, I think it will be inevitable (that rate will rise dramatically) to deal with all the expenses they have been incurring with dams and transmission lines and lots of employees to look after," Yusishen said. "It does not surprise me."

martin.cash@freepress.mb.ca

Martin Cash

Martin Cash
Reporter

Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.

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