Business Opportunity
WFWE EXCLUSIVE
Based on information gathered from the Canadian Solar Industry Association, a solar industry labour force survey, recent news articles, federal and provincial government representatives and businesses engaged locally in solar energy activity, the solar energy industry is growing now and expected to continue to grow in the future in Ontario and the Windsor Essex area. A number of sources expect significant growth this year in both business and employment opportunities. This growth is driven primarily by incentives created by the Ontario government.
Business opportunity for solar photovoltaic technology (producing electricity) is benefiting significantly from Ontario’s Green Energy Act. The Green Energy Act enables the Feed-in Tariff (FIT) program which provides standardized program rules, prices and contracts as well as domestic content requirements. The Ontario Power Authority is responsible for implementing the FIT program.
To learn more about the Green Energy Act click here.
The Feed-in Tariff program is divided into two streams (FIT) and microFIT. To learn about the FIT & microFIT programs click here.
Ontario Power Authority Announcements
- On December 16, 2009, the Ontario Power Authority announced approval of 700 microFIT rooftop solar projects with a total generating capacity of 8.6 megawatts. For more information click here
- On March 10, 2010, the Ontario Power Authority announced approval of 510 renewable energy projects in Ontario with a total generating capacity of 112 megawatts including 24 solar projects with a generating capacity of 4,618 kilowatts from solar rooftop applications and 250 kilowatts from a ground mounted application in the Windsor Essex area. For more information click here
Examples of Local Business Activity
- In October 2009, Green Sun Rising Inc. converted part of a former tool and die factory into a showroom, office and warehouse with plans for production to start in 2010
- In February 2010, the Windsor Star reported First Solar Canada (a subsidiary of First Solar, based in Tempe Arizona) is seeking to build a $50-million, 10 megawatt solar energy farm near Amherstburg
- In April 2010, Schletter Inc., a German manufacture of support racks for solar panels, announced a plant opening in Windsor. The company intends to be in production by mid-May
- In April 2010, the Windsor Star reported Youil Ensys Corp.; a Korean solar energy company has picked a Tecumseh site for its first project in North America. The company expects to invest $50-million to $100 million in several solar farms in Essex County
- In May 2010, the Windsor Essex Development Corporation, along with the City of Windsor announced that Solar Source Corporation will be locating a manufacturing facility in Windsor to produce solar PV panels. The first phase of the manufacturing project is expected to result in 150 full time jobs while the second phase is expected to create an additional 50 jobs.
- In October 2010, the Windsor Essex Development Corporation, along with the City of Windsor announced that Siliken S.A., one of Europe’s leading solar companies will establish a new domestic content compliant module manufacturing facility in Windsor. It is expected to be in full production by the second quarter of 2011, and will be one of the largest solar module manufacturing plants in North America. The new facility will be capable of manufacturing 50 megawatts of solar modules a year while employing approximately 175 people.
Business Opportunity
- Many sources describe the solar industry sector as new and evolving therefore, information is sometimes uncertain and subject to change
- Solar energy could offer business opportunity in producing electricity or heat and manufacturing equipment
- The timeframe from the initial Ontario Power Authority contract offer to the commissioning (generating electricity) stage of the project is one year under the microFIT program and three years under the FIT program. Interviewed sources suggested not all microFIT or FIT contract offers will be realized and it is more likely that more microFIT contracts than FIT contracts will be realized.
Producing Electricity
Electricity generated by solar photovoltaic technology qualifies under the FIT and microFIT programs. The business requirements of developing a solar photovoltaic installation depend on such factors as size, location and design. There are many steps involved in planning, installing and operating a solar photovoltaic installation. These steps can be loosely grouped into three phases each creating potential business opportunities for existing firms or potential new firms.
Phase One: Planning, Engineering, Design
This phase can create business opportunities for:
- Local distribution companies (also known as local electricity utilities)
- System integrators – companies that lease an area, source components, install and operate, transmit electricity to grid or client
- Engineering firms
- Electrical contractors
- Independent electricians
- Importers
- Dealers
- Retailers
- Installation providers
Individual firms may structure their business organizations differently varying the degree to which activities are completed by their own internal resources or by contracting services. Business activities can include site identification, site assessment (sun and shading patterns) and system design. The degree of activity involved in system design varies with the size of the installation and can be quite significant. Research suggests the types of firms considering this business opportunity is varied which is common in conditions of an emerging market. Research suggests businesses like electrical contractors are well suited to benefit from this emerging business opportunity.
Phase Two: Installation
This phase can create business opportunity for:
- General contactors
- Electrical contractors
- Construction contractors
- Installation companies
- Roofing companies
- Component suppliers
- Transportation companies
Phase Three: Operation and Maintenance
This phase can create business opportunity for:
- Manufacturer product service providers
- Service providers
Research indicates operation and maintenance business opportunity varies based on the size of the solar photovoltaic installation and technology used. It can range from very limited to significant. For example, a small installation may require very little maintenance activity while a larger solar farm installation would most likely require ongoing monitoring and maintenance work. Also, solar installations with tracking systems will require more maintenance than fix mounted systems.
Producing Heat
Our research indicates that business opportunity for solar thermal technology is limited. Reasons cited for the limited opportunity include:
- Lack of government incentives – solar thermal technology is not included in the FIT or microFIT programs
- Lack of announced new federal funding for the ecoEnergy program
- Current low natural gas prices which offer an alternative heat producing source
- Issues with system and/or component certification
Resources indicated a variety of applications for which solar thermal technology could be used including generating heat for use in industrial processes, for heating water, in-floor heating and pools. The requirements for developing a solar thermal power plant depend on the application size, location and design.
There are many steps involved in planning, installing and operating a solar thermal installation. These steps can be loosely grouped into three phases each which could create potential business opportunities for existing firms or potential new firms depending on the amount of demand.
Phase One: Planning, Engineering and Design
This phase could create business opportunities for:
- Engineering firms
- HVAC contractors
- Plumbing contractors
Phase Two: Installation
This phase could create business opportunity for:
- HVAC contractors
- Plumbing contractors
Phase Three: Operations and Maintenance
This phase could create business opportunity for:
- Manufacturer product service providers
- Service providers
Manufacturing Opportunities
Photovoltaic Technology Equipment
- Research indicates the growing solar photovoltaic technology industry offers potential business opportunities for Ontario manufacturers
- The December 16, 2009 and March 10, 2010 Ontario Power Authority announcements should create significant demand for solar photovoltaic components
- The domestic content requirements of the FIT program for solar energy shifts from 50% to 60% in 2011 and will increase manufacturing opportunity
- A variety of components are used in the building of a photovoltaic power plant. Major components include solar panels, inverters and mounting systems
- It is not yet clear which components present the most manufacturing opportunity and for how long.
The Ontario Ministry of Economic Development and Trade website provides a Directory of Ontario Solar Energy Manufacturers and Suppliers. This directory offers a list of photovoltaic equipment used. Click here to view this list (This list is provided in Appendix 1 at the end of this document).
The 2009 Labour Force Survey of the Canadian Solar Industry (produced by the Canadian Solar Industry Association and the Electricity Sector Council) lists the following examples of manufacturers:
- Photovoltaic cell manufacturing equipment
- Photovoltaic cell material manufacturers
- Photovoltaic module manufactures
- Photovoltaic cell manufactures
- Solar electric power system manufactures
- Solar electric charge controller manufactures
The 2009 Labour Force Survey of the Canadian Solar Industry states:
“The supply chain consists of two types of manufacturers namely, the cell and module manufacturers and the Balance of System manufacturers (BOS). These manufacturers have suppliers of services as well as suppliers of materials and equipment. The next node in the supply chain includes distributors and integrators, importers and retailers who work either independently or in collaboration with a manufacturer to serve users either directly or through contractors.”
Key Informant Interviews – comments from sources interviewed include:
- The province of Ontario’s Green Energy Act is a game changer
- The Windsor Essex region offers potential manufacturers good access to Ontario and US markets
- Production facilities for some components (silicon wafers, ingots and cells) require significant capital investment which could limit/restrict market entry
- Some components have proprietary knowledge/technology which could limit/restrict market entry
- Many national/international manufacturers of solar products including panels and invertors are watching the Ontario market closely, they are talking but not acting yet
- The Samsung agreement with the Ontario government should contribute to manufacturing opportunity but it is currently too soon to know how and to what degree
- The domestic content requirements include assembly and this may be the significant opportunity for Ontario manufacturers
- Currently, most manufacturing in Ontario is focused on balance of system components like mounting systems
- Different business models apply to a variety of applications – ranging from residential to solar farm installations, this will impact how the manufacturer distributes its product
- Businesses would need to assess the short and long term demand through financial due diligence to determine if there is support for a business case. They would need to determine if this is the right business model and if they can get the financing they may need to enter this market
- Businesses must assess the number of potential orders in the pipeline to determine the potential return on investment
- Economies of scale of existing manufacturers may affect the amount of entry into the market.
Component information from sources interviewed include:
Sometimes different sources provided information which conflicted with other sources. It is assumed these differences arise from the fact that the solar industry is new and evolving.
- Canada does not have a heavy/significant investment in cell manufacturing, we may develop more if there is or becomes an active market
- Silicon – very few producers in Canada, one in Ontario, not likely to be produced here, it is technology and capital investment driven
- Silicon Wafers – we are unlikely to make, not yet anyway, maybe in the future
- Silicon Cells – unlikely to make, 3×5 inches in size, they go into modules
- Panels/Modules – the recent announcement by Solar Source opening a manufacturing facility in Windsor demonstrates that panels can be produced in Ontario. They require a specific type of production environment. A number of established companies are waiting and watching to see how much demand will unfold in the Ontario market, the domestic content requirement change from 50% to 60% in January 2011 was identified as a key marker
- Inverters – an inverter converts AC power to DC power and smoothes out distribution, invertors are made all over the world including Europe, Asia and Australia, there are companies manufacturing inverters in Canada and Ontario, the number of invertors required is a function of the size of the solar array
- Mounting Systems – greater local/Ontario manufacturing opportunity is in mounting systems, there is less capital investment involved, production uses standard manufacturing technologies such as stamping and production welding
Solar Thermal Technology Equipment
- Research indicates there is limited demand for solar thermal technology equipment
- Solar thermal technology equipment requires manufacturing capabilities which are more aligned with local manufacturing capabilities – more so than photovoltaic technology equipment manufacturing aligns with local manufacturing capabilities
- Manufacturing activities include metal forming, stamping, drilling, milling, soldering and assembly
- Equipment includes collectors/panels, solar piping/plumbing, solar storage tank, solar pump station, heat exchanger, controller.
Appendix 1
List of Equipment of Solar Energy Manufacturers and Suppliers
- Solar Cells
- Silicon used in solar photovoltaic cells
- Silicon ingots and wafers
- Crystalline silicone solar photovoltaic cells
- Thin film solar photovoltaic cells
- Solar photovoltaic modules (i.e. panels)
- Electronics
- Inverter
- Wiring and electrical hardware
- Software
- Mounting systems
- Mounting frames
- Solar tracking systems
