Ontario Domestic Content Rules

Ontario, Canada has put in extensive rules for domestic content usage in feed in tariffs and subsides for solar energy. These rules increase the amount of content that must be used in solar panels that are being installed in the province. This has made other countries see red, though major solar panel exporters like USA and China have not complained. Japan was the first country to take Ontario to WTO for violation of free trade rules, which do not allow discrimination between domestic and foreign made products. Ontario has merrily continued with its domestic content policy which has attracted many solar panel and solar inverter makers to set up factories in the province. Major panel suppliers to Ontario have been forced to tie up with local panel producers. This has led to large profits for these mostly unprofitable Canadian solar manufacturers and raised the end prices for consumers.

Read on GWI Solar Panels Ontario Canada Guide.

Ontario filed an appeal against the complaint and now Japan and EU have filed a counter appeal against Ontario. WTO processes take a long time to complete and countries can game the system by prolonging verdicts through appeals and other delaying tactics. Solar trade wars are heating up between major solar powers such as EU, China and US as well. India has been mostly made a sucker by other countries, which have captured its growing solar market. US has filed a WTO case against India’s domestic content policy despite First Solar capturing >50% market share .

Our earlier article on Japan’s WTO challenge of Ontario Subsidy

Ontario, Canada is the first state in North America to implement a comprehensive Feed in Tariff Program for Renewable Energy. This Subsidy Scheme has already attracted a lot of investor attention and dollars with a large amount of solar and wind capacity already in the works. Though the FIT program has faced some problems with change in FIT rates and criticism of its expense, it has largely proven to be a big success. The province has managed to attract a lot of manufacturing investment as well due to its local content requirements which requires around 50-60% locally produced parts. This has made Solar Module companies like Silfab and Canadian Solar to set up module plants while companeis like Enphase, Schneider and SMA are setting up inverter plants in the province. Note the local content requirements for Renewable Energy Equipment are nothing new with China implementing a 70% requirement in 2005 for Wind Turbines. However China could justify this on its developing country status while Ontario has little grounds for this mandate. However this is the first time that a Feed in Tariff Scheme is being challenged under World Trade Organisation which in principle is against any favoritism of local companies against foreign ones.

WTO

On 11 February 2013, Japan filed a cross appeal in the dispute involving “Canada — Renewable Energy” (WT/DS412) and the European Union filed a cross appeal in the dispute involving “Canada — Feed-in Tariff Program” (WT/DS426). Canada had earlier appealed these reports on 5 February 2013.