Ontario Insists on Local Content for Renewable Energy

In an interview with Reuters, Energy Minister Chris Bently refused to alter controversial rules that require local content for all projects.  The FIT review will be complete by the end of March, and it is expected that cuts will be made in the generous government subsidies that have previously jumpstarted renewable energy businesses in Ontario.

Ontario launched the feed-in-tariff (FIT) program in 2009 as a means to create jobs to replace jobs lost in the declining manufacturing sector.  The FIT program pays above-market rates to producers of renewable energy, such as solar power, wind power, and biomass.

Although cuts will be made to the FIT program, our view is that reductions can be offset by other funding mechanisms, such as refunds from the federal government’s SR&ED (Scientific Research & Experimental Development) program.  The SR&ED program offers a refundable tax credits of up to 40% of prior R&D expenses incurred within Canada, for the last 2 fiscal years.  The local content requirements will likely make many activities eligible for SR&ED.

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