Financial Return for Government Support Financial Return for Government Support of Large-Scale Thin-Film Solar Photovoltaic Manufacturing in Canada
Energy Policy, Vol. 38, pp. 4291–4303, 2010
44 Pages Posted: 23 Feb 2012 Last revised: 3 Mar 2012
Date Written: 2010
As the Ontario government has recognized that solar photovoltaic (PV) energy conversion is a solution to satisfying society's energy demands while reducing the adverse anthropogenic impacts on the global environment that compromise social welfare, they have begun to generate policy and funding programs to support financial incentives for PV. This paper (publication below) provides a financial analysis for investment in a 1 GW per year turnkey amorphous silicon PV manufacturing plant. The financial benefits for both the provincial and federal governments were quantified for: i) full construction subsidy, ii) construction subsidy and sale, iii) partially subsidize construction, iv) a publicly owned plant, v) loan guarantee for construction, and vi) an income tax holiday. Revenues for the governments are derived from: taxation (personal, corporate, and sales), sales of panels in Ontario, and saved health, environmental and economic costs associated with offsetting coal-fired electricity. Both governments enjoyed positive cash flows from these investments in less than 12 years and in many of the scenarios both governments earned well over 8% on investments from 100s of millions to $2.4 billion. The results showed that it is in the financial best interest of both the Ontario and Canadian federal governments to implement aggressive fiscal policy to support large-scale PV manufacturing.
Keywords: government incentives, photovoltaic, financing, solar energy, renewable energy, energy policy
JEL Classification: Q42, Q48
Suggested Citation: Suggested Citation