Ontario by gjjur4356


									                Solar In Ontario
                March 23, 2010

The Ontario Ministry of Economic
    Development and Trade

Feed-In-Tariff/Domestic Content

Competitive Business Environment

Specific Project Benefits
  •   Business Incentives
  •   Considerations
  •   Summary
                        Green Energy Act
              The Green Energy Act will facilitate renewable energy development
               in Ontario by:
                                                                                                                  Establishing a streamlined approvals
                                                                                                                  process, and provide service
                 Establishing right to connect for renewable energy
                                                                                                                  guarantees for renewable energy
                 projects on the transmission and distribution
                 systems based on economic test.                        “Right to
 Supporting the
 establishment and                                                                                  Streamlined
 implementation of a smart
 grid for Ontario                                                                                    Approvals
                                   Smart Power
                               Promoting                      Renewable
                              Conservation                     Energy
                                                                                                        A standard price according to technology to
                                                              Facilitator                               promote the development of community-based
                                                                                                        and large commercial renewable energy
                                                                                                        projects. This mechanism provides proponents
Fostering a culture of conservation by                                                                  with a market-viable price for their projects.
assisting consumers, government,
schools and industry to transition to               Establishing the Renewable Energy Facilitation Office
lower and more efficient energy use                 to offer one-window assistance and support to project
                                                    developers in navigating the approvals process..
     Ontario: Feed-in Tariff Rates

                        Technology Size                   ¢/kWh
                                   Tranches               (CDN)

                        Solar PV

                        Any Type      ≤ 10 kW             80.2
                        Rooftop       > 10 – 250 kW       71.3
                        Rooftop      > 250 – 500 kW       63.5
                        Rooftop      > 500 kW             53.9
                        Ground Mounted*
                                      ≤ 10 MW             44.3

                        Onshore          Any size         13.5
                        Offshore         Any size         19.0

                                                                  MW – megawatts
                                                                  kW - kilowatts
*Eligible for Aboriginal or Community Adder.
Contract term is 20 years, except waterpower (40 years)
Domestic Content
– Supporting Domestic Producers

•   Wind & solar developers will be required to have a
    certain percentage of their project costs come from
    Ontario goods and labour at the time they reach
    commercial operation.

•   For micro solar photovoltaic (PV) projects (10
    kilowatts or smaller), the requirement will start at 40%
    and increase to 60% on Jan. 1, 2011.

•   For larger solar PV projects, the requirement will start
    at 50% and increase to 60% on Jan. 1, 2011.
Feed-In Tariff Update (Solar)

Renewable Power
•  Round 1: 2,500 megawatts (MW) available
•  Currently 1,275 MW of renewable energy in Ontario

FIT Applications (10kW plus)
•   1022 applications received (Dec. 2009)
•   8000 MW of potential power

Microfit (10 kW or less)
•   Ongoing program
•   510 projects totalling 112 MW get contracts (Mar. 2010)
•   1,166 applications (8,382 kW) received (Dec. 2009)
Competitive Business Environment
               Ontario Offers:

•   A Top North Location in North America for Investment
•   NAFTA Access To U.S
•   Comparatively Low Debt-to-GDP Ratio
•   Low Manufacturing Costs
•   Low Tax Rates
•   Generous R&D Cost Advantage
•   A Dedicated and Highly Educated Workforce
•   Extensive Transportation Infrastructure
      Ontario is the Top Jurisdiction in North
                   America for FDI
Top Ranking Foreign Direct Investment Destination
States/Provinces in North America by Estimated Jobs in 2008
                      Ontario                                                        7000

                      Virginia                                                     6500

                          Ohio                                               5700

             South Carolina                                                 5500

               Pennsylvania                                           4800

                      Quebec                                       4500

             North Carolina                                    3900

                   California                            3200

                       Illinois                          3100

                      Indiana                           3000

Source: IBM Global Business Services Annual Global Location Trends Report
    NAFTA: Easy, barrier-free access to
    North America

         Most Favoured
          Nation (MFN)                   NAFTA vehicles
                                         & parts
Industrial Robots,
Assembly Line Machinery, and
Lathes: Free

Industrial Robots: 2.5%
Assembly Line Machinery: 2.5%       0%
Lathes: 4.2%

    Industrial Robots and
    Assembly Line Machinery: Free
    Lathes: Free
Canada – EU Free Trade
•    June 2007 – Canada & EU agree to study free trade costs & benefits
•    April 2009 – EU adopts free trade negotiating mandate
•    October 2009 – First negotiations
•    January 2010 – Next scheduled negotiation
•    Follow-up negotiations at 3 month intervals

FT Agreement
•    Agreement Goals:
     Advanced agreement
     Exceeding previous FT agreements
     Minimal duty - zero
•    Canada-EU Trade Deal by 2011

Possible Benefits:
•    Duty-free inputs into Canada
•    Duty-free Canada – U.S.
•    Duty-free back to Europe
More Free Trade Agreements

   Canada - Jordan
   Canada – Colombia
   Canada – Peru
   Canada – Costa Rica
   Canada – Chile
   Canada - Israel
                  Comparatively Low Debt-to-GDP Ratio
 •In 2008–09, the most recent year for which data are available for all
 jurisdictions in Canada, Ontario’s net debt-to-GDP level was near the median
 for provinces nation-wide.
 •In 2008–09, Canada’s and Ontario’s net debt-to-GDP ratios were below
 those of G7 countries and 46% below that of the USA.

        Net Debt-to-GDP, G7 Countries and Ontario: 2008–09
         90                  84.3
                                        48.2 45.1
         50                                       41.9
         40                                                              33.6
         30                                                                         26.1
                    Italy     Japan       U.S.    Germ any     France      U.K.     Ontario    Canada

Note: Net debt measures are not always comparable across countries due to different definitions and
treatment of debt (and asset) components.
Sources: OECD Economic Outlook No. 85 (June 2009) and Ontario Financing Authority.
                   Manufacturing Cost Competitiveness

                                                            Ontario is a cost-effective location
               Ontario, 92.9                                for manufacturers

                          Alabama, 95.5

                                      Texas, 98.2
                                           Carolina, 99.5

85                    90                    95                   100                    105      110
                                          (Index Score - US=100)

Note: Used costs for metal components manufacturing, precision component manufacturing and
electronics manufacturing as a proxy for overall manufacturing.
Source: MMK CompetitiveAlternatives.com Model (based on US exchange rate of 1.18, which is the
12 month average between Oct 2008- Sept 2009).
       Average Base Hourly Wage for an
             Industrial Engineer

   ONTARIO (SW)                $24.84

            New York           $37.34

   North Carolina              $33.84

   South Carolina              $34.50

                 Texas         $38.69

The above chart is in USD ($1 CAD = $ 0.95 USD).
Source: Labor Market Information and Service Canada, 2009, May 2008 State Occupational Employment
and Wage Estimates
       Average Base Hourly Wage for an
            Industrial Technician

   ONTARIO (SW)                $21.13

            New York           $23.21

   North Carolina              $23.83

   South Carolina              $23.97

                 Texas         $26.55

The above chart is in USD ($1 CAD = $ 0.95 USD).
Source: Labor Market Information and Service Canada, 2009, May 2008 State Occupational Employment
and Wage Estimates
                                                  Low Tax Rates
                Ontario’s M&P tax rates are also lower than comparable
                                jurisdictions in the US.

 2009                                                            2013
                                      Ontario                           Ontario
                                       31%                               25%

                                             Texas                                Texas
                                             33.9%                                32.9%

                                             Alabama                                 Alabama
                                              35.5%                                   34.4%


                 Ontario’s General Corporate Tax Rate is also lower than these
                 jurisdictions at 33% in 2009 and 25% in 2013.

Source: Office of Economic Policy, Ontario Ministry of Finance
       Competitive Corporate Taxes on Manufacturing
    Ontario (in 2012)                                25.0%
       Ontario (2010)                                 28.0%
       Ontario (2009)                                   31.0%
                Texas                                    33.9%
           Michigan                                       35.9%
              Florida                                      36.3%
             Georgia                                       36.8%          2009 Combined Federal
           New York                                        37.1%            and State/Provincial
 U.S. Weighted Avge                                        37.2%          (Corporate Income Tax)
               Illinois                                    37.4%
          Gret Lakes                                        37.7%
                  Ohio                                      38.1%
            Vermont                                         38.1%
           California                                       38.6%
         New Jersey                                         38.8%
       Pennsylvania                                          39.0%

                                       2008   2009   2010   2011   2012     2013

        Canadian Federal               19.5   19.0   18.0   16.5   15.0     15.0   Corporate Income
        (%)                                                                          Tax Rates on
        Ontario (%)                    12.0   12.0   10.0   10.0   10.0     10.0

        Combined                       31.5   31.0   28.0   26.5   25.0     25.0
Source: Ontario Ministry of Finance.
    Advanced Infrastructure for Manufacturing R&D

•     Ontario has a strong and diverse manufacturing sector. Ontario
      has become an R&D location of choice for industry leaders from
      aerospace to automotive, mining to ICT.

•     R&D talent is plentiful in Ontario, costs are low and our research
      Centres are focussed on applied research that meets the needs
      of today’s industry.

•     Ontario produces 29,000 graduates a year in the manufacturing
      critical fields of mathematics, engineering and science.

•     There are thousands of scientists working at 34+ renowned
      public research facilities across Ontario that are focused on all
      aspects of advanced manufacturing.

•     The Ontario Centre for Excellence for Material and Manufacturing
      and the Ontario Centre for Excellence for Energy help companies
      develop commercial applications for groundbreaking discoveries
      made at our public research labs.
                                         Employee Tenure
         Median years of tenure with current employer for wage and salary
         workers is significantly higher in Ontario. This equates to training cost
        10                                                                                     US


                                   Overall                                     Manufacturing
    This data is for the most recent period – Ontario (Sept 2009), US (2008)
    Source: Statistics Canada, US Bureau of Labor Statistics
                                       Highly Educated Workforce

                                              Ontario has one of the best
                                              educated workforces in the
                                              G7.                                                         College
(% civilan workforce)

                        50                                                                                Apprenticeship
                              27%                                                                      Apprenticeship statistics
                                                                                                       are not readily available
                        40                                                                             for US states

                                                                     28.3%                  28%
                        20    26%             23.4%                                                               26.4%

                             8%                8.8%                   9.9%                 11.2%                   7.7%
                             Ontario         Alabama               Michigan           North Carolina              Texas

         Note: Apprenticeship statistics are not readily available for the US. The college figure for US states
         represents those who received Associate degrees, it does not capture those who received other college
         diplomas or certificates.
         *Data is for most recent period; Ontario (2006), US states (2008)
         Source: Statistics Canada, Current Population Survey, US Census Bureau
    World Class Transportation Infrastructure

Ontario offers sophisticated, multi-modal
transportation links across Canada, to the USA and
the world.
        Comprehensive Transportation Network


Highway Crossings
Sarnia/Port Huron
Fort Erie/Buffalo

Major Rail Terminals
Windsor - Sarnia                                         Highways
Toronto (Concord)

Three major border crossings
handle $500 million/day

Source: Ontario Ministry of Finance, Statistics Canada
•       Over 80% of Ontario production ships to U.S.
•       Over $1 billion trade per day crosses Canadian-U.S. border
        and $500 million/day Ontario-U.S border

Air Freight:
•    Toronto: 322,253.5 tonnes cargo loaded/unloaded (2008)
•    Capacity 1 million tonnes

Truck Freight:
•   75% of Ontario $trade with U.S.
•   75,000 Ontario truck drivers
•   13.5 million trucks crossed Canada-U.S. border
•   7.3 million trucks crossed Ontario-U.S. (2008)
•   3,360 Canadian-based-for-hire carriers (2005)
•   65.9 million shipments (2004)

•    CN & CP access cross-Canada and into U.S.

Source: Ontario Trucking Association/Statistics Canada/Toronto Pearson Airport
Toronto Air Cargo
    Air Canada         American Airlines    Excel Cargo

     Access Air              ATS             EXP Cargo

    Ace Freight          Austrian Air      Freight Systems

     Air France           Bax Global          Handlex

 Airline Cargo Sales        BWIA            International

    Air-Ship Int’l       Canada Post        Int’l Fastlane

  Ait Time Express      Cathay Pacific      Japan Airlines

       Alitalia              DHL             KLM Cargo

 All Trade Shipping         EL AL          Korean Airlines

 American Aviation         EVA Air            Lot Polish
Toronto Air Cargo
          Lufthansa         Swiss International

       Mayfield Cargo        Swissport Cargo

          Northern                 TBI
          Northwest           U Freight Int’l

           Onward                  UPS

             Orbit             UPS - SCS

      Pine Tree Express       Varig Logistics

      Platinum Air Cargo       VCC Cargo

         Prestige Int’l      Worldwide Flight
     Secure/Maple Freight     FedEx (offsite)
Specific Project Benefits
  Ontario Manufacturing / Innovation

Southern Ontario Development Program

 $100 million FedDEV program offering grants
  of up to $100,000 or unsecured interest free
  loans for larger amounts
 Repayment terms negotiable (up to 10 years)
 Funding Amounts:
    Capital Projects: Up to 50%
    Non-capital Projects: Up to 90%
 Government program stacking is permitted up
  to 50%
Other Incentive Programs

• Hiring Programs

   •Job Connect
   •Targeted Wage Subsidies
• R&D Programs
   •Innovation Demonstration Fund (IDF)
   •Sustainable Development Technology
   Canada (SDTC)
       Business Incentive: Healthcare Cost Advantage
                Ontario Offers Significantly Lower Payroll Expense on
                Employee Health Care Costs

                Employer Health Costs for a Typical Firm*



                600                                                                    For 100 employees, Ontario’s
Thousand US $

                                                                                       cost advantage is:
                                                                                       USD$384,800 per year.
                400                                                                    (Based on USD$3848 per
                                                     286                               employee/year)



                                    U.S.       Ontario
 *Typical firm defined as having approximately 99 employees
 Source: MMK Consulting, 2009
 The Canadian dollar exchange rate used in this
 analysis is The Canadian dollar exchange rate used in this analysis is CDN$1.25 per US$. Note that at
 CDN$1.00 per US$, Ontario’s cost per employee remains significantly lower at US$3,071.00
                   Business Incentive:
               Capital Equipment Allowance

•   Canada and Ontario have both announced in their 2009 budgets
    an extension of the temporary accelerated 50 per cent straight line
    Capital Cost Allowance (CCA) rate for manufacturing and
    processing machinery and equipment investments made in 2010
    and 2011.
•   Manufacturers who locate in Ontario could take advantage of this
    generous allowance for machinery and equipment investment
    made in 2010 and 2011.
          Business Incentive: Other Programs

•   Export Development Canada (EDC)
    A Crown corporation that offers financing, credit insurance and
    bonding solutions for Canadian exporters through various
    financing and risk management programs.
The Ministry of Economic Development
and Trade welcomes the opportunity to
work with you to make your projects
successful in Ontario.

       Questions or Comments, please contact:
                  Rick Mohorovich
             Senior Business Consultant

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