Can you connect gasoline taxes with solar energy?
On the surface, it’s hard to make a direct link. One is a levy on an energy source that the world is trying to eliminate; the other is a future, alternative source of energy that is largely untapped in Canada.
However, here in Manitoba, gas taxes and solar energy are connected by current government policy and future energy needs.
Let’s connect the dots, starting with gas taxes.
It all starts with last fall’s provincial election, when the NDP unveiled plans to give Manitobans a break from the 14 cents per litre tax it charges on fuel.
It wasn’t the only reason for the election result, but the NDP certainly believes it prevented the Progressive Conservatives from portraying Premier Wab Kinew as just another tax-and-spend New Democrat.
Originally set to expire July 1, Kinew extended the gas-tax holiday until Sept. 30, and speculated earlier this month he might keep it going longer.
Kinew has argued the gas-tax cut has lowered inflation and made life in Manitoba more affordable. Whether or not that is true, the tax holiday has definitely taken a bite out of government revenues.
At the beginning of the year, it was estimated the gas tax would generate more than $300 million on an annual basis. With Kinew now considering an extension, the potential fiscal impact on the bottom line could be much bigger.
That loss of revenue connects a dot with Kinew’s overarching energy policy.
The NDP is currently putting the finishing touches on a comprehensive energy strategy that’s expected to be unveiled in the fall. The strategy must find ways to reduce carbon emissions and secure a sustainable energy supply.
Unable to build more dams, and shackled with significant debt, Manitoba Hydro must find new sources of energy generation through things such as wind and solar.
Both are promising avenues, but — and here comes another dot — both will require significant investments by government.
This is particularly true in the case of solar, one of the least-exploited alternative-energy opportunities.
Solar is a mixed blessing in Manitoba. The potential for solar-generated electricity is because most of the solar energy here is generated in the summer months, when electricity usage is lower; in the winter, when the days are shorter and electricity load grows exponentially, solar is less productive. As a result, government sources confirm that large-scale, “utility grade” solar farms are not likely to be part of Kinew’s long-term energy strategy.
But smaller installations could very much be part of it.
According to the most recent figures from Hydro, there are 1,567 privately owned solar installations in Manitoba. They range from a few solar panels on the roof of a house to a seven-acre, 3,000-panel, one-megawatt solar farm on the Fisher River Cree Nation, 200 kilometres north of Winnipeg.
How successful are they?
Hydro estimates the private solar arrays generate more than 40 megawatts of electricity. For context, that’s nearly enough to power the town of Oakbank for a year.
In addition to providing property owners with clean electricity, Hydro said 60 per cent of the energy generated by the solar installations is sold back into the grid. Owners that sell back to the utility get a credit on their bills that can be used to pay for electricity drawn from the grid in months where more energy is needed.
If a relative handful of privately owned solar installations could power a small town, imagine the benefits of having tens of thousands of homes and commercial buildings outfitted with solar panels, each contributing a small amount of energy that adds up to a significant boost to Manitoba’s future energy needs.
That approach is already catching on in other jurisdictions, including California and the European Union, both of which have introduced mandates to require all new residential and commercial buildings to include solar panels.
However, a future like that will never happen without money, the final dot that connects us back to gas taxes. To ensure broad adoption, government is going to have to underwrite the cost of solar installations.
Currently, Manitobans can access provincial grants up to $5,000 and loans up to $20,000; Ottawa also offers tax credits, grants and loans up to $40,000. However, given that a 10-kilowatt system installed on the roof of a single home can run as high as $25,000, the incentives are clearly inadequate. Particularly when the installations have the potential to channel electricity back into the grid.
At some point, Kinew is going to have to ween himself off the political thrill of cutting gas taxes and look at what $300 million can do for Manitoba’s long-term energy needs.
Our current generating capacity will be tapped out in the not-so-distant future, and dreams of a large-scale adoption of electric vehicles won’t be realized without new sources of electricity.
Is there a scenario where Manitoba can have a significant increase in solar installations and lower gas taxes? Perhaps, but the more government slashes into growth taxes, the fewer things it can afford to do.
The future for solar in Manitoba is incredibly bright. But gas-tax holidays are going to dim our prospects significantly.
dan.lett@winnipegfreepress.com
Dan Lett
Columnist
Dan Lett is a columnist for the Free Press, providing opinion and commentary on politics in Winnipeg and beyond. Born and raised in Toronto, Dan joined the Free Press in 1986. Read more about Dan.
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