Canada: Feed-In Tariff Review: Ontario's New Renewable Energy Procurement Strategy


Ontario's Feed-in Tariff (FIT) Program was launched in 2009 to create new clean energy industries and jobs, boost economic activity and the development of renewable energy technology, and to improve air quality by phasing out coal-fired generation by 2014. The Ontario government launched its scheduled two-year review of the FIT Program in October 2011. The two-year review report was released on March 22, 2012 and the following provides a brief summary of the Two-Year Review Report (Report) and its recommendations. For access to this Report, click here.

The Report contains recommendations in six strategic areas:

A. Continue commitment to clean energy

Currently, Ontario is committed to bringing online 10,700 MW of non-hydro renewable energy generation by 2018 as well as 9,000 MW of hydro by 2030. The Report outlines how the Ontario government plans to achieve this commitment:

  1. Ontario should procure 10,700 MW of non-hydro renewable energy generation by 2015.
  2. The government should determine whether a higher renewables capacity target is warranted at the end of 2013.
  3. Up to 50 MW of the remaining FIT contract capacity should be reserved for hydroelectric projects.
  4. FIT prices should be reviewed annually each November and take effect on January 1st of the following year.

The bottom line: The Ontario government has made it clear that it continues to see the renewable energy sector as one that will provide continued growth, jobs and overall economic development. However, this commitment will become more strategically focussed, as evidenced by the additional recommendations in the FIT review. Interestingly, the Report indicates a slight shift in focus by emphasizing the contribution development in smart grid technology will make to the Ontario economy going forward.

B. Streamline processes and create jobs

The following Report recommendations are designed to help encourage job creation by making sure approvals align with the size and characteristics of a project, simplifying the process and increasing accountability.

1. The regulatory approval processes should be streamlined and unnecessary delays or duplication eliminated. Three approval streams are recommended:

i. Exemption: microFIT projects should remain exempt from REA regulations, but subject to enhanced land-use protection.

ii. Self-screening: MOE's self-screening registry system should be expanded to include eligible small-scale solar and bio-energy projects.

iii. Full environmental approvals: Large, complex projects should continue to require the full environmental approval process, including REA regulations.

2. The Ministry of Natural Resources should review and update its policy approach to renewable energy development on Crown land as soon as possible.

3. The commercial operation milestone for rooftop solar photovoltaic should be shortened from three years to 18 months.

4. A new renewable energy committee should be created that includes senior officials from relevant ministries to help drive the progress of projects through the approvals process.

The bottom line: Despite the best intentions of the various ministries involved in the regulatory approvals process for renewable energy projects, little if any advancement has been made in streamlining approvals. In fact, the Renewable Energy Approval (REA), introduced in 2009 and meant to function as an omnibus environmental approval, has proved detrimental to project development since a hold up in one area of the REA delays the entire process. Additionally, REAs that have made it through the initial application stages are now being appealed. It remains to be seen how the Environmental Review Tribunal and possibly, the Divisional Court, treat such appeals. The regulatory approvals process will likely continue to be a major development hurdle in the near future.

Regarding the shortening of the commercial operation milestone date for rooftop solar, the solar industry is categorically opposed.

C. Encourage greater community and Aboriginal participation

Renewable energy projects with local or Aboriginal community partnerships create economic opportunities and jobs for the community. The Report outlines how the Ontario government plans to achieve greater community and Aboriginal participation, including:

1. Introduce a system to prioritize FIT applications for small, capacity allocation exempt projects and large projects that awards points to projects with minimum equity participation from Aboriginal and local communities, public schools, colleges, universities, hospitals and long-term care facilities.

2. Maintain adders for community and Aboriginal projects with adjusted prices. The adders should align with new participation and equity requirements for the FIT Program.

3. Set aside a minimum of 10% of remaining FIT contract capacity for local community and Aboriginal projects with greater than 50% equity participation.

4. To maintain continued participation, strengthen limitations on assignment and change of control for priority participation projects, except rooftop solar.

5. Extend support funding to Aboriginal communities partnering with Green Energy Investment Agreement projects.

6. Dedicate support funding for projects that are already in the design/development and regulatory approvals phases.

The bottom line: There have been several successful projects in which Aboriginal communities have partnered with non-Aboriginal entities to develop renewable energy projects. The benefits on all sides are evident and the government sees the FIT Program as a way to spur economic development in Ontario's First Nations and Métis communities. As the land tenure system for development on reserves continues to evolve, this should be viewed as a good opportunity for both Aboriginal and non-Aboriginal communities alike to develop strategic partnerships and good projects.

D. Improve municipal engagement

There is room for municipalities to play a greater role in the development of projects. The Ontario government plans to improve municipal engagement by:

1. Introducing a point system for FIT applications that awards points to projects that:

i. have minimum equity participation from an Aboriginal or local community and projects with participation by public schools, colleges, universities, hospitals or long-term care facilities;

ii. have demonstrated support from the local municipalities or Aboriginal communities;

iii. are water or bio-energy project which have ancillary electricity system benefits;

iv. with respect to wind, ground-mount solar and bio-energy projects, have a firm lease, option to lease/purchase, or have ownership of the land.

Solar rooftop applicants that do not own the host building should be eligible for project readiness points if they provide proof of firm site control in the form of a firm lease or option to lease. Furthermore, the technical guidelines in the Report recommend that the OPA should require a FIT project to earn a minimum of one point to be eligible for a FIT contract. The points allocation system is set out below:

2. Enhancing municipal engagement in the FIT Program:

i. For large FIT projects, require contract launch meetings with interested parties to facilitate early discussion, share information and define expectations.

ii. MOE should revise the municipal consultation form in the REA process to better reflect areas of municipal concern, in consultation with the Association of Municipalities of Ontario.

3. Clarify and strengthen project siting rules to ensure responsible project development:

i. Enhance protection of agricultural lands by prohibiting solar ground-mount projects (over 10 kW) on prime agricultural land that contain class 1, 2 and 3 soils. Expand protection to include organic and mixed soils and remove zoning exemptions.

ii. Prohibit solar ground-mount projects (of any size) in residential areas and lands bordering residential areas. Permit projects in commercial or industrial areas only when producing renewable energy is a secondary use.

The bottom line: The introduction of a points system to determine which projects go ahead should be viewed as the biggest change to the FIT Program and the change most likely to impact current FIT applications. The fact that applicants will need a minimum of one point to even participate is significant. The provincial government is, fairly or unfairly, squarely placing the responsibility of building project support within host communities on developers. The details and criteria as to what constitutes "support" will also be significant.

The government is also putting the brakes on ground mount solar by significantly restricting the areas for project development and lowering the FIT contract price for such projects (see below). This is likely purely a function of cost. The aggregate capacity of ground mount solar projects under the FIT Program, none of which are currently operational, is slated to grow to over 900 MW and will significantly impact electricity prices once these projects are completed. Nimbyism for solar projects, while growing, is not nearly as significant for wind power projects, which further indicates that the reduction in solar procurement is based on price impact.

The implementation of "contract launch meetings" may also cause serious issues for developers unless such meetings also function to crystallize siting of wind and solar power facilities.

E. Reduce prices to reflect lower costs

The Report recommends that the Ontario government reduce current FIT contract prices. Specific recommendations include:

  1. FIT Program prices for wind and solar technologies should be reduced by more than 20% for solar, depending on size, and approximately 15% for wind. Maintain current prices for water, biogas, biomass and landfill gas.
  2. Rather than setting a price at the time of project application for small and large FIT projects, price should be set when the contract is offered.

The bottom line: The Canadian Solar Industry Association (CanSIA) has already issued a press release saying that, while the price reductions are aggressive, it expects that its members will be able to work within the confines of the new pricing regime, with the exception is microFIT solar PV projects, which saw a price reduction of up to 31.5%. Setting aside for the moment domestic content rules (which remain unchanged), developers may be able to benefit from decreasing costs of modules.

The proposed 15% price cut to wind power facilities has come as a surprise to some. It remains to be seen whether the market will support wind power projects at 11.5 cents/kWh being developed in Ontario's somewhat onerous (and thereby expensive) regulatory regime.

F. Transmission and distribution

Going forward, the OPA will develop a rule regarding the appropriate maximum distance between a project site and its connection point. Furthermore, where the OPA's analysis indicates that upgrades are required to connect a project, the OPA should offer contracts only to projects where the need for minor transmission upgrades is identified.

The bottom line: Large wind projects will likely be most adversely affected by this change, since they require larger upgrades to the transmission system. Depending on the appropriate maximum distance between the project site and connection site determined by the OPA, other types of renewable projects may also be affected.

Next Steps

The revised FIT program will not affect projects that have achieved commercial operation. Those projects with a FIT contract in place but that have not achieved commercial operation will operate under the old FIT regime, however it is possible that some of the new land use restrictions will now apply to those projects as well. McCarthy Tétrault will provide updates as they become available. Proponents with a FIT application in the queue will have their applications and fees returned and are eligible to resubmit under the new rules and prices, while retaining their timestamp priority.

The government has stated in its press releases that it will move quickly to implement all of the recommendations contained in the Report. Industry associations such as CanSIA and the Canadian Wind Energy Association have each committed to continue to dialogue with the government on some of the recommendations that the associations have deemed unacceptable. The new FIT contract and FIT rules are expected shortly, and will be reviewed carefully by McCarthy Tétrault.

The Market Rule amendments being proposed by the Independent Electricity System Operator (IESO) for renewable generators must also be watched closely, since the dispatch procedures being proposed by the IESO will directly impact wind and solar generating facilities, with wind facilities expected to be the most adversely impacted. McCarthy Tétrault will continue to update clients as developments regarding FIT and dispatch procedures progress.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions