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On July 11, 2012, the Minister of Energy issued a directive to the Ontario Power Authority
(OPA) providing further direction regarding the
FIT 2.0
Rules and
Contract. Among other items, this directive provides further
details on the prioritization and ranking of applications, land use
restrictions and project location, directs the OPA to design a new
pilot stream for microFIT applicants with unconstructed buildings
and also extends the voluntary withdrawal period for existing FIT
Contract holders to September 30, 2012.
A brief summary of the main points of the directive follows.
Priority Points and Ranking
The directive provides that all projects that applied prior to
July 4, 2011 automatically receive one priority point and those
projects that applied on or after July 5, 2011 will receive half of
a priority point. A FIT contract will only be awarded where the
project has achieved at least one priority point.
Community and Aboriginal participation projects will continue to
be prioritized. All applications with greater than 15% community or
Aboriginal equity interest will still receive 3 priority points and
those applications with greater than 50% community or Aboriginal
equity interest will be offered contracts in advance of all other
applications within the same application window.
The directive indicates that the FIT contract will be revised
such that, where a project has received priority on the basis of a
50% or greater community or Aboriginal equity interest, any change
in the ownership that would result in such ownership falling below
the 50% threshold is prohibited and will constitute an event of
default leading to a termination right on the part of the OPA. The
OPA termination right will arise following a six-month cure period
during which time the supplier can remedy the default. There will
also be a six-month cure period in the instance of the community or
Aboriginal equity interest falling below the 15% threshold required
in order to be awarded prioritization points. With respect to
community equity interest projects, in order to have the benefit of
the cure period, a supplier must report the change in the
membership of the co-operative within 12 months of any change that
leads the supplier to fall below the 50% or 15% equity interest
threshold.
Project Siting
With respect to project siting, as described in our
April 9, 2012 post, the draft FIT 2.0 Rules prohibited
ground-mount solar projects from being located on a site comprised
(in whole or in part) of CLI Class 1, 2 or 3 Lands, Specialty Crop
Areas or CLI Organic Lands. The directive provides that while a
ground-mount solar facility cannot be located on any of these
lands, the site can contain a mix CLI Class 1, 2 or 3 Lands,
provided that the ground-mount solar facility will not actually be
located on the CLI Class 1, 2 or 3 Lands, as evidenced by a peer
reviewed soil study. In addition, non-hydroelectric projects will
not be permitted to be located 50 km or more from their proposed
connection point to the existing transmission or distribution grid.
This distance will be measured based on the distance to the
connection point from land which the supplier has access
rights over at the time of application.
FIT Contract Changes
As discussed in our
earlier post, the draft FIT 2.0 Contract contained a new right
for the OPA to terminate the contract for convenience at any time
following Notice to Proceed. The directive appears to remove this
provision and states that only those rights of termination in
favour of the OPA which existed in prior versions of the FIT
Contract shall be contained in the final FIT 2.0 Contract. It is
not clear whether this also applies to the right of the OPA to give
a "Stop Work Direction" under the draft FIT 2.0
Contract.
The directive also provides that, with respect to rooftop solar
facilities, the Milestone Date for Commercial Operation will
continue to be 18 months following the Contract Date, except in the
case of a "portfolio of rooftop solar facilities greater than
15 MW", for which the Milestone Date for Commercial Operation
will be 36 months following the Contract Date.
The OPA is expected to release revised drafts of the FIT and
microFIT Rules and Contract to reflect this directive and also to
open an application window for microFIT and Small FIT
Contracts.
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.
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