Canada: A New Path For Renewables: Major Changes To Ontario’s Renewable Procurement And Feed-In Tariff (FIT) Program

Last Updated: June 26 2013
Article by John Vellone and Shane Freitag

Most Read Contributor in Canada, November 2017

On June 12, 2013, the Minister of Energy issued a directive to the Ontario Power Authority (the "OPA") pursuant to the Electricity Act, 1998 to amend the Feed-in Tariff (FIT) Program (the "Directive").

The amendments follow on the May 30, 2013 announcement by Ontario Energy Minister Bob Chiarelli of major changes to the procurement and planning processes for renewable power generation in the Province as part of his speech to an industry association.

This bulletin outlines the recent changes to Ontario's Feed-in Tariff (FIT) Program. In short:

  • Large FIT – The OPA will no longer procure any additional capacity under the FIT Program for Large FIT projects and all Large FIT applications submitted prior to June 12, 2013 will be discontinued by the OPA. The OPA will be replacing the existing standard-offer FIT Program for large renewable projects with a new competitive procurement process.
  • Small FIT – The OPA will continue to procure new Small FIT Projects, with the next application window to open in the Fall of 2013 to procure up to 70 MW (plus the remains, if any, of the 200 MW of capacity from the current procurement). Between 2014-2018, the OPA will award up to 150 MW of contracts per year for Small FIT projects.
  • Municipal and Public Entity Involvement –To further support local participation in new renewables, the OPA will provide special incentives similar to those already given to community projects for Small FIT Projects undertaken by municipalities, publicly funded schools, public colleges, public universities, hospitals, publically owned long-term care homes, public transit services and Metrolinx through the provision of a "price adder" to the standard FIT pricing, the provision of priority points during the application process, and the creation of capacity set-asides. In addition, municipalities and the public sector entities noted above will have access to funding for costs associated with design and development of their Small FIT projects. This funding will be similar to that funding that is already available for community co-op and aboriginal sponsored projects.
  • MicroFIT – The OPA will also continue to procure up to 50 MW of projects in each year between 2014-2018 under the MicroFIT program. Up to an additional 30 MW will be made available for 2013 after the OPA issues its revised pricing schedule.
  • Domestic Content – The Minister has indicated his desire and intent that the FIT Program be brought into compliance with the recent World Trade Organization ("WTO") rulings on the domestic content obligations by pursuing the necessary legislative and other steps to achieve this outcome. The Minister expects this would affect the domestic content requirements in the new FIT program launched after May 24, 2013.
  • Aboriginal Projects on Reserve Lands – In acknowledgement of the unique and significant land control challenges facing Aboriginal FIT projects on reserve lands, the OPA has been directed to offer a 4 year extension to the Milestone Date for Commercial Operation to existing Large FIT contracts for Aboriginal Participation Projects where the generating facilities are located entirely on reserve lands.

Large FIT

Projects greater than 500kW, or greater than 250kW if connected at voltages less than 15kV ("Large FIT")

The OPA will no longer procure any additional capacity under the FIT Program for Large FIT projects and all Large FIT applications submitted prior to June 12, 2013 will be discontinued by the OPA. Under the terms of the Directive the OPA will return the application fee and all application security that had been paid in relation to those discontinued applications.

The OPA will be replacing the existing standard-offer FIT Program for large renewable projects with a new competitive procurement process. The OPA indicated during its June 7th management teleconference that it is going to work together with energy stakeholders to determine what the new competitive procurement process will look like. Pursuant to the Directive, all discontinued applicants will be eligible to participate in the OPA's upcoming stakeholder engagement regarding the creation of a new competitive process. Discontinued applicants would be well advised to attend these stakeholdering sessions.

One key change in this new competitive procurement process is the increased importance municipal interests will play in identifying appropriate locations and siting requirements for future renewable energy projects. Developers that want to re-bid projects that were discontinued under the FIT Program should reach out to their local municipalities in order to maintain or increase municipal support for their project.

Another key change in the procurement process is the addition of Ontario Power Generation ("OPG"). While no rationale was provided in the Directive, the inclusion of OPG should create additional competitive tension in the process.

Following a summer of stakeholder consultations, the OPA is required to report back to the Minister of Energy with interim recommendations on September 1, 2013. A further Minister's direction will be issued at a later date to authorize the commencement and content of a competitive procurement. Such a direction will follow the completion of the Long-Term Energy Plan review.

Small FIT

Projects 500kW or less, if connected at voltages greater than 15kV, otherwise projects 250kW or less ("Small FIT")

The Directive indicates that the OPA will continue to procure new Small FIT Projects, with the next application window to open in the Fall of 2013 to procure up to 70 MW of Small FIT Projects. If any of the 200 MW of capacity remains unused after contracts are awarded from the latest Small FIT Window, this unused capacity will be added to the 70 MW target for Fall 2013. Between 2014-2018, the OPA will award up to 150 MW of contracts per year for Small FIT projects. If capacity is remaining at the end of a year, that capacity will be added to the procurement target for the following year. To further support local participation in new renewables, the OPA will provide special incentives similar to those already given to community projects for Small FIT Projects. Specifically, projects undertaken by municipalities, publicly funded schools, public colleges, public universities, hospitals, publically owned long-term care homes, public transit services and Metrolinx will benefit from a new "price adder" to the standard FIT pricing, the provision of priority points during the application process, and the creation of capacity set-asides.

In addition, the OPA has reserved 15 MW of capacity for a pilot program for rooftop solar projects on un-constructed buildings and 10 MW of capacity for municipal hydroelectric projects (which initiatives were previously announced in July 22, 2012 and January 21, 2013 directives).

MicroFIT

Projects 10kW or less ("MicroFIT")

The OPA will also continue to procure up to 50 MW of MicroFIT projects in each year between 2014-2018. The OPA is currently undertaking a MicroFIT price schedule review for 2013. Once the new price schedule is published, the OPA will award up to 30 MW under the MicroFIT program for the balance of 2013. As with the Small FIT Program, if there is remaining capacity at the end of a given year, that amount will be added to the MicroFIT procurement target for the next year.

Domestic Content

On December 19, 2012, the WTO circulated the Panel report in Canada – Certain Measures Affecting the Renewable Energy Generation Sector. In this dispute, Japan and the European Union ("EU") challenged Ontario's domestic content requirements in the FIT Program and the individual FIT and MicroFIT Contracts for wind or solar photovoltaic sources which have been concluded by the OPA since the inception of the FIT Program.

The three-person WTO Panel unanimously found that the Minimum Required Domestic Content Level prescribed under the FIT Program, and also the individual FIT and MicroFIT Contracts executed under the FIT Program since its inception, violated Article 2.1 of the TRIMs Agreement and Article III:4 of the GATT 1994. Canada's appeal of this decision was unsuccessful. For the violations under Article 2.1 of the TRIMs Agreement and Article III:4 of the GATT 1994, Canada must bring itself into compliance with the recommendations and ruling of the dispute settlement body.

In accordance with the foregoing, the Minister in the Directive has indicated the Ministry's desire and intent that the FIT Program be brought into compliance with these WTO rulings. The Minister has indicated that the government will be pursuing legislative and other steps to achieve this outcome. The Minister expects this would affect the domestic content requirements in the new FIT program launched after May 24, 2013.

It is unclear at this stage how the Ministry and the OPA intends to bring the domestic content provisions in existing FIT Contracts back in-line with the WTO rulings. The Minister intends to issue a further direction to the OPA at a later date.

Aboriginal Projects on Reserve Lands

In acknowledgement of the unique and significant land control challenges facing Aboriginal FIT projects on reserve lands, the OPA has been directed to offer a 4 year extension to the Milestone Date for Commercial Operation to existing Large FIT contracts for Aboriginal Participation Projects where the generating facilities are located entirely on reserve lands.

CONCLUSION

Renewables procurement in Ontario will undergo a considerable amount of change over the summer and fall of 2013 as the OPA implements the Ministerial Directive. The impact of the directive on the Large FIT program will remain unclear pending additional consultation and stakeholdering.

New pricing initiatives, points, capacity set-asides and funding for municipal and public sector entities to participate in Small FIT Projects will likely facilitate increased involvement by such entities in the sector and may well provide additional opportunities to developers and other parties working with them.

We intend to continue to monitor the ongoing developments at a Provincial and OPA level. Please feel free to contact the authors should you have any questions about these developments.

About BLG

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 Mondaq.com.

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

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
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

    Mondaq.com (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 www.mondaq.com

    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 Mondaq.com’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.

    Disclaimer

    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.

    Registration

    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 unsubscribe@mondaq.com 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.

    Cookies

    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.

    Links

    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.

    Mail-A-Friend

    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.

    Emails

    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 .

    Security

    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 webmaster@mondaq.com.

    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 EditorialAdvisor@mondaq.com.

    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 enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com 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