The Ontario Government has recently announced significant amendments to the Feed-In-Tariff (FIT) program. These changes are likely to impact the way renewable energy is delivered in Ontario.

The Government's new focus is on small and micro FIT projects. The changes will support the small/micro FIT programming while making large FIT projects more competitive than under the previous regime. The existing large FIT program is discontinued and will be replaced with a new program to be established after stakeholder consultations.

In addition, the Government has increased municipal participation by giving more input into the decision making process at the local level. These changes are an attempt to address one of the biggest criticisms of the program from local governments and many local landowners.

The Government has also signalled it will implement the World Trade Organization (WTO) decision which found that the minimum domestic content requirements of the FIT program were contrary to treaties to which Canada is a party.

Further details of some of the proposed changes are set out below:

Large FIT Discontinued

The large FIT program is being discontinued. All large FIT (greater than 500 kW, or greater than 250 kW if connected at voltages less than 15 kW) projects will no longer be procured under the large FIT Program. This will be replaced with a new competitive procurement process. Particularly significant for these projects is the fact that they will not be eligible for a FIT contract if transmission lines are not available (minor upgrades will be permitted). It is also of note that special exceptions exist for existing large FIT contracts designed for First Nations participation when they are on reserve land.

Small-FIT Expanded and Micro-FIT Continued

Small FIT projects will continue to be procured. The procurement target will be 150 MW starting in 2014 and for the next 4 years. The next application window will be launched in the fall of 2013 for up to 70 MW. Micro FIT projects will continue to be procured. Starting in 2014 and for the next 4 years, 50 MW annually will be awarded. Unused capacity from the previous window will be added to this fall's target in addition to 30 MW this fall.

Small FIT projects undertaken by municipalities or other publicly-owned bodies such as publicly-funded schools, public colleges and universities, hospitals, publicly-owned long-term care facilities, public transit and Metrolinx will gain capacity set-asides and will be given priority.

Municipal Participation and Land Use Regulation

In 2009, amendments to the Planning Act eliminated a municipal government's right to control the construction of renewable energy projects through traditional land use planning controls, such as in official plans or zoning by-laws. While this will not change, priority will be given to FIT projects that have support from the municipal council by awarding points to supported projects. Municipalities will have increased say in identifying locations and siting requirements. In other words, large FIT project proponents will have to work with municipalities to find appropriate sites for new projects to increase the chance the project will proceed, but municipalities will still not be able to prohibit the construction of these projects. Time will tell whether this change in approach will prevent the construction of unpopular projects or whether it will only delay construction.

Domestic Content

The Ontario Government intends to implement the 2012 WTO ruling, which found that the FIT program's minimum domestic content requirements violate the General Agreement on Tariffs and Trade and the Agreement on Trade-Related Investment Measures.

Reductions to Price per KW/h

Pricing will be reviewed annually beginning in the summer of 2013 and developers can expect rates to continue to fall as the cost of solar panels and equipment drop.

Pilot Rooftop Solar Program

A pilot project will be commenced in the summer of 2013 to permit certain FIT contracts for solar projects on unconstructed buildings. Previously projects had to be located on existing buildings. This pilot project has a goal of encouraging the construction of new buildings with roofs that are built with the intent of hosting solar power systems.

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