This represents the first phase of the two-phased
procurement framework proposed by the IESO and the Ontario
Power Authority (the "OPA") in response
to the Ministry of Energy's Long Term Energy Plan (also discussed here and here), which provides for the procuring of 50
MW of energy storage by the end of 2014. The 15 MW balance of
the procurement will be led by the OPA in a second phase of
procurement. The 35 MW phase one procurement process is now in full
swing: the RFP closing date was on May 5th and the
selection of preferred respondents will be on June 1st
with an anticipated contract effective date of June
Project developers and lenders will be interested to know
A broad range of technologies are encouraged provided that
energy will be absorbed, stored and then later discharged back to
the grid. It is not permissible to consume energy during off-peak
hours and then generate new energy when demand ramps-up.
Although the RFP allowed bidders to propose a contract service
term of between three and ten years, shorter contract service terms
are considered by the IESO to be more desirable and scored
accordingly. Consequently, bidders were given a strong incentive to
put forward as low a contract service term as possible (or at least
to include multiple contract service terms in their bids).
The service contract (i.e., the revenue contract that
underpins any storage project) includes two unusual
termination rights: firstly, upon a change in the market rules or
any applicable law that has a material adverse impact; and
secondly, at any time by the IESO at will, in each case
on thirty days written notice. The compensation for a
non-default termination is limited to breakage, demobilization
and termination payments while lost profits are expressly
The two most obvious challenges to the bankability of phase one
contracts are items 2. and 3. above. The likely short term of the
contracts combined with the ability of the IESO to effectively
terminate a project's revenue contract at its convenience are
both challenges that will make it difficult to find long term
conventional project financing.
Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
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