As part of the Ontario government’s plan to generate 5% of Ontario’s total energy capacity from new renewable sources by 2007 and 10% by 2010, the government has announced a Standard Offer Contract program. Certain details of the program were provided on March 21, 2006, with contract details and additional specifics to follow in June.
The Standard Offer Contract program (similar to a renewable energy tariff or feed-in tariff program in Europe) is intended to promote small-scale renewable energy production in order to supplement the government’s request for proposals program. The Ontario Standard Offer Contract program is the first such program in North America.
Based on the information provided to date, the Standard Offer contracts will provide for a twenty-year term at a guaranteed price (subject to certain adjustments), which will depend on the particular source of the renewable energy. To qualify, each project can produce up to a maximum of 10 megawatts (MW) of energy, but there will be no limit to the amount of total generating capacity that can be brought on line through the program. Each new project must connect directly to the distribution system with a connection voltage of 50 kilovolts or less.
The program will provide for a base price of 11 cents per kilowatt-hour for wind, biomass and small hydro production and a fixed price of 42 cents per kilowatt-hour for solar energy. Certain projects demonstrating generation control may also be eligible for an additional payment for power delivered on-peak. The government hopes that the program will attract farmers, rural landowners, community groups, municipalities, First Nations and business owners, as well as wind farm developers and commercial energy producers.
Critics of the program have pointed out that the prices are significantly less than those used in European renewable energy tariffs and, since the projects are limited to a maximum of 10 MW, there is little ability to take advantage of economies of scale to lower average costs. It has also been noted that the 10 MW limit may actually work to slow down and further complicate wind farm development, as prospective sites may be broken up between projects in order to fall under the 10 MW threshold.
Overall, the industry appears to be generally optimistic about the introduction of a program that, although it has its weaknesses, still represents a significant advance for the development of wind energy in North America.
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