The Province of Ontario is accepting feedback on a proposed
transition of the current microFIT program to a net metering
program which it wants to implement by late 2017 or early 2018. The
net metering program will focus on renewable energy systems that
are 10KW or less but may impact larger systems — potentially
even commercial scale systems.
Net metering program objectives:
Reduce ratepayer cost of generating small scale renewable
energy relative to the current microFIT program. The ultimate goal
is to create a self sustaining program;
Facilitate Ontario's Conservation First policy by ensuring
systems are right-sized and sited close to load;
Reflect the costs and benefits of net metered generation while
distributing the costs fairly; and
Offer consumers choice to offset their electricity consumption
by using renewable energy, subject to cost and need
The program concept is to develop a long-term framework for
developing small-scale renewable energy systems and to fairly
allocate the costs and benefits of distributed energy systems among
ratepayers. The amount of electricity consumed minus the amount of
electricity generated will be charged at retail rates to consumers.
Any net excess generation would be credited at a price that
reflects the project's value to Ontario's electricity
This value-based compensation would be calculated to include
'avoided cost' — a concept which has proven
notoriously hard to pin down in other jurisdictions which have
adopted net-metering. The idea, in Ontario at least, is that the
province's many local distribution companies would willingly
connect and compensate participants at a value that reflects system
costs and benefits, that the determination of compensation would be
transparent and predictable and that the program would be flexible
enough to integrate innovative technologies
— including energy storage. Focusing
on value-based compensation, there are two proposed models for
implementing this program. The first is the Value-of-Solar Tariffs
("VOST") model which would attempt to value the benefit
PV electricity provides to the grid by valuing specific components
of the energy generation system. The components of this
calculation are yet to be determined but they may vary depending on
location. VOST is calculated independently from retail rates
so it may be priced above or below retail rates. The second
proposed model is the Locational Adder Mechanism ("LAM",
pronunciation uncertain). This is a simplified approach for
locations where distributed renewable energy can preclude or offset
infrastructure development. Participants would receive a premium
over the retail rate for their net excess energy generated
reflecting the Locational Adder.
Both the VOST and the LAM price determination models will leave
ample room for interpretation discussions by various industry
stakeholders. In light of the recently announced reductions to
Ontario FIT Program pricing, the adoption of net metering will be
of significant interest to solar market participants —
particularly those focused on serving the consumer and commercial
rooftop market sectors.
The Ministry of Energy has put forward a general framework for
this program but it is relying on feedback and further consultation
to refine its various elements. It is continuing to hold in-person
engagement sessions to solicit feedback on this concept proposal
with the final two sessions scheduled for Sept. 29, 2015 and Oct.
1, 2015 in Thunder Bay and London respectively. Written comments on
key elements of this proposal will be requested following the
in-person sessions and the anticipated deadline for submitting
comments is anticipated to be mid-October.
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