Canada: Ontario Announces A $250 Million Aboriginal Loan Guarantee Program

Last Updated: September 22 2009
Most Read Contributor in Canada, September 2016

Article by Linda L. Bertoldi , John Vellone and Tricia Ralph, Student-at-Law

Province Also Releases Framework For A New Aboriginal Energy Partnerships Program

On Friday September 4, 2009, the Ministry of Energy and Infrastructure (the "MEI") announced further details of two new programs for First Nations and Métis communities interested in developing and owning renewable energy projects:

  1. the Aboriginal Loan Guarantee Program, which was first announced in the 2008 Budget, is a $250 million program administered by the Ontario Financing Authority that will facilitate Aboriginal participation in new renewable green energy infrastructure; and
  2. an Aboriginal Energy Partnerships Program, a program that will be managed by the Ontario Power Authority (the "OPA") and will support Aboriginal participation in renewable generation projects by creating a new Aboriginal Renewable Energy Network, providing support for community energy plans, and providing funding for renewable project feasibility studies, business cases and other technical or environmental studies.

These initiatives are consistent with the Minister's authority to facilitate the participation of Aboriginal peoples in the development of renewable energy generation facilities under the Green Energy and Green Economy Act, 2009 (the "GEGEA"). They build on the OPA's innovative Aboriginal Pricing Adder as part of its proposed feed-in tariff program (the "FIT"). In addition, these initiatives are intended to create jobs, stimulate economic development and offer a guaranteed and sustained long term revenue stream.

1. The Aboriginal Loan Guarantee Program ("ALGP")

The ALGP is a $250 million project that will facilitate Aboriginal participation in new renewable green energy infrastructure such as wind, solar and hydroelectric. Under the ALGP, Aboriginal communities will be eligible for loan guarantees for up to 75 per cent of an aboriginal corporation's equity in an eligible project. The guarantee for each project will be up to a maximum of $50 million. Loan guarantees will be granted only to commercially viable projects deemed eligible following an extensive due diligence process. For instance, a project would be required to have:

  • established agreements to sell or transmit electricity at a pre-determined cost (e.g. a FIT contract with the OPA or another power purchase agreement for generation or regulated rates for transmission projects);
  • experienced proponents and business partners that have track records in construction and infrastructure operation;
  • secured commercial financing arrangements; and
  • wholly-owned corporations created by Aboriginal communities to take on all aspects of the project, including signing contracts and entering partnership agreements.

The Ontario Financing Authority (the "OFA") will administer the ALGP. Additional program details will be available later in the fall of 2009.

2. The Aboriginal Energy Partnerships Program ("AEPP")

The AEPP is intended to maximize Aboriginal participation in renewable generation projects. To accomplish this, the province will assist in three ways:

  1. Support for Community Energy Plans. These plans will enable Aboriginal communities to determine local interests, need and opportunities for renewable energy projects, conservation, grid connection and reducing reliance on diesel in remote communities.
  2. Support through funding project pre-feasibility and feasibility studies, development of business cases, and technical and environmental studies. Other soft costs for First Nation and Me_tis energy projects will also be provided.
  3. Support to create the Aboriginal Renewable Energy Network (the "AREN"). This network will provide an online-based centre for sharing knowledge and best practices related to First Nation and Métis green energy projects. The AREN will enable contact and information exchange between First Nation and Métis proponents throughout project development. Additionally, the AREN will make use of regional seminars, educational material and interaction with the Renewable Energy Facilitation Office.

The OPA will manage the AEPP following a directive by the Minister to establish this initiative. Specific program details will be available in the coming weeks.


Implementation of the ALGP and the AEPP are steps two and three of the Ontario government's ten-step plan to bring the GEGEA to life over the next several weeks. Together, the ALGP and the AEPP are intended to support First Nation and Métis development and ownership of economically viable green energy projects.

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