Canada: Finding The Right Shade Of Green - Clarifications And Updates To The OPA FIT Program

Since its release of the Feed-In Tariff (FIT) program on September 30, 2009, the Ontario Power Authority (OPA) has faced both commendation and criticism. Throughout the Launch Period, ending November 30, 2009, the OPA has released several clarifications and amendments to the initial FIT program. The following is a summary of the key announcements made throughout the past two months and some of the issues that remain outstanding.

Key Recent Announcements

Domestic Content Technical Notes: This component of the FIT program has raised extensive criticism from proponents. The OPA has indicated that the requirements set out in the original FIT contract will not be changed but has now provided further technical notes to assist proponents in interpreting these obligations. These notes can be found on the OPA website and will be updated periodically.

Agricultural Land Restrictions for Solar PV: The OPA has announced that it will provide guidelines for proponents that detail the benefits of more renewable energy with the need to protect Ontario's prime agricultural land and details on exemptions available for lands zoned for non-agricultural purposes. Contained within these guidelines will be details on the evidence that a proponent must provide for proposed projects on such lands. These guidelines have not been released as of the date of this update.

Transition options for microFIT (< 500 kW) projects: On October 30, 2009, the OPA announced new options for microFIT proponents that have projects in the late phases of development. These new options exempt such projects from domestic content requirements. Eligible proponents must have either a previous RESOP contract or have purchased generation equipment prior to October 1, 2009 and may elect to transition into the microFIT program or amend the RESOP contract to reflect microFIT prices.

Critical questions

Priority Access: As many generators are aware, Ontarian's demand for electricity has been, at certain times, well below the available generated load on the system. Renewable energy projects have been given a priority right of access to connect to the grid under amendments arising from the Green Energy Act (GEA) but have no defined prioritized right in the actual sale of generated electricity into the grid. As curtailment decisions from the Independent Electricity System Operator (IESO) and Local Distribution Companies (LDCs) become more common, renewable energy generators face the same risk of generation limitation that all other generators, including large scale gas generators, face.

Transmission and Distribution: The popularity of both the old Renewable Energy Standard Offer Program (RESOP) and the FIT program clearly indicates that there are countless project developers interested in entering the generation market. The current determining factor of how quickly these proponents are able to begin selling electricity is transmission and distribution capacity. Hydro One Networks Inc. (HONI) has been directed by the government to commence a large-scale transmission expansion program which is planned to be on stream between 2013 and 2017. Many proponents have raised concerns that the required expansions in both the transmission and distribution systems will cause significant delays in meeting the demand of proposed renewable energy generation facilities.

Conservation and Demand Management (CDM) and Smart Grids: Conservation was a key component to the GEA and it is expected that LDCs will play an important role in the development of CDM protocols. It is anticipated that CDM targets will be made a condition of distribution licences but the details of such an amendment have not been released. The Ontario Energy Board is expected to develop a CDM Code in the coming weeks which will provide a framework on licensing targets and CDM programs.

Despite the concerns raised by many renewable energy project proponents, the FIT program has been, thus far, very well received. As of November 10, 2009, the OPA had received more than 90 applications under the FIT program, representing more than 78 MW of generated capacity and nearly 500 applications under the microFIT program, representing more than 2.5 MW of generated capacity. In comparison to the RESOP program, which contracted more than 1,316 MW of renewable generation, these numbers seem small but the OPA has indicated that it expects these will more than double before the end of the Launch Period. After the November 30, 2009 deadline, the FIT program remains open to applications, although the standard contract rules for time stamping and transmission/distribution capacity allocation become applicable.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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