Ontario’s Long-Term Energy Plan

Ontario’s Long Term Energy Plan, Achieving Balance (“LTEP”), released by the Government of Ontario’s Ministry of Energy in December of 2013, reflects a strengthened commitment to renewable energy. The government has announced a goal of 20,000 MW of renewable energy power generation being online by 2025, which represents nearly half of Ontario’s capacity.

The LTEP is guided by the five core principles of: cost-effectiveness, reliability, clean energy, community engagement, and conservation and demand management. The strongest emphasis is placed on conservation, which is evident throughout the LTEP, for example through plans to develop innovative technologies such as energy storage within the renewable energy sector.

The feed-in tariff ("FIT") program continues to be a priority for the government. The government plans to make up to 300 MW of wind, 140 MW of solar, 50 MW of bioenergy and 50 MW of hydroelectric capacity available for procurement in 2014. In 2015, the targets will be 300 MW of wind, 140 MW of solar, 50 MW of bioenergy and 45 MW of hydroelectricity. Any capacity that is not procured will be reallocated for procurement for each renewable technology.

Ontario now has more than 2,300 MW of installed wind power generation, and more than 900 MW of solar photovoltaic (“PV”) electricity generation power online to date. Going forward, wind power project developers should be aware that municipalities will have a greater say in wind development. Project proponents will therefore need strong municipal support. The Independent Electricity System Operator (“IESO”) will also be granted the ability to set curtailment limits on wind energy generation when the system does not require it.

The solar PV industry is likely to benefit from the intention announced in the LTEP to examine the possibility for the microFIT program to evolve from an energy generation purchasing program to a net metering program, allowing individuals to offset the cost of electricity by power generation. This is likely to create heightened demand for solar PV systems, aided by the fact that the average cost of a solar PV system is continuously decreasing.

Also likely to generate increased demand and potential for solar PV systems is the government’s intention to introduce legislation that would completely eliminate the FIT program domestic content requirements, announced in a news release on December 11, 2013. The decision to eliminate the domestic content requirements is a reflection of the strong position of the industry. As stated in the news release, “strong growth in the sector means the measure is no longer required”.

The government also seeks to fully comply with its World Trade Organization obligations in eliminating the domestic content requirements. The elimination of the domestic content requirements will allow for cost reductions and lower per watt capital costs, allowing investors to continue to generate attractive returns on their investment. See also my blog dated August 27th, 2013, for a further discussion on domestic content requirements: http://www.dalelessmann.com/en/news/blog/important-changes-opa-fit-program-new-domestic-content-requirements-and-new-pricing.

A new competitive procurement process for renewable energy projects larger than 500 kW is expected to launch in  2014. The OPA shall report back to the Minister of Energy with a proposed design for the Competitive Process by March 1, 2014, and subject to a further direction, plan to post the draft Request for Qualification for comment for the Competitive Process before the end of the first quarter of 2014. The process will occur in successive rounds to provide opportunity for a diverse set of participants, and will place an emphasis on aboriginal participation, electricity system need, and cost-efficiency. The program demonstrates the shifting focus towards conservation throughout the LTEP as it will consider proposals that integrate energy storage with the renewable energy generation.

The LTEP reaffirms Ontario’s commitment to renewable energy. The demand for renewable energy continues to grow. Procurement targets are being maintained, and innovation in the energy sector such as energy storage is being supported. The emphasis placed on conservation and taxpayer savings is likely to encourage hesitant ratepayers to embrace renewable energy technology as a viable alternative source of energy. The LTEP celebrates the growth of the renewable energy industry, and the successful phasing-out of coal energy. Through the LTEP, Ontario has demonstrated a lasting commitment to renewable energy.

Sven Walker is a Partner at Dale & Lessmann LLP, a Toronto, Ontario, Canada-based full service law firm with specific focus on renewable energy law and in particular solar, wind, hydro and biogas energy law. Sven is a legal counsel to a number of industry equipment and technology manufacturers, suppliers and installers, as well as investors, developers, purchasers, contractors, consultants and financing entities. To speak with Sven, please call 416-369-7848 or email him at swalker@dalelessmann.com.