Ontario Announces Biennial Review of OPA’s Feed-in Tariff Program

On October 31, 2011, the Ontario Minister of Energy, Chris Bentley, announced that the government has commenced its biennial review of the Ontario Power Authority’s FIT and MicroFIT programs. The review will be conducted by Fareed Amin, Ontario’s Deputy Minister of Energy who will work closely with the Ministry of Energy and the Ontario Power Authority and will include direct consultation with the renewable energy sector.

The FIT and MicroFIT program review will consider a wide range of issues, including:

  • Amendments to the general program rules; 
  • Feed-in tariff price reductions; 
  • Accelerating the local consultation and Renewable Energy Approval (REA) process; and
  • The potential inclusion of new and emerging technologies, such as geothermal, in the program.

As a result of this review, new rules and prices will be developed to balance the interests of ratepayers with the need to encourage investments in new clean energy in Ontario.

Since the  FIT and microFIT programs were launched 2 years ago, there has been a significant decrease in pricing for domestic content compliant equipment, such as solar panels and wind turbines. It is likely that current market conditions will play a key role in establishing the revised feed-in tariff rates. The deepest feed-in tariff rate cuts are expected for solar projects due to the plummeting prices of solar modules. For example, from April of 2011 to November of 2011, there has been a price reduction for photovoltaic modules of approximately $0.90 per Watt-peak. Given the current level of the feed-in tariff rates, if Ontario follows Germany’s model and implements a 15% - 20% feed-in tariff rate reduction from current levels, it will still be possible for investors to generate a reasonable rate of return on their investment.

To Whom Will the Amendments Apply?

FIT or microFIT contracts that have already been awarded by the OPA will not be subject to the new rules and pricing.

The new rules and pricing will apply to the following FIT and microFIT applications:

  • FIT applications on the priority ranking list;
  • Capacity Allocation Required (CAR) applications submitted June 5, 2010 or later;
  • Capacity Allocation Exempt (CAE) applications submitted December 8, 2010 or later;
  • All applications submitted after October 31, 2011; and
  • MicroFIT applications submitted on or after September 1, 2011.

New applications will continue to be accepted and time-stamped, but will not be processed until the new rules and pricing are available once the review is complete. Applications that were already submitted to the OPA prior to October 31, 2011, will be processed under the new rules and pricing schedule once the review is complete. The OPA will refund the normally non-refundable FIT application fee for applicants who wish to withdraw their application as a result of the program review announcement.

The revision period will end on December 14, 2011. The OPA strongly encourages all stakeholders to participate in the consultation process. You may provide feedback by answering an online survey or making a written submission to 2yearFITreview@ontario.ca. The review of the FIT and microFIT programs will no be completed until early 2012.

About the FIT Program

Since the launch of the Green Energy and Green Economy Act and FIT program, the province has:

  • Offered contracts for approximately 2,500 medium and large FIT Projects and over 11,000 microFIT projects have connected or are expected to connect soon. This represents roughly 4500 MW or enough electricity to power almost 1.2 million homes.
  • Created more than 20,000 jobs and is on track to create 50,000 jobs by the end of 2012.
  • Moved forward towards its goal of replacing coal fired generation by the end of 2014. Compared to 2003, Ontario has reduced its use of coal-fired power by 90%. In October 2010, the province closed four coal-fired power units, four years ahead of schedule. In total, Ontario has decommissioned eight of 19 coal units; the remaining units will close by the end of 2014.

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