Primary Changes to FIT 2.1 Resulting from the Ministry of Energy Directions

On November 23, 2012, the Ministry of Energy released a Direction regarding the Renewable Energy Program Re-Launch (the “November Direction”). This Direction was the result of the Land Use Working Group’s recommendations which were accepted by the Minister of Energy.

Subsequently, on December 11, 2012, the Ministry of Energy released a second Renewable Energy Program Re-Launch Direction (the “December Direction”) which, together with the November Direction, were used as the primary source to amend the Feed-in Tariff (the “FIT”) rules leading to the creation of FIT 2.1. The following is intended to provide a summary of those changes.

November 23, 2012 – Ministry of Energy Direction

The primary changes to FIT 2.1 as found in the November Direction can be summarized as follows:

1. Ground Mounted Solar PV Projects

The November Direction implemented the changes outlined below with respect to ground-mounted solar PV projects on lands within rural and rural/agricultural zones with multiple primary uses where residential is one such primary use.

      (a) Rural Lands

FIT 2.1 requires a setback be combined with a visual buffer to allow for the improved integration of ground-mounted solar PV projects into communities where rural residences exist. The Ontario Power Authority (the “OPA”) will not enter into a new FIT contract (or consent to a site amendment on an existing FIT contract) where the facility (or a new portion of a site being added to an existing site) is located on rural land with multiple primary uses (residential being one such primary use), unless the Supplier commits to the implementation of one of the following setbacks:

 

Facility: 10kW – 10MW

Facility: >10MW

Setback from all property lines

20 meters

100 meters

 

A Supplier must also visually screen the facility from any bordering properties and commit to maintaining any such visual screen.

      (b) Abutting Residential Lands

The OPA will no longer enter into a FIT contract or amend an existing contract, where a new ground-mounted solar PV project with a generation capacity of greater than 10 kW or a new portion of a site being added to an existing site is:

     a) Located on property that is rural, with multiple primary uses where residential is one such use; and

     b) Where the property borders a residential cluster,

unless the Supplier commits to the implementation of the following applicable setback:

  • A 100 meter setback from the nearest property line of the residential cluster; and
  • A visual screen (and maintenance of the visual screen) from the bordering residential cluster.

2. Strengthening Community and Aboriginal Participation

     (a) Set-aside

The FIT 2.1 rules include the contract capacity set-aside (“CCSA”) participation of up to 100 MW for projects with greater than 50% community or Aboriginal equity participation as detailed in the April 5, 2012 Ministry of Energy Direction. The project allocation will be divided equally amongst the community and Aboriginal groups where each group is allocated 50 MW of capacity. In addition, half of the CCSA available to community equity participation projects (25 MW) and Aboriginal equity participation projects (25 MW) will be apportioned to the Small FIT window and in the future, the Large FIT window. Within the Aboriginal CCSA project subcategory, the OPA will apportion two-thirds of the projects to applications with greater than 50% First Nation equity participation, and the remaining one-third to applications with greater than 50% Métis equity participation.

The OPA will begin by offering contracts to CCSA projects until the target availability for each abovementioned category is reached or until no more projects are eligible for CCSA in such category. Once all CCSA projects have been allocated, all applications will be processed in accordance with the Prioritization Points Table in Appendix A of the July 11, 2012 Ministry of Energy Direction. (For a discussion on the Prioritization Points Table, see Sven Walker’s blog post Ontario's Feed-in Tariff Program: Results from the Public Consultation Phase.)   

3. Re-launching the Community Energy Partnership Program and the Aboriginal Renewable Energy Fund

Finally, as part of the November Direction, the OPA is planning on amending the Aboriginal Renewable Energy Fund (the “AREF”) and Community Energy Partnership Program (the “CEPP”) to provide funding support for Pre-FIT funding and Partnership funding.

Pre-FIT funding provides the organizational development support necessary for Aboriginal and community projects to submit a FIT application. The Partnership funding will provide support to Aboriginal communities to perform any due diligence associated with partnership agreements for FIT projects. The funding cap for these programs is set at $500,000 respectively.

December 11, 2012 - Ministry of Energy Direction

The primary changes to the FIT 2.1 Rules as found in the December Direction can be summarized as follows:

Strengthening Community and Aboriginal Participation

The establishment of an allocation process for Aboriginal CCSA under the Small FIT application window as follows:

  • Multiple qualifying applications submitted by an Aboriginal community or group of communities, the OPA will allocate contract capacity for one application (initially) per community or group of communities. Any remaining capacity will be allocated on an application priority basis;
  • This same process will be applied to First Nation and Métis CCSA.

Upon the allocation of all CCSA capacity, or where no further applications for First Nation or Métis CCSA, the OPA will proceed to process application for all projects, which may include Aboriginal projects, based on prioritization points as set out in the Prioritization Points Table in Appendix A of the July 11, 2012 Direction.

Summary of Primary Changes to FIT 2.1 from Ministry of Energy Directions

The November Direction prescribed for the implementation of set-back and visual buffer requirements, strengthened Community and Aboriginal Participation and provided for the re-launch of the Community Energy Partnership Program and the Aboriginal Renewable Energy Fund. Whereas, the December Direction focused on strengthening Community and Aboriginal participation in FIT contracts. It appears the major interests in the 2012 directions were to focus on Aboriginal, Community and Rural/Agricultural interests. Maximizing upon these well-favoured groups can provide opportunities for partnerships to renewable energy companies and economic development for these groups or regions.

 

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Jordan Morelli is an Associate at Dale & Lessmann LLP, a Toronto, Ontario full service law firm specializing in renewable energy law and in particular solar, wind and biogas energy law. To speak with Jordan, please call 416-369-3813 or email him at jmorelli@dalelessmann.com.