April 17, 2012
Ontario’s Feed-in Tariff Program: Two-Year Review Report
In a directive issued April 5, 2012, Chris Bentley, the Minister of Energy, confirmed that the government is committed to the implementation of the recommendations outlined in Ontario’s Feed-in Tariff Program, Two Year Review. The review was completed and issued on March 22, 2012, after a 6 month stoppage of energy procurement. The review began in the fall of 2011 and resulted in significant industry participation.
Fit-to-Date
The program, by all accounts, has been a great success in pushing Ontario towards cleaner energy. Since the FIT-Program was initiated, Ontario has managed to contract for enough clean energy to power 1.2 million homes. This translates into almost 2,000 small and large FIT Contracts generating a combined installed capacity of almost 4,600 MW of electricity. The program has also served to attract $20 billion in foreign investment and has helped create more than 20,000 jobs.
Goals and Targets
The overall goal of the FIT review was to ensure the long-term viability of the renewable energy program while creating jobs, reducing energy prices and giving communities a greater role in the process. The province’s Long-Term Energy Plan has established some of Ontario’s targets:
As a further sign of the government’s commitment to green energy, the Ontario Power Authority (OPA) has agreed to begin awarding 50 MW of microFIT and 200 MW of small-FIT projects as soon as possible.
Beginning at the end of 2013, the government will begin to review Ontario’s energy needs in order to determine whether higher renewable targets are needed.
Efficient Renewable Energy Approval Processes
The Government has directed that approval processes be streamlined in order to facilitate the transition of projects from the planning to the development stage. Different Ministries (Ministry of the Environment (MOE), the Ministry of Natural Resources (MNR) and the Ministry of Tourism, Culture and Sport (MTCS)) should cooperate to better administer the approval process and eliminate delays and the duplication of efforts. Such action would help to speed along the development of these projects and encourage job creation. Three approval streams are recommended:
Applications
The new FIT Rules contemplate the evaluation of applications in four stages:
Under the new rules, FIT applications that were submitted before April 5, 2012 may be resubmitted if the details of the application remain the same. Specifically, the OPA requires the site on which the proposed project will be located, the applicant and applicant’s name to remain the same.
Pre-existing applications must be resubmitted during specific application periods. The OPA reserves the right to terminate any applications that are not resubmitted. Information or supporting evidence that was provided during the previous application process will be considered in the examination of the resubmitted application. All previous fees and security will be cancelled and returned. Applicants will be expected to pay a new application fee and provide new application security in the re-submittal process. The OPA has proposed new minimum fees, $500.00 for the application and $1,000.00 for security. Applications cannot be corrected and the OPA may terminate any contracts that fail to provide the requisite information.
i. New Restrictions
The OPA has now prohibited the assignment of applications and change of control of the applicant. Should this occur, the OPA may terminate the applicant and retain the application security.
Application to Other Projects
Projects that have a signed FIT Contract and have reached commercial operation will be governed by the terms of their contract and will not have to worry about the recent changes.
Projects that have a signed contract but have no completed construction will be subject to the terms of their contract. They may, however, be subject to some of the new rules concerning land use.
Projects that do not have a signed FIT Contract will have to resubmit in accordance to the aforementioned rules. They will, however, retain their timestamp.
Priority Points System and Ranking
Applications will be examined for 60 days and awarded priority points based on certain criteria. Applications must accrue a minimum number of 1 priority point to qualify for consideration. After that minimum threshold is achieved, the points serve to rank the application. Points are awarded based on Non-Project type and Project type criteria. In addition to the below, for a more detailed breakdown of the points system please see Appendix “A”.
Non-Project Type Priority Points
Points will be allocated to projects that exhibit the following criteria:
Project Type Priority Points
Points will be allocated based on the following:
The report also suggests that price adders for community and aboriginal projects must be maintained and reflect the new participation and equity requirements (see Appendix “B” for further detail).
Any change that would result in the lowering of an economic interest, which contributed to the applicant’s acquisition of priority points, to a percentage lower than mandated by the OPA for the specific applicant type in the prioritization process is both prohibited and grounds for termination.
The change restrictions apply to rooftop solar projects differently. With respect to these types of projects, any change that would result in the economic interest of a project that acquired such priority points dropping below the level that facilitated the acquisition of those points prior to the fifth anniversary of its commercial operation date will be prohibited.
Reduction of Prices
When the FIT-program was launched, the tariff rates were pegged in consideration of many different factors. Recently, Ontario has been experiencing a reduction in costs. This has resulted in the completion of projects at a cheaper price. Controversially, the Minister of Energy decided to lower the tariff rates to reflect this phenomenon. These rates will now be set when the contract is offered instead of at the application stage. Generally, tariff reductions of 20 percent will apply for solar and approximately 15 percent for wind, with other generation methods maintaining their current price. See Appendix “C” for a more detailed breakdown of the rate changes. Price reviews will now occur annually.
Land Considerations
i. Agricultural Lands
The OPA has highlighted, as one of their goals, the protection of agricultural lands. As such, the OPA will not engage any contracts for ground-mounted solar with a generation of capacity of greater that 10 MW on specific soils used for Agriculture (Specifically, Class 1,2 or 3 soil, or any mixture of the three, organic/specialty crop soil.)
ii. Land Use Rules
The OPA has issued further land use restrictions. The OPA will not be allowed to enter into FIT or microFIT contracts for ground-mounted solar or wind generation facilities on land that is zoning for commercial or industrial use, even if it is not being used for the purpose. There are also restrictions imposed by the OPA with respect to the development of certain renewable energy facilities on land zoned for residential use or land adjacent to such land.
Transition and Distribution
Under the new FIT rules, the OPA and Ministry of Energy will create a limit regarding the distance that a project can be located from the connection point on the grid. Furthermore, FIT contracts will only be awarded to projects that require no transition upgrades.
Click here for the Transmission Availability Table.
Appendix "A":
Applicant Type | Local Participation Level | Points |
Local Community with minimum 15% equity | Project includes 50 or more property owners who live in the municipality where the project is located | 3 |
Aboriginal with minimum 15% equity | N/A | 3 |
Public Schools, Colleges, Universities, Hospitals & Long-Term Care facilities with minimum 15% equity or project host | N/A | 2 |
Other participants | N/A | 0 |
Additional points | ||
Municipal Council Support Resolution | 2 | |
Aboriginal Community Support Resolution | 2 | |
Project Readiness | 2 | |
System Benefit (water and bioenergy) | 1 |
Appendix "B":
Aboriginal Projects | Community Projects | |||
Participation Level (Equity) | > 50% | > 15% ? 50% | > 50% | > 15% ? 50% |
Price Adder (c/kWh) | 1.5 | 0.75 | 1.0 | 0.5 |
Appendix "C":
Fuel | Project Size Tranche | Original FIT Price (c/kwh) | New FIT Price (c/kwh) | % Change from Original FIT Price |
Solar Rooftop | 10 kW | 80.2 | 54.9 | -31.5% |
>10 ? 100 kW | 71.3 | 54.8 | -23.1% | |
< 250 kW | ||||
>100 ? 500kW | 63.5 | 53.9 | -15.1% | |
> 250 ? 500 kW | ||||
>500 kW | 53.9 | 48.7 | -9.6% | |
Solar Groundmount | ?10 kW | 64.2 | 44.5 | -30.7% |
>10 kW ? 500 kW | 44.3 | 38.8 | -12.4% | |
>500 kW?5 MW | 44.3 | 35.0 | -21.0% | |
>5 MW | 34.7 | -21.7% | ||
Wind | All sizes | 13.5 | 11.5 | -14.8% |
Water | ? 10 MW | 13.1 | 13.1 | 0.0% |
>10 MV ? 50 MW | 12.2 | 12.2 | 0.0% | |
Biomass | ? 10 MW | 13.8 | 13.8 | 0.0% |
> 10 MW | 13 | 13 | 0.0% | |
Biogas On Farm | ? 100 kW | 19.5 | 19.5 | 0.0% |
100 kW ? 250 kW | 18.5 | 18.5 | 0.0% | |
Biogas | ? 500 kW | 16 | 16 | 0.0% |
> 500 ? 10 MW | 14.7 | 14.7 | 0.0% | |
> 10 MW | 10.4 | 10.4 | 0.0% | |
Landfill Gas | ? 10 MW | 11.1 | 11.1 | 0.0% |
> 10 MW | 10.3 | 10.3 | 0.0% |