As described in greater detail in our April 9, 2012 and July 12, 2012 posts, in response to a direction by the Minister of Energy, the Ontario Power Authority (OPA), released drafts of version 2.0 of the Feed-in Tariff Program Rules (the Rules), Contract (the FIT Contract), and related documentation on April 5, 2012 for comment. On July 11, 2012, the Minister of Energy issued a further directive that mandated certain amendments to the Rules and FIT Contract. The final version 2.0 of the Rules was released by the OPA on August 10, 2012 and included several changes compared to the April 5, 2012 draft Rules (the Draft Rules). The OPA has also posted a list of frequently asked questions here.
Application Prioritization and Ranking
There have been several changes and clarifications to the “Priority Points” criteria, as follows:
- Pre-existing applications submitted on or before July 4, 2011 are eligible for 1 Priority Point;
- Pre-existing applications submitted on or after July 5, 2011 are eligible for ½ of a Priority Point;
- The points available if applicants submit evidence of “Project Readiness” have been reduced from 2 to 1 Priority Points;
- All local municipalities in which the Project is located must provide a resolution in the prescribed form to receive 2 Municipal Council Support Priority Points; and
- Only Small FIT Projects that are located on First Nations lands and that have received the support of all Aboriginal communities resident on such lands, are eligible to receive 2 Aboriginal Support Resolution Priority Points.
Contract Capacity Set-Aside Projects
As mandated in the July 11, 2012 Directive, the Rules will continue to prioritize community and aboriginal participation projects. All applications that have a community or Aboriginal participation level equal to or greater than 15% will continue to receive 3 Priority Points and be eligible for a price adder under the FIT Contract; however, applicants that have a community participation level in excess of 50% that is held by a co-operative with membership of 50 or more local property owners or an Aboriginal participation level in excess of 50% (collectively referred to as “Contract Capacity Set-Aside Projects”) will now also receive a higher ranking than all other applications. Contract Capacity Set-Aside Projects will be ranked amongst other projects of the same class firstly, as to the number of Priority Points they receive, then by time stamp, and lastly if there is still a tie, by random selection.
Applicants may apply for designation as a Contract Capacity Set-Aside Projects by so identifying in their application. If so designated by the OPA, a failure to maintain a participation level of greater than 50% will constitute an event of default leading to a termination right on the part of the OPA.
The Rules now permit applicants with pre-existing applications to assign applications to an assignee for the purpose of designation as a Contract Capacity Set-Aside Project; however, any such assignment must be structured in compliance with other restrictions in the Rules relating to assignment.
A number of clarifying changes have been made in the Rules regarding project siting, including as follows:
- Projects (other than waterpower projects) must not be located 50 km or more from the proposed connection point;
- The definition of “Site” has been revised to expressly exclude land on which connection lines are located, and accordingly these lands are not subject to the restrictions in the Rules limiting the ability of applicants to site multiple projects on a deemed single property;
- Unless a project is located on provincial Crown lands, an application must now include evidence of access rights for all of the proposed Site (which as mentioned above, excludes connection line lands). Under the Draft Rules, it was only necessary to submit evidence that the applicant had site control over lands sufficient to build and operate its project;
- The Rules now provides that a property is considered to “Abut” another property if the properties share a common border or are only separated by a right-of way having a width of not greater than 15 meters. This change, in turn, helps to clarify whether certain properties would qualify as a deemed single property and whether a ground-mount solar project would satisfy siting rules that prohibit such projects from abutting a residential property; and
- There are a number of special considerations and evidentiary requirements now contained in the Rules for projects located on provincial Crown lands and for waterpower projects.
Additional details have also been provided in respect of the restrictions and documentation required for siting ground-mount solar projects. In the Draft Rules, there was a blanket restriction preventing ground-mount solar projects from being sited on organic and Class 1, 2, and 3 soils. Although the drafting of the Rules is not clear, it appears that projects can now be located on properties that contain Class 1, 2, or 3 soils or organic soils as long the project itself is not located on the portion of the property containing Class 1, 2, or 3 soils or organic soils, or so long as the project is located on lands that are used for certain non-agricultural purposes set out in the Rules (such as lands used as an aerodrome, closed landfill, military installation, contaminated property, or for industrial use or lands that are owned by a municipality).
Deemed Single Property
Pursuant to the Rules, there is a limit on the aggregate contract capacity that can be located on a deemed single property of 10 MW for solar and 50 MW for waterpower projects, which aggregate limit now includes the contract capacity of any renewable energy generating projects under contract with the OPA or the Ontario Electricity Financial Corporation.
The OPA now requires an applicant and any applicant related person to disclose whether it has submitted a separate application in respect of a separate project under the FIT Program.
An applicant may apply to the OPA for a Rooftop Portfolio designation if it has a portfolio of two or more rooftop solar facilities with FIT Contracts and with an aggregate contract capacity greater than 15 MW. Rooftop Portfolios will benefit from an option to extend the Milestone Date for Commercial Operation under the FIT Contract to 36 months following each Contract Date; however, such projects may not be separately assigned under the FIT Contract.
There are a number of changes to the transitional provisions for pre-existing applications in the Rules, as follows:
- A resubmitted application may not have a contract capacity that exceeds that specified in the pre-existing application;
- An applicant must still be the same person and have the same name as the pre-existing applicant, except as follows:
- The name of the applicant in a resubmitted application may be changed (i) for the purpose of qualifying the project as a participation project or a Contract Capacity Set-Aside Project; or (ii) where the name of the applicant has changed due to circumstances other than an assignment or a change of control, with the consent of the OPA; and
- A pre-existing applicant may assign its application in prescribed circumstances set out in the Rules.
The Rules provide that the contract price and the price adder will be those in effect at the time a contract award is made, not at the time that the application was submitted. If the prices set out in the offer for a FIT Contract are less than those at the date of the application, the applicant may elect not to enter into a FIT Contract and the OPA will return all application security.
The OPA has announced that the application window for small FIT projects is anticipated to open on October 1, 2012 and remain open until November 30, 2012. The OPA anticipates awarding 200 MW of small FIT contracts. The OPA will announce the timing for the large FIT project application window once details are finalized, but the OPA has not yet given any indication of when that window will open.
Once FIT contracts have been offered to successful applicants, all applications that were submitted in the first application window that do not receive contracts and those pre-existing small FIT applications that are not resubmitted in the first application window will be terminated and their time stamp will be lost. Application security for such applications will be returned.