Following a two year review of the Standing Offer Program (SOP), BC Hydro has revised the SOP in key areas related to eligibility, pricing, interconnections, EPA terms and the general SOP process.
The SOP, launched in 2008 was intended to encourage the development of small and clean or renewable energy Projects throughout British Columbia. The SOP pricing has been increased between 14% and 29%, depending upon the location of the project. BC Hydro estimates that the new pricing will attract a cumulative total of approximately 1,000 gigawatt hours (GWh) per year of energy over two years under the SOP. BC Hydro currently has approximately 190 GWh/year of energy under contract from the SOP.
Some of the key revisions to the SOP are as follows:
- Eligibility - The SOP will now be open to non-proven, near commercial and/or prototype technologies. Formerly, the SOP was only open to Commercial Operation Generation Technology, which means that the generation technology is readily available in commercial markets and in commercial use (not demonstration use only) as evidenced by at least one generation plant (which need not be owned or operated by the developer) generating energy for a period of not less than one year, to a standard of reliability generally required by Good Utility Practice (as defined in the Standard Form EPA).
- Project Size - Introduced in April 2008, the program provided a process to purchase energy from small projects with a nameplate capacity greater than 0.05 megawatts (MW) but not more than 10 MW. The Project Size upper limit has increased to 15 MW, from 10 MW.
- Pricing - The SOP now uses a base price in 2010$ determined by the region of the POI for the Project. With respect to this pricing, BC Hydro has stated that it "believes this pricing will render the revised SOP as being cost-effective because it is based on recent competitive call prices and compares favourably to pricing in other jurisdictions." The Regional POI Base pricing is as follows (2010$/MWh): Vancouver Island 102.25; Lower Mainland 103.69; Kelly/Nicola 97.02; Central Interior 99.26; Peace Region 94.86; North Coast 96.17; South Interior 98.98; East Kootenay 102.18. One hundred percent of the base price will be escalated at CPI annually up to the year in which a Project EPA is signed. Escalation will commence in 2011 and will be effective as of January 1st in each year.
- First Nations Consultation Assessment - The Program Rules will now include a description of BC Hydro's First Nations consultation requirements as part of the application review process. BC Hydro will have the ability to reject an application on the basis of an unfavourable assessment.
Other Comments on the SOP:
- Environmental Attributes - No Change. There is no additional payment for Environmental Attributes or for environmental certification (as defined in the Standard Form EPA). BC Hydro states that this is because electricity without the associated environmental attributes is not considered clean or renewable. BC Hydro also states that: "Requiring the transfer of EAs and including their value in the base price is consistent with many other jurisdictions that have procurement programs for renewable power. The illiquidity of the current market for Renewable Energy Certificates (RECs) and the future market uncertainty associated with regulations concerning GHG emissions make it challenging to determine an appropriate value for EAs under a longterm contract such as the one offered under the SOP."
- Pre-Application Meetings - Potential applicants to the SOP may request a meeting or conference call with BC Hydro at any time prior to submitting an Application. The purpose of the pre-Application meeting is to review the Application process, the Standard Form EPA, the interconnection requirements and study costs, First Nations consultation requirements and other matters required to facilitate the Application process. To arrange such a meeting or conference call, see www.bchydro.com/standingoffer
- EPA's - Project EPA will have a term of 20 to 40 years from COD (as defined in the Standard Form EPA) as selected by the Developer. Standard Form EPA - The Standard Form EPA for the SOP is available at www.bchydro.com/standingoffer.
- No Expiry Date to SOP - Which will be reviewed by BC Hydro in 4-5 years, pursuant to the Clean Energy Act.
- No Application Fee for SOP - Though there are other costs associated with the application process (such as the costs of interconnection studies)