1. Ontario Ministry of Energy Direction to the Ontario Power Authority on Renewable Energy Programs

Introduction

On August 16, 2013, the Minister of Energy issued a direction to the Ontario Power Authority (“OPA”) on various matters related to the administration of renewable energy and conservation programs. This direction contains many important new developments in relation to the province’s Feed in-Tariff Program (“FIT Program”) that are summarized below.

Renewable Energy Support Programs

In consultation with the Ministry of Energy, the OPA is directed to undertake an evaluation of opportunities to improve, streamline and better align support programs under the FIT Program. This evaluation process should ensure that these support programs meet the needs  of First Nations, co-operatives, municipalities and other public sector entities as they develop renewable energy projects. The OPA is instructed to report back to the Ministry of Energy by January 31, 2014.

Development and approvals funding for Small FIT1 projects will remain on a per project basis but is being reduced to reflect the lower development costs for Small FIT projects compared to larger renewable projects.

In addition, two new streams of funding support  of $500,000 per year are being made available to municipalities and public sector groups that are in the preliminary stages of developing small to medium sized FIT projects. The OPA is also instructed to make the remaining funding for education and capacity building for First Nations, municipalities, public sector organizations and co-operatives available to them now.

Contract Capacity Set-Asides (“CCSA”)

The direction also makes changes to the events of default for renewable energy projects with a FIT contract that have received priority under the existing FIT rules. “A drop in equity participation to 50 per cent or less, or for the purposes of a Community CCSA project, a drop of local property owner membership below 50 members, shall only be grounds for termination of the contract if it occurs before the fifth anniversary of achieving commercial operation. A minimum participation level of 25 per cent must be maintained for the full term of the contract”.

Moreover, the direction now provides that it is not an event of default if prior to the fifth anniversary of achieving commercial operation, a drop of local property owner membership below 50 members and of equity participation to 50% or less occurs where the drop occurs as a result of the death or departure from the community of one or more property owner members.

Domestic Content Rule Changes

In order to bring the FIT program into compliance  with the World Trade Organization ruling on May 24th, 2013, the government is taking an interim step of requiring the OPA to reduce the minimum domestic content levels in new FIT procurements as noted below:

  • For  on-shore  wind  facilities, the  minimum domestic content level shall be 20 per cent.
  • For solar photovoltaic, (PV) facilities utilizing crystalline  silicon  PV  technology, the  minimum domestic content level shall be 22 per cent.
  • For solar photovoltaic, (PV) facilities utilizing thin-film PV technology, the minimum required domestic content level shall be 28 per cent.
  • For solar photovoltaic (PV) facilities utilizing concentrated  PV  technology  the  minimum required domestic content level shall be 19 per cent.

These new domestic content levels will apply to the Fall 2013 procurement window for Small FIT, microFIT and pilot solar projects on unconstructed buildings and any unused capacity for the Small FIT window that closed on January 18, 2013.

Annual Small FIT Procurement Schedules

Beginning in 2014, the OPA is required to prepare annual schedules of planned Small FIT application windows. These schedules will be published in January of each year.

Changes to the Industrial Transmission Connected Electricity Efficiency Program

This energy-efficiency program is also referred to as the “Industrial Accelerator Program” (“IAP”) and was established by ministerial direction in 2010 to reduce electricity use and increase competitiveness for  large industrial companies directly connected to the transmission system by providing financial incentives for investments in electriticy-saving projects. In order to improve access to this program, the OPA is instructed to amend the IAP to:

  • Include non-industrial transmission connected consumers. Program criteria will change to enable the participation of industrial, commercial and institutional consumers who have projects or facilities connected to the IESO-controlled grid and who are not otherwise eligible for conservation incentives from any local distribution company;
  • Include conservation measures addressing equipment replacement and retrofits and new construction. The OPA will design and deliver new incentives for projects completed before June 1, 2017 which will be added to existing IAP measures.

Participants in the Industrial Electricity Incentive Program will not be permitted to apply for the new IAP measures.

2. Ontario Power Authority Updates Price Schedule for FIT and microFIT Projects

Effective August 26, 2013, the OPA introduced an updated price schedule for the FIT and microFIT programs and for FIT price adders for Aboriginal Participation Projects, Community Participation Projects and  Municipal or Public Sector Entity Participation Projects. The OPA’s revised price schedule and FIT Price Adders are as follows:

FIT/microFIT Price Schedule (August 26, 2013)

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FIT Price Adders

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