On February 1, 2011, the OPA released much anticipated draft rules and a proposed contract for commercial aggregators under the microFIT program (available to 10 kW or less projects). This group of renewable energy generators, being businesses that lease land or rooftops from individuals for multiple small renewable energy generation projects, has been shut out of the FIT/microFIT program since last fall, when the OPA announced size and applicant restrictions in both the FIT and microFIT rules.
The proposed C-FIT program includes more commercial terms, including secured lender provisions similar to those under the FIT program, than those available to microFIT generators. The proposed contract remains simplistic and does not include all standard commercial terms, including assignment and change of control provisions, but is still viewed as many as being critical in making such projects financeable. Interestingly, the OPA has restricted its own assignment right – limited to entities that have a credit rating not lower than that of the OPA at the time of such assignment. This provision is an attempt to address lenders’ concerns regarding the strength of the payment covenant following an assignment of these contracts. This proposal would make the C-FIT contract more onerous than the FIT contract in terms of the OPA’s assignment rights.
While the C-FIT proposal re-opens the microFIT program to commercial aggregators, the terms of the program are not as rosy as they were when the microFIT program was first announced. Under the C-FIT program, generators will earn 71.3 cents per kWh for rooftop solar PV projects and 44.3 cents/kWh for ground-mounted solar PV projects. Under the microFIT program, projects of a similar size earn 80.2 cents per kWh and 64.2 cents/kWh, respectively. Further, prior to applying under the C-FIT program, generators must obtain an offer to connect from the applicable local distribution company. C-FIT applicants will also be charged an application fee of $500 per megawatt, with a minimum fee of $500.
Draft rules and the proposed C-FIT contract can be found on the OPA’s website. Comments on the draft documents will be accepted until February 18, 2011. The OPA expects to begin accepting applications for the CFIT Program in mid-March 2011.