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August 23, 2012

Feed-in Tariff (FIT 2.0) program

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Ontario re-launches the Feed-in Tariff (FIT 2.0) program with new rules and rates; Ontario Expands Support for Aboriginal clean energy projects

Following the recent reconsideration of the Feed-in Tariff (FIT 2.0) program, the Ontario Power Authority (OPA) is moving ahead to kick start the FIT 2.0 with the release of up to 200 MW of “small FIT” projects (up to 500 kW in size).  The application window is set to open on October 1, 2012 and close on November 30, 2012.

The timeline for “large FIT” projects (greater than 500kW in size) has yet to be released.

The new FIT 2.0 program made several key changes summarized below, including changes to the eligibility requirements for project location and a reduction in rates.  Most importantly, the FIT 2.0 introduces an application prioritization and ranking system designed to facilitate the contract selection process.  Incentives are established for developers to partner with First Nations and Métis communities and other Community groups such as co-ops, municipalities, universities, schools and colleges, hospitals, long-term care homes, and social and affordable housing groups.

Additional clarity was also provided on the “Contract Capacity Set-Aside Project” category.  Applicants who can demonstrate that they have greater than 50% “Community Participation” or “Aboriginal Participation” will be prioritized above all other applications and will similarly be ranked according to the application prioritization points system among other applicants that meet the “Contract Capacity Set-Aside Project” definition.

Key changes to the FIT Program include

  • Solar and wind prices have been reduced to reflect decreased equipment costs.  FIT prices will be reviewed annually; revised prices will be published in November of each year and will take effect January 1 of the following year.
  • FIT applications must be submitted during the specific application window, rather than on an ongoing basis.
  • All project applicants, including those with “small FIT” projects, will now need to submit application security if they wish to apply or reapply for FIT 2.0.  (Lower security rates still apply to projects with greater than 50% Community or Aboriginal Participation).
  • Applications will be prioritized with points awarded based on project type, municipal support, Aboriginal support, project readiness and electricity system benefit.
  • Based on the time stamp of a pre-existing application, one point is available for projects that applied on or before July 4, 2011, and 0.5 points for projects that applied on or after July 5, 2011.
  • Applications with greater than 50% equity participation from Aboriginal or Community Participants will be prioritized above all other applications in an application window.
  • There are restrictions on assignments and changes in participation level for projects that receive priority points based on the participation of certain types of entities.
  • Solar rooftop projects must reach commercial operation within 18 months of receiving a contract (compared with three years previously).  Proponents with more than 15 MW of projects contracted from the same application window will have 36 months to reach commercial operation provided they meet the definition of Portfolio projects. 
  • Solar, wind and bioenergy (but not water power) projects must be located less than 50 km from their proposed connection point, based on the straight line distance.  OPA will be meeting with “large FIT” applicants to discuss possible amendments to this rule.
  • Ground-mounted solar projects may not be located on residential property or on property abutting residential property.  Note, the Ministry of Energy has charged a multi-stakeholder working group with providing recommendations on the siting of ground-mounted solar projects on rural zoned lands with multiple primary uses and rural/agricultural zoned lands with abutting residential use.
  • A ground-mounted solar project is permitted on commercial or industrial property as long as the project is not the main, primary or only use of the property.
  • In addition to the restrictions of locating ground-mounted solar projects on Class 1 and 2 soils, these projects will also not be allowed on CLI Class 3 and CLI Organic soil (with limited exemptions on lands used for certain non-agricultural purposes).
  • Standards for soil studies that are required for ground-mounted solar PV projects on CLI Class 1, 2, 3 or organic soils (as well as other soil classes) will be posted on the Ontario Ministry of Agriculture, Food and Rural Affairs website shortly.

The domestic content requirements have not changed in the FIT 2.0 and remain at 50% for wind projects and 60% for solar projects.  However, a new domestic content grid for concentrated solar PV technology is now included in the FIT 2.0 Program.

Additional details are available on the OPA website at http://fit.powerauthority.on.ca/faqs-existing-fit-applicants-projects-500-kw-or-smaller

Ontario expands support for Aboriginal clean energy projects

The province has topped up its Aboriginal Loan Guarantee Program (ALGP) with an additional $150 million to encourage First Nation and Métis participation in new transmission and wind, solar and hydroelectric generation projects.  Announced in the 2009 Ontario Budget, the ALGP provides loan guarantees of up to 75% of an Aboriginal corporation’s equity in an eligible project, to a maximum of $50 million per project.

To date, the program has received applications totaling $250 million for projects that are expected to bring over 600 megawatts of renewable energy online.  In 2011, the Mother Earth Renewable Energy Project (100% owned by M’Chigeeng First Nation) and the Lower Mattagami Project (Moose Cree First Nation hold a 25% equity position) were approved for loan guarantees under the ALGP.  A number of other applications are currently under review.

The ALGP is administered by the Ontario Financing Authority.  To be eligible for a loan guarantee under the ALGP contracts must be in place to purchase energy in the case of generation projects or regulated rates in the case of transmission projects.  Applications are accepted on an ongoing basis and are available through the OFA’s website at http://www.ofina.on.ca/algp/program/overview.htm