The Ontario government's two-year review of its feed-in-tariff (FIT) program, announced on March 22, is a refreshing continuation of the province's successful FIT program.
For starters, the FIT review continues Ontario's commitment to clean energy. The government has committed to 10,700 MW of non-hydro renewable energy generation by 2015. Although this is very encouraging, unfortunately, transmission and distribution capacity continue to be a limiting factor.
Further, many of the better wind resource locations have been taken or dismissed for various reasons. The government's proposed publishing of the transmission availability following each contact round will assist wind developers in prospecting for new locations.
While smaller projects – defined here as less than 10 MW – communities and First Nations will certainly enjoy more opportunities to participate in the program, there are a few additional takeaways. The FIT review does the following:
1. Streamlines processes and creates jobs. As of March 23, only 36 renewable energy approvals had been granted in Ontario. Although the larger wind projects require full environmental assessments, streamlining and improving this process is long overdue.
In addition, the permitting changes for smaller wind projects is a positive step. Ontario's self-screening option – which allows developers to go online and submit information, similar to the Environmental Activity and Sector Registry for air compliance – will make a number of smaller projects viable. Developers still have to do some of the work, but it will be nothing close to the time frame required by the renewable energy approval process.
2. Encourages greater community and Aboriginal participation. For FIT programs to be successful, community involvement is key. A cornerstone of the update refers to introducing a system to prioritize projects with community and Aboriginal involvement. Active participation from these groups is vital to the continued success of the program and the development of more renewable energy projects.
3. Improves municipal engagement. Municipalities have longed for a seat at the renewable energy stakeholder and permitting table. It remains to be seen if Ontario municipalities have the resources to manage this. Oftentimes, smaller rural municipalities cannot afford to have land-use planners with sufficient experience in wind on staff.
4. Reduces prices to reflect lower costs. The reduction in FIT prices for wind and solar was widely expected, particularly for solar. For wind, the new base price of $115/MWh assumes economies of scale and bargaining power that would only be available to larger developers of utility-scale projects.
For smaller projects, the Aboriginal and community adders will be a necessity. With interest rates, exchange rates and equipment costs undulating, the move to set the contract offer was a good one, as long as contracts are offered in a timely manner. Also, the move to a yearly review of FIT prices is welcomed. The key is to find a pricing formula that accurately reflects changing costs across the Ontario market.
5. Expands Ontario's clean energy economy. This update gives hope to developers, manufacturers, investors and service organizations involved in Ontario's renewable energy market. The government is breaking new ground with this FIT update, while protecting the ratepayers, stakeholders and the environment.
The FIT review addresses a number of issues that had been raised by stakeholders over time. The calls for greater municipal involvement and a re-examination of the program's economics have been addressed. Overall, it is encouraging that the program will continue, although grid access and procurement constraints will remain core issues for the Ontario renewable energy market.
Michael Tingle is director of corporate business development at ORTECH Power, a Mississauga, Ontario-based consultancy. He can be reached at mtingle@ortech.ca.
