In our October 2005 Energy Law Update we advised you that the Federal government had allocated $97 million over five years, and a total of $886 million over fifteen years, to stimulate the development of renewable energy, such as small hydro, wind, biomass and landfill gas. The Update also noted that provincial governments were developing renewable energy programs, with the Ontario government setting a target of 2,700 megawatts of electrical power to come from new renewable energy sources by the year 2010.
As part of this initiative, the Ontario Power Authority (OPA) and Ontario Energy Board (OEB) have designed a standard offer program (RESOP) for small renewable energy generation programs, and the name of the game (according to the OPA) is to simplify eligibility requirements and contracting and to offer standard pricing in an effort to eliminate barriers that prevent small renewable energy projects from succeeding.
The OPA published its "Draft Program Rules" on September 7, 2006, which were open for public comment until September 22, 2006. The results of the public consultation process are to be published before the end of the year.
To be eligible under the RESOP, a project must be based in Ontario with an installed generating capacity of 10,000 kW or less (the OPA is considering a separate program for smaller renewable project of 10 kW or less). Projects must use one of the following methods: wind, thermal electric solar, voltaic solar, biomass biogas, biofuel, landfill gas or water.
While an application package is not yet available from the OPA, applicants are being advised that they must provide evidence that each has met the prescribed requirements for application.
For example, an applicant must send out a "community notification" to the relevant local government, setting out, among other things, the size of the project and the estimated commercial operation date of the project .In addition, for projects over 10KW in size, the applicant must provide a "business plan review" that includes written confirmation from a chartered accountant, professional engineer or similar accredited professional that the business plan is complete, and that the applicant's cost estimates and critical path for the project can reasonably be achieved.
Power generators are to be paid a base rate of 11.0 cents per kWh for electricity that is delivered to the grid under contract with the OPA. Twenty per cent of this base rate will be indexed for inflation based on the CPI. In addition, a premium of 3.52 cents per kWh will be paid for electricity delivered during peak hours to generators who can operate reliably during those hours. Note, however, that solar photovoltaic system generators will be paid 42.0 cents per kWh, but this rate will not be subject to indexation for inflation or the peak-hour premium.
All prospective applicants must be aware of the fact that there are, or will be, parts of the Ontario transmission grid that will not be able to accept incremental power, and the OPA may limit applications in certain areas or restricted sub-zones of the province. The OPA will, at some point, publish details of what these restricted areas are, but, importantly, that information is not yet available.