By Robert Colman
Ontario’s Green Energy and Green Economy Act, 2009 (the GEGEA) is set to change the electricity landscape. Many speakers at the recent Renewable Energy in Ontario conference in Toronto, hosted by Insight Information, also suggest that it is going to give Ontario an innovative edge in clean and green technology development as well. However, the Act also requires many changes in the way industry and regulation work in the province. What was also made clear is that the regulatory changes necessary to make Ontario into this innovative juggernaut are taking time to sort through. So even though the pump is primed, the real results are yet to come.
By Robert Colman
The GEGEA essentially created a framework for the provincial government to promote conservation and more renewable power by removing some key barriers for development. It aimed at creating:
• Price certainty in the market to encourage investment,
• Better transmission and distribution to make renewables more viable, and
• Leadership in the development of smart grid technologies.
Although not all elements of any of these three pieces of the puzzle are completely settled yet, the province is constantly getting closer to its goal of a better and nimbler electricity system. However, the hurdles are not minor ones.
Successes – the FIT program
One of the most critical moves the government made was to introduce a feed-in tariff for green energy projects. A feed-in tariff (FIT) is a fixed price guarantee. The price can vary according to the type of energy, the location of the generation project, and other factors.
Previously, power was obtained through RFPs, which is a less flexible system. The feed-in tariff, meanwhile, is just a standing offer – if you can develop a project at a certain price, you can proceed.
Eligible renewable energy technologies include:
• Wind (onshore and offshore)
• Solar PV
• Biomass (bio-gas, bio-fuel and landfill gas)
Domestic content rules have been placed on both wind and solar PV developments to encourage the growth of industry in Ontario. From 2009-2011, domestic content for wind projects has to be 25 per cent. After that period, the minimum increases to 50 per cent. For solar PV, the requirement for 2009-2010 is 50 per cent; in 2011, this rises to 60 per cent. The program is administered by the Ontario Power Authority (OPA), so for full details on how to apply, visit fit.powerauthority.on.ca.
A companion piece to the FIT program is the microFIT program, which aims to encourage the development of projects of 10kW or less. This is expected to be primarily solar PV projects installed on residential, small commercial and institutional buildings. The program allows for a variety of business arrangements, including owning your own project, leasing your roof, leasing your project equipment, or being part of a community project. Information and an application form for the microFIT program is also available on the OPA website at microfit.powerauthority.on.ca.
Both the FIT and microFIT have received an enthusiastic response, as reported on at the conference by Jim MacDougall, P. Eng, Manager of Distributed Generation at the OPA. Thus far, there have been more than 1,000 FIT applications, totaling a capacity of close to 10,000 MW. The large majority of projects are ground mounted solar PV, on shore wind, and rooftop solar PV installations. Although there have been challenges with many of the applications, it’s clear that the FIT program is having its effect in the marketplace as an enabler of renewable energy development.
Better transmission/distribution access
The new Act makes it clear that the approval process for connection and transmission and distribution is to be accelerated for renewable energy generators. The Environmental Protection Act is being amended so that renewable energy projects will only require a single “renewable energy approval.” They will be exempt from a number of others, such as certificates in regards to air and noise emissions, waste disposal systems, etc.
The Act will allow the creation of time limits for the completion of assessments by distributors and transmitters – a six-month window. And renewables will be given priority access.
Peter Fraser, Senior Manager of Infrastructure and Renewables, Regulatory Policy and Compliance at the Ontario Energy Board noted at the conference that the changes that have been established with the GEGEA have changed the nature of his organization’s role in the market.
“The most significant change for the OEB was the creation of new objectives,” says Fraser. Those objectives, as Fraser noted, were:
• The promotion of renewable energy projects, and particularly the timely connection of such projects to transmission and distribution systems;
• The promotion of conservation; and
• Facilitation of the implementation of a smart grid.
As it is, with about 1,350 MW of renewables coming on stream from previous programs in 2010-11, the FIT program response, and other deals like the 2,500 MW Samsung arrangement made with the Ontario government recently, the requirement to expand transmission and distribution systems is an obvious challenge.
The OEB has responsibility for oversight of network rates and investment, rules for allocation of existing connection capability and rules for allocation of connection costs. These have been retooled to incorporate its new objectives. The changes include creating a simpler settlement process for FIT contracts, shifting some of the cost of developing renewable transmission connections from the generators to ratepayers, and opening up opportunities for distributor-owned generation.
The challenge with this retooling, of course, is the pace of change. Anthony Haines, President and CEO of Toronto Hydro Corporation, noted at the conference that this is his one concern.
“I think one of the frustrations I can articulate on is the pace,” says Haines. “I understand that it’s a lot of paper to be pushed around and regulations and directives and whatnot but here we are a year later and we’re still waiting (to go forward with projects). From the environmental perspective and our project perspective, I begin to see that what we’ve had is some pretty good momentum starting to move into stagnation.”
It appears that the OEB is ready to go forward with new distribution planning guidelines and filing requirements this month (March 2010), and is moving on a number of other fronts as well.
The Act introduced the concept of the “smart grid” for the first time in Ontario energy legislation, and set the task of promoting development and promotion of a smart grid in provincial government hands. As has been noted by many professionals and the U.S. government, the smart grid is key to boosting the provincial economy, so this is an important first step on that journey.
Dan McGillivray, PhD, Managing Director of the Ontario Centre of Excellence for Energy, believes that Ontario already has an edge in smart grid development.
“The (most recent) Ontario budget made a specific promise for an investment of $50 million to enable research and capital for demonstration projects necessary to develop smart grid technology in Ontario,” he notes. “A lot of people criticized that investment, suggesting it wasn’t enough. The U.S. is spending billions on the smart grid. But Ontario has already made that investment in smart meters. They are deployed, and are a tremendous foundation for leading in terms of smart grid deployment.”
McGillivray went on to note that the information these meters supply are “beyond reason. We have to get serious regarding how we take advantage of that investment.”
And as he also notes, the province has the know-how to make a more intelligent electricity infrastructure possible, with key ICT companies headquartered here in Ontario, as well as a number of key companies with global markets and cutting edge cleantech companies being developed in the province, there are ample opportunities to prove that Ontario has what it takes to lead.
McGillivray believes that local distribution companies should be encouraged to lead by example by becoming early adopters of homegrown smart grid technologies. Encouraging that, of course, is part of his role at the OCE, but it is a constant challenge in the Canadian market – convincing companies to serve as pilot sites.
The GEGEA was really the launching pad for this wide swathe of activity that is now challenging regulators, utilities, and now a broader collection of potential players in the electricity and smart grid market. Every organization should be considering how it fits in the puzzle.