FIT Review Brings Uncertainty To Ontario's Wind Energy Market
Marnie Dawson, Tuesday 03 January 2012 - 12:05:01
When Ontario's feed-in-tariff (FIT) program was launched as part of the Green Energy Act in 2009, it was mandated that a review of the program occur two years after its commencement.
On Oct. 31, 2011, the FIT program review was announced by the government of Ontario. The review focuses on a broad range of issues, including the following:
- FIT price review to maintain balance with ratepayer interest,
- Long-term sustainability of clean energy procurement,
- Continuation of the success of clean energy job creation and Ontario-based manufacturing,
- Consideration of new emerging technologies, and
- Local consultation and the renewable energy approval (REA) process.
The aspects of the FIT review that primarily concern the wind industry, however, are the following:
- Will there be new prices? and
- What will the new rules be?
As a result, Ontario’s renewable energy future is, yet again, in a state of uncertainty. Fortunately, projects that already have an existing FIT contract with the Ontario Power Authority (OPA) will not be subject to the new rules and pricing.
Over the past month and a half, the OPA and Deputy Minister Fareed Amin, tasked with spearheading the FIT review, have held numerous consultation sessions with various stakeholders, trying to gather information for the FIT review.
During the consultation sessions, it became clear that the OPA/FIT reviewers are looking for the following criteria: concrete ideas on how to streamline the process, how to allocate the remaining renewable generation targets, how to enhance and maintain a viable manufacturing sector in Ontario, and financial models to demonstrate how various price points would work.
Generally, this translates into three main changes to the FIT program: price, REA process, and FIT contract rules and process.
It is assumed that the FIT price will be modified based on current supply-chain and ratepayer acceptance. To a degree, a lowered FIT price is still expected to ensure a viable renewable energy market in Ontario, particularly if the price is lowered to ensure a resilient and stable market exists for all project sizes.
It is hoped that a modified REA process will better align with FIT contract timelines; provide a consistent, stable process; and include additional consultation mechanisms for municipal consultation/engagement. Although the details on the modifications to the REA process are unknown, many in the sector have been playing an active role in suggesting changes that could be made to improve the process.
The OPA is expected to streamline the FIT program and follow a consistent process that adheres to times identified in the FIT rules for running the transmission availability test and distribution availability test to identify projects that will proceed to contract and projects that will proceed to the economic connection test. This will allow applications to move through the program, resulting in the natural attrition of projects.
Ontario was experiencing tremendous growth and success in renewable energy as a result of the progressive policy initiatives of the FIT program. The current FIT program, however, presents several challenges that need to be addressed in order to make it more efficient and bring projects from application to completion.
It is hoped that the current review will lead to improvement in the FIT program that furthers the renewable energy goals of the province and the industry.Marnie Dawson is a senior project manager at Stantec's Guelph, Ontario, office. She can be reached at (519) 836-6050 or marnie.dawson©stantec.com.
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