Ontario announces feed in tariffs for renewable energy

Ontario is poised to introduce new electricity pricing to encourage the development of renewable energy from a diverse range of producers including homeowners, community-based groups and larger scale commercial generators.

Price Guarantees for Large and Small Renewable Energy Projects will

Create Jobs
TORONTO, March 12 /CNW/ - Ontario is poised to introduce new electricity pricing to encourage the development of renewable energy from a diverse range of producers including homeowners, community-based groups and larger scale commercial generators.

As North America's first guaranteed pricing structure - called a feed-in tariff (FIT) - for various forms of electricity production, it would offer a stable, competitive price combined with a long term contract. A FIT would establish prices for energy generated from renewable sources, including on-shore and off-shore wind, hydroelectric, solar, biogas, biomass and landfill gas. Proposed prices and program guidelines announced today will form the basis of an eight-week consultation process with renewable energy stakeholders and several general information sessions for the interested public.

"The proposed feed-in tariff program would help spark new investment in renewable energy generation and create a new generation of green jobs," said George Smitherman, Deputy Premier and Minister of Energy and Infrastructure. "It would give communities and homeowners the power and tools they need to participate in the energy business in the new green economy."

"Ontario has made great progress in procuring renewables, becoming Canada's leading province for wind power," added Colin Andersen, CEO of the Ontario Power Authority. "This proposed FIT program would build on our success and ensure that more contracts turn into projects sooner."

The proposed Green Energy Act (GEA), if passed, would establish Ontario as North America's leader in renewable energy, drive green investment in the province and create 50,000 jobs in the first three years. Additional changes proposed under the GEA would also make it easier and faster for projects to get connected to the grid. Other countries - particularly Germany, Spain and Denmark - have successfully used FITs to encourage the development of renewable energy projects.

The proposed FIT prices were developed based on experience here in Ontario and in other jurisdictions. Prices differ based on project size and type of renewable energy technology. They cover capital, operating and maintenance costs and allow for a reasonable rate of return on investment over an approximate 20-year period. They also provide special categories for community based projects.

To view chart, please go to http://files.newswire.ca/792/OEB1.jpg

Solar micro-generation, 10 kilowatts and under, will enjoy the highest tariff in order to incent Ontarians to participate. If the proposed FIT program leads to 100,000 residential solar rooftop installations, it will amount to one percent of Ontario's supply mix.

The OPA will begin consulting with renewable energy stakeholders on the proposed design of a FIT program, including eligibility criteria and proposed pricing next week. Weekly sessions run from March 17 to May 5, 2009.

Quick Facts
- In 2008, 25% of Ontario's electricity generation came from renewable
energy sources.
- Nearly 1,200 megawatts of wind capacity will be online by end of
2009, enough to power almost 325,000 homes.
- Investments in new renewable energy projects already in place or
under construction in Ontario total about $4 billion.
- Rooftop solar prices should drive installations in urban centres,
matching areas with high summer air conditioning demand.
- Methane capture at landfill sites will provide significant greenhouse
gas emission reductions.
- Many waterpower projects and partnerships with First Nations and
Metis involvement are anticipated, especially in the North.
- In some cases, like farm-based biogas and hydroelectric production,
an on-peak producing incentive will be offered.
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Proposed Feed-In Tariff Prices
for Renewable Energy Projects in Ontario
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Technology Proposed size tranches Proposed cents/kWh
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Biomass(x)
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Any size 12.2
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Biogas(x)
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(less than or equal to) 5 MW 14.7
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(greater than) 5 MW 10.4
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Waterpower(x)
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(less than or equal to) 50 MW 12.9
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Community Based (less than or equal to) 2 MW 13.4
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Landfill gas(x)
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(less than or equal to) 5 MW 11.1
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(greater than) 5 MW 10.3
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Solar PV
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Rooftop (less than or equal to)10 kW 80.2
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10 - 100 kW 71.3
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100 - 500 kW 63.5
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(greater than) 500 kW 53.9
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Ground Mounted (less than or equal to) 10 MW 44.3
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Wind
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Onshore Any size 13.5
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Offshore Any size 19.0
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Community Based (less than or equal to) 10 MW 14.4
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(x) on/off peak pricing applies (see Backgrounder for details)

BACKGROUNDER
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Proposed Green Energy Act sparks changes
The Green Energy Act, if passed, would establish Ontario as North America's leader in renewable energy, drive green investment in the province and create 50,000 jobs in the first three years.

The proposed GEA was introduced in the Ontario Legislature on Feb. 23, 2009. The legislation, and the expected regulatory changes and policies that would flow from it, include a range of measures intended to foster a culture of conservation and encourage the development of renewable energy projects. Complementary to the GEA, the proposed feed-in tariff program (FIT) would guarantee specific prices for energy generated from renewable sources and drive investment to Ontario.

What is a feed-in tariff program?

A FIT program is a simpler way to contract for renewable energy generation. It is simpler because of standardized program rules and standardized contracts, including standardized prices. Developers of renewable energy projects would receive a FIT contract if they meet all program requirements.

Benefits of Ontario's proposed FIT program
Ontario's proposed FIT program would have several key features. It would:
- provide a simpler way to contract for generation
- be open to various renewable energy technologies (full list: wind,
waterpower, solar and bio-energy technologies)
- allow all types of generators, from homeowners to private developers,
to participate
- have different prices for different technologies and project sizes
- have prices that cover total project costs and provide a reasonable
rate of return over a long-term contract (20 years)
- provide incentives for First Nation, Metis and community-based
projects
- offer long-term price guarantees to increase investor confidence and
access to financing
- provide a right to connect based on shared reasonable costs
Proposed FIT prices

Proposed prices are outlined in the News Release. These will be refined with energy stakeholder input during eight weeks of consultations from March 17 to May 5.

Waterpower and bio-energy will receive a higher price on-peak hours - 35% higher from 11am to 7pm on business days - and a 10% lower price during off-peak hours.

The proposed FIT prices for solar photovoltaic (PV) projects are designed to kick-start the solar PV industry in Ontario. Solar PV is a rapidly developing and growing industry with potential for price reductions in the coming years. There are just over 100 rooftop installations in operation in Ontario for a total of approximately 0.5 megawatts.

The proposed FIT prices were derived from a range of sources using best available and most recent information. Prices were developed based on experience here in Ontario and in other jurisdictions. They cover building and maintenance costs and allow for a reasonable rate of return on investment over an approximate 20-year period, and the basic connection costs for typical projects.

Sample projects and typical project costs

For example, a homeowner in Ontario would be looking at a residential scale Solar PV project of about 3 kilowatts, which costs around $30,000. This would provide enough electricity to meet one third of their consumption and would generate about $7 per day. This payment would result in approximately $2,500 in revenue per year for the homeowner, resulting in about a 12-year payback (see illustration on next page). In addition, the government is expected to introduce plans to provide low-cost financing for residential renewable projects, including solar thermal, solar PV and ground-source heat pumps.

A farm-based 250 kW bio-digester would cost around $1.7 million to install, and could earn back this investment in about a 12-year time frame, depending on its operation.

A 10 MW, community-owned wind farm in Ontario would cost around $32 million to construct, and is expected to have a 10-year payback.

Realizing the Potential for Renewable Energy

In order of 1,000 MW have reached commercial operation and are generating clean, green electricity from wind, water, sun and bio-based resources. The proposed FIT Program will encourage further investment in generation, transmission and distribution to facilitate greater incorporation and use of renewable energy sources.

Ontario's system could incorporate many more thousands of MW of additional renewable supply over the next five years through the FIT Program. How much electricity will be generated from each type of renewable fuel source is uncertain.

To view chart, please go to http://files.newswire.ca/792/OEB2.jpg

Energy Agency Involvement

Successful implementation of a FIT Program will require changes across the energy sector that enable renewable energy to be brought into service more quickly and efficiently. The Ontario Energy Board (OEB), the Independent Electricity System Operator (IESO) and transmitters and distributors would work together to bring more renewable electricity generation online in Ontario. The OPA will establish a simplified process for residential micro-scale projects of 10kW or samller.

Stakeholder Involvement

From March 17, 2009 to May 5, 2009, the OPA will host a series of weekly consultation sessions with renewable energy stakeholders. These consultation sessions will be used to seek input and feedback, including from large and small renewable energy suppliers, on proposed FIT program rules and contracts. Renewable energy stakeholders include any person in the province that could generate and supply renewable energy to the grid ranging from large-scale commercial developers to micro-scale project developers, homeowners and farmers.

Full day consultation sessions will be held on a weekly basis with about 200 stakeholders. The sessions are open to the public. Stakeholders are also invited to listen-in by webcast or teleconference.

The OPA will establish a FIT web page on its website (www.powerauthority.on.ca) for general information where all documentation from the consultation sessions will be publicly available. People will also be able to get questions answered online.

Launch of new pricing system

If the Green Energy Act is passed, the OPA would expect to be in a position to quickly implement the FIT program this summer.

(Source: CNW )

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