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Moving Ahead: Nova Scotia's Feed-in Tariff Update

Community groups can now put the final touches on their applications to participate in Nova Scotia's new Community Feed-in Tariff to support small-scale locally owned renewable energy projects. Standards for the project were released by Nova Scotia's Department of Energy on July 26, providing more detail on small-wind project specifications and eligible biomass sources. Included in the standards is a new limit on the list of sanctioned turbines for small wind projects, which is expected to be contested by the industry.

There have been a number of other significant developments on the COMFIT and Nova Scotia’s new Request for Proposal (RFP) program in the last month. COMFIT rates were finalized in June and the government also appointed a new Renewable Electricity Administrator (REA) to oversee the RFP for larger-scale wind projects.

The rates for the COMFIT came in as expected with small-scale tidal receiving the highest rate at 65.2 cents/kWh and small wind (50 kW or less) coming in at 45.2 cents/kWh; biomass at 18 cents/kWh and run-of-the-river hydro at 14 cents/kWh. Large wind (greater than 50 kW) currently sits at 13.8 cents/kWh but the Nova Scotia Utility and Review Board (UARB) is expected to adjust that rate to 13.3 or 13.4 in early August.  The rate will change because the UARB is likely moving to a capacity factor of 33 percent for large wind projects rather than the 31 percent that was used by Synapse Energy Economics, the consultancy that prepared the rate recommendations.

Carlisle-Massachusetts-based Power Advisory has been appointed as the REA. This is a newly created role to oversee the call for bids from independent power producers to win the right to develop medium to large-scale renewable energy projects totalling around 100 MW of wind power. The principles of Power Advisory have both been very involved in renewable energy procurement in Ontario: Jason Chee-Aloy is the former Director of Generation Procurement at the Ontario Power Authority (OPA) where he led the implementation of Ontario’s FIT program and John Dalton had a major role in the design of Ontario’s standard offer program as well as advising on the FIT.  

Industry is eager to see what the pricing will look like under Nova Scotia’s new RFP. Past tenders have not been altogether successful with many projects failing because developers underbid to win contracts and were then unable to find financing. The other challenge is interconnection which has, of course, been the source of major delays and frustrations in Ontario. There is a limited amount of transmission and distribution capacity in Nova Scotia with a number of projects awaiting connection. There will need to be significant upgrades in order to meet the province’s goal of moving to 25 percent renewable electricity by 2015.

Nova Scotia Power Inc., which provides 95 percent of the generation, transmission and distribution of electricity in the province, has, for the first time, published a distribution interconnection queue. This is giving COMFIT applicants a good sense of competition on different areas of the grid. There are currently around 100 MW of applications in the queue, which breaks down to around a dozen 4 to 6 MW projects and a series of 2 MW projects. According to one local developer, NSPI has been very accessible in discussing the connection process.

There have been a couple of other changes post-launch to the COMFIT. In May, the Department of Energy announced that 25 percent of financing for COMFIT projects must come from provincial sources. These projects must be at least 51 percent owned by community groups including municipalities, universities, First Nations, co-ops and Community Economic Development Investment Funds (CEDIFs). The 25 percent requirement means that community organizations will have to raise half of their equity locally, which may be challenging. For large wind, it means raising around $500,000 locally per MW of installed capacity.

The province also recently changed the ownership rules for municipalities stating that they must own 100 percent of a project under COMFIT because the 51 percent rule violated the Municipal Government Act. At the same time, the province agreed to extend Municipal Finance Corp. funding to COMFIT projects which will provide municipalities with access to capital at low rates. This change is disappointing for developers and suppliers looking to partner with municipalities on these projects. It doesn’t rule out partnerships entirely but certainly makes it more complicated.

It will be interesting to see how the COMFIT and RFP progresses over the coming months. Local experts say the RFP is expected to begin in early 2012 and the government will begin accepting COMFIT applications Sept. 19.

Through these programs, the Nova Scotia renewable energy market will likely be made up of a handful of experienced developers and suppliers and whole raft of community organizations who will be involved in renewable energy for the very first time. For wind and suppliers developers, this region offers an opportunity to establish a strong position in a smaller market that has tremendous export potential to neighboring provinces and states. It is also offers interesting prospects for tidal developers and suppliers around the world given it’s the only market currently offering rates for tidal power.

Adrienne Baker is a Director of Canadian Clean Energy Conferences, which is organizing the Nova Scotia Feed-in Tariff Forum on Sept. 21-22 in Halifax. www.nsfitforum.com

 

 

 

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