Renewable energy developers and manufacturers are eagerly awaiting the outcomes of the Ontario Feed-in Tariff review. The two-year review is considering critical aspects of the FIT program including price, grid connectivity, program rules and approvals. What industry is looking for is clear direction from government and greater certainty for the scheme which has attracted renewable developers and manufacturers from across the globe. “What all businesses want is some level of consistency and predictability,” comments Mike Garland, CEO of Pattern Energy, which is developing four Ontario wind projects with Samsung totaling 870 MW.  
 
According to the Ontario Ministry of Energy, since the launch of the FIT program in 2009, Ontario has offered contracts for approximately 2,500 medium and large FIT Projects and over 11,000 microFIT projects have connected or are expected to connect soon. There are many projects in the application queue, however, and developers and investors want to understand the ROI of these and future projects. Uncertainty over pricing and the scale of the FIT program itself has created a chill in the industry which has been particularly challenging for solar manufacturers and their customers.
 
“There is little going on right now in terms of construction and it won’t be a year like 2011 because the residential market which was driving the industry until now has dried up, all of our hopes are on the commercial rooftop market,” comments Martin Pochtaruk, President of Heliene Canada, a solar panel manufacturer based in Sault Ste. Marie. Heliene’s target market is solar rooftop installations under the FIT and MicroFIT programs. As Pochtaruk points, this is the market that has been hardest hit by program uncertainty with many manufacturers shortening work hours and installers cutting staff. In response to the launch of the review in October, Pochtaruk invested hundreds of hours with his manufacturing peers preparing and discussing recommendations for the revamped FIT program. Today, his hope for the new FIT is very simple: “My only hope is that there is a program.”

“More so than the detailed breakdown of the prices, the delay in the release of FIT 2.0 is affecting our business most,” adds David Pichard, Managing Director & SVP Business Development at Samco Solar, a contract manufacturer for fixed mounting and tracking systems. The price digression is needed and healthy for the industry, he points, but the current lack of executed projects has not allowed manufacturers to return their capital investments put in place on the assumption that a large number of approved contracts would start construction in spring/summer 2011. Red tape and connection issues delayed the construction of projects last year and the result is an oversupply of Ontario-made products and a manufacturing base that is looking for greater certainty about the viability of the domestic market.
 
For the bioenergy industry, the price issue is central with developers and financiers looking for better rates for biomass and biogas projects. “The primary weakness of the FIT program for biomass projects is the rate does not seem to be sufficient to provide an incentive to investors,” reports Alastair Baird, Manager of Economic Development Services for the County of Renfrew and the Ottawa Valley Forest Industry Alliance. Research by Renfrew County and The Monieson Centre at Queen’s University determined that a rate of 19.5 cents per kWh would encourage investment, up from the current biomass FIT rate of 13.8 cents per kWh.
 
“When you have a fuel source that is readily available across central and northern Ontario and yet there are no projects, that is the clearest indication that the rate is not good,’ adds Baird, who points to the tremendous potential for biomass to help create new jobs and retain thousands of existing jobs for Ontario’s forestry sector. Baird is hopeful that the review will acknowledge the benefits of biomass: “We are sensing a possible recognition of the genuine economic sustainability opportunity of these projects.”
 
Uptake of biogas projects in Ontario has been similarly slow with no more than a dozen projects connected and running in the province. Access to the grid and the approvals process have been very challenging for biogas under FIT, reports Jennifer Green, Director of the Agri-Energy Producers Association of Ontario. “At this point, there are no biogas projects that have received Renewable Energy Approval since the program was put in place,” she adds. “The REA was intended to streamline environmental approvals and it is hoped that the government will take into account the recommendations made in order to achieve this goal.”


Indeed many FIT projects have experienced longer than expected processing times which has pushed back timelines, increased costs and created uncertainty. Wind projects have been particularly impacted with many forced to go through an appeal process when local communities raise concerns. In fact the REA appeal has almost become a standard order of business for wind developers with more and more projects undergoing a six-month tribunal period. The result is that there is now a confluence of wind projects in Ontario that will need to be built in a relatively short period of time.
 
“The longer duration of getting projects to a construction ready stage is placing pressure on the ability to execute within a reasonable timeframe,” reports Brent Bergland, Director of Project Development for Mortenson Construction. “One would hope the FIT review will result in a more reasonable timeframe for wind projects to be approved.”
 
Despite these challenges, Ontario is the leading province for wind energy development in Canada. “Ontario is the current provincial leader in installed wind energy capacity accounting for 1,969.5 MW of wind energy installations,” points Robert Hornung, President of the Canadian Wind Energy Association.  CanWEA has developed a Best Practices in Community Engagement and Public Consultation guide for its members. “The guidelines are designed to support wind energy project developers in continuously improving their work with local communities while ensuring that they meet and strive to exceed provincial requirements for public consultation,” summarizes Hornung.
 
Wind developers are also pooling their resources to address community concerns. A group of five prominent project leaders have formed the Community Vibrancy Fund for Haldimand County. Pattern Energy, Capital Power Corporation, Niagara Region Wind Corporation, Nextera Energy Canada and Samsung have formed an agreement with Haldimand County to contribute over $40 million dollars to benefit the residents of the County over the next two decades. These funds will be earmarked for Council approved community related projects and other community needs as determined by Council. The companies have also agreed to hire local suppliers of labor and materials to the extent that they are available.

Hydro developers have been similarly challenged to try to meet the approvals timeline under the FIT program which has shortened considerably from previous programs. “What used to take place over a decade has now been condensed into a much smaller 60-month timeframe and that is extremely challenging,” comments Mark Holmes, Vice President, Corporate Affairs, Xeneca Power Development, which is developing a number of waterpower projects under FIT. “There are so many different elements to this challenge and the government doesn't have the internal resources right now to review all the applications for renewable energy projects which are coming down the pipe.”

Today there are more than 100 new waterpower projects awaiting approval in response to the FIT program or previous procurement programs and about half are scheduled to be commissioned in the near term. “There is much more practical waterpower potential that could be realized and one of the main contributing factors has been the need for alignment of supporting policy across government, notably resource access,” says Paul Norris, President of the Ontario Waterpower Association. All hydro projects in Ontario need admittance to provincial Crown Land through the Ministry of Natural resources which does not currently allow for such access.
 
“The OWA has offered a number of suggested improvements that build on the existing FIT program that we believe can result in a more significant contribution to affordable, reliable and flexible waterpower to Ontario’s electricity supply mix,” adds Norris. Suggestions include changes to the allocation process for transmission and distribution connection, further support for aboriginal community involvement and better coordination between ministries to facilitate project construction. “We have also suggested the concept of a Remote FIT for diesel dependant First Nation Communities in the Far North,” Norris adds.
 
“You really have to make sure your renewable energy project fits with the needs of the power system,” summarizes Chris Henderson, President of Lumos Energy and an expert in First Nations power partnerships. To date there have been 35 FIT projects with aboriginal partners and there is potential for many more, especially in the hydro sector. Henderson points that developing partnerships with aboriginal groups is a lengthy and complicated process and they best succeed when communities are supported through the process by partnering utilities or developers. “It is a process that evolves from one stage to the next and you can’t expect First Nations to be an adequate partner unless they have been supported to do that,” he adds.

Currently Ontario’s Ministry of Energy, led by Deputy Minister Fareed Amin, is working to complete the review which is expected to be finished sometime in March. A recent update from Deputy Minister Amin on the Ministry of Energy web site reads: “I am working with the OPA and ministry staff to analyze the written submissions and comments we heard through the face-to-face meetings. I expect to submit my recommendations to the minister in the near future.”

Developers and manufacturers from all sectors are very keen to understand the new rules of the game under the revamped FIT program and move forward with projects this spring. “The FIT program has been very successful in terms of creating jobs and the number of MW proposed and those being built,” notes Pattern Energy’s Garland. “What we need now is clarity and continuity for the policy and program.”
 

On April 3-4, over 500 renewable energy developers, manufacturers and suppliers will meet with government and infrastructure experts in Toronto for the third annual Ontario Feed-in Tariff Forum which will examine the new landscape for renewables in Ontario. Visit www.ontariofitforum.com for more details or contact adrienne.baker@canadianclean.com.