Recent Changes to Developing and Operating a Renewable Energy Project in Ontario

Last week, a number of changes were made to the process of developing and operating a renewable energy project in the province of Ontario. The changes are summarized below.

Changes to Feed in Tariff (FIT) Contract Terms

The Ministry of Energy directed the Ontario Power Authority (OPA) to offer FIT contract holders the opportunity to have the OPA's termination rights under the FIT Contract waived.

The directive allows renewable energy project developers to elect to obtain a waiver of the OPA's termination rights contemplated in Section 2.4(a) of the FIT Contract (the “Waiver”).

In conjunction with the Waiver, developers who have identified solar (PV) or wind as their renewable fuel type must submit the following additional information to the OPA:

1. For projects defined as “non-Capacity Allocation Exempt Facilities” by the OPA (projects with no more than 250 kW of generating capacity where the facility is connected to a line rated less than 15 kV or projects with no more than 500 kW of generating capacity where the facility is connected to a line rated 15 kV or higher):

• the Waiver by October 14, 2011; 
• a Domestic Content Plan, in the prescribed form, by October 14, 2011; and
• evidence of agreement(s) for the purchase of generating equipment, in the form of a statutory declaration, by November 30, 2011.

2. For projects defined as “Capacity Allocation Exempt Facilities” by the OPA, the Waiver and Domestic Content Plan must be submitted by December 30, 2011.

The Waiver, form of Domestic Content Plan and form of statutory declaration can be found at http://fit.powerauthority.on.ca/waiver-opa-termination-rights-available.

In a further effort to expedite the project development process, the OPA also announced that it will make a commercially reasonable effort to review and execute by September 30, 2011 any Waiver it has received by August 15, 2011.

The Waiver does not alter the Notice to Proceed requirements set out in the FIT Contract. Developers must still provide the OPA with an NTP Request and satisfy the NTP Pre-requisites specified in Sections 2.4(b)(i);(ii);(iii) and (iv) of the FIT Contract.

Developers of clean energy programs that do not require Domestic Content Plans – hydro, biogas, landfill gas and biomass – may also request that the OPA waive its termination rights.

Changes to Renewable Energy Approval Process

The Ministry of Environment has committed to a reduction in the amount of time it takes for the initial screening review of applications from 90 days to 40 days.

This process improvement will be further enhanced by a new Technical Guide to
Renewable Energy Approvals to help renewable energy developers meet the
requirements of the Renewable Energy Approvals regulation. The Technical Guide
can be found at

http://www.e-laws.gov.on.ca/html/regs/english/elaws_regs_090359_e.htm.

Changes to Samsung Agreement

The Ontario government announced an amendment to its agreement with Samsung C&T Corporation and the Korea Electric Power Corporation (Samsung).

In February 2011, holders of FIT contracts were granted a one year extension to their commercial operation date. In exchange for a similar extension, Samsung has agreed to amend its original agreement signed in January 2010.

Under the amended agreement, the economic development payments to Samsung are reduced to a maximum of $110 million – down from a projected $437 million when the deal was first signed. These payments will only begin after manufacturing plants Samsung has committed to build start operating, job commitments are met and the solar and wind projects begin producing clean energy. Should job levels fall
or a plant close, payments will be reduced accordingly.

The revised agreement will also see all manufacturing plants open their doors one year earlier than previously committed to by Samsung.