OPA FIT Program Review

The Ontario Green Energy Act (2009) is the legislation that formed the back-drop  for the  Feed-In Tariff (FIT) Program by the Ontario Power Authority (OPA).  The primary aim of the FIT Program was (is) to stimulate the investment of capital from non-governmental sources to enable  the implementation of  existing renewable energy technologies such as Solar PV, Wind, Biomass and Landfill Gas.  The concept was (is) to stimulate the growth of the renewable energy industry in Ontario to provide Ontarians with sustainable sources of energy in the future that minimize potential impacts of energy generation on climate.  The premise for "stimulation" of growth was to encourage capital investment by providing a premium (or Tariff) on the price that the OPA would pay the contractor for the electrical energy generated and sent onto the Ontario electrical grid.

To date it appears that the program has achieved a good start resulting in literally thousands of applications for FIT Contracts  (see http://fit.powerauthority.on.ca/what-feed-tariff-program).  However, as the large discrepancy between FIT Contract Applications submitted and FIT Contracts awarded demonstrates, there are serious problems in translating FIT Contract Applications into Contracts that will enable the construction of the renewable energy systems to generate the electricity.  These problems can be solved.

At the launch of the FIT Program in October, 2009, one of the stipulations from the OPA was that the program would be reviewed every two years.  Ergo, on October 31, 2011 the FIT Program review was announced (see http://fit.powerauthority.on.ca/fit-program-review-underway).  Scary things happen on October 31, and part of the OPA's FIT Program review announcement was (is) indeed scary!!!!  The renewable energy industry has been expecting (justifiably) that the FIT Program pricing for electricity will be decreased because of  lower costs for renewable energy components and their installation -- soooo that's not the scary part.  What is scary is that the OPA's FIT Review proposes the retroactively apply the outcome of the review back to December, 2010, rather than sticking with the rules established in 2009 for the operation of the program to date!!!!!

If followed through, this approach will cause havoc in renewable energy development in Ontario.  Renewable energy developers have invested very large amounts of capital (the actual amount needs to be calculated) into finding and securing the locations for their projects, conducting due diligence studies, identifying and validating the technical information required by the OPA FIT Applications, and providing the significant dollars required by the OPA for Application Security Deposits that must accompany FIT Contract Applications.  Now the OPA proposes to change the rules RETROACTIVELY, resulting in the wastage of capital and effort by developers for projects in the FIT Contract queue between December 2010 and October, 2011!!!!!

The launch of the FIT Program on October 1, 2009 followed an exhaustive (and exhausting!) series of Stakeholder Consultations that provided information that the OPA used in establishing the FIT Rules.  One of the fundamental components of the FIT Program important towards ensuring a "level playing field) for the participation of energy producers was (is?) a fair and equitable "Time Stamp" approach.  Time Stamps were to be (and the have been) assigned to each FIT Contract Application to identify the order of the Application in the queue for awarding FIT Contracts, AND the pricing for the electricity to be paid through the  FIT Contract once the  renewable energy system(s) is in operation.  This Time Stamp process secures the queue position and pricing, security  required for the investment of capital into the renewable energy systems.

I implore that the OPA not retroactively change  the Rules established in 2009.  Rule changes going forward from a date to be established through the FIT Program review are expected  and needed.  Investors can react accordingly to the rule changes going forward; going backward with retroactive changes will reek havoc with investor confidence.

What is your opinion?  Get your opinion out there through Ontario Solar Advocates!!!  Go Solar!!!  Go Renewables!!!!