In 2009, the Canadian province of Ontario dramatically revised its standard offer renewable energy program into a full-fledged feed-in tariff (FIT). The program provides a guaranteed grid connection, cost-based prices for renewable energy producers, and a long-term power purchase contract. Paul Gipe awarded the program an ‘A-‘ in his recent analysis of North American FIT policies and we find the bonuses for domestic content and local ownership to be innovative twists on a successful policy tool.
The microFIT applies to projects 10 kW and smaller, and provides long-term (20 years) contracts for electricity from solar PV, wind, waterpower (40-year contract), biomass, biogas, and landfill gas. The prices are based on providing a reasonable rate of return to producers and are even inflated annually at 1/5 the rate of the CPI. The microFIT also requires that projects have at least 60% domestic content for projects in service in 2011 or later, up from an initial requirement of 40%. Click here for more detail on the microFIT program (pdf).
The FIT program applies to projects 10 kW and larger projects powered by biomass, biogas, landfill gas, wind, water, and solar power. Water power projects are capped at 50 MW and solar PV projects are capped at 10 MW. Like with the microFIT, electricity contract prices have a small inflation factor.
The FIT program has some additional features that encourage use of existing land, development of domestic industry, maximization of the existing grid, and local ownership. Some agricultural lands are off-limits to ground-mounted solar PV projects, to discourage use of arable land for solar PV. Both solar PV and wind projects have minimum domestic content requirements, with minimums of 60 percent and 50 percent domestic content, respectively. To maximize the use of the existing grid, smaller projects (< 500 kW) that connect to the distribution grid can also get fast-tracked for approval. Finally, Ontario provides a price adder of 0.4 to 1.5 cents per kWh for aboriginal or community-owned projects, based on the technology. Projects with partial local ownerhsip can also get a proportionally reduced price bonus.
There are also price advantages for dispatchable renewable resources (biomass, biogas, landfill gas, and hydro power) for producing during peak periods.
Click here for a detailed review of Ontario’s FIT program.
The Ontario FIT program is not only a well-designed feed-in tariff, but contains innovative twists to improve the economic benefits of the renewable energy it develops. The domestic content requirements will encourage domestic industry to support the wind and solar PV development. Fast-tracking small project connections to the distribution grid will help maximize use of the existing grid whiel expanding renewable energy production. Finally, local ownership adders will encourage the development of more aboriginal- and community-owned renewable energy projects, shown to have a significantly higher economic impact than absentee-owned projects.