By Bob Moser, Americas correspondent

Ontario's new feed-in tariff scheme for renewable energy is already hailed as a success among applicants and investors whose projects have been accepted, following the program's creation last year under the Green Energy and Green Economy Act of 2009.

While few problems have surfaced so far, analysts will keenly observe progress on the initial round of Economic Connection Tests due to start in the next few months. They say they are now watching to see whether funding falls in line for approved projects, and what areas of the province will get the green light for more wind power.

“This program has been enormously successful in drawing attention to the province as a growing wind center,” said Michael Hennessy, analyst with Bloomberg New Energy Finance. “There's a lot of attention from big developers in Europe and the US to move to Ontario. The economics are favorable, and the feed-in tariff (FiT) policy is quite good.”

Under the scheme, power purchase agreements in Canada and Ontario are signed with the local authority, in this case the Ontario Power Authority. Project applicants apply publicly, and if selected they're offered a FiT contract with the OPA.

Out of a total 2,500 megawatts of renewable energy PPAs assigned thus far, 1,529 MW have been approved for wind energy PPAs. Onshore wind farms will receive CAD135 per Mwh, while offshore farms get CAD190 per Mwh (one such project was selected). While the program has not set targets for large-scale wind additions, OPA Spokesman Ben Chin believes the growth of the FiT scheme has certainly drawn more big wind applicants.

Will projects see the light of day?

But the concern isn't with awarding contracts for wind; it is whether the approved projects get built on time, says Bloomberg's Hennessy. “Of the 1,500 MW awarded, 100% won't be built. How much less of it will? Developers need to secure project financing, and it's a matter of execution at this point.”

Demand for more wind connections in the province appears to be there. In the next two to three years Chin expects another 1,500 MW of renewables capacity to be installed, a significant portion of which will likely comprise wind. Beyond that, the Ministry of Energy has identified around 20 transmission upgrade projects to enable further renewable wind connections.

“We have the first green energy act, and this is the first FiT in North America, that is significant,” said Kristopher Stevens, executive director of the Ontario Sustainable Energy Association. “There is a lot of demand, and a lot of question marks around how long it'll take to build out infrastructure to support the new generation - likely anywhere from 5-10 years. That will impact which projects get to move ahead and when. There are also increasing discussions about how storage may fit into the mix, enabling the grid to capture more renewables.”  

The first step of that expansion process was supposed to start in early August with Economic Connection Tests. The ECT would impact where projects are built in Ontario and when, beyond this initial round of FiT confirmations. Because of the FiT and the wealth of attractive projects being offered throughout the province, this ECT could redefine where the hot spots for wind energy should be in Ontario. 

Procedural delays 

But it was recently decided to delay the tests to allow OPA to catch up with a wave of applications that have recently flooded in for other programs. Chin said OPA will notify applicants and the public when a new ECT start date is set.

“I don't want to predict what the ECT will do, I don't think the OPA even knows how much will change because of this,” Stevens said. “A number of factors will come into play: how much will it cost to build this system out; is supply close to demand; what's the appetite to build the new infrastructure (i.e. transmission lines). All of those factors will need to be worked into their strategy … in order to see which lines will make the most sense to build.”

There have been some stumbling blocks during this first year that sources hope the government and private industry will learn from. OPA's ability to maintain transparency and public involvement throughout the process may be key to the longevity of the FiT scheme.

“Next year there is an election, there's lots of politicking going on,” Stevens said. “Traditional energy and others are used to the system working one way, a centralized paradigm, and we're on our way to decentralized. People in the public sector are facing a steep learning curve on how we'll be doing things differently.

“No one wants to spend money (on energy infrastructure), but we haven't spent money in 20 years. So the conflict is over how we don't want to spend money now, but what do we want for our future?” 

To respond to this article, please write to:

Bob Moser: bobmoser333@gmail.com

Or write to the editor:

Rikki Stancich: rstancich@gmail.com

Image courtesy of Sask Power