What the FIT Review Means for Community Power in Ontario
by Mümtaz Derya Tarhan
Changes made to Ontario’s FIT program, as part of the province’s scheduled 2-year FIT review process, are expected to be announced later this week. The review is expected not only to make pricing adjustments, but also consider the potential inclusion of new and emerging renewable energy technologies in the pricing structure, the assessment of government policies and tools related to renewable energy sector.
The waiting game will finally be over for the community power sector in Ontario, which has been in limbo since late October as no new FIT contracts were awarded during the review process, and due to uncertainties surrounding the review’s potential outcomes. This review is of great importance for the future of community power project in the province, which account for 1500 MW of FIT’s 6900 MW project pipeline, but only 326 MW of the 4700 MW of signed FIT contracts. As these figures tell, community power projects are having difficulties obtaining contracts and getting their projects off the ground due to numerous factors.
First of all, pricing. This goes without saying, as financial viability is a key factor for community-owned projects in accessing debt financing and raising equity through share offerings. The new rates will definitely be lower than the previous ones, but must still provide community groups a reasonable economic incentive besides their environmental goals. For pricing recommendations submitted to the Ontario Power Authority (OPA) through a joint submission by numerous community power and renewable energy groups in Ontario, take a look at this document
Another important issue for community power groups is grid constraints and connectivity issues. A significant example to this issue is the stalling of the 20 MW Lakewind Co-operative project after 7 years of development effort and almost $1 million in community investment,
due to lack of connection capacity. As community power projects (mostly small-scale) compete with large commercial projects for grid capacity and therefore have a competitive disadvantage, connection capacity for community and aboriginal projects should be prioritized. Furthermore, the aforementioned report
recommends a carve-out for FIT contracts awarded to community and aboriginal projects, in order to reduce uncertainty for community power projects and move the sector forward.
According to the same report, the inclusion of new technologies to the FIT program such as
solar hot water, ground-source heat pumps, small wind, remote community projects, and the encouragement of conservation and energy efficiency through FITs can also empower communities across the province to respond to their immediate power needs, to generate income, and to provide temporary and permanent employment opportunities.
This is a very brief overview how the FIT review can uplift the community power sector in Ontario. If the FIT review fails to address the issues listed above, Ontario will put in risk its transition to clean sources of energy generation, hinder local employment opportunities and income generation, and miss out on a great opportunity to provide its citizens with the opportunity to take true ownership of this transition. Denmark and Germany are great testimonies on how community groups can successfully carry a nation towards a clean energy generation. While 20% of Germany’s power comes from renewable sources today with the help of its FIT program, nearly 50% of its renewable energy generation is community-owned. 86% of Denmark’s wind turbines are co-operatively owned, and Denmark generates almost 20% of its energy from wind and is a global leader in wind technology and innovation.
Ontario’s FIT review should encourage more community groups to get their projects off the ground. Beneficial financing mechanisms, such as the Community Energy Partnerships Program, and support mechanisms such as the Ontario Sustainable Energy Association and TREC are already in place. And numerous community organizations focusing on renewable energy are being established across the province. These organizations need to be complemented by a higher number of successful projects to increase experience and resource sharing, and strengthen the community energy sector in the province. If Ontario does not take a step back with its FIT review and address current issues, Ontarians will be empowered to carry the province to a clean, co-operative and prosperous future, just like their European counterparts did.