For the past decade, the renewable energy industry and various branches of the federal government have engaged in an ungainly, enormously unproductive two-step on production tax credits (PTC) for...
Ontario's Feed-In Tariff
Can a European-style renewable model work in the Americas?
of developers indefinitely holding queue positions, failure to meet a milestone completion date for operation carries the penalty of a reduced period for collecting contracted prices.
A major problem for most FIT programs, and in general for development of generation from renewables, is access to the distribution or transmission grid. Grid access was a major issue for RESOP. The GEGEA addressed these difficulties by stating that T&D providers must connect renewable projects that request it. Any needed large upgrades will be paid for by all electricity consumers in Ontario, not just those of the particular transmitter or distributor.
This requirement could lead to connections that clearly aren’t economic, such as building many kilometers of connecting line for a 10 MW project. As part of the FIT design, therefore, the OPA has devised a process to determine whether a required upgrade is economic or not.
Projects that can connect immediately can move through contract and connection stages directly. Projects that can’t be connected immediately are subject to an economic connection test with others in the same area. This test is intended to determine whether it’s economic to expand transmission or distribution facilities to accommodate FIT program applicants. If transmission expansion for a project is economic, it’s placed in a queue called the FIT production line. However, the first time the project is included in an economic connection test as a resource in the FIT production line, 10 percent of its applica- tion security is placed at risk; another 5 percent is placed at risk with each subsequent economic connection test. This process makes implementation of projects in the queue more certain so the OPA can include them in its integrated system plan. Also they’re used by T&D planners to establish the need for grid upgrades.
Projects that fail the economic connection test are placed in the FIT reserve. Projects are checked every six months for potential inclusion given changing conditions of access. Proponents can withdraw from the FIT reserve and get back the entire application security.
The Ontario content requirements haven’t yet been published, even in draft form. They could affect the design or equipment choice for some projects. Probably the government will start with less stringent requirements and gradually tighten them as provincial resources develop.
FIT in the United States
In May 2009, the Vermont legislature implemented the country’s first state-wide set of feed-in tariffs. 7 The program explicitly seeks to encourage the “rapid development” of renewable energy projects. It will cover renewable energy systems with capacity up to 2.2 MW, sets a cap of 50 MW, and allows contracts for power purchases of 10 to 20 years. 8
The bill sets interim prices at 12 cents/kWh for methane derived from landfills or agriculture, 20 cents/kWh for wind power less than 15 kW, and 30 cents/kWh for solar power. Additionally, systems greater than 15 kW using wind, hydro, or biomass energy will receive prices equal to average residential rates (about 12.3 cents/kWh).
The Vermont Public Service Board was directed to review and amend these interim prices if they don’t “constitute a reasonable