Information for Renewable Energy Generators
If you want to become an electricity generator…
- I understand the province will give me a subsidy to become a small generator. How does it work?
The Ontario Power Authority (with the help of the Ontario Energy Board) has been asked to create a program called the Standard Offer Program. It is not a traditional subsidy program.
When the program becomes effective this Fall, small generators (under 10MW) using selected renewable resources like solar, wind, small hydro and some biomass, will have the opportunity to sign a 20-year contract to sell power to the OPA and receive a guaranteed price per kilowatt hour for the energy delivered into the Grid, over the life of the contract.
The generator will be responsible for the entire cost of the project, including the costs of connecting to the existing electricity distribution system.
- If the Standard Offer Program isn’t final yet, what specific information is available?
The parameters of the Standard Offer Program will include:
- The program will be open to any renewable resource type that qualifies as a renewable resource in the Renewable Energy Supply II RFP including wind, small hydro-electric, solar, and some bio-mass.
- The maximum project size will be limited to 10 megawatts (MW). No minimum project size is currently proposed.
- To be eligible, projects must be connected to their local electricity distributor’s low voltage (50 kV or less) distribution system.
- There will be no locational restrictions on the SOP, other than those determined by the technical limitations of the local distribution system and also, the technical limitations of the high-voltage transmission system.
- A written contract that documents the obligations of the parties under the Standard Offer Program will be required. Contract terms will typically be for twenty (20) years.
- For the first year of commercial operation, all eligible renewable resource type projects (except solar photovoltaic) will be paid a base rate of 11 cents per kilowatt hour for all kilowatt hours delivered. The rate will escalate from 11 cents per kilowatt hour over the 20 year term of the contract. Projects that can demonstrate generation control will be eligible for an additional 3.52 cents per kilowatt hour for all electricity delivered during on-peak hours.
- A price of 42 cents per kilowatt hour for solar photovoltaic projects will be established in order to conduct price discovery on this technology. Solar PV projects will not receive the inflation escalation or peak premium.
- No maximum project limit for the program will be established.
- Does it cost a lot to build a small generating project?
It depends on size, fuel source and a number of other factors. For example, a very small 1KW solar panel may cost as much as $15,000. Capital costs for larger projects, including the other technologies, could cost in the millions of dollars. Minimum licensing and connection costs may add another $1,100 or more. To provide more detail about specific technologies—costs, suppliers, counsel, etc.—we have created links to selected websites.
- What are the connection costs?
Some of the requirements that the Generator will be responsible for include:
- The requirement that all generators have an Ontario Energy Board generator license ($100 one time charge for generators under 5 MW).
- The requirement that all generators of 5.0 megawatts or greater pay an annual $800 registration fee.
- The requirement that all generators have a four quadrant meter and telecommunications capability to transmit the hourly data. These meters can cost between $1000-$3000 installed and a dedicated phone line may be required.
- The generator requires a new utility account, with a fixed monthly charge in the range of $10 to $30 per month, depending on the utility.
- It sounds expensive, especially for very small generators. Can you make money?
The OPA does not believe that very small, residential scale projects will make a profit under the Standard Offer Program. Residential scale generators are welcome to participate in the Standard Offer Program.
Homeowners may be motivated by reasons other than making a profit. The Standard Offer Program was designed to reduce the barriers small generators were facing in the competitive bidding processes that were previously available. It is up to each project to satisfy its own decision criteria.
In some cases, particularly the very small projects, another program—called Net Metering—might be a more satisfying way to get involved.
- What is the Net Metering Program all about?
Small unlicensed generators—less than 500 kilowatt capacity—using renewable sources are able send electricity to the distribution system in return for credits toward their energy costs. While the costs of generation and connection remain, there are no licensing fees and the metering requirements are less onerous.
For more information please visit: The Ontario Ministry of Energy website information on Net Metering. You may also wish to review the FAQ on the RFP website.
- Which program do you recommend?
It is important that each developer decide what is in their own best interests. There is a great deal of information available from a variety of sources, to help you make your decision. And, although the Standard Offer Program will not be finalized until the Fall, we have created a brief outline that will help you make some early decisions…
