OPA Recommendations for Large Renewable Procurement

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The Ontario Power Authority (OPA) recently published its final Large Renewables Procurement (LRP) recommendations to the Ministry of Energy. The report follows the OPA's interim recommendations published in August 2013 and incorporates the OPA's findings received through community outreach activities held from December 2013 to February 2014.

Following the release of Ontario's Long Term Energy Plan (LTEP) by the Ministry of Energy on December 2, 2013, the OPA received a direction from the Ministry of Energy regarding the LRP. This direction set out the LRP technologies, capacity targets and timing as summarized in the table below.

LRP Targets

  Technology (MW)
Year Wind Solar Bioenergy Hydro-electric
2014 300 140 50 50
2015 300 140 50 45
2016 Any capacity that is left un-procured in 2014 and 2015 is to be made available for the LRP in 2016, along with any capacity from large renewable energy projects that expire or terminate prior to the launch of the 2016 procurement.

The OPA is proposing to conduct a two-phase procurement process for each of the 2014 and 2015 procurement rounds using an initial RFQ process to qualify applicants who wish to participate in the LRP followed by an RFP process to evaluate the projects proposed by qualified candidates. The combined RFQ/RFP process for each procurement round is expected to take 12-16 months to complete.

In summary, the OPA's key final recommendations to the Ministry of Energy were:

  1. RFQ Phase
    • Include detailed applicant experience and financial capacity requirements.
    • Do not include community engagement requirements – leave this to the RFP Phase.
    • Link developer experience requirements with fuel type and project size.
    • Increase the suggested RFQ fee (currently at $1,000 - $10,000).
    • OPA to provide early and thorough connection availability information.
    • Provide direction regarding the priority ranking of the LRP process vis-à-vis other procurement program particularly in connection challenged parts of the province.
  2. RFP Phase
    • Use rated criteria rather than priority points to evaluate projects.
    • Include various degrees of rated criteria for community engagement.
    • Encourage Aboriginal, municipal and community (e.g., co-op) participation through both direct (e.g., price adders) and indirect (e.g., support resolutions, community benefit agreements) means.
    • Include flexible pricing mechanism that addresses high and low energy demand periods.
    • Require all LRP projects, both Tx and distribution system connected, to respond to IESO dispatch instructions.
    • Consider requirements for applicants to demonstrate resource availability as part of the RFP.
  3. General Program Requirements
    • No project size limits. Grid connection limitations and community engagement processes will naturally act to define appropriate project sizing.
    • Carefully consider consequences of program-specific agricultural land or land-use restrictions.
    • Consider requiring projects to connect to the nearest or second nearest connection point.
    • Project density restrictions should not be included.
    • Update connection resource availability as other procurement programs (e.g., HESOP Expansion Stream, FIT 4.0) tap into connection resources.
    • Maintain FIT-like change of control and assignment restriction prior to contract offer and consider price reduction for change of control post contract offer up to commercial operation.
    • Require community input into proposed applicant changes of control.
    • Require independent third-party review of Ontario Power Generation applications to ensure a level playing field with other qualified applicants.
  4. Recommendations for Government
    • The Ministry of Energy should provide common responses to renewable energy procurement program participants on common policy issues (e.g., pricing).
    • Develop consistent decommissioning policies.
    • Allow pre-contract environmental site due diligence and community engagement to count toward EA or REA requirements.
  5. Integrate innovative technology into the LRP (i.e., integrating energy storage elements into renewable generation facilitates).
  6. Integrate out-of-province waterpower facilities into the LRP.

Next Steps

The OPA is intending to post the draft RFQ by the end of March 2014. The OPA is also working to provide detailed connection availability as soon as possible.

The full text of the OPA recommendations and related materials can be found at: http://www.powerauthority.on.ca/large-renewable-procurement

 

Topics:  Canada, Energy, Procurement Guidelines, Renewable Energy, Utilities Sector

Published In: Energy & Utilities Updates, Government Contracting Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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