The Two-Year FIT and MicroFIT Review Report

Published: 04/20/2012

By Jason Bullen, Stuart English, Colin Ground, Robert Lysy

On March 22, 2012, the Two-Year FIT Review Report (“Review Report”) was released by the Government of Ontario disclosing the results of Ontario’s microFIT and FIT Scheduled Program Review. The Review Report made strategic recommendations in six areas to ensure the long-term success and sustainability of the programs. The areas are:

1. continuing commitment to Clean Energy;
2. streamlining processes and creating jobs;
3. encouraging greater community and Aboriginal participation;
4. improving municipal engagement;
5. reducing prices to reflect lower costs; and 
6. expanding Ontario's clean energy economy.

The Review Report also recommended expansive revisions to the FIT and microFIT 2.0 programs rules and contracts. The draft FIT 2.0 program rules and contract were released on April 5, 2012. Notable changes to the program involve pricing, the application process and the availability of contracts.

Pricing

Prices for FIT solar contracts will be reduced, depending on the size and type of project, by 9.6% to 23.1% and prices for wind contracts will be reduced by 14.8% in order to reflect lower capital costs. MicroFIT solar prices will also be reduced by approximately 31%. Prices for hydro, biogas, biomass and landfill gas project contracts remain unchanged.

Application Process

FIT and microFIT applications will no longer be accepted on an ongoing basis but only during respective application windows. Applications will be also no longer be accepted on a “first come, first served” basis but will be prioritized using a point system, where points are given based on applicant type, municipal support, Aboriginal support, project readiness and electricity system benefit. A minimum of 1 point is required to be eligible for a contract. Furthermore, even if projects qualify for these points, contracts may not be granted as a 2015 target of 10,700 MW of non-hydro renewable energy generation has been established. This target includes contracts already awarded, so in reality only 1,000 to 2,000 MW remains to be filled by 2015 (depending on the extent to which existing contracts are realized).

The Ontario Power Authority (“OPA”) will implement transition windows in 2012 to allow suppliers with existing FIT contracts to withdraw from the FIT Program and have their security returned. Pre-existing FIT applications can be revised in accordance with the new process and eligibility requirements. The first such transition window to open will be for FIT applications for projects with a capacity ≤ 500 kilowatts (kW). FIT applicants for larger projects that wish to reduce their capacity to ≤ 500 kW will be permitted to resubmit their application during this “small FIT” transition window. The OPA is planning to award 200 MW of “small FIT” contracts as soon as possible. Applicants must revise pre-existing microFIT applications in accordance with the new rules and eligibility criteria. All microFIT projects wishing to apply or re-apply under the new program rules will now need to submit application security. The OPA is planning to award 50 MW of microFIT contracts as soon as possible.

The OPA is accepting feedback and commentary on the 2.0 FIT and microFIT draft rules and contracts until April 27, 2012. All comments are to be made on the submission form available on the OPA website . The final rules and contracts for the programs will be posted in early May 2012. The date for re-launching the FIT and microFIT programs under the 2.0 rules and contracts has yet to be announced.

The Cassels Brock Renewable Energy and Clean Tech Group brings together a multi-disciplinary team of top-ranked lawyers with a wealth of expertise in electricity, infrastructure and project/equipment finance, environmental assessment and approval, government relations, land development and real estate, public-private partnerships and intellectual property. Our team is skilled at helping clients respond to the risks and opportunities presented by government regulations and programs, such as FIT and microFIT, aimed at reducing greenhouse gas emissions, or “carbon footprints,” through, for example, the development of alternative renewable energy resources.