Opportunities for Aboriginal Communities: Green Energy Act, FIT and microFITMétis Nation of Ontario –August 19, 2010

2

How Electricity Gets to You

Generation

Distribution(local delivery)

Transmission(Network)

Source: Fortis BC

Transmission(Line Connection)

Transmission(Transformer Station)

Large Customer

3

How We Got Here: 1906 - Present

1906 - 1973 1973 - 1998 1998 - 2005 2005

VERTICAL INTEGRATION(one company owns everything)

COMPETITION(many companies)

HYBRID

Market Participants(Generators, Distributors,

Retailers, Wholesalers, etc.)

Market Participants(Generators, Distributors,

Retailers, Wholesalers, etc.)

4

OPA Mandate

• Long term planner for Ontario’s electricity system

• Procure needed generation resources

• Design and administer conservation programs

5

How Planning is Done – Changing Approaches

55

IPSP

PLANNING

FIT projects

BEFORE

Generation & Transmission projects

TODAY

6

Aboriginal Projects: Putting the Pieces Together

Feed-in Tariff(FIT)

Loan GuaranteeProgram

(OFA)

Price Adder(FIT)

PartnershipsProgram(AEPP)

RenewableEnergy Project

7

OPA and Aboriginal Communities

• The OPA’s role is to design and administer programs and undertake planning activities that facilitate First Nations and Métis communities’ opportunities to:– Develop renewable generation

– Undertake conservation activities

• OPA’s consultation role involves power system planning and not individual projects

• OPA ready and willing to facilitate interaction between aboriginal communities and particular ministries, agencies and developers

8

OPA and Aboriginal Communities

• What we heard from you and how we responded– Aboriginal communities want an opportunity to

participate in the development of the renewable energy and associated transmission that the Province will develop under the Green Energy and Green Economy Act but face some obstacles:

• Access to Capital loan guarantee program (OFA)

• Capacity Aboriginal Energy Partnerships Program

• Opportunity Price Adder (FIT) and AEPP

9

The Green Energy and Green Economy Act

10

GEA Overview

• Making it happen - facilitating renewable energy

development and use

• Enabling First Nations and Métis partnership and

participation in electricity sector

• Supporting capacity development in First Nations and

Métis communities

• Increasing conservation and culture of conservation

• Creating green jobs

• Developing “smart grid” – more interactive and locally

resilient

11

First Nations and Métis Participation in Electricity Sector

• Act to be interpreted consistent with s. 35 of Constitution Act

• Minister has the power to direct consultation in relation to Ontario Power Authority activities

• Minister has the power to direct OPA to facilitate aboriginal peoples’ partnership and participation in development of renewable resources, transmission and distribution

12

Feed-in Tariff (FIT) Program

13

FIT and microFIT

• The FIT Program is divided into two streams – FIT and microFIT

• The microFIT program is highly simplified and the contract issuance process is different from the FIT program

FIT Program Stream microFIT Program Stream

Small, medium and large renewable energy projects.

Generating over 10 kW of electricity.

Very small renewable projects such as home or a small business installations.

Generating 10 kW or less.

14

FIT and Aboriginal Communities

15

Introduction to FIT Program

What is a FIT Program?

• Generators of renewable energy – from homeowners to large developers – are paid a reasonable price for the electricity they produce over the term of the contract

• Allows generators to recover expected cost of the investment plus a reasonable profit

• Can provide a predictable and stable source of revenue to reduce risks

A FIT Program provides a simple way to contract for renewable energy supply

16

Introduction to FIT Program

Standardized features of FIT Program

• Open to various renewable energy supply technologies – Wind – Waterpower – Solar Photovoltaic (PV) – Biomass technologies

• Different prices for different technologies and project sizes

• Long-term contracts (e.g. 20 years)

• Prices that aim to cover total project costs and provide a reasonable rate of return over the contract term

• Opportunities for promoting community-based and Aboriginal projects

17

Introduction to FIT Program

Objectives of the FIT Program

• Increase the amount of renewable energy supply to ensure there is enough generation and reduce emissions

• Simpler method to build new green generation

• Create new green industries through investment and job

creation

• Provide incentives for investment in renewable energy

technologies to encourage more development in the area

18

Building Transmission for FIT

• OPA will on a regular basis assess economics of building transmission to serve generation projects that have applied under FIT

• Information from FIT applications will provide support for build out of Ontario’s transmission system

PLANNING

PLANNING

FIT projectsBEFORE

Generation & Transmission projects

TODAY

19

• Opportunities for promoting Aboriginal involvement

• Pricing by technology and size

• Aboriginal Project Price Adder – Adjusts in proportion to Aboriginal Interest in renewable

energy project

• Prices aim to cover total project costs and provide a reasonable rate of return over the contract term

• Prices derived using recent market data, OPA experience with previous renewable energy contracts (Renewable Energy Supply (RES), RESOP) and experience in other jurisdictions

Contract Pricing

2020

FIT Price Schedule (August 13, 2010)Renewable Fuels Capacity Range Price (¢/kWh)

Rooftop or /Ground Mounted Solar PV ≤ 10 kW 80.2/64.2Rooftop Solar PV > 10 kW ≤ 250 kW 71.3Rooftop Solar PV > 250 kW ≤ 500 kW 63.5Rooftop Solar PV > 500 kW 53.9Ground Mounted Solar PV* > 10 kW ≤ 10 MW 44.3On-shore Wind* Any size 13.5Off-shore Wind* Any size 19.0Waterpower * ≤ 10 MW 13.1**Waterpower * > 10 MW ≤ 50 MW 12.2**Biomass * ≤ 10 MW 13.8Biomass* > 10 MW 13.0On Farm Biogas * ≤ 100 kW 19.5 On Farm Biogas * > 100 kW ≤ 250 kW 18.5 Biogas * ≤ 500 kW 16.0Biogas * > 500kW ≤ 10 MW 14.7Biogas * > 10 MW 10.4Landfill gas * ≤ 10 MW 11.1

> 10 MW 10.3

*Eligible for Aboriginal or Community Adder

**Contract term for water power extended to 40 years

2121

Aboriginal Project Price Adder

• Varying adder in proportion to % of equity ownership by Aboriginal Group, for example:– >=50% » 100% of price adder– 40% » 80% of price adder– 25% » 50% of price adder– 10% » 20% of price adder (10% minimum level required)

• Rationale– Many projects likely to be partnerships with non-Aboriginal

companies– Encourages partnerships with Aboriginal Communities– Encourages Aboriginal Community partners to maximize their

equity share

2222

Aboriginal Project Price Adder

Adder reflects incremental capital costs

Adder reflects incremental cost of debt financing for equity portion

Adder is available on a sliding scale based on equity interest

Technology WindPV

(Ground Mounted)

Water Biogas BiomassLandfill

Gas

Maximum Aboriginal Adder (cents / kWh)

1.5 1.5 0.9 0.6 0.6 0.6

23

Aboriginal Community

• “Aboriginal Community” means, for the purposes of the FIT Program, i. a First Nation that is a “Band” as defined in the Indian

Act (Canada);

ii. the Métis Nation of Ontario or any of its active Chartered Community Councils;

iii. a Person, other than a natural person, that is determined by the Government of Ontario for the purposes of the FIT Program to represent the collective interests of a community that is composed of Métis or other aboriginal individuals; or

iv. a corporation that is wholly-owned by one or more Aboriginal Communities as described in (i), (ii) or (iii).

24

Updates to the microFIT Program – August 13

• New price for ground-mounted solar PV 10kW and less– 64.2 ¢/kWh

• Program only open to eligible participants such as individuals, co-ops and farmers

• OPA to establish Advisory Panel to explore options for other participants such as commercial aggregators

Prices for Renewable Energy Projects that are 10 kW or less

Renewable

Technology

Price(¢/kWh)

Contract

Term(years)

Percentage

Escalated(%)

Solar PVRooftop 80.2 20 0

Ground-mounted 64.2 20 0

Wind 13.5 20 20

Waterpower 13.1 40 20

Biomass 13.8 20 20

Biogas 16.0 20 20

Landfill gas 11.1 20 20

25

Program Uptake - since October 2009

• microFIT– 19,000 microFIT applications representing over 170

megawatts (MWs)

– 6,100 conditional offers – 57 MWs

– 800 microFIT contracts for projects that have completed installation and are connected to the grid – 5 MWs

• FIT– Over 2,700 applications representing over 15 gigawatts

– Over 600 contracts executed – over 2000 MWs