Feed-in-Tariff review: Green Party submission

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RE: Green Party of Ontario Submission to FIT review

Dear Deputy Minister Amin;

The Green Party of Ontario believes that conservation and renewable energy are essential to Ontario’s economic prosperity and quality of life.  We support the Feed-in Tariff (FIT) program.  Governments around the world are adopting FIT programs as a sensible way to support the transition to sustainable energy systems. 

However, we have serious concerns with the Ontario government’s implementation of renewable energy and the limited scope of the program.  We offer these comments in a spirit of constructive criticism in order to strengthen the FIT program.

FIT Review Process

The FIT review process is problematic.  Although stakeholders expected the FIT review this fall, the government gave no notice that contracts submitted two months prior to the review would be suspended.  Freezing contracts during the review process is causing cash flow challenges that are killing jobs and potentially bankrupting local businesses.

While the Green Party understands  and supports the need for the review, there is no need to suspend contracts already in process.  Similarly, it would be a simple matter to pre-approve new submissions for microFIT and community power projects during the review process with the understanding that the approvals will be at the new lower prices. This would protect ratepayers while ensuring that business does not come to a complete stop.

Efficiency and Conservation

The cheapest and greenest kilowatt is the one that is never produced.  The most responsible and effective way to protect individuals and businesses from rising energy prices is to make conservation and energy efficiency the government’s top priority.  Currently the government is not meeting its conservation targets, even though demand reduction saves the province and ratepayers money. 

Although conservation programs may be outside the scope of this review, the FIT program is needlessly limited in scope.  The government should strongly consider a FIT like program for conservation.  Providing financial incentives for homeowners, tenants and businesses to reduce electricity demand is the most efficient and cost effective way to help people save money by saving energy.  Technology exists with smart meters to measure conservation, and entrepreneurs have developed businesses that can measure and monetize conservation.  A FIT like program would facilitate a market for conservation by providing financial incentives to increase efficiency and reduce demand in an effective and affordable way.

Local Participation, Decision making, Benefits

One of the GPO’s primary concerns with the implementation of green energy in Ontario is the lack of local participation, benefits and decision making.  We are also concerned that the government has allocated most of Ontario’s grid access to commercial projects and prioritized grid access for foreign owned corporations. For renewable energy policy to be sustainable, opportunities for local participation and benefits must become a priority.

The GPO believes all green energy projects should require some local ownership and decision making, with benefits accruing in part to the local community hosting such projects.  Best practices in countries like Denmark and Germany show that successful implementation of renewable energy requires community participation and benefits.

The government should consult stakeholders on local ownership requirements for commercial scale projects.  We recommend a minimum local equity component of 15% prior to approval of any privately owned, commercial scale green energy project.  Alternatively, commercial projects could meet local ownership requirements by providing 15% of gross project revenues to the host municipality or a registered charity in the host community. In addition to providing economic opportunities for individuals, businesses and community groups, local participation or ownership should be expanded to include municipalities and municipal owned utilities, which are currently excluded from the FIT program.

Community and locally owned green energy projects should have priority access to Ontario’s grid.  Projects that have widely engaged local citizens in ownership should have the right of first refusal for available grid access, especially on crown land.  Preferred access to the grid should be allocated on a sliding scale based on the extent of local participation.  That is projects with 100% local ownership access the grid first and those with 15% local ownership go last.

The GPO supports a loan guarantee program to facilitate community owned green energy projects. We also support price adders for community projects.

The GPO believes it is essential to restore local decision making for energy projects with mechanisms that enable the province to fulfill its responsibility to provide a reliable supply of electricity.  One way to achieve this is to restore full zoning and approval authority to municipalities with approved plans to achieve renewable energy and conservation targets. 

The province should require municipalities to establish committees of diverse stakeholders to pre-approve acceptable and unacceptable locations for commercial scale energy projects. Such plans should be in place before commercial scale projects are approved by the province.  Such an approach empowers municipalities to determine the appropriate type, scale and location of energy projects in their communities.  The province would maintain science-based, province-wide regulatory standards.

The province should establish a time line for municipalities to develop community energy plans as part of their official plans.  Incentives should be established for municipalities with approved net zero energy plans.

The GPO believes that the financial benefits from energy projects should be available to all members of host communities.  This can be achieved through pooled land lease arrangements that provide financial compensation for adjacent land owners to commercial scale green energy projects.  In addition, municipal governments should receive annual tax revenue from green energy developments.

Transparency, Stability, Accountability

To succeed, the FIT program must be open, transparent, accountable and stable.  Lack of transparency in determining FIT prices, back room deals with companies such as Samsung, unannounced policy and prices changes, and confusion about available grid access have undermined confidence in the FIT program and hurt local businesses.

The determination of FIT prices requires a transparent formula that provides a reasonable rate of return for investors while protecting ratepayers.  The province should have a transparent plan with a budget and a schedule for adding new capacity with a predetermined formula that lower prices at regular intervals when input costs decline.  This approach will provide a predictable and stable policy framework to make investment decisions.  Ratepayers need assurances that government has a plan to take advantage of advances in technology and manufacturing efficiencies to lower prices.

Far too many people have established businesses or invested in green energy projects only to subsequently learn that there is no grid access in their area. This is more than a mere policy oversight; it is fundamentally unfair.  Government has a responsibility to ensure that transparent, accurate and updated information on grid access is easily available across the province.  This transparency should include information identifying who and where grid access has been reserved for development. In addition, information on where projects are in the approval and development process should be easily accessible.

Government needs to streamline the process for microFIT projects.  Bureaucratic delays  and conflicting rules are creating unnecessary expenses for small scale projects.  In addition, Hydro One must increase interpretation of the IEEE standard to increase grid ability from 7% to 15% for microFIT applications.  Estimates suggest there are $400 million of microFIT applications stranded under the current interpretation.

Transparency includes ongoing science-based research on the health, safety and environmental impacts of all sources of energy.  The GPO recommends that the government conduct research on the health effects of all sources of energy so that comparable data is available to make informed choices about energy sources and the best regulatory framework to protect health, safety and environment.

Transparency also requires pricing studies that incorporate full cost accounting for all sources of energy.  It is important to measure capital costs, operating expenses, environmental and health costs, decommissioning, and  long term disposal and storage costs.

New Technologies

Now is a good time to consider new technologies for inclusion in the FIT program.  As already mentioned, using a FIT model to create market incentives for conservation and energy efficiency could save the province substantial money in avoiding costly new sources of generation.  Government should determine whether a FIT program for combined heat and power or the standard offer approach is the more effective and efficient way to expand CHP capacity.

The FIT review process should consider incorporating the following thermal technologies into the FIT program: district energy systems where heat steam is not supplied by incineration of waste, clean energy recovery systems, geothermal and solar thermal.  Using the FIT program to encourage solar thermal domestic water heating systems is an especially cost effective way to reduce demand.   The GPO is opposed to other thermal technologies for applications, including the disposal of solid waste, incineration, gasification or energy from waste, for financial, health and environmental reasons. (Note: this paragraph was revised on Jan. 16, 2012 to make our position on thermal technologies more clear.)

Government must move forward with smart grid investments to support conservation and demand management programs and to incorporate renewables in a more efficient and effective way.  Where appropriate government should consider including smart grid and storage systems in the FIT program.

Conclusion

The world is on the cusp of a new energy era. Renewables—including solar, wind, biomass, hydro and biogas—are an essential part of Ontario’s energy future. The Green Party believes all Ontarians should have the opportunity to become renewable energy producers and earn income by generating green power for the grid. We support a FIT program that provides a transparent and stable investment climate for Ontario residents, communities and businesses.

We look forward to working with you to strengthen the FIT program in ways that benefit our communities and our local economies. 

Thank you for your consideration of my comments.

With cordial regards,

Mike Schreiner, Leader
Green Party of Ontario  

Submitted December 12, 2011 to:

Ontario Power Authority
Attn: Fareed Amin
Ministry of Energy
900 Bay Street, 4th Floor
Hearst Block
Toronto ON M7A 2E1
2yearFITreview@ontario.ca