New Procurement Process for Large Renewable Energy Projects: An Update
We recently highlighted some important changes by the Ontario Power Authority (the “OPA”) to Ontario’s renewable energy procurement program for microFIT, Small FIT, Large FIT and Contract Capacity Set-Asides. Perhaps the most significant of these changes originated in an Ontario Ministry of Energy directive, issued on June 12, 2013, which instructed the OPA to replace Large FIT Projects (over 500 kW) with a new competitive procurement process to be developed based on feedback from municipalities, aboriginal communities, industry associations, the general public and other stakeholders.
On December 2, 2013, the Ministry of Energy released Achieving Balance: Ontario’s Long-Term Energy Plan(“LTEP”), a comprehensive strategy of energy power generation from now until 2025. Importantly, the LTEP provides guidance on the capacity and timing of new resources to be procured under the OPA’s large renewables procurement (“LRP”) process. For example, the government plans to extend the existing renewable energy in-service target of 10,700 MW for wind, solar and bioenergy to 2021 and increase the hydro-electric power target to 9,300 MW (from 9,000 MW) by 2015. In each of 2014 and 2015, the target is to procure up to 300 MW of wind, 140 MW of solar, 50 MW of bioenergy and 50 MW (45 MW in 2015) of hydro-electricity. Any capacity that is not procured or developed under existing contracts is to be reallocated for 2015. For more on the LTEP please click here and here.
After exhaustive consultations, meetings and webinars with community and industry stakeholders, the OPA is now well on its way to finalizing a set of recommendations and next steps for the development of the LRP. The LRP is intended for projects over 500 kW in areas with sufficient connection availability.
The OPA is seeking to roll out the LRP before the end of Q1 2014, beginning with an open Request for Qualifications (“RFQ”) process, followed by a Request for Proposals (“RFP”) process for qualified applicants later in 2014. The RFQ stage will focus on “qualifying” applicants and the RFP stage will concentrate on project-specific details. The final set of RFQ criteria is expected to be published by mid-June.
The most recent interactive OPA webinar on January 22, 2014 (PowerPoint slides can be accessed here) included some important details relating to the RFQ component of the LRP. Briefly, these proposed requirements include:
- Stage 1 – Completeness:
- This stage involves confirmation that accurate materials have been provided by the applicant and appropriate fees have been paid.
- Stage 2a – Mandatory Requirements (Applicant):
- This stage involves a detailed assessment of the applicant’s development experience, including experience of the company (i.e., the proponent group behind the project), the employees and other team members. This is done by measuring the applicant’s “experience with aggregate (total) proposed project capacity”, so larger projects will require larger project teams and more experience.
- The applicant must also demonstrate the requisite financial capability.
- Stage 2b – Mandatory Requirements (Project Questionnaire):
- This questionnaire is meant to gather preliminary details about the project, including general location, fuel type/supply, contract capacity, connection point and line distance and so on.
- Stage 2c – Mandatory Requirements (Community Engagement):
- This stage, perhaps the most important of the RFQ criteria, assesses evidence by the applicant of early and meaningful community engagement activities for each proposed project, including a review of municipal or aboriginal equity interests in the project.
- Not intended to overburden communities; no significant site due diligence expected to be completed at this stage.
- The Minister has indicated that community engagement will be crucial at both the RFQ and RDP stages. There will be considerably more community engagement envisioned for applicants who qualify for the RFP stage.
A more fulsome description of the preliminary set of RFQ criteria can be found here.
Stay tuned for further updates on the LRP program – the OPA is expected to publish draft RFQ materials for additional feedback in March 2014.