AESO Releases Key Information regarding the Renewable Electricity Program and Announces an Education Session on Capacity Markets
On January 19th and 31st, 2017, the Alberta Electric System Operator (the AESO) provided additional guidance regarding project eligibility, updated its timeline for the first competition under Alberta’s Renewable Electricity Program (REP) and posted the consolidated stakeholder comments on the key provisions of the Renewable Electricity Support Agreement (RESA).
This post provides an overview of the new details regarding the REP and an update with respect to the upcoming AESO education session on Alberta’s capacity market to be held in Calgary on February 7th, 2017.
1. Alberta’s Renewable Electricity Program
“New” and “expanded” projects
The REP is only available for new and expanded projects and the AESO’s recent guidance clarified for the first time what this means. Specifically,
New projects may include reusing a previous site, but only if:
- there has been no renewable generation on that site since September 1, 2016; and
- all generating units and other equipment and facilities are new. However, pre-existing transmission lines and infrastructure such as roads and utility services will not disqualify a site.
Expanded projects must be true expansions. The REP cannot be used to replace existing renewable energy generation, or any generating units or equipment that have been in use at any point since September 1, 2016. An expansion project must be separately metered from any pre-existing projects.
In order to prevent collusion during the bidding process, the AESO has limited participation in multiple REP projects. A party may only be a “Control Team Member” (a party who owns or controls a majority interest in a project, or who is a Project Team Lead) for one project. However, that party may still be a “Non-Control Team Member” (a party with a minority interest or other involvement who is a not a Project Team Lead) in other projects.
Project timelines and fees
The first stage, the Request for Expressions of Interest (REOI), is set to commence in late March 2017.
The second stage, the Request for Qualification (RFQ) is scheduled for April 2017. At this stage, bidders must demonstrate compliance with the following three categories:
- project eligibility;
- financial strength and capacity, including a demonstrated commitment for 51% of the required project equity, from providers with a tangible net worth of at least $250,000 per MW of proposed project capacity (proportionate to the amount of their investment). For example, a 40% equity provider on an 8 MW project must have a tangible net worth of at least $800,000 in order to count; and
- development, construction and operational capability.
At the RFQ state, bidders are also required to pay a competition fee. The fee for a first bid is calculated as $1,000/MW of nameplate capacity, although with a minimum competition fee of $10,000 and a maximum fee of $50,000, projects in the 5 to 10 MW range will be paying the same fee, as will those 50 MW or greater. The competition fee payable for any subsequent bid by the same bidder is a flat fee of $2,500.
The third and final stage, the Request for Proposal (RFP), has a target date of mid-September 2017, with the successful projects to be selected in December 2017.
Consolidated Stakeholder Feedback on the Renewable Electricity Support Agreement
The AESO released the redacted stakeholder feedback on the key provisions of the RESA. These redacted comments can be found here.
The AESO indicated that it is still conducting its review of the stakeholder comments and intends to provide updated RESA term sheets at the REOI stage (late March 2017) and a full form of RESA at the RFQ stage (April 2017).
2. Capacity Market Design Education Session
The AESO also announced that it will hold a capacity market design education session on the afternoon of February 7th, 2017, at the Metropolitan Conference Centre in Calgary. The AESO has engaged Charles River Associates to present at this session.
Stakeholders will also be able to participate remotely. Further details, including RSVP information (for both in person and remote attendance), are available here.
Although sustainable biomass was included as a renewable energy resource in the Sustainable Electricity Act passed in October 2016, it appears that further details are yet to be released regarding what types of biomass will be eligible for the REP. Stay tuned for further updates.