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Market News

 June 20, 2007
Ontario to develop 'clean energy' standard offer

 Toronto, Canada (GLOBE-Net) -- Building on its Standard Offer Program (SOP) for renewable energy, the Ontario Power Authority says it will develop a new 'Clean Energy' SOP that will provide a set tariff for power from sources such as combined heat and power (CHP) or electricity generated as a by-product of another process. The Power Authority also announced it is seeking potential CHP projects of all sizes.

The Renewable Energy SOP gives small producers of renewable energy -- wind, solar, biomass and small hydro -- a fixed price for electricity generated into to the provincial power grid. The OPA will purchase electricity produced by wind, biomass or small hydroelectric at a base price of 11 cents per kilowatt-hour. The fixed price for solar photovoltaic will be 42 cents per kilowatt-hour.

The Clean Energy SOP will provide a similar incentive for three categories of small energy generation:

  1. Natural gas fuel fired combined heat and power (CHP) projects
  2. By-product fuel fired generation project
  3. An under-utilized energy generation project

These types of energy can increase overall energy efficiency by maximizing the use of fossil fuels and other energy sources. Typical applications may include greenhouses, hospitals, universities, industrial facilities, or natural gas pressure regulating stations.

Eligible clean energy projects must:

  • be located in Ontario
  • have an installed generating gross nameplate capacity of no more than 10 megawatts
  • be connected to an eligible distribution system licensed by the Ontario Energy Board and connect at a voltage of no more than 50 kilovolts
  • be metered by the local distribution company in accordance with OEB requirements
  • adhere to transmission constraint limits, as applicable.

Approved projects will be eligible to sign a 20 year agreement with the Ontario Power Authority to sell excess energy back to the electricity grid. Generators will receive a set payment of 8.10 cents/kWh during peak periods, and 4.32 cents/kWh during off-peak periods.

For natural gas CHP projects, the OPA will offer an optional spark spread hedge which covers a fraction of the generators gas price risk.

The CESOP details will be developed over the next few months. The OPA will develop draft rules and seek stakeholder input. An electronic application form and online contract management process will also be developed prior to the CESOP launch in the fall of 2007.

For details on the proposed CESOP rules, click here.

The Renewable Energy SOP has been more successful that initially forecast. Since its inception in November 2006, 36 SOP contracts have been signed for a total of 238 MW of renewable energy.

The Renewable Energy SOP is the largest of its kind in North America and is expected to add 1,000 megawatts of clean energy to the grid over the next 10 years. The provincial government's long term energy plan includes a goal of doubling the province's use of renewables to 15,700 Megawatts by 2025, as well as increasing the use of efficient energy sources such as CHP and waste energy utilization.

Ontario seeking potential CHP projects of all sizes

The Ontario Power Authority has also issued a request for Expressions of Interest for the development of Combined Heat and Power Projects with a capacity of over 10 Megawatts.

The purpose of the CHP II RFEI is to assist the OPA in gaining further understanding on potential CHP projects that may be viable or in active development. Based on this information, the OPA will determine whether, and in which form, the OPA may launch a second CHP procurement process and how Identified Projects and their particular attributes may be considered in the procurement design.

For details on the CHP procurement process, click here.



For More Information: Ontario Power Authority