This article is another in the series looking at the all-important Feed-in- Tariff (FIT) and its ramifications, from the legal standpoint that will impact energy producers and consumers well into this century.
Background
In 2009 the Ontario provincial government made a significant policy shift to encourage the development of renewable energy generation in the province. With the introduction of the Green Energy and Economy Act, 2009 the province embarked on a new approach to incentivise the development of renewable power generation.
Ontario has a long history of renewable energy. Early in the last century Ontario harnessed the power available in many rivers and in particular the water that would have fallen wastefully over Niagara Falls. However, early development in this area was undertaken by a monopoly that came to be known as Ontario Hydro. The power from Niagara and other similar facilities was so much a part of the provincial consciousness that Ontarians, to this day, refer to electrical power as ‘Hydro’ power despite the fact that less than half the electricity in the province is generated in this fashion.
If we fast forward about one hundred years to 2009 and a time in which the former monopoly had been disassembled, by a previous government, around the turn of the millennium the province had just made a commitment to eliminate coal generation as a source of power. To realize this commitment other sources of power were needed. With the introduction of the Green Energy Act the province attempted to do just that.
One headline aspect of this new green energy regime was the Feed in-Tariff (FIT) that offers preferential prices for power generated by renewable sources and twenty year contracts to help would-be developers obtain financing. Another key element of the new legislative program was the introduction of the Renewable Energy Approval (REA) that was intended to bundle most of the environmental assessment and related approvals into one efficient and timely approval process.
The Renewable Energy Approval
The REA sounds like an excellent idea – and it is! Making the Ontario Ministry of the Environment (MOE) the front line agency for approval was exactly what was needed. Most of the approvals that would, in the past, have been needed for a renewable energy project were already the responsibility of the MOE. What has become apparent since its introduction, however, is that coordinating the various bodies that feed into the approval process can be challenging.
While the MOE is the main window into the process for project proponents many other agencies or ministries feed into the process. Two of the more significant such bodies are the Ontario Ministry of Natural Resources (MNR) and the Ministry of Tourism, Culture and Sport (Culture). MNR has responsibility for, among other things, wildlife and endangered species and Culture’s responsibilities include archaeological heritage. Without describing the specific requirements of MNR or Culture it is easy to see that they could be significant depending on the nature of a project that is proposed and the impacts its construction and operation could have. As such, the amount of coordination between MOE, MNR, Culture, and other ministries in the REA process is significant.
This was anticipated at least to a certain degree and the Green Energy Act also created the Renewable Energy Facilitation Office (REFO) to assist in the coordination of the various interests within government. With a three year track record, observers have commented that the REFO was perhaps less organized than would have been desirable initially. To its credit, the REFO has continued to evolve over time and has received more favourable reviews as time has passed.
Another element of the REA that was intended to facilitate development was the introduction of a six month service guarantee related to the time it would take to either be granted or refused the approval. The idea is that once the MOE receives a ‘complete’ application it will make a decision regarding the REA within six months. Again, this sounds great. However, real life can be a little different than the headlines and this is no exception to that rule.
Faced with a complex approval to consider, the MOE has understandably moved much of the work required for the approval to the pre-application stage of the process. Consequently, proponents of renewable energy projects have found that it can take around two years to prepare a complete application for a wind development and close to a year for a sizable solar facility. While proponents and their consultants are getting better and more efficient in the preparation of REA applications with experience, the process remains somewhat more time consuming than was originally advertised.
Appeals
At the other end of the approval process is the potential for appeals of issued REAs. To provide some certainty of process and to ensure appeals were dealt with promptly, the test on appeal was made quite difficult to meet and a deadline for the appeal process was set at, a rather familiar sounding, six months. So far only REAs for wind projects have been appealed and none, at the time of writing, have been successful. Thus far, no solar or biogas REA appeals have been brought.
It is unclear how many other REAs will be appealed or whether they will be successful. What is clear is that the renewable energy sector in Ontario is well into a new phase. It will be interesting to see how it continues to evolve and how it looks when seen from the point of view of the future.
About the Author
Adam Chamberlain is a partner in the Toronto office of BLG who practises environmental and energy law with a focus on the development of infrastructure such as mining, energy, transportation, waste, wastewater and water supply facilities. Adam can be reached at achamberlain@blg.com
