LIFE After FIT: Ontario Quietly Pulls the Plug on its Feed-in Tariff Program

LIFE After FIT: Ontario quietly pulls the plug on its Feed-in Tariff Program

Ontario quietly shut down a key component of its renewable energy policy last month, marking the end of a largely successful - if often contested - effort to change Ontario’s energy landscape.

Tucked within a December 16 directive (PDF) from Energy Minister Glenn Thibualt was an change to the FIT schedule set in 2013, to shave off the final year of the program. The directive states that “the IESO shall cease accepting applications under the FIT Program by December 31, 2016, and any unallocated procurement target as of the end of that procurement process will remain unallocated.”

And so, without any kind send-off, ends Ontario’s seven-year experiment with building renewable energy under fixed-rate tariffs.

LIFE Co-op has been fortunate to have won a number of solar contracts under the FIT in 2014 (our FIT 2 projects), which are now generating power and revenues for the co-op and our partners. Our newest project, Moorefield Wind, received its FIT 4 contract last year, and looks on schedule to be connected within the next few months. (To learn how you can invest in this project please see our investment opportunities, and consider attending one of our upcoming investor information sessions.)

In view of the program's initial goals – reducing emissions from power generation, kick-starting a green energy economy, and harnessing private investment to build out new electricity infrastructure – the FIT has been an important and largely successful initiative, and its achievements are worthy of some celebration.

Smog alerts, once all too common in the Golden Horseshoe, are now a true rarity.  In the business sector, thousands of jobs have emerged in the renewable industry – though many have since disappeared as the program scaled back from its initial grandeur. And clean FIT-contracted wind, solar and biogas today produce a significant portion of Ontario’s electricity from privately financed facilities.

But the FIT has also seen its share of controversy, especially related to concerns over Ontario’s large wind projects, most of which are FIT contracted, and the rising costs of electricity for homeowners and businesses (only a fraction of which is due to the FIT). These issues, fanned by both political opponents and citizens' groups, have cost the Liberal Party significant voter support, in rural Ontario especially.

No doubt the starting FIT rates were very high, and contracts were eagerly grabbed up by local and international proponents; more than 4200 MW was contracted under the first round of the program (FIT 1). Sensing it may have served up too much of a good thing, and the government hit the brakes, engaging in a review process that effectively stalled the program for almost two years, and ended with the release of much slimmer program. Subsequently, from FIT 2 to FIT 5, only 750 MW of contracts were (or will be) issued (see Figure 1).

Figure 1: FIT Procurement 2010-2016

Source: IESOProgress Report on Contracted Supply (Q3 2016)

Rates paid under the FIT were also trimmed, especially for solar, which has been reduced by well over 50% across the board (prices vary depending on ground or roof mounted, and also according to the size of the project). Yet even while rates have been falling, each of those rounds has been oversubscribed; generally, applications are submitted representing 2 to 3 times the kW that would be contracted. In FIT 5, for instance, applications for almost 400 MW were received, when only 150 MW is to be contracted.

But while demand for participation in the FIT has remained strong, the need for additional generation is low. Ontario’s energy consumption has declined every year but one since 2008, and today stands at 1997 levels. The Province’s long-term commitment to nuclear, along with ample hydro resources and excess natural gas infrastructure, means that additional generation is unlikely to be needed for a few years, at least. (The scheduled shut-down of Pickering Nuclear Station in 2020 was delayed last year to 2024, which further reduces the urgency of building new renewables.)

Indeed, together with last year’s cancellation of LRP II (the second Large Renewable Procurement), it might seem the Province has all but abandoned the Green Energy file. However, a revised net metering program will continue – and may even expand into third party virtual net metering and the inclusion of storage. The Conservation First initiative remains in place, with a number of initiatives aimed at reducing demand and pilot projects testing new pricing and non-pricing mechanisms. Additional initiatives include large storage pilots, electrification of transport, and of course carbon taxing, all of which could help enable growth in the renewable sector in years to come.

LIFE will continue to monitor policy changes and seek out new opportunities for its members and investors; for now we're looking closely at prospects in the area of net metering, and considering prospects for electric vehicles, thermal energy generation, and even retailing for the behind-the-meter and off-grid market.

We look forward to hearing from members and others who want to help write the next chapter of our story: “LIFE after FIT”.

 

 

 

LIFE 2016 Year in Review

Though 2016 may not have been the world's cheeriest year, overall the year has been quite a success for our small community-owned renewable energy co-operative! 

2016 was LIFE's 10 year anniversary, and so we celebrated this summer with a fantastic BBQ and potluck with our members. We also used that happy time to announce dividends, so lots of celebration all around! 

On the solar front, all 18 of our solar projects are officially up and running, with the last of the paperwork wrapped up early this year by our fantastic manager Shane Mulligan. Through the partnerships we have across southwestern Ontario, our projects are producing 3010 kW, or enough to power 345 homes! 

Moving on to the wind front, we moved forward massively on the Moorefield Wind Project. We received a contract with IESO under FIT 4 in the summer, put up the wind turbine in October, and had our offering statement approved in November. Now anyone can purchase shares in the Moorefield wind project through our new offering statement. We are hoping to raise at least $350,000 in A.3 shares over the coming year.

So 2017 is shaping up to be a busy time for us on the board of directors as we aim to link members and non-members with the Moorefield wind project. We'd love for people to get in touch with us about this opportunity - and you can check out more information about A.3 shares here

To learn more about investment opportunities, we are going to host several info sessions. Our first one is in Kitchener on January 31 - please RSVP and invite your friends here: https://www.facebook.com/events/1346448405396750/

From all of the directors, we wish you all a happy new year. We hope that 2017 will be filled with even more renewable energy! 

- Sylvie Spraakman, Board Member

 

Raising the Tower!

There's a special pleasure in seeing a smile on a friend’s face, and knowing you had a role in putting it there; so it was seeing Bill Roubos’ reaction to the work on his farm this past week. “I’ve seen lots of these go up”, he says casually, referring to the 65 m turbine tower rising, in five “lifts” over 5 days, on his 180 acre farm near Palmerston. Indeed, as former head of Moorefield Excavating, and owner of Roubos Wind Energy, Bill has been involved in his fair share of wind projects in Ontario, the USA, and Europe. But it’s clear this one is different. For one thing, the Moorefield Wind turbine is (literally) in his back yard. And this wind project - given the challenges of Ontario’s energy regulations – has been some nine years in the making, with Bill overseeing every aspect of the process. This week saw the most visually satisfying step in bringing Bill’s vision to a reality, and his face was a mixture of pride, satisfaction, and at least a touch of exhaustion. “If I knew all that was involved I’m not sure I’d ever have started this,” he says. “But it’s great to finally see this happening.”

 

John Hogg, of Free Breeze Energy (http://freebreeze.com/Home.html), of Listowel, ON, has been helping Bill with the project since the beginning, and he was on hand throughout the lift. John generously explained to me many of the technical details of the process, and we hope to put together some video clips that will let him tell the story in his own words. Carlsun Energy (http://www.carlsun.com/index.html), of Port Elgin, brought its experienced team to manage all aspects of the lift, from cleaning the parts to guiding them with tie-ropes as they rose around the crane. They worked closely with the crane crew from Mammoet (http://www.mammoet.com/), a global firm with a big shop in Ayr, ON, not far from Kitchener. Though the winds slowed the process, the crew still managed to finish up before the big winds arrived Thursday.

For LIFE Co-op, of course, this is a milestone too. LIFE’s dream of a turbine began in 2006, and our early logos show the vision – “Fostering community investments in sustainable energy to reduce our environmental footprint” – saw a wind turbine as a fitting monument to the vision of sustainability. Our first attempt at a wind project near St Agatha unfortunately did not get off the ground; LIFE reluctantly pulled the plug on it in 2011, and shifted to solar in an adaptation to changes in the FIT Rules.  So it was pretty exciting to be able to help Bill with a new FIT contract, as his FIT 1 contract had terminated before he was able to get the turbine up. The current contract, a FIT 4, is held by Moorefield Wind 1 Inc., a company owned 51:49 by LIFE and Roubos Wind Energy. Although somewhat less lucrative than a FIT 1, this contract should still enable a simple payback of less than 12 years, while the project eliminates over 200 tonnes per year of carbon emissions.

LIFE is enabling its members and investors to have a part of this project through the purchase of Series A.3 investment shares; we are projecting returns to investors in the range of 5% to 5.5%, with dividend payments starting as soon as 2018.

Join us at our Annual General Meeting (https://kitchenerwaterloo.snapd.com/#/events/view/999742), or contact us at invest@lifecoop.ca, to learn more about how (and why) to invest in LIFE!

 

Moorefield Wind Project!

Mr. Roubos spent years trying to get a wind turbine on his property. He got a FIT Contract Offer, but was not able to construct all the pieces in time. He asked for an extension of his FIT contract offer, but this was not allowed. The wind turbine pieces were laying in his field for more than two years. In partnership with LIFE, we applied for a second FIT contract in September 2015. We received notification that we got the contract at the end of the August 2016. 

This is a fantastic investment opportunity! Class A.3 shares are now being sold to finance
final development and up to 25% of equity ($350,000 est.).

View How to Invest --> 

Project Details

Location: Wellington County, Ontario
Turbine: Vestas V47-500 kW
Total project cost: $1.4 million (est.)
Partner: Roubos Wind Energy Inc. (co-owner)
Consultants: Free Breeze Energy * The Paragon Group * Radicle Works