Exploring Prospects for Community Energy in Ontario in 2018 (and beyond)

Since the closing of Ontario’s Feed-in Tariff Program, the Community Power sector in Ontario has struggled to identify a clear path forward. Many of Ontario’s RECs (Renewable Energy Co-operatives) have kept busy developing their FIT pipeline, or even acquiring projects already under contract.


Here at LIFE we’ve competed the building out of our projects – most recently the Moorefield Wind Project - and while we’re pleased with what we’ve accomplished to date, we’re also thinking hard about the next steps for our co-op, and for the community power sector in Ontario.


It’s worth reminding ourselves that LIFE was among the earliest RECs, and even before the FIT program was drafted, LIFE’s volunteer Directors were pushing to move the clean energy file forward in Ontario. When the FIT emerged with the 2009 Green Energy and Green Economy Act, Ontario’s co-ops finally saw a clear and viable business opportunity that would enable communities to pool resources to develop innovative energy projects.


The lesson here is in the fact that it was only through substantial community efforts that we saw the emergence of policies that enabled “community power” to grow in Ontario. We saw our goal well before we had a policy that would enable us to get there.


(Of course we owe a lot to political champions like George Smitherman, who led the charge at Queen’s park, as well as leaders from OSEA, the Toronto Renewable Energy Co-op (TREC) and the Community Power Fund (later by the Community Energy Partnerships Program, or CEPP, now the EPP), along with allies from Germany and Denmark, who showed us what was possible.)


Ontario’s FIT program presented opportunities, and also challenges, and many participants were challenged by the timing of the FIT windows, the intensive paperwork, and in trying to finance projects in Ontario’s young market (financial institutions were initially very wary of renewable energy projects). When the rules were changed in 2012 to give additional advantage to co-ops (along with aboriginal communities, and in 2015, municipalities as well), co-ops and others took up the chance to participate, with most subsequent projects involving some degree of community participation. In FIT 5, the last round, roughly 125 of the total 150MW contracts awarded were given to community projects (with the vast majority of projects being solar PV).


Going forward, we see new grid-tied prospects for “LIFE after FIT” in areas of community net metering and electricity storage, and possibly in the development of micro-grids, which may be getting a boost from the expanding reach of blockchain technology.


Net metering (NEM) allows a generator to export their excess energy to the grid, and to draw energy when needed, and to be billed only for the net consumption (plus any fixed charges). NEM is currently available to any regular metered homeowner or business account in Ontario. But under current regulations, the account holder (usually the building owner) must also be the generator (i.e. the entity that owns and operates the generating facility), which means the co-op cannot participate as a “generator” (as it must, under the Co-op Corporations Act).


However, we are anticipating updates to the net metering regulations this year, which are expected to enable third-party ownership as well as pilot projects for virtual net metering. This combination could, when fully implemented, allow a co-op project to offset the consumption of members’ accounts on a net metered basis, thus expanding the benefits of net metering to persons whose homes are not suitable for generation (such as condo owners, or renters) and gaining the cost benefits of larger-scale installations.


Energy storage offers another promising opportunity, especially as prices have declined significantly in recent years. Storage of electricity most commonly uses batteries, including lithium-ion, although other technologies exist (such as flywheels, pumped hydro, or hydrogen). Regulations changed in mid-2017 to allow storage to be integrated alongside net metering; however, since net metered accounts apply a blended rate for power (as opposed to time of use), there is no opportunity to benefit from arbitrage (i.e. by buying power off peak and sending it back during peak times).


Still, electricity storage is an important component of a modern grid with substantial renewable energy generation, and is essential to manage renewable energy fluctuations as their contribution increases. (Note that hydro can often adjust to these fluctuations, but in Ontario we apply natural gas generation as well, especially to satisfy summer mid-day peaks. Thus gas is the principal remaining greenhouse gas contributor in our electrical system.)


The IESO began introducing non-hydro storage facilities in 2014, procuring some 34 MW of storage capacity for ancillary services to support increased reliability and efficiency of the grid. In 2015 they procured another 16.75 MW to examine technologies that can store energy when prices are lower and re-inject it at other times of the day when prices are higher. In 2017 they issued an RFP for 50 MW of ancillary services, and received 42 bids totaling 350 MW; the 50 MW was awarded between only two of these projects.


We expect to see more additions of storage based on the rollout of Ontario’s Long Term Energy Plan, which provides a 20-year roadmap for the energy sector. We’ll continue this blog soon with more information on the LTEP, as well as other Federal and Provincial initiatives including Ontario’s Climate Change Action Plan, that may suggest new opportunities for LIFE to continue advancing community power in Ontario.