OPA provides critical FIT updates

The Ontario Power Authority ("OPA") has released three important updates to the Feed-in Tariff ("FIT") program:

1) Domestic content Q&A

The OPA has been flooded with questions about the details of the domestic content rules, which are viewed by many as a high hurdle to clear to participate in the FIT program. In response, the OPA has posted some additional details about how it will interpret the "designated activities" set out in the various domestic content tables. For example, where a designated activity refered to the manufacturing of a system that has sub-components (e.g., mounting systems), the OPA has provided additional guidance as to which sub-components must be made in Ontario for the designated activity to qualify under the domestic content rules.

2) Agricultural land restrictions for solar PV

The OPA has been directed by the Minister of Energy and Infrastructure not to enter into FIT contracts for ground-mounted solar PV projects greater than 100 kW that are located on:

• lands comprised of Class 1 or 2 soils, as designated by the Ontario Ministry of Agriculture, Food and Rural Affairs ("OMAFRA") in the Canada Land Inventory ("CLI"); or
• specialty crop areas within the meaning of the Ontario 2005 Provincial Policy Statement.

FIT applicants must demonstrate compliance with these restriction by submitting CLI maps that show the entire property where the project will be located and the specific siting of the project on that property. CLI maps are available for download from OMAFRA. Where CLI maps for the subject property show multiple soil classifications, the applicant must also include a site-specific soil study performed by a qualified independent soil scientist to confirm the CLI classifications using accepted standards.

Additionally, the government has imposed a province-wide cap of 500 MW on projects on Class 3 lands. This 500 MW cap has been allocated between the four Regional Administrative Boundary Alignments (northern, central, western and eastern) of the province (as discussed in a previous posting, 100 MW of the portion of the cap allocated to the western region has been set aside by the province, likely in connection with its negotiations with the Samsung Group). FIT contracts on Class 3 lands will be awarded on a first-come, first-served basis.

Note that the foregoing limitations do not apply to lands zoned for non-agricultural purposes as of October 1, 2009.

3) Enhanced transition options for RESOP contract holders

In a concession to those who have invested time and money developing projects under the old Renewable Energy Standard Offer Program ("RESOP"), the OPA will now allow projects of any renewable technology that have a capacity of 500 kW or less and were purchased or were in service by 11:59 p.m. on October 1, 2009 to transition to the FIT and microFIT Programs. Such projects will be deemed to have met the domestic content requirements.

Proponents holding RESOP contracts for projects that are not yet in service and was not purchased by October 1, 2009 must executed a mutual termination agreement with the OPA to be eligible to transition to the FIT. Proponents of Micro RESOP projects 10 kW and less that were purchased or were in service by October 1, 2009 will have to executed a RESOP to FIT Transition Agreement with the OPA.

Word on the street

Anecdotal reports from local distribution companies suggest that very few FIT applications have been submitted to date. However, there continues to be significant buzz from developers, particularly of solar PV projects on industrial and commercial rooftops. Just under 3 weeks remain in the launch phase of the FIT. With details like those discussed above becoming more clear, we expect to see the trickle of applications increase to a deluge by November 30.