Davies | Flash: Ontario's Green Energy Act Passed

Flash: Ontario's Green Energy Act Passed

May 19, 2009

On May 14, 2009, the Green Energy Act, 2009 was passed. It is intended to encourage the development of renewable energy in Ontario by streamlining the approvals process, enhancing connection and distribution and providing certainty in the province's power purchase arrangements.

Passed in record-breaking time, key components of the Act include:

Feed-in tariff program – A feed-in tariff procurement program will replace the Ontario Power Authority's current request for proposal process and standard offer program. This new program is intended to increase investor confidence in renewable energy projects by providing standard program rules, standard contracts and standard pricing for classes of renewable energy. Prices will be differentiated by energy source or fuel type, generation capacity and the manner by which the generation facility is used, deployed, installed or located.
Streamlined approvals process – A 'one-stop' approvals process will combine existing environmental approvals into a single new 'renewable energy approval' with province-wide standards for renewable energy projects. To minimize potential delays, the Act exempts renewable energy projects from prescribed planning approvals issued by municipalities (including official plan and zoning). The Act is to be administered to promote community consultation (including municipalities) through a process prescribed by the province. Also, consultation requirements for participation by aboriginal interests may be specified by the province.
Transmission connections – The Act authorizes incentives and cost recovery programs to encourage the expansion and upgrade of transmission and distribution systems. Transmitters and distributors will be required to connect and grant priority access to renewable energy projects if the project meets prescribed technical, economic and other regulatory requirements.
'Smart grid' – To fully exploit the potential of renewable energy, 'smart grid' technologies will be adopted to better accommodate the intermittent energy flows from wind and solar projects.
Energy conservation – Energy conservation is to become a priority in Ontario by developing Building Code conservation standards, requiring conservation and demand management plans for prescribed consumers, setting electricity conservation targets for local utilities, creating new financing tools to encourage small-scale renewable energy projects and requiring energy audits prior to the sale of homes (which a purchaser may waive).

While nuclear and hydroelectric power are expected to be the backbone of Ontario's energy mix over the next few decades, the Act should make it easier and more profitable to develop renewable energy projects in Ontario (in particular, rooftop solar). The majority of legislative changes will come into force upon proclamation and the specific details regarding the implementation of the Act will not be available until the draft regulations are released (likely this summer). Until such details are known, it is not yet clear whether the Act will spark significant new development of renewable energy projects in Ontario or what impact it will ultimately have on the price of electricity in Ontario.

If you would like additional information, please contact Alexandria Pike (416.367.6989) or Sarah Powell (416.367.6931) in our Toronto office or Hillel Rosen (514.841.6443) in our Montréal office.

Davies Ward Phillips & Vineberg LLP, with over 250 lawyers, practises nationally and internationally from offices in Toronto, Montréal, New York and an affiliate in Paris and is consistently at the heart of the largest and most complex commercial and financial matters on behalf of its North American and overseas clients.

The information and comments herein are for the general information of the reader and are not intended as advice or opinions to be relied upon in relation to any particular circumstance. For particular applications of the law to specific situations, the reader should seek professional advice.