June 25, 2007

New programs will broaden clean energy options in Ontario

In a precedent-setting move, the Ontario government is setting up a Clean Energy Standard Offer Program (CESOP), to be implemented by Ontario Power Authority (OPA) and modelled on the OPA's Renewable Energy Standard Offer Program (SOP). The first program of its kind in North America, CESOP will reduce barriers to small generators and distributed energy projects that use natural gas or surplus energy streams. As with the renewable energy program, small generators who meet CESOP criteria will be offered 20-year contracts for the power they produce by the OPA.

Through this and a new combined heat and power (CHP) program, the OPA seeks to encourage businesses and institutions across Ontario to invest in distributed generation electricity projects to fulfill their own electricity and heat requirements and, where possible, those of neighbouring facilities.

The OPA's two new initiatives will encourage organizations to use the electricity and heat generated for their own requirements and to sell incremental energy, in the form of electricity or steam, to surrounding users. These projects generally take advantage of situations where industries or groups of users require both electricity and thermal energy for industrial use, heating or cooling. They are also practical for some district heating systems and where industries have under-utilized energy streams.

The two initiatives address both small-scale and larger projects.

1) The Clean Energy Standard Offer Program (CESOP, for projects with capacity of 10 MW or less) is intended to reduce barriers to small generators who generate power using clean fossil fuels or under-utilized energy streams. The OPA will publish draft program rules, based on recommendations approved by the Ontario Ministry of Energy, later this summer. The final program is expected to launch this fall.

The CESOP will also be available for qualifying combined heat and power (CHP) applications that use natural gas or under-utilized energy streams that can generate electricity. CESOP GHP projects are appropriate for multiple settings, including industrial, commercial, institutional (IC&I) or residential applications.

The Renewable Energy SOP has been highly successful: in the first four months of the program, contracts have been executed with more than 78 projects across the province, representing some 396MW of potential capacity over the life of the 20-year agreements.

2) The OPA has also launched the second phase of its Combined Heat and Power (CHP) initiative, targeting projects with more than 10 MW of capacity. A newly-posted request for expressions of interest (REOI) is intended as the first step towards a potential future CHP procurement for larger co-generation projects. The CHP REOI will help the OPA gain more detailed understanding of potential larger CHP projects that may be viable or in active development and will help determine the need for, and scope of, any future procurement.

This follows a successful CHP procurement completed last fall - the first of its kind in Canada. In October 2006, the OPA awarded seven contracts with a total capacity of 414 MW. These projects represent a total capital investment of some $800 million benefiting communities across the province, among them Windsor, Kingsville, London, Oshawa, Markham, Sault Ste Marie and Thorold. They range in size from a two-MW district energy project in Oshawa to a 236-MW industrial application in Thorold.

Finally, the Ontario government is expanding its Renewable Energy Standard Offer Program to include waterpower projects in northern Ontario. This will increase the province's supply of clean, renewable energy, said Energy Minister Dwight Duncan.

Ontario's waterpower initiative will reduce barriers to small-scale hydro projects (10 megawatts (MW) or less) by offering these projects the opportunity to connect to the transmission system. This will help some renewable projects proceed where they might otherwise have been uneconomical. The OPA will offer small generators who meet the program criteria 20-year contracts for the power they produce, through the Renewable Energy SOP.

"This move will encourage waterpower development in the north, and add to our supply of renewable energy. It also means cleaner air, as well as a sustainable and environmentally responsible energy future," said Natural Resources Minister David Ramsay.

Paul Norris, president of the Ontario Waterpower Association, commended the government's initiative. "The expansion of the Standard Offer program will provide additional opportunities for communities, First Nations, and the private sector to invest in the North," he said.

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