Ontario Commercial Rooftop Solar Generation Projects:
Looking Forward
June 19, 2014
Power Advisory LLC
Jason Chee-Aloy
Tel: 416-303-8667 Email: jchee-aloy@poweradvisoryllc.com
Today’s Discussion
 Ontario Power System Needs
 Procurement Processes
 IESO/OPA Merger
 Regulatory Policy and Net Metering
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Ontario’s Future Supply Gap
Indication of requirement for additional capacity,
beyond total resource commitment
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Ontario’s Future Supply Gap Underestimated in Long-Term
Energy Plan
 The earlier removal of Pickering moves the need date for new resources
forward to 2018
 Disruption to the refurbishment schedule at Darlington and Bruce B
increases the resource requirement beyond 2022 through to 2032
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Procurement Processes
 OPA likely to re-start microFIT/FIT (< 500 kW)
 Processing applications
 FIT 3
 OPA likely to re-start Large Renewable Procurement (LRP) I process
(> 500 kW)
 Final RFQ
 Draft RFP
 Maybe draft contract
 IESO/OPA merger likely to not frustrate re-starting microFIT/FIT and LRP I
 LRP II and LRP III may be subject to change
 microFIT/FIT and LRP I are still objectives in LTEP, therefore will likely
continue in parallel to merger and afterwards
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IESO/OPA Merger
 Unlike Bill 75, OPA is being folded into IESO
 IESO governed by the Market Rules and IESO Board of Directors (BOD)
have rule making authority
 IESO will act more independently than OPA
 IESO BOD to determine protocols to ensure wholesale market operations
and contract management do not present conflicts
 IESO/OPA merger may happen quicker than expected
 Annual Energy Outlook reports
 Scope?
 Could drive changes to LTEP and solar generation policies and procurement
targets
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Changing Regulatory Policy – Distribution and Low Volume
Customers
 In many jurisdictions, including Ontario, there is a growing paradox
 Utilities (e.g., LDCs) recover costs through fixed charges and variable rates
 Variable rates linked to volumetric consumption (i.e., energy draw), so when
consumers decrease consumption LDCs lose revenue (i.e., losing revenue
resulting from “sales”)
 Problematic for LDCs because less revenue means less cost recovery and less
profitability
 This can provide disincentives for LDCs to administer and support CDM
programs, distributed generation (e.g., solar, combined heat and power, etc.),
and other technologies (e.g., storage, etc.) despite policy objectives
 OEB started consultation on “revenue decoupling”, proposing to drop
variable rates for low volume electricity customers leaving only fixed
charges (i.e., “decouples” revenues from sales)
 Arguably takes away above disincentives, therefore helpful for rooftop solar
generation but controversial
 e.g., front page of June 17, 2014 Toronto Star and June 19, 2014 editorial in the
Toronto Star
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Revenue Decoupling Across North America
 As of 2013, in the U.S., over 25 electric LDCs in over 13 states adopted
some form of revenue decoupling (but different to OEB’s proposal)
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Why is Revenue Decoupling Important for Commercial Rooftop
Solar Generation?
 LDCs may have disincentives to support rooftop solar generation without
revenue decoupling, as solar energy production occurs when energy
consumption is highest, therefore decreasing LDCs revenues
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Declining Solar Generation Costs and Rising Total Costs to
Electricity Customers
 Ontario has a “perfect storm”, total electricity costs to customers are
rapidly increasing while costs to install solar rooftop installations are
declining, therefore commercial rooftop solar generation may become
economical after 2020
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Net Metering
 Projections of costs to customers and rooftop solar installation costs show
that consumers may not require mechanisms like microFIT and FIT after
2020 to install rooftop solar generation
 Therefore, mechanisms like net metering will likely be more effective in the
future to incentivize uptake of rooftop solar generation
 Less transaction costs, clarity in rate structure, less administration, etc.
 However, net metering will only work effectively if LDCs do not have
disincentives to administer and support rooftop solar generation
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LDCs need to recover costs to serve their customers and maintain their assets
Customer classes need to be effectively determined
Costs need to be efficiently allocated across customer classes
Effective design of rates and charges per customer classes are essential
 Net metering factors into rate design
 Therefore, pending on the final OEB revenue decoupling decision, net
metering may be much easier or much harder to design and implement
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Going Forward
 CanSIA has a decision to make in Ontario – given that the LTEP supports
development of net metering, how much effort should be given to present
issues with microFIT/FIT versus development and implementation of net
metering?
 e.g., scope of DG Task Force?
 If sufficient effort is to go to development and implementation of net
metering, heavy participation in developing and changing applicable
regulatory policies will be required before the OEB
 Regulatory economics
 Rate design
 Integrated resource planning (i.e., costs-benefits of rooftop solar generation,
etc.)
 LDC capital plans
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