The Canadian Business Law Blog

Earlier this year the government of Ontario enacted the Green Energy Act.  The Act amends 21 different Ontario statutes and several elements are not yet in force as the government continues to work toward implementation.   The intention of the Act is, in part, to help promote the growth of clean, renewable sources of energy such as wind, solar, hydro, biomass and biogas.  Assuming that all elements of the Green Energy Act are eventually put into force, two of the most exciting aspects are the “right to connect” and the “feed in tariff program”.

Subject to certain conditions, the “right to connect” creates an obligation for utilities to grant grid access to green energy projects.  The utilities are, in turn, entitled to recoup the costs of permitting such access by spreading those costs equally across their entire rate base.   I understand that there are some wrinkles to be ironed out in this concept, particularly where it relates to portions of the current Ontario electricity grid that are “reserved” to carry nuclear power from the province’s nuclear generators.

The “feed in tariff program” works hand in hand with the right to connect and sets a fixed rate at which  utilities are required to purchase power generated by renewable energy projects over the life of a 20 year contract.  Different rates are set for energy derived from different renewable sources, with energy from solar generally commanding the highest rates.  All  rates are intentionally set at above market rates in an attempt to help producers of renewable energy offset  the high costs associated with starting up a project which might otherwise be prohibitive. The feed in tariff program  is based on models already in place in parts of Europe.

Many other changes implemented by the Green Energy Act will assist and encourage the production of renewable energy in the province including changes to zoning and local approval requirements.  For renewable energy businesses, the Act helps to level the playing field (or, some might say, tilt it slightly in favour of the small upstart producers) and will hopefully  act as a catalyst for more renewable energy development in the province of Ontario.