RESCo Energy Inc.

It has been an interesting two weeks. If we harnessed the amount of energy that has gone into building this industry, helping create policy, and rapidly adjusting to political direction, we would have no need for new sources of energy! We are now happy to say that there is some significant light at the end of the domestic content tunnel. We can now guarantee access to supply for 2010 that meets Ontario targets and are significantly down the path of being able to do the same for 2011.

Pricing does not appear to have suffered for 2010. 2011 numbers are still being finalized but are more dependent on the number of options available and the currency exchange rate than anything else.

There is still a huge challenge and that is that designs are significantly impacted and that ability to optimize a project for a specific location and building are very limited by what is available with Ontario content.

That said, it looks like this policy may drive new businessess to Ontario, assuming that they can get assurances of longevity in the FIT program.

We have had many requests for a summary of the Feed-In Tariff program and have had some good response to this overview. Please enjoy responsibly!

RESCo FIT Summary

A great deal of the excitement around the Feed-In Tariff program is turning to concern as people have had a chance to review the hundred plus pages of documentation over the weekend. The OPA call yesterday confirmed what we found and that is that the domestic content calculations may make doing solar photovoltaic projects uneconomical or impossible to qualify for the program for the next 6, 12, or 24 months.

The issue lies in the way domestic content is calculated. The requirement for 50% local content is tough, but understandable given that the purpose of this program is to generate green energy while keeping the economic benefit of this work in Ontario. The caluculation however is set up so that it requires new assembly or manufacturing to be set-up here in order for projects to comply by the very nature that investment grade components are not made in Ontario. This means that the industry is forced to wait, yet again, for manufacturers to commit to Ontario, finance their projects, build their factories, complete their test runs, get their products certified and then build up production to meet demand.

This creates an economic as well as a supply challenge. When companies begin producing in Ontario, they will have a virtual monopoly and this is very likely to drive prices up as latent demand is very high given the hundreds of millions of dollars of projects currently waiting to move forward.

For a summary of the FIT program please contact Kevin Monsour

The OPA has released the final program documents for the Feed-In Tariff program. They can be found on the Feed-In Tarrif website. There is an open conference call and webinar on Monday September 28th from 2pm to 4pm. The details are provided below:

Toll Free: 1.866.212.9078
www.snwebcastcenter.com/event/?event_id=565

Well I was trying to provide an update but it came so fast I have had to revise this post! All annoucements are now out. Details are pending. On Sept 30th the OPA site will be updated with the program materials and applications will be accepted starting Oct 1, 2009.

The Ten Steps as outlined by the Minister’s Office are:
1. Closing 4 Coal-Fired Plants by 2010 (Sept 3, 2009)
2. Launching the $250M Aboriginal Loan Guarantee Program for Renewables (Sept 11, 2009)
3. Launching the Aboriginal Energy Partnerships Program (Sept 11, 2009)
4. Funding 20 key Transmission upgrade projects (Sept 21, 2009)
5. Launching the Community Energy Partnerships Program (Sept 23, 2009)
6. Launching the Municipal Renewable Energy Program (Sept 23, 2009)
7. Making the Renewable Energy Approval law (Sept 24, 2009)
8. Establishing Minimum Setbacks for Wind (Sept 24, 2009)
9. Release the Local Content Requirements for Renewable Energy (Sept 24, 2009)
10. Official Launch of the Feed-In Tariff Program (Sept 24, 2009)

Though not originally intended to help compensate for the effect of the global meltdown, the Green Energy Act has become a key economic driver in Ontario. Unlike many stimulus dollars that are not yet released, this program serves to bring private dollars into the market place rather than public ones. The program creates an investment climate and by doing so has created an industry ready to explode with the actual launch of the Feed-In Tariff (FIT) program.

For months now, companies have been preparing, financiers have been doing due diligence, and building owners have been crunching numbers. Though it is unlikely much will get installed this winter (costs, safety, etc) a great deal of design, permitting and financing will. This lead time will give companies time to budget, train, hire, and prepare for what proves to be a very busy 2010 for Ontario!

RESCo Energy Inc. is proud to support the North American Board of Certified Energy Practitioners. Shawn Speed, VP of Purchasing and Installation, has been Certified in Knowledge by NABCEP.

NABCEP is the national certification organization for professional installers in the field of renewable energy in the United States and is recognized in many other jurisdictions for its rigorous training and certification standards.

As we understand it, the ground breaking Feed-In Tariff program in Ontario is to be launched as early as next Tuesday, Sept 8th. With only a final legal review and translation to go, the program is now set and ready for launch. All consultations are concluded and all program documents are in final draft. Local content requirements have also been finalized and will be disclosed at the program launch.

A big congratulations to the folks who have lead to this success including, but in no way limited to, Deb Doncaster, Paul Gipe, Jose Etcheverry, Mike Brigham, the Community Power Fund, the Ontario Sustainable Energy Association, Environmental Defence, the First Nations Energy Alliance, Marion Fraser, The Toronto Renewable Energy Co-op, Pembina, the Ivey Foundation, and The David Suzuki Foundation.

Of course an enormous congratulations to Minisiter Smitherman and his team (Jordan, Jennifer, Yuri, et al) for the relentless pursuit of excellence in government policy and the satisfying of stakeholders while creating the most progressive jurisdiction in North America for the development of renewable energy.

A large round of applause goes to the great work of Jim McDougal and his team and colleaugues at the Ontario Power Authority for launching the RESOP program and then following it up with a fundamental shift in the procurement of green power.

September looks like it might still be the release of the Feed-In Tariff program in Ontario. There are more than a dozen related announcements pending in September around the Act. Additionally, it looks like the local content requirements may be addressed using a different legal mechanism to avoid the 30-day consultation period.

For an industry on the verge of expansion this can’t come fast enough. There has been significant industry consolidation and restructuring as a result of the 16 month program freeze. A few companies are well positioned to capture the relatively instaneous market that will develop with the release of the program, and others are struggling to stay in the game long enough to capture at least some of these benefits.

Decision making certainty has been the issue for the last 36 months. If properly handled this month, the Ontario Government and the Ontario Power Authority have the opportunity to create that certainty and that will create the type of positive impact that is necessary to get one step closer to distributed green energy.

Status
Pre-Launch – Launch Date dependent upon remaining steps – but expected Fall 2009.

Our Assessment
The Provincial Government has passed the enabling legislation allowing for the development of the regulations and programs necessary to create green energy and green jobs. The Feed-In Tariff Program is all but complete on the Green Energy side of things. The only remaining issue is the local content requirements which are a function of moving projects forward and investing in the creation of local industry. Roof top solar under 250kW has been singled out as a preferential energy source resulting in a streamlined contracting and approvals process. Projects that are complete or can be completed quickly are expected to get preference upon launching the program.

Key Next Steps
Local Content Component – will require 30 days of consultation upon release – being issued by Ministry of Economic Development

Key Milestones
May 14, 2009 – Passing of Bill 150 – The Green Energy and Economy Act
June 8, 2009 – Draft FIT Contract
July 10, 2009 – Draft FIT Program Rules, Definitions & Revised Price Schedule
August 14, 2009 – Draft microFIT Rules

Program Documents Available for Review

microFIT Rules - Draft August 14, 2009 and microFIT Contract (Direct) - Draft August 14, 2009
The Ontario Power Authority has been developing a streamlined approach to small renewable energy projects under the umbrella of the proposed Feed-in Tariff (FIT) Program. The microFIT rules – Draft August 14, 2009 and microFIT Contract (Direct) Version 1.0 – August 14, 2009 are available for downloading.

Revised FIT Program Rules, Standard Definitions and Price Schedule - Draft July 10, 2009
These documents are available for download in PDF format.

FIT Contract - Draft June 8, 2009
The Draft Feed-In Tariff Contract (June 8, 2009) and related documents are available for download in PDF format.

For Additional Information
Ontario Power Authority
Ministry of Energy and Infrastructure
Official Liberal Party Page
Green Energy Act Alliance