An explanation why Ontario is pursuing a feed-in tariff whereas US states are pursuing Renewable Portfolio Standards

1. 2009 OEA Industry Leaders’ Roundtable
Ontario’s Feed In Tariff in the Context of North
American Renewable Energy Policies
April 30, 2009
John Dalton
jdalton@poweradvisoryllc.com
Tel: 978 369-2465

2. Presentation Outline
 Renewable Energy Policies in North America
 Objectives
 Creating Manufacturing Jobs
 Renewable Portfolio Standards
 Feed In Tariffs
 Objectives
 Challenges
 Ontario’s approach
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3. Range of renewable policies being employed across North
America
 Alternatives include:
 Purchase mandates, including Renewable Portfolio
Standards (RPS) and Standard Offers
 Tax incentives
 Grants
 Policies driven by objectives including:
 Environmental benefits
 Price stability
 Economic development
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4. Economic development focused on manufacturing jobs
 Providing the conditions to attract industry
 Competitive, skilled labour force
 Logistics: minimizing shipping costs
 Procurement of components and delivery of
product
 Close to the market
 Driven by incentive levels (PV) and resource base
(wind)
 Access to other markets
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5. RPS the predominant form of procurement policy in the US
www.dsireusa.org / April 2009
WA: 15% by 2020* VT: (1) RE meets any increase ME: 30% by 2000
New RE: 10% by 2017
MN: 25% by 2025 in retail sales by 2012;
MT: 15% by 2015
(Xcel: 30% by 2020) (2) 20% RE & CHP by 2017 ☼ NH: 23.8% by 2025
OR: 25% by 2025 (large utilities)
ND: 10% by 2015 MI: 10% + 1,100 MW ☼ MA: 15% by 2020
5% - 10% by 2025 (smaller utilities) by 2015* + 1% annual increase
(Class I Renewables)
SD: 10% by 2015 WI: Varies by utility; ☼ NY: 24% by 2013
10% by 2015 goal RI: 16% by 2020
☼ NV: 20% by 2015* CT: 23% by 2020
IA: 105 MW
☼ OH: 25% by 2025†
UT: 20% by 2025*
☼ PA: 18% by 2020†
IL: 25% by 2025 VA: 15% by 2025*
☼ CO: 20% by 2020 (IOUs) ☼ NJ: 22.5% by 2021
CA: 20% by 2010 10% by 2020 (co-ops & large munis)*
☼ MO: 15% by 2021 ☼ MD: 20% by 2022
☼ AZ: 15% by 2025 ☼ DE: 20% by 2019*
☼ NC: 12.5% by 2021 (IOUs)
10% by 2018 (co-ops & munis) ☼ DC: 20% by 2020
☼ NM: 20% by 2020 (IOUs)
10% by 2020 (co-ops)
TX: 5,880 MW by 2015
HI: 20% by 2020 28 states & DC
have an RPS
5 states have goals
State renewable portfolio standard
☼ Minimum solar or customer-sited requirement
*
State renewable portfolio goal Extra credit for solar or customer-sited renewables
Solar water heating eligible
† Includes separate tier of non-renewable alternative resources
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6. RPS structures vary by state
 Restructured markets, RPS utilize RECs
 RECs represent the environmental attributes
 Benefits of RECs: market-based signal of attributes
 Can lower costs of realizing target
 Disadvantages: uncertainty regarding REC value
 REC markets short term
 Discount for long-term sales
 Net effect can be higher costs for renewable energy
 New York RPS: central procurement: $22 to $15
 New England states utilize RECs: $45 to $35
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7. FITs effective in developing renewable energy industry
 Most appropriate where costs and performance well
known
 Key is stability offered by the program
 Allows manufacturers to make investment decisions
 Risk if you get the FIT price wrong
 Depends on the premium relative to market
 Asymmetrical: prices too high versus too low
 Major source of tension with FIT implementation
 Enable project development on sustainable basis
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8. Ontario’s FIT seeks to resolve this tension
 Program pricing balances the following objectives:
 Promote broad participation in program
 Provide price stability necessary to promote
investment
 Encourage efficient project development
 Electricity market reforms must ultimately consider the
impacts on customers
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9. Introducing Power Advisory
 Power Advisory specializes in electricity market analysis and strategy, power
procurement, policy development, regulatory and litigation support, resource
planning and project feasibility assessment.
 Our consulting support is driven by the objective of offering clients
strategic and tactical insights that provide competitive advantage.
 Our approach is based on an understanding of fundamental economic
drivers as shaped by market structures and market participant behavior.
 Our consulting services are provided by seasoned electricity sector
professionals, offering a wide breadth and significant depth of industry
knowledge.
 For additional information regarding our services, please contact:
John Dalton
jdalton@poweradvisoryllc.com
978-369-2465
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10. Introducing Power Advisory
 Clients include:
 Algonquin Power
 Atlantic Power
 Bluewater Power Generation
 Bruce Power
 Canadian Wind Energy Association
 Connecticut Resources Recovery Authority
 Great Lakes Power
 Manitoba Hydro
 National Energy Board
 Natural Resources Canada
 Northland Power
 New Jersey Resources
 Ontario Energy Board
 Ontario Power Authority
 Suncor
 TransAlta
 TransCanada
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