Facilitating small scale development -- Standard offer success

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The first commercial-scale wind project to be built under Ontario's program of standard offer power purchase contracts for small scale renewable energy developments has come on line on the shores of Lake Huron. Sky Generation's 9.9 MW Ravenswood wind farm, made up of six Vestas 1.65 MW turbines, completed commissioning January 23.

Two-thirds of the output is covered by a standard contract with the Ontario Power Authority (OPA) offering a fixed price of C$0.11/kWh over 20 years. To be eligible for a standard offer contract, projects must be connected to the network at the level of the distribution grid and have a maximum generating capacity of 10 MW.

Sky Generation CEO Glen Estill says the contract was key to getting the wind farm built. "The support of the province's renewable energy standard offer program helped make this project possible," he says. "The real positive thing about it is you are going to get a contract. That was the huge uncertainty before. You would do all of the pre-development work with no idea whether or not you would get a contract."

For small developers like Sky Generation, the prospect of competing for big utility contracts thrown into the arena in a request for proposals process is daunting. The standard offer program presents a way for them to participate in the market, says Estill.

The remaining one-third of the project's output is being sold to Bullfrog Power, a green electricity retailer based in Toronto, allowing Estill to also participate in Ontario's voluntary green power market. "It is not going to be anywhere near as potent as the government itself doing it, but it is additive. It is above and beyond government mandates," he says. "The beautiful thing about that is it goes on even if there is a change in government policy. It gives the people, if you will, the chance to influence where their power comes from."

With Ravenswood complete, Sky Generation is turning its attention to finishing development of another project in the same area using three turbines. If the company can finalise its permits and turbine supply in time, says Estill, the turbines could come on line as early as this year. But what is still not clear is the impact rising turbine prices could have on his decision to proceed. The increases are making it "more and more difficult" for small producers, he says. "I am a little bit worried about the standard offer and what is going on with turbine prices."

Tiered tariff

The OPA has said it expects to review the standard offer tariff at least every two years. Estill says he sees merit in a recommendation for a tiered tariff made by the Ontario Sustainable Energy Association when the standard offer program was first planned. It is expected to make the proposal again when the first review is held. A tiered tariff would see higher prices paid for power from lower speed wind sites. "With the tariff today and turbine prices today we are only going to find the very top sites in the province developed -- and that is problematic. It essentially means they go through the process of signing a bunch of standard offers for projects that don't get built," says Estill.

By the end of 2007, the OPA had executed 241 contracts totalling 915 MW of renewable energy capacity and had another 87 applications to process. Wind led the way with 65 contracts totalling 573 MW. Until Ravenswood, only a 65 kW and a 250 kW wind power installation had reached commercial operation under the program. Two utility scale turbines built earlier this decade were also grandfathered into the program.

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