Just two weeks prior to the late November launch of the program, the Ontario Power Authority (OPA) released a map showing a large area around the Bruce Peninsula on Lake Huron where it will only accept SOC applications for micro generation no larger than 10 kW and farm based bio-energy projects up to 250 kW. At the time, Hydro One Networks, which provides transmission and distribution service to most of Ontario, had completed the connection impact assessments needed for hooking up about 379 MW of renewable projects in the region, most of them wind, compared to 247 MW in the rest of the province. It had another 400 applications for standard offer contracts yet to be processed.
While it was expected there would be some constraints in the Bruce area, says CanWEA's Robert Hornung, the industry was surprised at the magnitude of the restrictions. "For people who have been developing projects, it is almost like there has been a change in the rules of the game. There are a lot of people very, very concerned about the impact it has on their particular projects and also about the signal it sends to future investors in Ontario," Hornung says. "This is particularly frustrating for us because at the moment there are no transmission constraints."
The problem is that Ontario, facing significant electricity shortages, has been procuring supply through a number of avenues. It has already contracted for 725 MW of large scale wind generation in the Bruce region, all of which is expected to be operating by 2008, and has signed an agreement with the owner of the Bruce nuclear power plant for the refurbishment and restart of two idle units with a total generating capacity of 1500 MW. When the nuclear units come online, as early as 2009, generation will exceed the transfer capacity of existing transmission.
While plans are being made to build a new 500 kV line out of the area, a newly released discussion paper on Ontario's transmission needs says it will not be ready by 2009. The paper suggests a series of near term reinforcements and other interim measures to deal with the situation, including restricting new generation in the area until the line is in service. "These actions will permit committed and new generation to be added to the Bruce area as scheduled, with minimum need for curtailment and congestion costs and provide transmission capability for incorporating future resources in the Bruce area," states the discussion paper.
But Hornung argues there are two sides to the cost issue. The province already makes constraint payments to generators in some congested regions and should consider doing the same in the Bruce area, he argues. He also points out that with plans already in place to bolster transmission capability, any period of constraint will be limited. "You have to balance what is the potential cost against what is the potential loss in terms of new renewables capacity, renewables investment and local benefits in that area," he says. "It is a financial issue and it is a political issue, and we think it is inappropriate for the OPA to make that judgement."
Risk of constraint
The industry is pushing hard for a solution. CanWEA, says Hornung, has asked energy minister Dwight Duncan to order the OPA to make standard offer contracts available to projects in the Bruce region. "We recognize those contracts may have to be different than other ones. They may have to acknowledge that there is a risk of constraint. They may have to specify when a generator can come online. But we think the contracts should nonetheless be made available."
Without the certainty of a contract, he says, companies will not be able to continue to obtain and invest funds to keep the development process going. CanWEA has been successful in getting the OPA to create a multi-stakeholder group to look at options that would allow contracts to be awarded. The group, which began meeting in December, is to produce recommendations by no later than April.