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Standard Offer Program: How to Get Connected
The Standard Offer Program will be launched and available to generators in the Fall of 2006. This fact sheet will be updated as details of the program are finalized.
- About the Standard Offer Program (SOP)
- Before You Begin: Issues to Consider
- Steps to Connect to the Power Grid
- How to Learn More
If you are interested in generating and selling renewable energy in Ontario, the provincial government has made it easier for small generators to get into business through an initiative called the Standard Offer Program. While the program will not be finalized until the Fall of 2006, this fact sheet offers a brief overview and outlines the steps you will likely need to take to connect to the province’s power grid.
About the Standard Offer Program (SOP)
To help meet Ontario’s energy challenges and ensure an adequate supply of electricity for Ontarians, the SOP is being introduced as a way to boost development of small, clean, renewable energy projects – those with capacity of 10 megawatts and less (i.e., “small generators”). Such projects can range from simple solar panels on a roof, to a wind turbine, to a small hydro generation plant.
How will the SOP work? Tentative details are as follows:
- Small generators will be able to sign a contract to sell electricity to the Ontario Power Authority (OPA). Under the current proposal contracts may be in effect for up to 20 years.
- The OPA will pay generators a guaranteed price per kilowatt hour. The proposed prices are as follows:
- Electricity produced from wind, biomass and small hydro will be paid 11 cents per kilowatt-hour. This rate will escalate over the term of the contract.
- Solar electricity will be paid 42 cents per kilowatt hour for the entire term of the contract.
More details on rates and pricing are available on the OPA website. The OPA is the agency responsible for administering the program. If you become a generator under the SOP, you will supply/deliver the power you produce to the electricity distributor in your area, and through the distributor the OPA will buy and pay for the electricity.
Before You Begin: Issues to Consider
While the SOP is being designed to encourage renewable energy projects, becoming an electricity generator requires careful consideration. Connecting your project to the system, for instance, will involve obtaining approvals and following rules and codes from various bodies that govern the electricity industry.
The actual requirements for a SOP contract and connection are still being developed, however, the following gives you an idea of the things you need to think about before you finalize your plans and embark on your endeavour:
- Energy type – What type of energy generation do you want to use and does it qualify?
- Cost – What are the costs involved in designing, building and connecting your generation facilities?
- Regulations – What regulatory requirements must be adhered to? There are, for example, electrical safety standards. There are also rules and guidelines pertaining to licensing and connection requirements, which are set out in the Distribution System Code administered by the Ontario Energy Board (OEB).
- Municipal zoning – What are the zoning regulations for the area where you want to locate your project? For example, some municipalities have recently approved regulations governing wind turbines.
- Environment – Are there any environmental factors that must be taken into consideration? Is an environmental assessment required?
- Technical criteria – What are the connection requirements to hook up to the power grid? The next section provides details.
- Revenue/profit potential – How long will it take to break even and make a profit? To determine if you can make money generating electricity from renewable energy projects, visit the Canadian Government’s RETScreen International Clean Energy Decision Support Centre. This free, online tool will provide a financial analysis of your small scale energy project.
- Information – Where can I find useful information? What organizations can I contact for guidance? A list of helpful resources is provided at the end of this Fact Sheet.
Steps to Connect to the Power Grid
There is a multi-step process in place that varies depending on the size and type of facility you wish to connect. Here are the key steps you’ll need to take:
1. Consult with your local electricity distributor: Early in the planning stages, you should talk with the local distribution company your project would connect with. They will meet with you to discuss your plans, provide preliminary information on your connection options, and explain the process to connect your generation facility to their system. A list of licensed distributors in Ontario is on the OEB website.
2. Apply for an Impact Assessment : You will need to apply for an Impact Assessment, which is undertaken by the local electricity distributor. They will review the specifications of your project and determine if there’s available capacity in the distribution system to connect. You are responsible for the cost of the Impact Assessment.
3. Obtain a meter : At present, depending on the local electricity distributor in your area, you may need to obtain a four quadrant meter from the distributor. Meters can cost up to $3,000 installed. The OEB is reviewing metering requirements for distributed generation. You would also need a meter reading to transmit the hourly data, so a dedicated phone line may be required.
4. Set up an account : You may need to set up a separate generator account with the local electricity distributor. There is a fixed monthly charge in the range of $10 to $40 per month.
5. Get a generator licence : Generating, delivering or selling electricity in Ontario requires a generator licence from the OEB. You will need to apply for a licence, which typically takes 90 days to process, and pay for any applicable licensing fees. There is a one-time licence application fee of $100 for electricity generators with 10.0 megawatts or less in capacity. Very small generators of 500 kilowatts or less capacity are exempt from the need to obtain a generator licence. Application forms are available on the OEB’s website.
6. Get a safety check : The Electrical Safety Authority (ESA) enforces the Ontario Electrical Safety code. You will need to contact them to have your facility and its connection to the local electricity distributor’s system inspected. If approved you will receive an inspection certificate.
7. Sign a Connection Agreement : Once all required work and approvals are complete, you will sign a connection agreement with the local electricity distributor outlining the roles and responsibilities of each party. Such contracts will be mandated by the OEB under the Distribution System Code.
If you experience trouble getting a connection to a local distributor, you should contact the OEB’s Market Operations Hotline at 416-440-7604. The OEB has a dispute resolution process for problems. A key role of the OEB is to ensure generators have non-discriminatory access to the electricity system.
How to Learn More
More information will be available in the coming weeks as the SOP rolls out. Also read our tip sheet, Questions to Ask When Considering Selling Electricity, or contact the OEB’s Market Operations Hotline.
The following organizations also offer helpful information:
- Your local electricity distributor
- Ontario Power Authority (www.powerauthority.on.ca)
- Ontario Ministry of Energy (www.energy.gov.on.ca)
- Electrical Safety Authority (www.esainspection.net)