August 15, 2011 - Canadian utility versus distributed solar

State and provincial governments are implementing programs designed to promote the growth of small-scale distributed renewable energy projects like solar photovoltaic installations.  For these programs to succeed, new distributed energy projects need to be able to interconnect into the existing utility grid on a fair and predictable timeline.  For this reason, feed-in tariff and other distributed generation programs must work hand-in-hand with utility tariffs requiring fair interconnection access – but some solar and renewable industry groups are concerned that utilities may not be honoring these obligations.

A small solar array serving the Utah Communications Agency Network radio system atop Beaver Mountain, UT.

Consider the example of the Canadian province of Ontario.  The Ontario Power Authority – the entity charged with ensuring an adequate, long-term supply of electricity in Ontario – offers feed-in tariff programs for qualified generation.  Ontario’s “micro-FIT” program gives developers of small renewable power projects – 10 kW or less – long-term contracts to sell the projects’ output at a fixed price.  For rooftop solar projects, these contracts pay 80.2 ¢ per kWh for a 20-year term – about ten times the most recent regulated retail electricity price in Ontario.

As anticipated, this program has drawn interest from thousands of developers of small generating units – perhaps as many as 25,000 by earlier this year.  Each of these projects is entitled to interconnect to the electric grid in a timely fashion, but doing so requires the local utility to evaluate the technical and engineering aspects of the interconnection to ensure safety and system reliability.  For example, a utility must formally offer to interconnect with a project within 15 days if it is at an existing interconnection point, with actual interconnection to be completed within 5 days after the utility receives its customer’s payment and signed agreement.

Some utilities are having trouble complying with this schedule.  In a case currently pending before Ontario’s energy regulator, one utility has asked for a waiver of the interconnection timeline.  Hydro One Networks Inc.’s April 2011 petition to the Ontario Energy Board, docketed as case EB-2011-118, notes that it was in non-compliance on an estimated 442 interconnection applications based on the utility’s failure to meet tariffed deadlines.  As a result, the utility asked to be relieved of its scheduling commitments for six months.

Businesses, homeowners, and the solar installation industry have objected to this request, pointing out that they have already suffered great harm as a result of the utility’s failure to meet its interconnection timing deadlines.  Evidence submitted in the case suggests millions of dollars in lost revenue, layoffs, and business closures as a direct result of the utility’s missed deadlines.

The Ontario Energy Board conducted hearings on the utility’s waiver request, but has not yet issued a ruling.  When it does, it may affect not only people interested in solar energy development but moreover the balance between traditional centralized utility organization and Ontario’s pro-distributed generation feed-in tariff policy.