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Power to the people
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Last week, the province announced the first approved contracts under the Green Energy Act’s (GEA) feed-in-tariff (FIT). More than 500 mostly small, mostly solar projects were approved in this first round, with many more (and many larger) projects expected to follow in early April. While this first wave of projects, coming less than a year after the GEA was passed into law, has total potential generating capacity of 112MW, the surprise headline-grabber was a major grocery store chain. (See The Star, The Globe, The Sun, The Ottawa Business Journal.)
Demonstrating vision and a commitment to their own sustainability, and perhaps also seeing a ripe business opportunity, Loblaws was approved to begin 136 rooftop solar installations through a new venture called Fresh From the Sun Energy, created specifically to manage the energy production for all of their Ontario locations. They will begin with four pilots with the intention of expanding outwards if all goes well. This represents a total generation potential of over 21MW.
Tyler Hamilton reports that this move has reinforced the interest of other major retailers (incluxding Canadian Tire) looking to bolster their CSR. While the FIT is still in its infancy, the fact that a major corporation has stepped forward in the very first round shows a willingness by industry — and a blow to skeptics — for the potential of distributed generation. Flying into Pearson, it is apparent that there is a massive opportunity to install rooftop solar on the thousands of flat commercial and industrial rooftops (site of a large percentage of energy consumption), without the distribution constraints of windfarms.
Many of these first (and smaller) projects will benefit from the community-based “price adder” under the GEA’s FIT. Community-based projects are roughly defined as having at least 50% ownership in the form of:
- one or more individuals resident in Ontario;
- a registered charity with its head office in Ontario;
- a not-for-profit organization with its head office in Ontario, or
- a “co-operative corporation,” whose members are residents in Ontario.
Projects meeting these criteria receive incentives to participate (a guaranteed premium on top of the existing 20-year pricing promise) to encourage local development and investment. While no size restrictions exist, the majority are expected to smaller local projects (not the multi-million dollar large scale variety). The result is an opportunity for community groups to participate in what would otherwise be a sector dominated by established energy providers. However, like all projects, these will require financing.
To that end, MaRS, the GEAA and D&D Securities will host a follow-up to the highly successful GEAFF, titled the Community Power Finance Forum, on May 10th. This forum will provide a venue to learn more about the extent of this opportunity and present methods of participation. Community power projects will have their own unique challenges, but the GEA’s Community Power incentives make them a very compelling business opportunity.
Register early, as the GEAFF sold out very quickly!
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Kevin Downing @ MaRS
Kevin currently manages initial client engagements with the MaRS Venture Group. He also administers a federal fund that provides mentorship to start-up companies across Ontario.
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