Financial incentives work, but beware potential pitfalls.
Forrest Small is a director in Navigant Consulting Inc.’s energy practice. Email him at: fsmall@navigantconsulting.com. Mitchell Rothman is an analyst based in Toronto and can be reached at: MitchRothman@yahoo.ca.
The Province of Ontario instituted the first open renewable-energy standard-offer program1 (RESOP) in North America in November 2006. RESOP offers 20-year power-purchase agreements to all proponents meeting the eligibility criteria and prerequisites. By measure of contracts signed, the program has succeeded beyond expectations. But by measure of capacity actually in place, the ultimate verdict on program success still is out.
The much-greater-than-expected response to the RESOP spotlighted some program design features that led to unintended consequences. The responsible agency, the Ontario Power Authority2 (OPA) froze applications3 on May 13, 2008 and began a comprehensive program review. By the end of the second quarter of 2008, OPA had signed contracts with 347 participants for 1,491 MW of renewable capacity. The rate of contracting slowed dramatically in the third quarter of 2008 due to the freeze on new megawatt-scale applications.