4. Feed-In Tariff Program

The Feed-In Tariff (FIT) Program was developed in 2009 to encourage and promote greater use of renewable energy sources, including on-shore wind, solar photovoltaic (PV), bioenergy (biomass, biogas and landfill gas) and hydroelectricity for electricity generating projects in Ontario. Through this program, Ontario procures renewable energy from generation facilities that have a rated electricity generating capacity generally up to and including 500 kilowatts (kW).

In this section an overview of the FIT program is provided, including the:

  • FIT program eligibility rules
  • point system for priority ranking of FIT applications
  • FIT contracting process

The microFIT program, for projects 10 kW and smaller, is also described.

In the event of any inconsistency between this information and the Independent Electricity System Operator’s (IESO) FIT and microFIT documentation, the IESO’s program rules and contracts will govern. These, and other program documents, are available on the Program Resources section of the IESO’s FIT and microFIT websites.


4.1. FIT PROGRAM OVERVIEW

The FIT program is a standard offer program. This means that the pricing, contract terms and program rules are standardized.

The FIT program is open to a variety of participants who generate renewable energy and sell it to the province at a guaranteed price for a fixed contract term. FIT program participants can include homeowners, communities, municipalities, Aboriginal communities, business owners, and private developers. Participants are paid a guaranteed price over a 20-year contract term (40 years for waterpower projects) for all the electricity that is generated and delivered to the Ontario grid.

The FIT program is managed by the IESO. The IESO opens the FIT program to applications on a regular basis and the window for submitting applications typically lasts one month. The IESO then reviews all applications for eligibility and the ability to connect to the grid. Projects that are successful at all stages are offered a FIT contract.

The most current information about the administration of the FIT program can be found on the IESO’s website.

The awarding of a FIT contract to a developer does not mean that the project is a “done deal.” A developer may not build a FIT project unless all of its key contractual and regulatory requirements, including the necessary environmental approvals,  are met (see Section 6 for more detail).

The microFIT program offers a streamlined process for homeowners and other eligible participants to develop a small or “micro” renewable energy project 10 kW or smaller on their property. For more information about the microFIT program, see Section 4.8.

4.2. FIT PROJECT SIZES

Projects under the FIT program are categorized by project size and renewable energy technology type.

FIT projects have a rated electricity generating capacity of greater than 10 kW and generally up to 500 kW. The FIT program is open to the following renewable energy technologies:

  • on-shore wind
  • solar PV – both rooftop and ground-mounted solar installations
  • bioenergy – including biogas, landfill gas, and biomass
  • waterpower

Learn more about the renewable energy technologies eligible under the FIT program on the IESO’s website.

4.3. FIT PRICES

FIT prices are set at the date the contract is signed and are fixed for the term of the contract.

The FIT price is the amount paid per kilowatt-hour (kWh) of electricity delivered to the provincial grid under a FIT contract. The price paid for electricity produced varies according to the renewable energy technology used and the size of the project.

Each year the IESO reviews the prices offered to new projects under the FIT program and adjusts the prices to reflect the current cost of developing projects while allowing a reasonable rate of return for project developers. Annual price reviews are expected to continue to result in cost savings for ratepayers.

The IESO website publishes the latest FIT price schedule, which indicates the amount developers will be paid for the renewable energy their FIT projects produce and deliver to the distribution system.

4.4. FIT 4 PROGRAM REVIEW

In addition to annual price reviews, from time-to-time the province reviews the FIT program in its entirety to ensure it aligns with government policy objectives and to consider potential enhancements to the program.

In late 2014, the IESO and Ministry of Energy engaged with key stakeholders and the public on proposed changes to the FIT and microFIT programs. This broad set of stakeholders, as well as municipalities and Aboriginal communities, provided submissions on the proposed changes to the FIT and microFIT programs. The IESO and Ministry of Energy considered these comments while working together to finalize the changes to the FIT program. No changes to the microFIT program were implemented for 2015 as the Ministry continues to investigate transitioning microFIT to a net metering program.

4.5. THE FIT DEVELOPMENT PROCESS

There are a number of points in the FIT contracting and development process where municipalities can be involved. The following graphic outlines the key steps in the process:

Feed-in Tariff Development Process (follow link for description)

Stages in the FIT development process that are of particular interest to municipalities are described in the sections below.

Pre-application Stage

The activities that take place during the pre-application stage are often thought of as developer front-end work. These activities may include identifying and obtaining access to a suitable site, arranging project financing and contacting the municipality to begin pre-consultations. Developers are encouraged to contact the local municipality during this stage to begin discussions about the proposed project.

Since formal municipal support for a project translates into the awarding of two priority points in the system for ranking FIT applications (discussed below), municipalities have the ability to selectively support the projects that are better aligned with local planning priorities and local considerations. By proactively engaging with developers at the pre-application stage, municipalities can work to influence important decisions, such as project siting.

For example, a municipality may be able to suggest to the developer alternative locations within the municipality for the proposed project in exchange for a municipal support resolution and the associated priority points or for municipal support for an exemption from FIT residential, commercial or industrial siting restrictions.

Though developers do not have to contact the municipality as part of their pre-application due diligence, if a municipality is contacted by the developer (for example, for information about archaeological or heritage resources), such contact provides an opportunity for the municipality to engage the developer in discussions that may lead to mutually beneficial agreements.

During the pre-application stage, developers would also assess whether there are any significant issues related to the property that they are considering for their renewable energy project, such as the presence of Prime Agricultural Land or First Nation land claims.

Developer Prepares and Submits FIT Application

Details about how to complete a FIT application are beyond the scope of this guide. Please find this information on the FIT program website and by contacting the Renewable Energy Facilitation Office (REFO).

Developers of ground-mounted solar projects of any size must obtain confirmation of the existing municipal zoning as part of their application to the IESO to ensure all FIT land use restrictions are met. Developers must request confirmation of zoning from municipalities and use the prescribed FIT program form for documentation. The form is to be completed and executed by a:

  • land use planner (registered professional planner) employed by the municipality, including a director of planning or equivalent municipal official (i.e., a registered professional planner)
  • independent land use planner (registered professional planner) not employed by the municipality
  • chief building official, chief municipal administrative officer, or municipal clerk or equivalent municipal official

The developer must obtain zoning confirmation information for every municipality in which the project is located in whole or in part.

The role of the municipal official/independent professional planner is to provide confirmation of the existing zoning in the municipality(ies). The IESO will use this information to determine whether the FIT application meets the relevant land use restrictions under the program rules.

Priority Point System for IESO Ranking of FIT Applications

The FIT program uses a point system to prioritize applications as they move through the contracting process. In this guide we refer to this as the priority point system. To qualify for a contract, an application needs to earn at least one point.

There are two categories of points that can be awarded:

  • Price Reduction Priority Points
  • Additional Priority Points

The IESO awards Price Reduction Priority Points to applications that voluntarily select reduced prices from the schedule provided by the IESO. Three tiers of reduced prices are available and each tier awards a corresponding number of points.

The IESO also awards Additional Priority Points for projects that have received community support (either in the form of municipal or Aboriginal community support) and for projects that are located on Aboriginal land, or hosted by a municipal or public sector entity.

For more information on priority points, consult the Minister of Energy’s Direction to the IESO, dated April 7, 2015.

The chart below summarizes the categories and points available:

PRICE REDUCTION PRIORITY POINTS Points
Tier One 1
Tier Two 2
Tier Three 3
ADDITIONAL PRIORITY POINTS Points
Municipal Council Support Resolution 2
Aboriginal Community Support Resolution 2
Municipal Site Host or Public Sector Entity Site Host 1
Aboriginal Community Site Host 1

Municipal Support and Engagement

Every developer can earn priority points for a project by demonstrating support from the local municipality. For the purpose of priority points, municipality means a municipal corporation as defined by the Municipal Act, 2001. More specifically, the IESO will award two priority points if the developer submits, along with its application, a prescribed form showing that a formal Municipal Council Support Resolution was passed in support of the proposed project.

The ability to earn priority points as a result of municipal support means that developers seeking a contract have an incentive to negotiate and work with municipalities.

Municipal support resolutions have been specifically designed to enable participants in the FIT program to receive priority points for engaging effectively with municipalities. Projects that obtain municipal support for the purpose of acquiring FIT priority points are still subject to all relevant permitting and approval processes.

There are two types of municipal support resolutions:

MUNICIPAL SUPPORT RESOLUTIONS
1. Municipal Council Support Resolution
  • provides support for an individual project (ie. project-specific resolution)
  • use IESO template
2. Municipal Council Blanket Support Resolution
  • provides support for all projects of a certain technology type proposed during a 1-year period
  • use IESO template

For a project to be awarded priority points for demonstrating municipal support, the FIT program rules require that Municipal Council Support Resolutions use the exact wording provided in the applicable FIT program template. If municipalities have additional requirements they would like project developers to undertake, they may wish to enter into separate agreements with developers.

To earn priority points, Municipal Support Resolutions must be provided at the same time the developer submits a FIT application. Once a FIT contract is awarded by the IESO, any changes the municipality makes regarding its position on the project will have no impact on the developer’s FIT application priority position.

Municipalities can encourage applications from proponents of specific types of renewable technologies (for example, by passing a Municipal Council Blanket Support Resolution in favour of all rooftop solar projects in the municipality), as well as encourage applications in areas that are consistent with local municipal planning priorities (for example, the municipal growth plan and community energy plan). Therefore, it is to the developer’s advantage to work closely with municipalities to achieve broader support for a project and acquire priority points during the application process.

Developers can also earn Additional Priority Points, in the form of Municipal Site Host or Public Sector Entity Site Host Points, by locating their projects on municipal or public sector entity buildings or sites that are located within the host municipality. This encourages developers to engage municipalities and public sector entities regarding the siting of their projects. It also allows amenable municipalities and public sector entities to attract projects to their own sites and gives developers an incentive to consult with municipalities regarding specific locations that could offer benefits to both parties.

New for FIT 4, the IESO will grant an exemption to certain FIT ground-mounted solar land use restrictions where the local municipality confirms support for the project. The restrictions that would be affected by the exemption include residential, commercial and industrial siting restrictions, and setback and visual screening requirements for projects on rural-residential lands. Municipal support is indicated by providing an appropriate Land Use Restriction Exemption Resolution. This is another way developers are encouraged to engage municipalities on project siting preferences.

Screening and Ranking Applications

For each round of contracting, the IESO pools eligible applications and ranks them based on the total number of priority points. Priority among applications that have accumulated the same number of points is determined based on when the application was first submitted, also known as the timestamp.

The IESO screens all ranked projects to assess if the projects are likely to be able to connect to the grid. For more information on the screening process, see the IESO website.

The FIT program also assigns Contract Capacity Set-Asides (CCSAs) for specific types of priority projects. For instance, a minimum two-thirds of the FIT 4 procurement target is reserved for CCSA projects – projects with greater than 50 per cent economic participation by municipal or public sector entities, Aboriginal communities or communities (co-operatives).

Within any FIT application window, qualifying applications that meet the CCSA eligibility criteria are tested for their ability to connect to the grid first. This is a distinct advantage, since those that are deemed able to connect to the grid first will be offered contracts first.

For applications that pass the Transmission Availability Test (TAT) and the Distribution Availability Test (TAT), the IESO will offer developers FIT contracts subject to the procurement targets set by the IESO.

The TAT and DAT screening tests do not guarantee an ability to connect the project to the electricity grid. If a generator receives a FIT contract, the project would be subject to one or more detailed impact assessments that may be required by the system operator, transmitter or local distribution company (LDC). Interested applicants are encouraged to consult with the applicable LDC or transmitter prior to submitting a FIT application.

4.6. FIT PROGRAM ELIGIBILITY RULES

To qualify for the FIT program, projects must meet eligibility criteria. A detailed explanation of the FIT program eligibility rules are available on the FIT website. This section highlights eligibility rules that are of particular interest to municipalities.

Project Siting Rules

Generally, ground-mounted solar projects cannot be located on a property that is partially or wholly on prime agricultural lands made up of Canada Land Inventory (CLI) Class 1, Class2, or Class 3 lands, Specialty Crop Areas or Organic soils. Any exemptions from these restrictions are discussed in the FIT Rules.

For ground-mounted solar project sites with a mix of prime agricultural land (Classes 1 to 3) and/or organic soil and non-prime agricultural land (Classes 4 to 7), siting restrictions remain in place. Land evaluation studies are required to be prepared by a qualified soil scientist/pedologist according to a standardized methodology to demonstrate that the ground-mounted solar facility can be placed on the non-prime agricultural portions of the property only. The studies must undergo a third party peer review. The standardized methodology and peer review process is detailed on the Ministry of Energy’s website.

Ground-mounted solar facilities are not permitted to be developed on rural/agricultural land that abuts residential lands or on lands zoned to permit residential use, except in some cases where projects may proceed if they are able to meet specific setback and visual buffering requirements. More information is available in the FIT Rules.

Ground-mounted solar continues to be permitted on lands zoned as commercial or industrial as long as the solar facility is not the primary use of the lands. More information on siting of ground-mounted solar is available in the FIT Rules.

Under FIT 4, applicants have the ability to obtain an exemption from certain FIT ground-mounted solar land use restrictions by providing a Land Use Restriction Exemption Resolution confirming the local municipality’s acceptance of a project site. The restrictions that would be affected by the exemption include residential, commercial and industrial siting restrictions, and setback and visual screening requirements for projects on rural-residential lands. The appropriate Land Use Restriction Exemption Resolution form can be found on the IESO website.

Rooftop solar facilities continue to be permitted on agricultural, residential, commercial and industrial areas.

The following chart summarizes the FIT ground-mounted solar land use restrictions and highlights where changes have been introduced under FIT 4.

SUMMARY OF LAND USE RESTRICTIONS ON GROUND-MOUNTED SOLAR FACILITIES
FIT 3 Projects between 10 kW and 500 kW, may not be located on:

  • Specialty Crop Areas
  • CLI Organic Lands
  • CLI Class 1, 2, or 3 lands, unless the site is:
    • an airport or aerodrome
    • a closed landfill
    • a contaminated site (see FIT 4 documents for definition)
    • a federal military establishment
    • CLI Class 3 soil that is owned by a municipality

Note: When proposing a project on the non-CLI 1, 2, 3 or organic soil portions of a property with a mix of soils, developers must submit soil studies, using an expanded methodology and peer review process, to the IESO.

  • Residential property or on property abutting residential property, except where the property is located on rural-residential lands and the residential use is ancillary to the agricultural use. However, in some cases, projects will be permitted if they meet specific setback, and visual buffering requirements.
  • Commercial or industrial properties (unless it is entirely a secondary use of the property)
Changes for FIT 4 Note: The IESO will exempt ground-mounted solar projects from certain land use restrictions where the local municipality provides a Land Use Restriction Exemption Resolution confirming acceptance of the project site. The restrictions that would be affected by the exemption include residential, commercial and industrial siting restrictions, and setback and visual screening requirements for projects on rural-residential lands. Agricultural land restrictions still apply.

4.7. OPPORTUNITIES FOR MUNICIPALITIES

The FIT 2, FIT 3 and the extended FIT 3 programs provided opportunities for municipalities to participate in renewable energy development by prioritizing projects with municipal ownership. As a result, municipalities responded with extensive participation in these procurements.

FIT 4 continues to provide opportunities for municipal participation through the Municipal and Public Sector Entity CCSAs for those projects with greater than 50 per cent municipal or public sector entity economic participation.

Furthermore, by offering priority points for those projects that are supported by Municipal Council Support Resolutions and which have a Municipal Site Host, municipalities are in the position to discuss and potentially influence decisions regarding projects in their communities. As outlined in the chart below, contracts offered by the IESO in 2013 and 2014 had high levels of municipal support and municipal ownership.

FIT 2 (2013) FIT 3 (2014) Extended FIT 3 (2014)
Number of Contract Offers 951 500 332
Projects with Municipal Support 90% 96% 87%
Projects with significant Municipal or Public Sector Entity Ownership 1 33% 32% 45%

Municipalities, among other groups, can apply for funding to explore project partnerships and to develop renewable energy projects under the new Energy Partnerships Program to be launched in 2015 2. They also have access to funding under the Education and Capacity Building Program, which equips target audiences with knowledge and training to participate in the energy sector. For more information, please visit the Community Energy Program website.

4.8. microFIT

The microFIT program was developed to provide individuals, homeowners, farmers and municipalities the opportunity to develop micro scale renewable energy projects using a simplified and streamlined process. microFIT is open to projects that are 10 kW or less in size. Since the program launch in 2009, over 20,000 microFIT projects have been connected to the grid – 99 per cent of which are solar PV projects.

The most current information about the administration of the microFIT program can be found the IESO’s website.

Technologies and Pricing

The microFIT program is open to the following renewable energy technologies:

  • on-shore wind
  • solar PV – both rooftop and ground-mounted solar installations
  • bioenergy – including biogas, landfill gas, and biomass
  • waterpower

More information about these eligible technologies is on the IESO’s website.

Under the microFIT program, prices are set at the date the Application Approval Notice is issued by the IESO (see description below). The prices are fixed for the term of the contract.

Each year, the IESO reviews the prices offered to new projects under the microFIT program and adjusts the prices to reflect the current cost of developing projects while allowing a reasonable rate of return for project developers. Annual price reviews are expected to continue to result in cost savings for ratepayers.

The latest microFIT price schedule is available on the IESO’s website, under Program Resources.

Eligible Participants

The complete list of eligible microFIT participants can be found on the Eligible Participant Schedule on the microFIT website.

Application and Contracting Process

microFIT Application Process (follow link for description)

Prospective microFIT applicants must first register with the IESO online. After reviewing the microFIT Rules and Contract, the applicant completes the online application process with the required supporting documentation.

The IESO reviews the application for completeness, ensuring that all required information is provided. If the completeness review is passed, the applicant must submit a connection request to the LDC, as well as any additional information the LDC may request, in order to assess if there is sufficient grid capacity to connect the project. The LDC will inform the IESO whether it has issued or denied the connection request.

If the LDC issues the connection request, the IESO will provide the applicant with an Application Approval Notice. It is at this point where installation and connection of the microFIT project can begin.

Project construction and installation must be completed and an Electrical Safety Authority (ESA) Connection Authorization obtained within 180 days of being issued the Application Approval Notice. Once ESA Connection Authorization is obtained, the applicant must finalize the connection with the LDC, who will notify the IESO when the project is connected.

The IESO will then offer a microFIT contract to the applicant, which must be accepted or declined within 45 days. Once the microFIT contract is accepted, payments can begin.

More information on the microFIT application and contracting process is available on the IESO’s website.

Approvals Process

Most microFIT projects (10 kW and smaller) do not require an REA due to their size, though other permits and approvals may be required.

MicroFIT solar projects, for example, do not require an REA. However, wind projects greater than three kW in size are subject to a streamlined and simplified REA process. See Section 6.2 for more details on environmental approval requirements for each technology type and project size.

Siting Restrictions

A ground-mounted microFIT solar project is not permitted to be located on, or adjacent to, residential lands. Also, microFIT wind projects three kW or smaller are not permitted on residential lands. Any microFIT project that is located on commercial or industrial lands must not comprise the primary use of the lands.


1. The figures in this row represent projects with greater than 50 per cent equity held by Municipalities or Public Sector Entities (including schools, colleges, universities, hospitals, long-term care homes, public transit service entities or Metrolinx).
2. The EPP streamlined the Municipal and Public Sector Energy Partnerships Program (MPSEPP) with the Community Energy Partnerships Program (CEPP), the Aboriginal Renewable Energy Fund (AREF), and the Aboriginal Transmission Fund (ATF) into a single program.