New Small Scale Generation Regulation aims to fill the gap between micro-generation and large utility companies

New Small Scale Generation Regulation aims to fill the gap between micro-generation and large utility companies

On November 22, 2018, the Government of Alberta (GoA) released the Small Scale Generation Regulation (SSGR)[1]in force on January 1, 2019. This regulation clarifies the regulatory process for small scale generation and is part of the result of an increased focus on renewable energy in the province. Although still early days, this regulation sets the stage for a middle ground between micro-generation and large scale utility size generation.

The GoA stated that one purpose of this regulation is to enable “neighbours, community groups, municipalities, agricultural societies, rural and urban co-ops, universities, schools, Indigenous communities and other groups to partner on small-scale renewable energy projects such as wind, biomass, hydro or solar that provide community benefits.”[2] It is accompanied by $200 million from the Climate Leadership Plan intended to both guarantee the price that community scale renewable energy projects receive for their power and help those communities affected by the coal phase out, transition to clean energy.[3]

The Regulation includes a broad definition of renewable energy:[4]

Electric energy generated from products having current EcoLogo certification or solar, wind, hydro, fuel cell, geothermal, biomass or other generation sources, if the emissions intensity of the electric energy produced or the total energy produced from the production of electrical and thermal energy is less than, or equal to, 418 kg of CO2e per MWh.

In order to qualify for the small scale generation program, a small scale unit must be considered an eligible generating unit, to be determined through the application process (which is set to be released at a later date). To be eligible, a generating unit must meet certain criteria.  It must exclusively use sources of renewable or alternative energy, it must be part of an interconnected electrical system or be within an isolated community (as defined by the Isolated Generating Units and Customer Choice Regulation), and the distribution system must have sufficient hosting capacity at the interconnection point to accommodate the generating unit.

 

Community Generating Units

Community generating units must demonstrate community benefits such as direct revenue to the community, the creation of local jobs, training opportunities, new social programs or new infrastructure to receive approval. This classification also comes with certain benefits, such as a standing offer of zero dollars per megawatt hour, the Balancing Pool acting as the market participant, and paying the small scale power producer for electric energy produced from the generating unit on a monthly basis, these benefits are outlined further, below.

In order to qualify as a community generating unit, applicants must demonstrate that there are community benefits stemming from the project, that there is a community benefits agreement or statement in place and that the group qualifies as a community group. Each of these terms are defined in Section 1 of the Regulation:

Community benefits agreement – a legally binding written contract between a small scale power producer and a community group in respect of a small scale generating unit that confers social, environmental or economic benefits to the community group.

Community benefits statement – a statement in writing made by a small scale power producer that qualifies as a community group. The statement must pertain to a small scale generating unit wholly owned by the community group, that sets out the social, environmental, or economic benefits flowing to the community group.

Community group – includes a co-operative, a school board, a board of a public post-secondary institution or private college, an Indigenous band, a Metis settlement, a municipal authority, a society, an incorporated congregation, an irrigation district, an agricultural society, a condominium corporation, a registered charity, or an association under the Companies Act or Rural Utilities Act.

How to become a community generator

Unlike a small scale generating unit, in order to qualify as community generation, a small scale power unit must be subject to a community benefits agreement or statement.[5] In order to qualify as a community generator, a small scale power producer may apply to the AUC directly for approval.[6]

Once the application for a community generating unit has been finalized, the distribution owner must purchase the meter (to a max of one meter per facility) for any community generating units not located in an isolated community. If a community generating unit is located within an isolated community, the distribution owner must purchase a meter (to a max of one per facility) and is responsible for the cost of any system reliability upgrades.[7] These costs are then compensated by the ISO with the amount of compensation determined by the AUC, who will then recover this amount through an ISO tariff or fee.[8]

In the event changes are proposed for a community generating unit, information about the change must be provided to the AUC for approval. This includes changes to the unit, the community benefits agreement or benefits statement, the status of the named community group, and any benefits received by the community group under the agreement or statement. Notice of these changes must be provided by either the owner of the unit or a distribution owner.[9] Upon receipt of the changes, the AUC must determine whether the community generating unit will retain its eligibility as such, despite the change, and must communicate their decision to the owner, the distribution owner, the ISO and the Balancing Pool.[10]

 

Small Scale Generating Units

Small-scale generation units do not need to demonstrate community benefits and seem to be limited solely by distribution capability. Although the criteria for small scale generation units is left undefined in the regulation, a statement from Energy Efficiency Alberta (EEA) indicates that there is no limit on the size of a unit, rather, the only size limit comes from any constraints associated with the distribution system’s capacity.[11]

The GoA states that the new “policy provides for the establishment of a default market participant for small-scale generators. This participant will offer energy to the pool on behalf of the generator, liaise with the AESO and coordinate any payments for excess energy to the grid.”[12] This is designed to lessen the burdens associated with connecting to the electricity market that would otherwise make it more inaccessible for smaller scale units. Additionally, program funding is set to guarantee the price that generators will receive for the power they produce.

According to EEA, more detailed program criteria (e.g. criteria that must be demonstrated in order to be eligible for this project) will be provided once the application process has been established – anticipated to be released in Fall 2019.[13]

How to become a small scale generating unit

In order to qualify as small scale generation, the owner of an eligible generating unit must apply to the distribution owner for the service area in which the generating unit is located.[14] The application must then be reviewed by the distribution owner, who has authority to determine whether the generating unit is qualified as a small scale generating unit.[15] In the event that the distributor does not qualify as a small scale generating unit the matter is decided by the Alberta Utilities Commission (AUC) within 30 days of receipt of a “notice of dispute”.[16]

This process is similar to the micro-generation approval process, with only disputes ending up at the AUC. This eliminates AUC approval in most cases, streamlining the application process.

Once a generating unit qualifies as a small scale generating unit under the regulation, the distribution owner is responsible for connecting the unit to the distribution system and for ensuring that a meter suitable for the nameplate capacity of the unit is installed at the interconnection point.[17] The distribution owner must also provide metering services for units within its service area and ensure that the meter date manager provides the meter date to service providers, load settlement agents and the ISO.[18]

The small scale power producer is then responsible for costs associated with connecting the small scale generating unit to the interconnected electric system including the costs for the meter, electric energy transfer facilities, and other connection costs.[19] They are also responsible for the costs incurred by the distribution owner through the provision of metering services and meter data and all costs of operation.[20]

In the event that a small scale power producer intends to make any changes to a generating unit, the regulation requires them to provide notice of the proposed changes to the distribution owner.[21] This will trigger the same process as the initial application process, first going to the distribution owner[22] and then moving on to the AUC in the event of a dispute.[23] Notably, throughout the regulation, whenever the AUC is tasked with making a decision, the decision is final and not subject to appeal.

 

Market Connections for Small Scale Power Producers

For small scale power producers, including those that qualify as community generating units, (unless the generating unit is located in an isolated community) the Balancing Pool is responsible for acting as the market participant – dealing with the ISO and exchanging payments.[24] Additionally, if the small scale power producer is located in an isolated community, the distribution owner is responsible for exchanging the electric energy that enters the distribution system and must submit the hourly metering data to the ISO on a monthly basis.

The Balancing Pool will also pay an amount to the small scale power producer for electric energy produced from the generating unit on a monthly basis. In turn, the ISO must compensate the Balancing Pool for the supplied electric energy. Small scale generating units (including those located in isolated communities) are deemed to have a standing offer of zero dollars per megawatt hour for the electric energy offered to the power pool, or, in the case of an isolated community, as if it was being offered to the power pool.[25]

Overall, the Small Scale Generation Regulation opens up the field of renewable energy to new participants, enabling small groups and communities to take charge of their energy production and use.

 

[1] Small Scale Generation Regulation, Alta Reg 194/2018 [Small Scale Generation Regulation].

[2] Government of Alberta, Media Release, “Putting power in the hands of communities” (22 November 2018) online: https://www.alberta.ca/release.cfm?xID=620855BF8D8B3-9B90-88C9-FD9330F8A9406D44.

[3]  Paula Olexiuk, Jessica Kennedy & Cassandra Richards, “Government of Alberta Launches and Seeks Input on Community Generation Program for Renewable Electricity” (14 December 2018) Osler, Hoskin & Harcourt LLP online: http://www.mondaq.com/article.asp?articleid=764152&friend=1.

[4] Small Scale Generation Regulation, s 1.

[5]  Small Scale Generation Regulation, s 3(1).

[6] Small Scale Generation Regulation, s 3(1).

[7] Small Scale Generation Regulation, ss 5(3)(a) & (b).

[8] Small Scale Generation Regulation, ss 5(2)(a) & (b).

[9] Small Scale Generation Regulation, ss 10(1) & (2).

[10] Small Scale Generation Regulation, ss 10(3)(a) & (b).

[11] Energy Efficiency Alberta, “Community Generation Online Resource Hub” online: https://www.efficiencyalberta.ca/commgen/.

[12] Energy Efficiency Alberta, “Community Generation FAQ” online: https://www.efficiencyalberta.ca/community-generation-faq/.

[13] Energy Efficiency Alberta, “Community Generation Online Resource Hub” online: https://www.efficiencyalberta.ca/commgen/.

[14] Small Scale Generation Regulation, s 2(2).

[15] Small Scale Generation Regulation, s 2(3).

[16] Small Scale Generation Regulation, s 2(4).

[17] Small Scale Generation Regulation, s 4(1).

[18] Small Scale Generation Regulation, s 4(2).

[19] Small Scale Generation Regulation, s 5(iii)(A).

[20] Small Scale Generation Regulation, ss 5(1)(a)(i) & (ii).

[21] Small Scale Generation Regulation, s 9(1).

[22] Small Scale Generation Regulation, s 9(2).

[23] Small Scale Generation Regulation, ss 9(3) & (4).

[24] Small Scale Generation Regulation, s 7(1).

[25] Small Scale Generation Regulation, s 6.

 

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